UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~March 31,~~September 30, 2019

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

For the transition period from _________to__________

Commission File Number 1-38315

CURO GROUP HOLDINGS CORP.

(Exact name of registrant as specified in its charter)



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

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

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

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

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



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

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

Indicate by check mark whether the registrant has submitted electronically 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 filer	☐	Accelerated filer	☒
Non-accelerated filer	☐
Smaller reporting company	☐☒	Emerging growth company	☐

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

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

At ~~May 3,~~November 1, 2019 there were ~~46,442,628~~41,486,965 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

FORM 10-Q

~~FIRST~~THIRD QUARTER ENDED ~~MARCH 31,~~SEPTEMBER 30, 2019

INDEX



		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets –
	~~March 31,~~September 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations –
	Three and nine months ended ~~March 31,~~September 30, 2019 and 2018	4
	Condensed Consolidated Statements of Comprehensive Income –
	Three and nine months ended ~~March 31,~~September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows -
	~~Three~~Nine months ended ~~March 31,~~September 30, 2019 and 2018	6
	Notes to Condensed Consolidated Financial Statements	78
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3343
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5168
Item 4.	Controls and Procedures	5168

PART 2 – OTHER INFORMATION

Item 1.	Legal Proceedings	5370
Item 1A.	Risk Factors	5370
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5371
Item 3.	Defaults Upon Senior Securities	5372
Item 4.	Mine Safety Disclosures	5372
Item 5.	Other Information	5372
Item 6.	Exhibits	5472

SIGNATURES		72

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

~~(unaudited)~~


							September 30, 2019			December 31, 2018
	March 31, 2019			December 31, 2018			(unaudited)
ASSETS
Cash	$	82,859		$	61,175		$	62,207		$	61,175
Restricted cash (includes restricted cash of consolidated VIEs of $15,460 and $12,840 as of March 31, 2019 and December 31, 2018, respectively)	34,319			25,439
Gross loans receivable (includes loans of consolidated VIEs of $180,631 and $148,876 as of March 31, 2019 and December 31, 2018, respectively)	553,215			571,531
Less: allowance for loan losses (includes allowance for losses of consolidated VIEs of $22,764 and $12,688 as of March 31, 2019 and December 31, 2018, respectively)	(94,322		)	(73,997		)
Restricted cash (includes restricted cash of consolidated VIEs of $21,897 and $12,840 as of September 30, 2019 and December 31, 2018, respectively)							38,754			25,439
Gross loans receivable (includes loans of consolidated VIEs of $231,533 and $148,876 as of September 30, 2019 and December 31, 2018, respectively)							657,615			571,531
Less: allowance for loan losses (includes allowance for losses of consolidated VIEs of $25,375 and $12,688 as of September 30, 2019 and December 31, 2018, respectively)							(108,385		)	(73,997		)
Loans receivable, net	458,893			497,534			549,230			497,534
Right of use asset - operating leases (Note 1)	135,405			—			118,260			—
Deferred income taxes	5,014			1,534			1,846			1,534
Income taxes receivable	40,872			16,741			23,966			16,741
Prepaid expenses and other	36,511			43,588			32,228			43,588
Property and equipment, net	75,260			76,750			70,381			76,750
Goodwill	119,878			119,281			120,110			119,281
Other intangibles, net of accumulated amortization of $35,662 and $34,576 as of March 31, 2019 and December 31, 2018, respectively	29,968			29,784
Other intangibles, net of accumulated amortization							32,666			29,784
Other	15,151			12,930			18,484			12,930
Assets from discontinued operations (Note 15)	—			34,861			—			34,861
Total Assets	$	1,034,130		$	919,617		$	1,068,132		$	919,617
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities	$	52,042		$	49,146
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of $7,259 and $4,980 as of September 30, 2019 and December 31, 2018, respectively)							$	63,685		$	49,146
Deferred revenue	7,851			9,483			9,052			9,483
Lease liability - operating leases (Note 1)	143,412			—			126,048			—
Income taxes payable	4,425			1,579			—			1,579
Accrued interest (includes accrued interest of consolidated VIEs of $848 and $831 as of March 31, 2019 and December 31, 2018, respectively)	5,593			20,904
Accrued interest (includes accrued interest of consolidated VIEs of $777 and $831 as of September 30, 2019 and December 31, 2018, respectively)							5,625			20,904
Liability for losses on CSO lender-owned consumer loans	8,662			12,007			10,249			12,007
Deferred rent	—			10,851			—			10,851
Long-term debt (includes long-term debt and issuance costs of consolidated VIEs of $92,718 and $3,803 as of March 31, 2019 and $111,335 and $3,856 as of December 31, 2018, respectively)	766,068			804,140
Debt (includes debt and issuance costs of consolidated VIEs of $105,742 and $3,259 as of September 30, 2019 and $111,335 and $3,856 as of December 31, 2018, respectively)							805,407			804,140
Subordinated stockholder debt	2,243			2,196			—			2,196
Other long-term liabilities	6,686			5,800			8,594			5,800
Deferred tax liabilities	404			13,730			4,427			13,730
Liabilities from discontinued operations (Note 15)	—			8,882			—			8,882
Total Liabilities	997,386			938,718			1,033,087			938,718
Commitments and contingencies (Note 13)
Stockholders' Equity
Preferred stock - $0.001 par value, 25,000,000 shares authorized; no shares were issued at either period end	—			—			—			—
Common Stock - $0.001 par value; 225,000,000 shares authorized; 46,431,289 and 46,412,231 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	9			9
Common stock - $0.001 par value; 225,000,000 shares authorized; 46,503,406 and 46,412,231 shares issued as of September 30, 2019 and December 31, 2018, respectively; and 42,347,165 and 46,412,231 shares outstanding as of September 30, 2019 and December 31, 2018, respectively							9			9
Treasury stock, at cost - 4,156,241 as of September 30, 2019							(53,064		)	—
Paid-in capital	62,117			60,015			67,579			60,015
Retained earnings (accumulated deficit)	18,983			(18,065		)	63,205			(18,065		)
Accumulated other comprehensive loss	(44,365		)	(61,060		)	(42,684		)	(61,060		)
Total Stockholders' Equity	36,744			(19,101		)	35,045			(19,101		)
Total Liabilities and Stockholders' Equity	$	1,034,130		$	919,617		$	1,068,132		$	919,617

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

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,					Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018			2019			2018			2019			2018
Revenue	$	277,939	$	250,843		$	297,264		$	269,482		$	839,503		$	757,494
Provision for losses	102,385		76,883			123,867			127,692			338,262			290,922
Net revenue	175,554		173,960			173,397			141,790			501,241			466,572

Cost of providing services
Salaries and benefits	28,701		26,918			27,462			26,515			82,249			80,341
Occupancy	14,237		13,427			14,036			13,522			42,205			40,269
Office	5,113		6,453			5,993			7,326			16,563			19,311
Other costs of providing services	14,220		13,431			12,843			12,484			39,917			38,516
Advertising	7,786		7,885			16,424			21,349			36,990			44,347
Total cost of providing services	70,057		68,114			76,758			81,196			217,924			222,784
Gross margin	105,497		105,846			96,639			60,594			283,317			243,788

Operating expense
Corporate, district and other expenses	49,088		35,429			38,665			27,495			123,043			95,904
Interest expense	17,690		22,354			17,364			23,403			52,077			66,229
Loss on extinguishment of debt	—		11,683			—			69,200			—			80,883
Loss from equity method investment						1,384			—			5,132			—
Total operating expense	66,778		69,466			57,413			120,098			180,252			243,016
Income from continuing operations before income taxes	38,719		36,380
Provision for income taxes	10,046		11,467
Net income from continuing operations	28,673		24,913
Net income (loss) from discontinued operations	8,375		(1,621		)
Net income	$	37,048	$	23,292
Income (loss) from continuing operations before income taxes						39,226			(59,504		)	103,065			772
Provision (benefit) for income taxes						11,239			(16,914		)	28,738			(269		)
Net income (loss) from continuing operations						27,987			(42,590		)	74,327			1,041
Net loss from discontinued operations, before income tax						—			(4,293		)	(39,048		)	(8,518		)
Income tax expense (benefit) related to disposition						$	598		$	139		$	(45,991	)	$	278
Net (loss) income from discontinued operations						$	(598	)	$	(4,432	)	$	6,943		$	(8,796	)
Net income (loss)						$	27,389		$	(47,022	)	$	81,270		$	(7,755	)

Basic earnings (loss) per share:
Continuing operations						$	0.63		$	(0.93	)	$	1.63		$	0.02
Discontinued operations						(0.01		)	(0.10		)	0.15			(0.19		)
Basic earnings per share						$	0.62		$	(1.03	)	$	1.78		$	(0.17	)

Diluted earnings (loss) per share:
Continuing operations						$	0.61		$	(0.93	)	$	1.59		$	0.03
Discontinued operations						(0.01		)	(0.10		)	0.15			(0.19		)
Diluted earnings per share ⁽¹⁾						$	0.60		$	(1.03	)	$	1.74		$	(0.16	)

Weighted average common shares outstanding:
Basic	46,424		45,506			44,422			45,853			45,759			45,674
Diluted	47,319		47,416

Basic income (loss) per share:
Continuing operations	$	0.62	$	0.55
Discontinued operations	0.18		(0.04		)
Basic income per share	$	0.80	$	0.51

Diluted income (loss) per share:
Continuing operations	$	0.61	$	0.53
Discontinued operations	0.18		(0.03		)
Diluted income per share	$	0.79	$	0.50
Diluted ⁽¹⁾						46,010			45,853			46,887			48,061
(1) As of December 31, 2018, the Company made certain insignificant adjustments to previously-reported Earnings Per Share ("EPS") to correctly reflect the effect of anti-dilutive shares on diluted EPS calculations in accordance with ASC 260. These changes were immaterial to the overall EPS calculation. Diluted loss per share for the three months ended September 30, 2018 of $0.97 was corrected to $1.03.						(1) As of December 31, 2018, the Company made certain insignificant adjustments to previously-reported Earnings Per Share ("EPS") to correctly reflect the effect of anti-dilutive shares on diluted EPS calculations in accordance with ASC 260. These changes were immaterial to the overall EPS calculation. Diluted loss per share for the three months ended September 30, 2018 of $0.97 was corrected to $1.03.

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

Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

Three Months Ended
March 31,
2019 2018
Net income $ 37,048
$ 23,292
Other comprehensive income (loss):

Cash flow hedges, net of $0 tax in both periods —
54
Foreign currency translation adjustment, net of $0 tax in both periods 16,695
(2,910 )
Other comprehensive income (loss) 16,695
(2,856 )
Comprehensive income $ 53,743
$ 20,436



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Net income (loss)	$	27,389		$	(47,022	)	$	81,270	$	(7,755	)
Other comprehensive (loss) income:
Cash flow hedges, net of $0 tax in both periods	—			(187		)	—		(572		)
Foreign currency translation adjustment, net of $0 tax in both periods	(1,954		)	2,649			18,376		(7,015		)
Other comprehensive (loss) income	(1,954		)	2,462			18,376		(7,587		)
Comprehensive income (loss)	$	25,435		$	(44,560	)	$	99,646	$	(15,342	)

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

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(dollars in thousands, unaudited)

Three Months Ended March 31,
2019 2018
Cash flows from operating activities
Net income from continuing operations $ 28,673
$ 24,913
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization 4,920
4,535
Provision for loan losses 102,385
76,883
Amortization of debt issuance costs and bond (premium)/discount 872
1,129
Deferred income tax benefit (10,343 ) (1,094 )
Loss on disposal of property and equipment 991
478
Loss on extinguishment of debt —
11,683
Increase in cash surrender value of life insurance (723 ) (1,482 )
Share-based compensation expense 2,172
1,842
Changes in operating assets and liabilities:
Fees and service charges on loans receivable 1,937
5,093
Prepaid expenses and other assets 9,938
9,820
Other assets (5,651 ) (39 )
Accounts payable and accrued liabilities 2,326
(3,172 )
Deferred revenue (1,709 ) (1,709 )
Income taxes payable 29,562
19,629
Income taxes receivable (9,890 ) (7,411 )
Deferred rent —
280
Accrued Interest (15,329 ) (19,084 )
Other liabilities 868
449
Net cash provided by continuing operating activities 140,999
122,743
Net cash (used in) provided by discontinued operating activities (504 ) 1,411
Net cash provided by operating activities 140,495
124,154
Cash flows from investing activities
Purchase of property, equipment and software (3,119 ) (1,542 )
Loans receivable originated or acquired (420,568 ) (500,501 )
Loans receivable repaid 355,621
444,148
Investments in Cognical Holdings (1,568 ) (958 )
Net cash used in continuing investing activities (69,634 ) (58,853 )
Net cash used in discontinued investing activities (14,213 ) (3,782 )
Net cash used in investing activities (83,847 ) (62,635 )
Cash flows from financing activities
Net proceeds from issuance of common stock —
13,135
Proceeds from Non-Recourse U.S. SPV facility —
3,000
Payments on Non-Recourse U.S. SPV facility —
(12,519 )
Proceeds from Non-Recourse Canada SPV facility 3,762
—
Payments on Non-Recourse Canada SPV facility (24,831 ) —
Payments on 12.00% Senior Secured Notes —
(77,500 )
Debt issuance costs paid (199 ) (71 )
Proceeds from credit facilities 30,478
10,000
Payments on credit facilities (50,478 ) (10,000 )
Proceeds from exercise of stock options 40
—
Payments to net share settle restricted stock units vesting (37 ) —
Net cash used in financing activities ⁽¹⁾
(41,265 ) (83,255 )
Effect of exchange rate changes on cash and restricted cash 1,938
(4,360 )
Net increase (decrease) in cash and restricted cash 17,321
(26,096 )
Cash and restricted cash at beginning of period 99,857
174,491
Cash and restricted cash at end of period $ 117,178
$ 148,395
(1) Financing activities include continuing operations only and were not impacted by discontinued operations



	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities
Net income from continuing operations	$	74,327		$	1,041
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization	14,180			13,628
Provision for loan losses	338,262			290,922
Amortization of debt issuance costs and bond discount	2,273			2,923
Deferred income tax (benefit) expense	(3,147		)	3,005
Loss on disposal of property and equipment	47			640
Loss on extinguishment of debt	—			80,883
Loss from equity method investment	5,132			—
Share-based compensation	7,587			6,112
Changes in operating assets and liabilities:
Accrued interest on loans receivable	(11,446		)	(5,986		)
Prepaid expenses and other assets	14,275			2,695
Other assets	(8,439		)	(2,458		)
Accounts payable and accrued liabilities	13,596			(4,862		)
Deferred revenue	(533		)	(1,984		)
Income taxes payable	25,117			326
Income taxes receivable	5,598			(12,908		)
Accrued interest	(15,303		)	(18,060		)
Other liabilities	2,767			1,162
Net cash provided by continuing operating activities	464,293			357,079
Net cash (used in) provided by discontinued operating activities	(504		)	5,562
Net cash provided by operating activities	463,789			362,641
Cash flows from investing activities
Purchase of property, equipment and software	(8,667		)	(8,030		)
Loans receivable originated or acquired	(1,369,644		)	(1,624,881		)
Loans receivable repaid	995,291			1,212,446
Investments in Cognical Holdings, Inc. ("Zibby")	(8,168		)	(958		)
Net cash used in continuing investing activities	(391,188		)	(421,423		)
Net cash used in discontinued investing activities	(14,213		)	(24,481		)
Net cash used in investing activities	(405,401		)	(445,904		)
Cash flows from financing activities
Net proceeds from issuance of common stock	—			11,549
Proceeds from Non-Recourse U.S. SPV facility	—			17,000
Payments on Non-Recourse U.S. SPV facility	—			(61,590		)
Proceeds from Non-Recourse Canada SPV facility	15,992			89,949
Payments on Non-Recourse Canada SPV facility	(24,835		)	—
Payments on 12.00% Senior Secured Notes	—			(605,000		)
Proceeds from 8.25% Senior Secured Notes	—			690,000
Debt issuance costs paid	(198		)	(17,517		)
Proceeds from credit facilities	179,811			65,169
Payments on credit facilities	(174,811		)	(36,169		)
Payments on subordinated stockholder debt	(2,252		)	—
Payments of call premiums from early debt extinguishments	—			(63,350		)
Proceeds from exercise of stock options	87			408
Payments to net share settle restricted stock units vesting	(110		)	—
Repurchase of common stock	(52,172		)	—

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(dollars in thousands, unaudited)



Net cash (used in) provided by financing activities ⁽¹⁾	(58,488		)	90,449
Effect of exchange rate changes on cash and restricted cash	1,204			(4,080		)
Net increase in cash and restricted cash	1,104			3,106
Cash and restricted cash at beginning of period	99,857			174,491
Cash and restricted cash at end of period	100,961			177,597
Less: Cash and restricted cash of discontinued operations at end of period	—			11,303
Cash and restricted cash of continuing operations at end of period	$	100,961		$	166,294
(1) Financing activities include continuing operations only, and were not impacted by discontinued operations

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

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

~~Basis of Presentation~~

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

The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and with the accounting policies described in its Annual Report on Form 10-K for the year ended December 31, 2018 ("2018 Form 10-K"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented.

The unaudited Condensed Consolidated Financial Statements and the accompanying notes reflect all adjustments, 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. On February 25, 2019, the Company's U.K. segment was placed into administration, which resulted in treatment of the segment as discontinued operations for all periods presented. Throughout this Quarterly Report on Form 10-Q ("Form 10-Q"), current and prior period financial information is presented as if the U.K. segment was excluded from continuing operations. For further information about the placement of the segment into administration, refer to "--Nature of Operations" below.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related Notes included in the 2018 Form 10-K. Interim results of operations are not necessarily indicative of results that may be expected for future interim periods or for the year ending December 31, 2019.

~~Principles of Consolidation~~

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

~~Use of Estimates~~

The preparation of Condensed Consolidated Financial Statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the periods reported. Some of the significant estimates that the Company made in the accompanying Condensed Consolidated Financial Statements include allowances for loan losses, certain assumptions related to goodwill and intangibles, accruals related to self-insurance, credit services organization ("CSO") liability for losses and estimated tax liabilities. Actual results may differ from those estimates.

Nature of Operations

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

U.K. Segment Placed into Administration

On February 25, 2019, the Company announced that a proposed Scheme of Arrangement ("SOA"), as described in the Company's Current Report on Form 8-K filed January 31, 2019, would not be implemented. In accordance with the provisions of the U.K. Insolvency Act 1986 and as approved by the boards of directors of the Company’s U.K. subsidiaries, Curo Transatlantic Limited and SRC Transatlantic Limited (collectively, “the U.K. Subsidiaries”), insolvency practitioners from KPMG were appointed as administrators (“Administrators”) for the U.K. Subsidiaries. The effect of the U.K. Subsidiaries’ entry into administration was to place their management, affairs, business and property under the direct control of the Administrators. Accordingly, the Company deconsolidated the U.K. Subsidiaries as of February 25, 2019 and presented the U.K. Subsidiaries as Discontinued Operations for all periods presented in this Form 10-Q.

Basis of Presentation

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

The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements ("Condensed Consolidated Financial Statements") in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and with the accounting policies described in its Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (the "SEC") on March 18, 2019 ("2018 Form 10-K"). Operating results for the three and nine month periods ended September 30, 2019 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ending December 31, 2019.

Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. Additionally, in September 2018, and subsequently expanded in June 2019, the SEC changed the definition of a smaller reporting company ("SRC"). The change in definition of an SRC allows more registrants to qualify to report under scaled disclosure requirements. Under these rules, CURO met the definition of an SRC as of June 30, 2019. Refer to "--FASB Definition of an SRC as related to the CECL standard and evaluation of the impact of the CECL standard" for information regarding the impact on the Company of meeting the definition of an SRC.

The Condensed Consolidated Financial Statements and the accompanying notes reflect all adjustments (consisting only of 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. On February 25, 2019, the Company's United Kingdom ("U.K.") segment, as defined by ASC 280, was placed into administration, resulting in the treatment of it as discontinued operations per ASC 205-20. Throughout this Quarterly Report on Form 10-Q ("Form 10-Q"), current and prior-period financial information presents the U.K. segment as discontinued operations as required. For further information about the placement of the segment into administration, refer to "--Nature of Operations" below.

Principles of Consolidation

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

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Equity Investment in Unconsolidated Entity

During the nine months ended September 30, 2019, the Company invested an additional $6.6 million in Cognical Holdings, Inc. ("Zibby"), offset by a $3.7 million carrying value adjustment as a result of the additional investment. As of September 30, 2019, the Company owned 42.3% of Zibby. See Note 8 - "Fair Value Measurements" for additional detail on Zibby's fair value considerations for the nine months ended September 30, 2019.

Use of Estimates

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

Open-End Loss Recognition

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

The aforementioned change was treated as a change in accounting estimate for accounting purposes and applied prospectively effective January 1, 2019.

The change affects comparability towith prior periods as follows:

Gross combined loans receivable: balances as of ~~March 31,~~September 30, 2019 include ~~$32.4~~$46.1 million of Open-End loans that are up to 90 days past-due with related accrued interest, while such balances for periods prior ~~periods~~to March 31, 2019 do not include any past-due loans.

Revenues: for the ~~quarter~~three and nine months ended ~~March 31,~~September 30, 2019, gross revenues include ~~accrued~~ interest earned on past-due loan balances of ~~$8.9~~approximately $15 million and $35 million, respectively, while revenues in ~~prior~~prior-year periods do not include comparable amounts.

Provision for Losses: ~~effective~~prospectively, from January 1, 2019, past-due, unpaid balances plus related accrued interest ~~charge off~~charge-off on day 91. Provision expense is affected by total charge-offs less total recoveries ("NCOs") plus changes to the ~~required allowance~~Allowance for loan losses. Because NCOs ~~now~~prospectively include unpaid principal and up to 90 days of related accrued interest, ~~as compared to prior periods,~~ NCO amounts and rates are higher and the ~~required~~ Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable is higher. The Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable ~~rose from 9.6% as of December 31, 2018,~~increased to ~~19.5% as of March 31, 2019.~~17.2% at September 30, 2019, compared to 9.8% in the comparable prior-year period.

Correction of an Immaterial ~~Error~~Errors in Previously-Issued Financial Statements

During the year ended December 31, 2018, the Company corrected immaterial errors toin its prior presentation of cash flows for loan originations and collections on principal. The Company determined that the historical presentation was in error by not conforming to US GAAP because it included outflows for loan originations and receipts on collections in Cash provided by operating activities rather than in Cash used in investing activities. Accordingly, the Company corrected ~~previously-filed~~previously filed financial statements by reclassifying cash outflows for loan originations and receipts on collections of principal of ~~$56.4~~$412.4 million from net Cash provided by operating activities to net Cash used in investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2018. Total cash flows for each period presented did not change. The Company concluded that the errors were immaterial to the unaudited Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the three and nine months ended March 31, 2018. The Company has revised its Condensed Consolidated Financial Statements for the three months ended March 31, 2018 presented in this Form 10-Q. A summary of the correction follows:

(dollars in thousands) Three Months Ended March 31, 2018
As Reported:⁽¹⁾

Net cash provided by continuing operating activities $ 66,390
Net cash used in continuing investing activities (2,500 )

As Corrected:
Net cash provided by continuing operating activities 122,743
Net cash used in continuing investing activities (58,853 )
(1) "As reported" balances include amounts from continuing operations historically presented within these captions.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

ended September 30, 2018. The Company has revised its Condensed Consolidated Financial Statements for the nine months ended September 30, 2018 presented in this Form 10-Q. A summary of the correction follows (in thousands):



	Nine Months Ended September 30, 2018
As Reported:⁽¹⁾
Net cash used in continuing operating activities	$	(55,356	)
Net cash used in continuing investing activities	(8,988		)

As Corrected:
Net cash provided by continuing operating activities	357,079
Net cash used in continuing investing activities	(421,423		)
(1) "As reported" balances include amounts from continuing operations historically presented within these captions.

Recently Adopted Accounting Pronouncements

ASU 2016-02

In February 2016, the Financial Accounting Standards Board ("FASB") established Topic 842, Leases, by issuing ASU No. 2016-02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. The Company adopted ~~ASU 2016-02~~the standard as of January 1, 2019 using the alternative modified retrospective ~~approach,~~method, also known as the transition relief method, permitted under ASU 2018-11, which ~~provides a method for recording existing leases at adoption and in~~allows companies to not recast comparative periods ~~that approximates the results of a full retrospective approach.~~

~~Adoption of the new standard resulted~~ in the ~~recording~~period of adoption. The Company elected the package of practical expedients permitted under the transition guidance which, among other things, permits companies to not reassess prior conclusions on lease identification, lease classification and initial direct costs. The Company also elected to combine lease and non-lease components and to exclude short-term leases, defined as having an initial term of 12 months or less, from the Condensed Consolidated Balance Sheets. The Company did not elect the hindsight practical expedient.

As of September 30, 2019, the Company held right of use assets ("ROU assets") and ~~additional~~ operating lease liabilities ("lease liabilities") of ~~$135.4~~$118.3 million and ~~$143.4~~$126.0 million, ~~respectively, as of March 31, 2019.~~respectively. Prepaid rent of $2.7 million and deferred ~~liability~~liabilities of $10.9 million were included in ROU assets and lease liabilities, ~~respectively.~~respectively, at the time of adoption. During the three months ended September 30, 2019, the Company reduced initial opening balances for ROU assets and lease liabilities recorded on January 1, 2019 by $18.0 million as a result of a previous misapplication of certain provisions of Topic 842. The ~~standard did not materially~~ impact of this misapplication on the Company's ~~consolidated net earnings.~~ financial position, results of operations, and cash flows was not material.

SeeNote 14 - "Leases" for additional information and disclosures required by Topic 842.

ASU ~~2018-12~~2018-02

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive income ("ASU 2018-02"), which permits the reclassification to retained earnings of disproportionate tax effects in accumulated other comprehensive income (loss) caused by the Tax Cuts and Jobs Act of 2017 ("2017 Tax Act"). The Company adopted ASU 2018-02 as of January 1, 2019, which did not have a material impact on the Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

Accounting Pronouncements Related to the Current Expected Credit Loss ("CECL") Standard

ASU 2016-13

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and subsequent amendments to the guidance: ASU 2018-19 in November 2018, ASU 2019-04 in April 2019 and ASU 2019-05 in May 2019. The standard, as amended, changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the current “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they currently do under the

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

other-than-temporary impairment model. The standard also simplifies the accounting model for purchased credit-impaired debt securities and loans. The amendment will affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2019-04 clarifies that equity instruments without readily determinable fair values for which an entity has elected the measurement alternative should be remeasured to fair value as of the date that an observable transaction occurred. ASU 2019-05 provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. As issued, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Company is evaluating its alternatives with respect to the available accounting methods under ASU 2016‑13, including the fair value option. If the fair value option is not utilized, adoption of ASU 2016-13 will increase the allowance for credit losses with a resulting negative adjustment to retained earnings on the date of adoption. Additionally, as disclosed below in "--FASB Definition of an SRC as related to the CECL standard and evaluation of the impact of the CECL standard", the Company expects to defer the adoption of ASU 2016-13 until at least January 1, 2021.

ASU 2019-05

In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326), which amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (i) were previously recorded at amortized cost and (ii) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05’s amendments should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings in the statement of financial position as of the date that an entity adopted the amendments in ASU 2016-13. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date for ASU 2016-13. The Company expects to elect the option to defer adoption to a later effective date, as further described below in "--FASB Definition of an SRC as related to the CECL standard and evaluation of the impact of the CECL standard." The Company is currently evaluating the methods and impact of adopting this new standard on the Condensed Consolidated Financial Statements.

ASU 2019-04

In May 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. The ASU’s amendments apply to all entities within the scope of the affected guidance. Accrued interest - Amortized cost basis is defined in ASU 2016-13 as "the amount at which a financing receivable or investment is originated or acquired, adjusted for applicable accrued interest, accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, write-offs, foreign exchange, and fair value hedge accounting adjustments." To address stakeholders’ concerns that the inclusion of accrued interest in the definition of amortized cost basis could make application of the credit loss guidance operationally burdensome, ASU 2019-04 provides certain alternatives for the measurement of the allowance for credit losses ("ALL") on accrued interest receivable ("AIR"). These measurement alternatives include (i) measuring an ALL on AIR separately, (ii) electing to provide separate disclosure of the AIR component of amortized cost as a practical expedient, and (iii) making accounting policy elections to simplify certain aspects of the presentation and measurement of such AIR. As issued, for entities that have adopted ASU 2016-13, the amendments in ASU 2019-04 related to ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, and interim periods therein. ASU 2019-04’s amendments should be applied "on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening retained earnings balance in the statement of financial position as of the date an entity adopted the amendments in ASU 2016-13." Certain disclosures are also required. Due to the FASB's decision to allow a deferment option for SRCs applying ASU 2016-13, the Company expects to defer adoption of both ASU 2016-13 and ASU 2019-04.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

FASB Definition of an SRC as related to the CECL standard and evaluation of the impact of the CECL standard

On October 16, 2019, the FASB approved a proposal to defer required adoption of the CECL standard for SRCs until fiscal periods beginning after December 15, 2022. Under current SEC definitions, CURO met the definition of an SRC as of June 30, 2019. The FASB further confirmed that for CECL, a company makes an evaluation of SRC status in accordance with SEC rules at the time of standard effectiveness (i.e., as of June 30, 2019) and that status is effective for purposes of adopting the CECL standard regardless of future changes in SRC status. The FASB is expected to codify the approved proposal with issuance of a new ASU during the fourth quarter of 2019. The Company will continue to monitor the standard-setting activities of the FASB and expects to elect to defer adoption of the CECL standard. The Company is currently evaluating the methods and impact of adopting the CECL standard on the Condensed Consolidated Financial Statements.

SEC Disclosure Update

In ~~the third quarter of~~August 2018, the ~~U.S. Securities and Exchange Commission ("SEC")~~SEC adopted final rules under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that had become redundant, duplicative, overlapping, outdated or superseded. Other than the amendment's expanded disclosure requirement for interim financial statements to disclose both current and comparative quarter and year-to-date reconciliations of changes in stockholders' equity, it did not have a material impact on the Company's Condensed Consolidated Financial Statements or Notes thereto for the three and nine months ended ~~March 31,~~September 30, 2019, nor is it expected to have a material impact on the Company's annual ~~disclosures~~Consolidated Financial Statements or ~~financial statements.~~Notes thereto.

NOTE 2 - VARIABLE INTEREST ENTITIES

In August 2018, the Company closed on the Non-Recourse Canada SPV facility, whereby certain loan receivables were sold to wholly-owned, bankruptcy-remote special ~~purposes~~purpose subsidiaries ("VIEs") to collateralize debt incurred under the facility.

As the Company is the primary beneficiary of the VIEs, ~~the Company~~it includes the assets and liabilities related to the VIEs in its Condensed Consolidated Financial Statements. As required, the Company parenthetically discloses on the Condensed Consolidated Balance Sheets the VIEs’ assets that can only be used to settle the VIEs' obligations and liabilities if the VIEs’ creditors have no recourse against the Company's general credit.

The carrying amounts of consolidated VIEs' assets and liabilities associated with the VIE subsidiaries were as ~~follows:~~follows (in thousands):


(in thousands)	March 31, 2019		December 31, 2018
					September 30, 2019		December 31, 2018
Assets
Restricted cash	$	15,460	$	12,840	$	21,897	$	12,840
Gross loans receivable less allowance for loan losses	157,867		136,187		206,158		136,187
Total Assets	$	173,327	$	149,027	$	228,055	$	149,027
Liabilities
Accounts payable and accrued liabilities	$	9,717	$	4,980	$	7,259	$	4,980
Deferred revenue	44		40		44		40
Accrued interest	848		831		777		831
Intercompany payable					93,671		44,330
Long-term debt	88,915		107,479		102,483		107,479
Total Liabilities	$	99,524	$	113,330	$	204,234	$	157,660

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 3 – LOANS RECEIVABLE AND REVENUE

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


	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018
					2019		2018		2019		2018
Unsecured Installment	$	135,778	$	125,379	$	137,233	$	137,660	$	395,119	$	377,976
Secured Installment	27,477		26,856		28,270		28,562		81,823		81,195
Open-End	52,869		27,223		66,120		40,290		173,961		94,735
Single-Pay	46,761		60,357		49,312		50,614		141,605		169,296
Ancillary	15,054		11,028		16,329		12,356		46,995		34,292
Total revenue	$	277,939	$	250,843	$	297,264	$	269,482	$	839,503	$	757,494

The following tables summarize Loans receivable by product and the related delinquent loans receivable at ~~March 31, 2019:~~September 30, 2019 (in thousands):


	March 31, 2019															September 30, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total
																Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total
Current loans receivable	$	69,753		$	120,915		$	67,375		$	208,346		$	466,389		$	78,039		$	127,952		$	72,866		$	268,918		$	547,775
Delinquent loans receivable	—			40,801			13,581			32,444			86,826			—			46,537			17,250			46,053			109,840
Total loans receivable	69,753			161,716			80,956			240,790			553,215			78,039			174,489			90,116			314,971			657,615
Less: allowance for losses	(3,897		)	(33,666		)	(9,796		)	(46,963		)	(94,322		)	(5,662		)	(38,127		)	(10,363		)	(54,233		)	(108,385		)
Loans receivable, net	$	65,856		$	128,050		$	71,160		$	193,827		$	458,893		$	72,377		$	136,362		$	79,753		$	260,738		$	549,230


	March 31, 2019								September 30, 2019
(in thousands)	Unsecured Installment		Secured Installment		Open-End		Total
									Unsecured Installment		Secured Installment		Open-End		Total
Delinquent loans receivable
0-30 days past due	$	13,455	$	6,001	$	12,423	$	31,879	$	17,187	$	7,456	$	18,734	$	43,377
31-60 days past due	11,757		3,555		9,432		24,744		13,890		4,711		13,283		31,884
61-90 days past due	15,589		4,025		10,589		30,203
61 + days past due									15,460		5,083		14,036		34,579
Total delinquent loans receivable	$	40,801	$	13,581	$	32,444	$	86,826	$	46,537	$	17,250	$	46,053	$	109,840

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


	December 31, 2018															December 31, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total
																Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total
Current loans receivable	$	80,823		$	141,316		$	75,583		$	207,333		$	505,055		$	80,823		$	141,316		$	75,583		$	207,333		$	505,055
Delinquent loans receivable	—			49,087			17,389			—			66,476			—			49,087			17,389			—			66,476
Total loans receivable	80,823			190,403			92,972			207,333			571,531			80,823			190,403			92,972			207,333			571,531
Less: allowance for losses	(4,189		)	(37,716		)	(12,191		)	(19,901		)	(73,997		)	(4,189		)	(37,716		)	(12,191		)	(19,901		)	(73,997		)
Loans receivable, net	$	76,634		$	152,687		$	80,781		$	187,432		$	497,534		$	76,634		$	152,687		$	80,781		$	187,432		$	497,534

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	December 31, 2018						December 31, 2018
(in thousands)	Unsecured Installment		Secured Installment		Total
							Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	17,850	$	7,870	$	25,720	$	17,850	$	7,870	$	25,720
31-60 days past due	14,705		4,725		19,430		14,705		4,725		19,430
61-90 days past due	16,532		4,794		21,326
61 + days past due							16,532		4,794		21,326
Total delinquent loans receivable	$	49,087	$	17,389	$	66,476	$	49,087	$	17,389	$	66,476

The following tables summarize loans guaranteed by the Company under CSO programs and the related delinquent receivables at ~~March 31, 2019:~~September 30, 2019 (in thousands):


	March 31, 2019									September 30, 2019
(in thousands)	Unsecured Installment			Secured Installment			Total
										Unsecured Installment			Secured Installment			Total
Current loans receivable guaranteed by the Company	$	51,773		$	1,847		$	53,620		$	58,862		$	1,966		$	60,828
Delinquent loans receivable guaranteed by the Company	7,967			284			8,251			11,842			396			12,238
Total loans receivable guaranteed by the Company	59,740			2,131			61,871			70,704			2,362			73,066
Less: Liability for losses on CSO lender-owned consumer loans	(8,584		)	(78		)	(8,662		)	(10,181		)	(68		)	(10,249		)
Loans receivable guaranteed by the Company, net	$	51,156		$	2,053		$	53,209		$	60,523		$	2,294		$	62,817


	March 31, 2019						September 30, 2019
(in thousands)	Unsecured Installment		Secured Installment		Total
							Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	6,388	$	228	$	6,616	$	9,859	$	330	$	10,189
31-60 days past due	926		33		959		1,229		41		1,270
61-90 days past due	653		23		676
61+ days past due							754		25		779
Total delinquent loans receivable	$	7,967	$	284	$	8,251	$	11,842	$	396	$	12,238

The following tables summarize loans guaranteed by the Company under CSO programs and the related delinquent receivables at December 31, ~~2018:~~2018 (in thousands):


	December 31, 2018									December 31, 2018
(in thousands)	Unsecured Installment			Secured Installment			Total
										Unsecured Installment			Secured Installment			Total
Current loans receivable guaranteed by the Company	$	65,743		$	2,504		$	68,247		$	65,743		$	2,504		$	68,247
Delinquent loans receivable guaranteed by the Company	11,708			446			12,154			11,708			446			12,154
Total loans receivable guaranteed by the Company	77,451			2,950			80,401			77,451			2,950			80,401
Less: Liability for losses on CSO lender-owned consumer loans	(11,582		)	(425		)	(12,007		)	(11,582		)	(425		)	(12,007		)
Loans receivable guaranteed by the Company, net	$	65,869		$	2,525		$	68,394		$	65,869		$	2,525		$	68,394

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	December 31, 2018						December 31, 2018
(in thousands)	Unsecured Installment		Secured Installment		Total
							Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	9,684	$	369	$	10,053	$	9,684	$	369	$	10,053
31-60 days past due	1,255		48		1,303		1,255		48		1,303
61-90 days past due	769		29		798
61 + days past due							769		29		798
Total delinquent loans receivable	$	11,708	$	446	$	12,154	$	11,708	$	446	$	12,154

The following table summarizes activity in the allowance for loan losses during the three months ended ~~March 31, 2019:~~September 30, 2019 (in thousands):


	Three Months Ended March 31, 2019																		Three Months Ended September 30, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
																			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	4,189		$	37,716		$	12,191		$	19,901		$	—		$	73,997		$	4,941		$	35,223		$	9,996		$	51,717		$	—		$	101,877
Charge-offs	(36,521		)	(44,237		)	(12,671		)	(3,638		)	(1,351		)	(98,418		)	(40,512		)	(34,252		)	(10,592		)	(31,993		)	(1,382		)	(118,731		)
Recoveries	27,911			6,318			3,123			5,159			898			43,409			26,599			5,279			2,445			3,791			845			38,959
Net charge-offs	(8,610		)	(37,919		)	(9,548		)	1,521			(453		)	(55,009		)	(13,913		)	(28,973		)	(8,147		)	(28,202		)	(537		)	(79,772		)
Provision for losses	8,268			33,845			7,153			25,317			453			75,036			14,736			31,891			8,514			31,220			537			86,898
Effect of foreign currency translation	50			24			—			224			—			298			(102		)	(14		)	—			(502		)	—			(618		)
Balance, end of period	$	3,897		$	33,666		$	9,796		$	46,963		$	—		$	94,322		$	5,662		$	38,127		$	10,363		$	54,233		$	—		$	108,385
Allowance for loan losses as a percentage of gross loan receivables	5.6		%	20.8		%	12.1		%	19.5		%	N/A			17.0		%	7.3		%	21.9		%	11.5		%	17.2		%	N/A			16.5		%

The following table summarizes activity in the liability for losses on CSO lender-owned consumer loans during the three months ended ~~March 31, 2019:~~September 30, 2019 (in thousands):


	Three Months Ended March 31, 2019									Three Months Ended September 30, 2019
(in thousands)	Unsecured Installment			Secured Installment			Total
										Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	11,582		$	425		$	12,007		$	9,433		$	71		$	9,504
Charge-offs	(40,980		)	(1,076		)	(42,056		)	(43,072		)	(888		)	(43,960		)
Recoveries	10,560			802			11,362			7,156			580			7,736
Net charge-offs	(30,420		)	(274		)	(30,694		)	(35,916		)	(308		)	(36,224		)
Provision for losses	27,422			(73		)	27,349			36,664			305			36,969
Balance, end of period	$	8,584		$	78		$	8,662		$	10,181		$	68		$	10,249

The following table summarizes activity in the allowance for loan losses and the liability for losses on CSO lender-owned consumer loans, in total, during the three months ended ~~March 31, 2019:~~

Three Months Ended March 31, 2019
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 4,189
$ 49,298
$ 12,616
$ 19,901
$ —
$ 86,004
Charge-offs (36,521 ) (85,217 ) (13,747 ) (3,638 ) (1,351 ) (140,474 )
Recoveries 27,911
16,878
3,925
5,159
898
54,771
Net charge-offs (8,610 ) (68,339 ) (9,822 ) 1,521
(453 ) (85,703 )
Provision for losses 8,268
61,267
7,080
25,317
453
102,385
Effect of foreign currency translation 50
24
—
224
—
298
Balance, end of period $ 3,897
$ 42,250
$ 9,874
$ 46,963
$ —
$ 102,984
September 30, 2019 (in thousands):

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)



	Three Months Ended September 30, 2019
	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	4,941		$	44,656		$	10,067		$	51,717		$	—		$	111,381
Charge-offs	(40,512		)	(77,324		)	(11,480		)	(31,993		)	(1,382		)	(162,691		)
Recoveries	26,599			12,435			3,025			3,791			845			46,695
Net charge-offs	(13,913		)	(64,889		)	(8,455		)	(28,202		)	(537		)	(115,996		)
Provision for losses	14,736			68,555			8,819			31,220			537			123,867
Effect of foreign currency translation	(102		)	(14		)	—			(502		)	—			(618		)
Balance, end of period	$	5,662		$	48,308		$	10,431		$	54,233		$	—		$	118,634

The following table summarizes activity in the allowance for loan losses during the three months ended ~~March 31, 2018:~~September 30, 2018 (in thousands):


	Three Months Ended March 31, 2018																		Three Months Ended September 30, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
																			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,204		$	38,977		$	13,472		$	6,426		$	—		$	64,079		$	3,604		$	30,291		$	10,386		$	9,717		$	—		$	53,998
Charge-offs	(44,336		)	(35,219		)	(11,485		)	(20,349		)	(667		)	(112,056		)	(40,753		)	(32,115		)	(11,188		)	(32,770		)	(1,494		)	(118,320		)
Recoveries	32,818			5,218			2,866			9,377			39			50,318			27,861			4,807			2,325			9,191			931			45,115
Net charge-offs	(11,518		)	(30,001		)	(8,619		)	(10,972		)	(628		)	(61,738		)	(12,892		)	(27,308		)	(8,863		)	(23,579		)	(563		)	(73,205		)
Provision for losses	9,892			24,739			6,786			11,428			628			53,473			12,757			32,946			9,698			31,686			563			87,650
Effect of foreign currency translation	(64		)	(77		)	—			(36		)	—			(177		)	(179		)	231			—			189			—			241
Balance, end of period	$	3,514		$	33,638		$	11,639		$	6,846		$	—		$	55,637		$	3,290		$	36,160		$	11,221		$	18,013		$	—		$	68,684
Allowance for loan losses as a percentage of gross loan receivables	5.7		%	25.8		%	16.6		%	15.2		%	N/A			18.1		%	4.3		%	19.5		%	12.3		%	9.8		%	N/A			12.8		%

The following table summarizes activity in the liability for losses on CSO lender-owned consumer loans during the three months ended ~~March 31, 2018:~~September 30, 2018 (in thousands):


	Three Months Ended March 31, 2018									Three Months Ended September 30, 2018
(in thousands)	Unsecured Installment			Secured Installment			Total
										Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	17,073		$	722		$	17,795		$	11,193		$	426		$	11,619
Charge-offs	(41,719		)	(1,219		)	(42,938		)	(44,896		)	(1,088		)	(45,984		)
Recoveries	10,976			1,169			12,145			6,901			665			7,566
Net charge-offs	(30,743		)	(50		)	(30,793		)	(37,995		)	(423		)	(38,418		)
Provision for losses	23,556			(146		)	23,410			39,552			490			40,042
Balance, end of period	$	9,886		$	526		$	10,412		$	12,750		$	493		$	13,243

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes activity in the allowance for loan losses and the liability for losses on CSO lender-owned consumer loans, in total, during the three months ended ~~March 31, 2018:~~September 30, 2018 (in thousands):


	Three Months Ended March 31, 2018																		Three Months Ended September 30, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
																			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,204		$	56,050		$	14,194		$	6,426		$	—		$	81,874		$	3,604		$	41,484		$	10,812		$	9,717		$	—		$	65,617
Charge-offs	(44,336		)	(76,938		)	(12,704		)	(20,349		)	(667		)	(154,994		)	(40,753		)	(77,011		)	(12,276		)	(32,770		)	(1,494		)	(164,304		)
Recoveries	32,818			16,194			4,035			9,377			39			62,463			27,861			11,708			2,990			9,191			931			52,681
Net charge-offs	(11,518		)	(60,744		)	(8,669		)	(10,972		)	(628		)	(92,531		)	(12,892		)	(65,303		)	(9,286		)	(23,579		)	(563		)	(111,623		)
Provision for losses	9,892			48,295			6,640			11,428			628			76,883			12,757			72,498			10,188			31,686			563			127,692
Effect of foreign currency translation	(64		)	(77		)	—			(36		)	—			(177		)	(179		)	231			—			189			—			241
Balance, end of period	$	3,514		$	43,524		$	12,165		$	6,846		$	—		$	66,049		$	3,290		$	48,910		$	11,714		$	18,013		$	—		$	81,927

The following table summarizes activity in the allowance for loan losses during the nine months ended September 30, 2019 (in thousands):



	Nine Months Ended September 30, 2019
	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	4,189		$	37,716		$	12,191		$	19,901		$	—		$	73,997
Charge-offs	(112,792		)	(115,825		)	(33,558		)	(66,319		)	(4,075		)	(332,569		)
Recoveries	78,811			16,963			8,261			14,487			2,565			121,087
Net charge-offs	(33,981		)	(98,862		)	(25,297		)	(51,832		)	(1,510		)	(211,482		)
Provision for losses	35,450			99,250			23,469			85,910			1,510			245,589
Effect of foreign currency translation	4			23			—			254			—			281
Balance, end of period	$	5,662		$	38,127		$	10,363		$	54,233		$	—		$	108,385
Allowance for loan losses as a percentage of gross loan receivables	7.3		%	21.9		%	11.5		%	17.2		%	N/A			16.5		%

The following table summarizes activity in the liability for losses on CSO lender-owned consumer loans during the nine months ended September 30, 2019 (in thousands):



	Nine Months Ended September 30, 2019
	Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	11,582		$	425		$	12,007
Charge-offs	(118,617		)	(2,647		)	(121,264		)
Recoveries	24,794			2,039			26,833
Net charge-offs	(93,823		)	(608		)	(94,431		)
Provision for losses	92,422			251			92,673
Balance, end of period	$	10,181		$	68		$	10,249

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes activity in the allowance for loan losses and the liability for losses on CSO lender-owned consumer loans, in total, during the nine months ended September 30, 2019 (in thousands):



	Nine Months Ended September 30, 2019
	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	4,189		$	49,298		$	12,616		$	19,901		$	—		$	86,004
Charge-offs	(112,792		)	(234,442		)	(36,205		)	(66,319		)	(4,075		)	(453,833		)
Recoveries	78,811			41,757			10,300			14,487			2,565			147,920
Net charge-offs	(33,981		)	(192,685		)	(25,905		)	(51,832		)	(1,510		)	(305,913		)
Provision for losses	35,450			191,672			23,720			85,910			1,510			338,262
Effect of foreign currency translation	4			23			—			254			—			281
Balance, end of period	$	5,662		$	48,308		$	10,431		$	54,233		$	—		$	118,634

The following table summarizes activity in the allowance for loan losses during the nine months ended September 30, 2018 (in thousands):



	Nine Months Ended September 30, 2018
	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,204		$	38,977		$	13,472		$	6,426		$	—		$	64,079
Charge-offs	(126,328		)	(98,946		)	(33,755		)	(76,926		)	(4,474		)	(340,429		)
Recoveries	88,945			15,110			7,487			30,451			2,728			144,721
Net charge-offs	(37,383		)	(83,836		)	(26,268		)	(46,475		)	(1,746		)	(195,708		)
Provision for losses	35,750			80,904			24,017			57,962			1,746			200,379
Effect of foreign currency translation	(281		)	115			—			100			—			(66		)
Balance, end of period	$	3,290		$	36,160		$	11,221		$	18,013		$	—		$	68,684
Allowance for loan losses as a percentage of gross loan receivables	4.3		%	19.5		%	12.3		%	9.8		%	N/A			12.8		%

The following table summarizes activity in the liability for losses on CSO lender-owned consumer loans during the nine months ended September 30, 2018 (in thousands):



	Nine Months Ended September 30, 2018
	Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	17,073		$	722		$	17,795
Charge-offs	(119,632		)	(3,300		)	(122,932		)
Recoveries	25,227			2,610			27,837
Net charge-offs	(94,405		)	(690		)	(95,095		)
Provision for losses	90,082			461			90,543
Balance, end of period	$	12,750		$	493		$	13,243

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)



	Nine Months Ended September 30, 2018
	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,204		$	56,050		$	14,194		$	6,426		$	—		$	81,874
Charge-offs	(126,328		)	(218,578		)	(37,055		)	(76,926		)	(4,474		)	(463,361		)
Recoveries	88,945			40,337			10,097			30,451			2,728			172,558
Net charge-offs	(37,383		)	(178,241		)	(26,958		)	(46,475		)	(1,746		)	(290,803		)
Provision for losses	35,750			170,986			24,478			57,962			1,746			290,922
Effect of foreign currency translation	(281		)	115			—			100			—			(66		)
Balance, end of period	$	3,290		$	48,910		$	11,714		$	18,013		$	—		$	81,927

NOTE 4 – CREDIT SERVICES ORGANIZATION

The CSO fee ~~receivable amounts~~receivables under CSO programs were ~~$11.0~~$13.4 million and $14.3 million at ~~March 31,~~September 30, 2019 and December 31, 2018, respectively. The Company bears the risk of loss through its guarantee to purchase specific customer loans that are in default ~~from~~with the lenders. The terms of these loans range ~~from~~up to six ~~to 18~~ months. See the 2018 Form 10-K for further details of the Company's accounting policy. As of ~~March 31,~~September 30, 2019 and December 31, 2018, the maximum amount payable under all such guarantees was ~~$51.6~~$60.4 million and $66.9 million, respectively. If the Company is required to pay any portion of the total amount of the loans it has guaranteed, it will attempt to recover some or the entire amount from the applicable customers. The Company holds no collateral in respect of the guarantees. The Company estimates a liability for losses associated with the guaranty provided

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

to the CSO lenders using assumptions and methodologies similar to the Allowance for loan losses, which it recognizes for its consumer loans. Liability for incurred losses on CSO loans Guaranteed by the Company was ~~$8.7~~$10.2 million and $12.0 million at ~~March 31,~~September 30, 2019 and December 31, 2018, respectively.

The Company placed ~~$13.5~~$5.9 million and $17.2 million in collateral accounts for the benefit of lenders at ~~March 31,~~September 30, 2019 and December 31, 2018, respectively, which is reflected in "Prepaid expenses and other" in the 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 such lender.

NOTE 5 – ~~LONG-TERM~~ DEBT

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


(in thousands)	March 31, 2019		December 31, 2018
					September 30, 2019		December 31, 2018
8.25% Senior Secured Notes (due 2025)	$	677,153	$	676,661	$	677,924	$	676,661
Non-Recourse Canada SPV Facility	88,915		107,479		102,483		107,479
Senior Revolver	—		20,000		25,000		20,000
Long-term debt	$	766,068	$	804,140
Debt					$	805,407	$	804,140

8.25% Senior Secured Notes

In August 2018, the Company issued $690.0 million of 8.25% Senior Secured Notes which mature on September 1, 2025 ("8.25% Senior Secured Notes"). Interest on the notes is payable semiannually, in arrears, on March 1 and September 1. In connection with the 8.25% Senior Secured Notes, the balance of capitalized financing costs of ~~approximately $12.8~~$12.1 million, net of amortization, is included in the Condensed Consolidated Balance Sheets as a component of ~~"Long-term debt.~~"Debt." These costs are amortized over the term of the 8.25% Senior Secured Notes as a component of interest expense.

The proceeds of this issuance were used (i) to redeem the outstanding 12.00% Senior Secured Notes of CFTC, (ii) to repay a portion of the outstanding indebtedness under the five-year revolving credit facility of CURO Receivables Finance I, LLC, a ~~wholly-owned~~wholly-

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

owned subsidiary, ~~("CURO Receivables"),~~ which consisted of a term loan and revolving borrowing capacity, (iii) for general corporate purposes and (iv) to pay fees, expenses, premiums and accrued interest in connection therewith.

~~As of March 31, 2019 and December 31, 2018, the Company was in full compliance with the covenants and other provisions of the 8.25% Senior Secured Notes.~~

12.00% Senior Secured Notes

In February and November 2017, CFTC issued $470.0 million and $135.0 million, respectively, of 12.00% Senior Secured Notes due March 1, 2022. In connection with these 12.00% Senior Secured Notes, the Company capitalized financing costs of ~~approximately~~ $18.3 million. These costs were being amortized over the term of the 12.00% Senior Secured Notes as a component of interest expense.

On March 7, 2018, CFTC redeemed $77.5 million of its 12.00% Senior Secured Notes using a portion of the proceeds from the Company's initial public offering, as required by the underlying indenture (the transaction whereby the 12.00% Senior Secured Notes were partially redeemed, the “Redemption”), at a price equal to 112.00% of the principal amount of the 12.00% Senior Secured Notes redeemed, plus accrued and unpaid interest paid thereon, to the date of Redemption. The Redemption price and the amortization of a corresponding portion of the capitalized financing costs resulted in a loss on Redemption of $11.7 million for the three months ended March 31, 2018. Following the Redemption, $527.5 million of the original outstanding principal amount of the 12.00% Senior Secured Notes remained outstanding. The Redemption was conducted pursuant to the Indenture governing the 12.00% Senior Secured Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent.

The remainder of the 12.00% Senior Secured Notes were extinguished effective September 7, 2018 using proceeds from the 8.25% Senior Secured Notes as described above. The early extinguishment of the 12.00% Senior Secured Notes resulted in a pretax loss of $69.2 million during the year ended December 31, 2018.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

Non-Recourse Canada SPV Facility

On August 2, 2018, CURO Canada Receivables Limited Partnership, a newly created, bankruptcy-remote special purpose vehicle (the "Canada SPV Borrower") and a wholly-owned subsidiary, entered into a four-year revolving credit facility with Waterfall Asset Management, LLC that ~~provides~~provided for C$175.0 million of initial borrowing capacity and the ability to expand such capacity up to C$250.0 million ("Non-Recourse Canada SPV Facility"). The loans bear interest at an annual rate of 6.75% plus the three-month CDOR. The Canada SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. In April 2019, the facility's maturity date was extended one year, ~~and now matures in~~to 2023. ~~As of March 31, 2019, the Canada SPV Borrower was in full compliance with the covenants and other provisions of the Non-Recourse Canada SPV Facility.~~

As of ~~March 31,~~September 30, 2019, outstanding borrowings under the Non-Recourse Canada SPV Facility were ~~$88.9~~$102.5 million, net of deferred financing costs of $3.3 million. For further information on the Non-Recourse Canada SPV, refer to Note 2, "Variable Interest Entities."

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

In November 2016, CURO Receivables and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides for an $80.0 million term loan and $70.0 million revolving borrowing capacity that can expand over time (collectively, “Non-Recourse U.S. SPV Facility”). Borrowings under this facility bear interest at an annual rate of up to 12.00% plus the greater of (i) 1.0% per annum and (ii) the three-month LIBOR. The SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. In connection with this facility, the balance of capitalized financing costs of approximately $5.3 million, net of amortization, was included in the Condensed Consolidated Balance Sheet as a component of "Long-term debt" and was being amortized over the term of the Non-Recourse U.S. SPV Facility.

On September 30, 2018, a portion of the proceeds from the 8.25% Senior Secured Notes were used to extinguish the revolver's balance of $42.4 million. In October 2018, the Company extinguished the remaining term loan balance of $80.0 million and made the final termination payment of $2.7 million, resulting in a loss on the extinguishment of debt of $9.7 million for the year ended December 31, 2018.

Senior Revolver

On September 1, 2017, the Company entered into a $25.0 million Senior Secured Revolving Loan Facility (the “Senior Revolver”). The terms of the Senior Revolver generally conform to the related provisions in the Indenture dated February 15, 2017 for the 12.00% Senior Secured Notes and complements the Company's other financing sources, while providing seasonal short-term liquidity. In February 2018, the Senior Revolver capacity was increased to $29.0 million as permitted by the Indenture to the 12.00% Senior Secured Notes, based upon consolidated tangible assets. Additionally, in November 2018, the Senior Revolver capacity was increased to $50.0 million, as permitted by the Indenture to the 8.25% Senior Secured Notes. The Senior Revolver is now syndicated with participation by four banks.

Under the Senior Revolver, there is $50.0 million maximum availability, including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The current term expires June 30, 2020. The Senior Revolver accrues interest at ~~the~~ one-month LIBOR plus 5.00% (subject to a 5% overall ~~rate~~ minimum) and is repayable on demand.

The terms of the Senior Revolver require that its outstanding balance be zero for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries that guarantee the 8.25% Senior Secured Notes and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing the 8.25% Senior Secured Notes. Additionally, the negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for the 8.25% Senior Secured Notes. The revolver ~~was undrawn~~had an outstanding balance of $25.0 million at ~~March 31,~~September 30, 2019.

The Senior Revolver contains various conditions to borrowing and affirmative, negative and financial maintenance covenants. Certain of the more significant covenants are (i) minimum eligible collateral value, (ii) consolidated interest coverage ratio and (iii) consolidated leverage ratio. The Senior Revolver also contains various events of default, the occurrence of which could result in termination of the lenders’ commitments to lend and the acceleration of all obligations under the Senior Revolver. ~~As of March 31, 2019, the Company was in full compliance with the covenants and other provisions of the Senior Revolver.~~

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Cash Money Revolving Credit Facility

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

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

(ii) C$10.0 million. As of ~~March 31,~~September 30, 2019, the borrowing capacity under the Cash Money Revolving Credit Facility, which was ~~reduced by~~C$9.7 million, net of C$0.3 million in outstanding stand-by-letters of credit.

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

The Cash Money Revolving Credit Facility was undrawn at ~~March 31,~~September 30, 2019 and December 31, 2018.

Subordinated Stockholder Debt

As part of the acquisition of Cash Money in 2011, the Company ~~was provided~~received indemnification for certain claims through issuance of an escrow note to the ~~seller. This note bears~~seller, bearing interest at 10.0% per annum ~~and~~with quarterly interest ~~payments are due until~~payments. This note matured and was paid during the ~~note matures~~second quarter of 2019.

Non-Recourse U.S. SPV Facility

In November 2016, CURO Receivables Finance I, LLC and a wholly-owned subsidiary entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provided for an $80.0 million term loan and $70.0 million revolving borrowing capacity that could expand over time (collectively, “Non-Recourse U.S. SPV Facility”). Borrowings under this facility bore interest at an annual rate of up to 12.00% plus the greater of (i) 1.0% per annum and (ii) the three-month LIBOR. The SPV Borrower also paid a 0.50% per annum fee on the unused portion of the commitments. In connection with this facility, the capitalized financing costs at the time of extinguishment, as discussed below, were $5.3 million, net of amortization. These capitalized financing costs were included in ~~May 2019. The~~the Condensed Consolidated Balance Sheet as a component of "Debt" and were amortized over the term of the Non-Recourse U.S. SPV Facility.

On September 30, 2018, a portion of the proceeds from the 8.25% Senior Secured Notes were used to extinguish the revolver's balance of ~~this note at March 31, 2019~~$42.4 million. In October 2018, the Company extinguished the remaining term loan balance of $80.0 million and made the final termination payment of $2.7 million, resulting in a loss on the extinguishment of debt of $9.7 million during the year ended December 31, ~~2018 was $2.2 million.~~2018.

NOTE 6 – SHARE-BASED COMPENSATION

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

Restricted Stock Units

Grants of time-based RSUs are valued at the date of grant based on the value of common stock and are expensed using the straight-line method over the service period. These RSUs are subject to time-based vesting and typically vest over a three-year period.

Grants of market-based RSUs are valued using the Monte Carlo simulation pricing model. In March 2019, the Company awarded ~~performance-based~~market-based RSUs ~~that will vest if certain performance conditions are met by the Company. These RSUs were~~ designed to drive the performance of the management team toward achievement of key corporate ~~objectives and will only~~objectives. The market-based RSUs vest ifafter three years depending upon the Company's total stockholder return over the three-year performance ~~targets are met by March 14, 2022.~~period relative to other companies in its selected peer group. Expense recognition for the ~~performance~~market-based awards ~~which was immaterial to~~occurs over the ~~first quarter of 2019, commences if and when it is determined that attainment of the performance goal is probable.~~

~~RSUs that have time-based vesting are typically valued at the date of grant based on the value of the Company's common stock and are expensed~~service period using the straight-line ~~method over the service period. RSUs that require the achievement of a performance condition to vest are typically valued using the Monte Carlo simulation pricing model.~~ method.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Grants of RSUs do not confer full stockholder rights such as voting rights and cash dividends, but provide for additional dividend equivalent RSU awards in lieu of cash dividends. Unvested shares of RSUs may be forfeited upon termination of employment depending on the circumstances of the termination, or failure to achieve the required performance condition, if applicable.

A summary of the status of time-based and ~~performance-based~~market-based RSUs as of ~~March 31,~~September 30, 2019 and changes during the ~~three~~nine months ended ~~March 31,~~September 30, 2019 are presented in the following table:


	Number of RSUs					Number of RSUs
	Time-Based		Performance-Based	Weighted Average Grant Date Fair Value per Share		Time-Based		Market-Based	Weighted Average Grant Date Fair Value per Share
December 31, 2018	1,060,350		—	$	14.29	1,060,350		—	$	14.29
Granted	434,272		394,752	9.93		598,114		397,752	10.08
Vested	(17,406	)	—	15.94		(83,481	)	—	15.59
Forfeited	(68,778	)	—	14.05		(68,778	)	—	14.05
March 31, 2019	1,408,438		394,752	$	12.28
September 30, 2019						1,506,205		397,752	$	12.04

Share-based compensation expense ~~during~~for the three months ended ~~March 31,~~September 30, 2019 and 2018, which includes compensation costs from stock options and RSUs, was $2.8 million and $2.1 million, respectively, and ~~$1.8~~during the nine months ended September 30, 2019 and 2018 was $7.6 million and $6.1 million, respectively, and is included in the Condensed Consolidated Statements of Operations as a component of "Corporate, district and ~~other" expense.~~other expenses."

As of ~~March 31,~~September 30, 2019, there was ~~$20.4~~$16.0 million of total unrecognized compensation cost related to stock options and RSUs, of which ~~$17.1~~$12.9 million related to ~~stock options and~~ time-based RSUs and ~~$3.3~~$2.8 million related to ~~performance-based~~market-based RSUs. Total unrecognized compensation costs will be recognized over a weighted-average period of ~~2.2~~1.7 years.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

NOTE 7 – INCOME TAXES

The Company's effective income tax rate ~~from continuing operations~~ was ~~25.9%~~27.9% and ~~31.5%~~(34.8)% for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 and 2018, respectively.

On December 22, 2017, the 2017 Tax Act became law, which reduced the statutory U.S. Federal corporate income tax rate from 35% to 21%, enacted a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions and imposed a new minimum tax on global intangible low-taxed income ("GILTI"). The Company provided an estimate of the deemed repatriation tax as of December 31, 2017, and pursuant to further IRS guidance, the Company recorded an additional accrual of $1.2 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2018. The Company recorded an estimated GILTI tax of ~~$0.4~~$0.5 million and $0.6 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2019 and 2018, respectively.

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 earnings of ~~$165.8~~$153.6 million were distributed to the U.S., the Company would be subject to Canadian withholding taxes of an estimated ~~$8.3~~$7.7 million. In the event the earnings were distributed to the U.S., the Company would adjust the income tax provision for the applicable period and would determine the amount of foreign tax credit that would be available.

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

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. 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 estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires 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.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 since limited market data exists. The Company develops these inputs based on the best information available, including its own data.

Financial Assets and Liabilities Carried at Fair Value

The table below presents the assets and liabilities that were carried at fair value on the Condensed Consolidated Balance Sheets at September 30, 2019 (in thousands):



			Estimated Fair Value
	Carrying Value September 30, 2019		Level 1		Level 2		Level 3		Total
Financial assets:
Cash Surrender Value of Life Insurance	$	5,799	$	5,799	$	—	$	—	$	5,799
Financial liabilities:
Non-qualified deferred compensation plan	$	4,333	$	4,333	$	—	$	—	$	4,333

The table below presents the assets and liabilities that were carried at fair value on the Condensed Consolidated Balance Sheets at December 31, 2018 (in thousands):



			Estimated Fair Value
	Carrying Value December 31, 2018		Level 1		Level 2		Level 3		Total
Financial assets: ⁽¹⁾
Cash Surrender Value of Life Insurance	$	4,790	$	4,790	$	—	$	—	$	4,790
Financial liabilities:
Non-qualified deferred compensation plan	$	3,639	$	3,639	$	—	$	—	$	3,639
(1) Zibby was not included as of 12/31/18 as it was accounted for under the cost method.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 Condensed Consolidated Balance Sheets at ~~March 31, 2019:~~September 30, 2019 (in thousands):


			Estimated Fair Value										Estimated Fair Value
(in thousands)	Carrying Value March 31, 2019		Level 1		Level 2		Level 3		March 31, 2019
											Carrying Value September 30, 2019		Level 1		Level 2		Level 3		Total
Financial assets:
Cash	$	82,859	$	82,859	$	—	$	—	$	82,859	$	62,207	$	62,207	$	—	$	—	$	62,207
Restricted cash	34,319		34,319		—		—		34,319		38,754		38,754		—		—		38,754
Loans receivable, net	458,893		—		—		458,893		458,893		549,230		—		—		549,230		549,230
Investment in Cognical	6,558		—		—		6,558		6,558
Investment in Zibby											11,231		—		—		11,231		11,231
Financial liabilities:
Liability for losses on CSO lender-owned consumer loans	$	8,662	$	—	$	—	$	8,662	$	8,662	$	10,249	$	—	$	—	$	10,249	$	10,249
8.25% Senior Secured Notes	677,153		—		—		580,659		580,659		677,924		—		591,489		—		591,489
Non-Recourse Canada SPV facility	88,915		—		—		92,718		92,718		102,483		—		—		105,742		105,742
Senior Revolver											25,000		—		—		25,000		25,000

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


			Estimated Fair Value										Estimated Fair Value
(in thousands)	Carrying Value December 31, 2018		Level 1		Level 2		Level 3		December 31, 2018
											Carrying Value December 31, 2018		Level 1		Level 2		Level 3		Total
Financial assets:
Cash	$	61,175	$	61,175	$	—	$	—	$	61,175	$	61,175	$	61,175	$	—	$	—	$	61,175
Restricted cash	25,439		25,439		—		—		25,439		25,439		25,439		—		—		25,439
Loans receivable, net	497,534		—		—		497,534		497,534		497,534		—		—		497,534		497,534
Investment in Cognical	6,558		—		—		6,558		6,558
Investment in Zibby											6,558		—		—		6,558		6,558
Financial liabilities:
Liability for losses on CSO lender-owned consumer loans	$	12,007	$	—	$	—	$	12,007	$	12,007	$	12,007	$	—	$	—	$	12,007	$	12,007
8.25% Senior Secured notes	676,661		—		—		531,179		531,179		676,661		—		531,179		—		531,179
Non-Recourse Canada SPV facility	107,479		—		—		111,335		111,335		107,479		—		—		111,335		111,335
Senior Revolver	20,000		—		—		20,000		20,000		20,000		—		—		20,000		20,000

Loans receivable are carried on the Condensed Consolidated Balance Sheets net of the Allowance for estimated loan losses. The unobservable inputs used to calculate the carrying values include quantitative factors, such as 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.

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 defaulted loans that it has guaranteed.

~~The fair~~During the second and third quarters of 2019, Zibby completed an equity raising round through which the Company increased its investment in Zibby to 42.3%, on a fully diluted basis, resulting in the accounting of the investment under the equity method as of September 30, 2019. This round included additional investments from existing shareholders and by new investors. As a result of the additional investment, the Company recognized a $3.7 million loss to adjust the Company's carrying value of Zibby.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The carrying value was further adjusted by the Company's pro rata share of Zibby's losses during the period in which the Company held a greater than 20% investment, typically considered the threshold for equity method accounting. During the three months ended September 30, 2019, this carrying value adjustment was $1.4 million.

The 8.25% Senior Secured Notes fair value disclosure was ~~based on broker quotations.~~transferred from Level 3, as previously reported, to Level 2 for September 30, 2019 and December 31, 2018. Upon management's review of the inputs, the Level 2 disclosure is appropriate given the limited trading activity in this public (observable) market. The fair values of the Non-Recourse Canada SPV facility and the Senior Revolver were based on the cash needed for their respective final settlements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 9 – STOCKHOLDERS' EQUITY

~~In connection with~~The following table summarizes the ~~Company's initial public offering~~changes in ~~December 2017,~~stockholders' equity for the ~~underwriters had a 30-day option to purchase up to an additional 1.0 million shares of the Company's common stock at the initial public offering price, less the underwriting discount~~three and nine months ended September 30, 2018 and 2019 (in thousands):



	Common Stock			Paid-in capital			Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity
	Shares Outstanding	Par Value		Paid-in capital			Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity
Balances at December 31, 2017	44,561,419	$	8	$	46,079		$	3,988		$	(42,939	)	$	7,136
Net income from continuing operations	—	—		—			24,913			—			24,913
Net loss from discontinued operations	—	—		—			(1,621		)	—			(1,621		)
Foreign currency translation adjustment	—	—		—			—			(2,910		)	(2,910		)
Cash flow hedge expiration	—	—		—			—			54			54
Share based compensation expense	—	—		1,842			—			—			1,842
Initial Public Offering, Net Proceeds ⁽²⁾ (underwriter shares)	1,000,000	1		13,135			—			—			13,136
Balances at March 31, 2018	45,561,419	$	9	$	61,056		$	27,280		$	(45,795	)	$	42,550
Net income from continuing operations	—	—		—			18,718			—			18,718
Net loss from discontinued operations	—	—		—			(2,743		)	—			(2,743		)
Foreign currency translation adjustment	—	—		—			—			(6,754		)	(6,754		)
Cash flow hedge expiration	—	—		—			—			(439		)	(439		)
Share based compensation expense	—	—		1,478			—			—			1,478
Proceeds from exercise of stock options	209,132	—		39			—			—			39
Common stock issued for RSU's vesting	49,994	—		—			—			—			—
Balances at June 30, 2018	45,820,545	$	9	$	62,573		$	43,255		$	(52,988	)	$	52,849
Net loss from continuing operations	—	—		—			(42,590		)	—			(42,590		)
Net loss from discontinued operations	—	—		—			(4,432		)	—			(4,432		)
Foreign currency translation adjustment	—	—		—			—			2,649			2,649
Cash flow hedge expiration	—	—		—			—			(187		)	(187		)
Share based compensation expense	—	—		2,792			—			—			2,792
Proceeds from exercise of stock options	222,432	—		369			—			—			369
Initial Public Offering, Net Proceeds (underwriter shares)	—	—		(1,586		)	—			—			(1,586		)
Balance at September 30, 2018	46,042,977	$	9	$	64,148		$	(3,767	)	$	(50,526	)	$	9,864
⁽¹⁾Accumulated other comprehensive income (loss)
⁽²⁾In connection with the Company's initial public offering in December 2017, the underwriters had a 30-day option to purchase up to an additional 1.0 million shares of the Company's common stock at the initial public offering price, less the underwriting discount for over-allotments, if any. The underwriters exercised this option and purchased 1.0 million shares on January 5, 2018. The exercise of this option provided additional proceeds of $13.1 million.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~for over-allotments, if any. The underwriters exercised this option and purchased 1.0 million shares on January 5, 2018. The exercise of this option provided additional proceeds of $13.1 million.~~

~~The following table summarizes the changes in stockholders' equity for the three months ended March 31, 2018 and 2019:~~

Common Stock Paid-in capital Retained Earnings (Deficit)
AOCI ⁽¹⁾
Total Stockholders' Equity
(dollars in thousands) Shares Outstanding Par Value
Balances at December 31, 2017 44,561,419
$ 8
$ 46,079
$ 3,988
$ (42,939 ) $ 7,136
Net income from continuing operations —
—
—
24,913
—
24,913
Net loss from discontinued operations —
—
—
(1,621 ) —
(1,621 )
   Foreign currency translation adjustment —
—
—
—
(2,910 ) (2,910 )
   Cash flow hedge expiration —
—
—
—
54
54
   Share based compensation expense —
—
1,842
—
—
1,842
Initial Public Offering, Net Proceeds (underwriter shares) 1,000,000
1
13,135
—
—
13,136
Balances at March 31, 2018 45,561,419
$ 9
$ 61,056
$ 27,280
$ (45,795 ) $ 42,550
⁽¹⁾Accumulated other comprehensive income (loss)


	Common Stock			Paid-in capital				Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity			Common Stock							Paid-in capital			Treasury Stock				Retained Earnings (Deficit)				AOCI ⁽¹⁾				Total Stockholders' Equity
(dollars in thousands)	Shares Outstanding	Par Value																						Paid-in capital			Treasury Stock				Retained Earnings (Deficit)				AOCI ⁽¹⁾				Total Stockholders' Equity
																	Shares Outstanding			Par Value				Paid-in capital			Treasury Stock				Retained Earnings (Deficit)				AOCI ⁽¹⁾				Total Stockholders' Equity
Balances at December 31, 2018	46,412,231	$	9	Paid-in capital			$	Retained Earnings (Deficit)		60,015	AOCI ⁽¹⁾			Total Stockholders' Equity			$	(18,065	)		$	(61,060	)	Paid-in capital			Treasury Stock			$	Retained Earnings (Deficit)			(19,101	AOCI ⁽¹⁾			)	Total Stockholders' Equity			46,412,231	$	9
Net income from continuing operations	—	—		—				28,673			—			28,673			—			—				—			—				28,673				—				28,673
Net income from discontinued operations	—	—		—				8,375			—			8,375			—			—				—			—				8,375				—				8,375
Foreign currency translation adjustment	—	—		—				—			16,695			16,695			—			—				—			—				—				16,695				16,695
Share based compensation expense	—	—		2,172				—			—			2,172			—			—				2,172			—				—				—				2,172
Proceeds from exercise of stock options	7,888	—		40				—			—			40			7,888			—				40			—				—				—				40
Common stock issued for RSU's vesting, net of shares withheld and withholding paid for employee taxes	11,170	—		(110		)		—			—			(110		)	11,170			—				(110		)	—				—				—				(110		)
Balances at March 31, 2019	46,431,289	$	9	$	62,117			$	18,983		$	(44,365	)	$	36,744		46,431,289			$	9			$	62,117		$	—			$	18,983			$	(44,365	)		$	36,744
Net income from continuing operations																	—			—				—			—				17,667				—				17,667
Net loss from discontinued operations																	—			—				—			—				(834		)		—				(834		)
Foreign currency translation adjustment																	—			—				—			—				—				3,635				3,635
Share based compensation expense																	—			—				2,644			—				—				—				2,644
Proceeds from exercise of stock options																	4,908			—				29			—				—				—				29
Repurchase of common stock																	(244,200	)		—				—			(2,507		)		—				—				(2,507		)
Common stock issued for RSU's vesting, net of shares withheld and withholding paid for employee taxes																	63,285			—				—			—				—				—				—
Balances at June 30, 2019																	46,255,282			$	9			$	64,790		$	(2,507	)		$	35,816			$	(40,730	)		$	57,378
Net income from continuing operations																	—			—				—			—				27,987				—				27,987
Net loss from discontinued operations																	—			—				—			—				(598		)		—				(598		)
Foreign currency translation adjustment																	—			—				—			—				—				(1,954		)		(1,954		)
Share based compensation expense																	—			—				2,771			—				—				—				2,771
Proceeds from exercise of stock options																	3,924			—				18			—				—				—				18
Repurchase of common stock ⁽²⁾																	(3,912,041	)		—				—			(50,557		)		—				—				(50,557		)
Balances at September 30, 2019																	42,347,165			$	9			$	67,579		$	(53,064	)		$	63,205			$	(42,684	)		$	35,045
⁽¹⁾ Accumulated other comprehensive income (loss)	⁽¹⁾ Accumulated other comprehensive income (loss)																⁽¹⁾ Accumulated other comprehensive income (loss)
⁽²⁾Includes the repurchase of 2,000,000 shares of common stock from FFL for $13.55 per share. See Note 17 - "Share Repurchase Program" for additional information.																	⁽²⁾Includes the repurchase of 2,000,000 shares of common stock from FFL for $13.55 per share. See Note 17 - "Share Repurchase Program" for additional information.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 10 – EARNINGS PER SHARE

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


	Three Months Ended March 31,					Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018			2019			2018⁽¹⁾			2019		2018
Net income from continuing operations	$	28,673	$	24,913
Net income (loss) from discontinued operations, net of tax	8,375		(1,621		)
Net income	$	37,048	$	23,292
Net income (loss) from continuing operations						$	27,987		$	(42,590	)	$	74,327	$	1,041
Net (loss) income from discontinued operations, net of tax						(598		)	(4,432		)	$	6,943	$	(8,796	)
Net income (loss)						$	27,389		$	(47,022	)	$	81,270	$	(7,755	)

Weighted average common shares - basic	46,424		45,506			44,422			45,853			45,759		45,674
Dilutive effect of stock options and restricted stock units	895		1,910			1,588			—			1,128		2,387
Weighted average common shares - diluted	47,319		47,416			46,010			45,853			46,887		48,061

Basic income (loss) per share:
Basic earnings (loss) per share:
Continuing operations	$	0.62	$	0.55		$	0.63		$	(0.93	)	$	1.63	$	0.02
Discontinued operations	0.18		(0.04		)	(0.01		)	(0.10		)	0.15		(0.19		)
Basic income per share	$	0.80	$	0.51
Basic earnings per share						$	0.62		$	(1.03	)	$	1.78	$	(0.17	)

Diluted income (loss) per share:
Diluted earnings (loss) per share:
Continuing operations	$	0.61	$	0.53		$	0.61		$	(0.93	)	$	1.59	$	0.03
Discontinued operations	0.18		(0.03		)	(0.01		)	(0.10		)	0.15		(0.19		)
Diluted income per share	$	0.79	$	0.50
Diluted earnings per share						$	0.60		$	(1.03	)	$	1.74	$	(0.16	)
⁽¹⁾ As of December 31, 2018, the Company made certain insignificant adjustments to previously-reported Earnings Per Share ("EPS") to correctly reflect the effect of anti-dilutive shares on diluted EPS calculations in accordance with ASC 260. These changes were immaterial to the overall EPS calculation. Diluted loss per share for the three months ended September 30, 2018 of $0.97 was corrected to $1.03.						⁽¹⁾ As of December 31, 2018, the Company made certain insignificant adjustments to previously-reported Earnings Per Share ("EPS") to correctly reflect the effect of anti-dilutive shares on diluted EPS calculations in accordance with ASC 260. These changes were immaterial to the overall EPS calculation. Diluted loss per share for the three months ended September 30, 2018 of $0.97 was corrected to $1.03.

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 and as such, these shares are not included in calculating "Diluted earnings per share." For the three and nine months ended ~~March 31,~~September 30, 2019, there were ~~1.4~~0.1 million and 0.3 million, respectively, of potential shares of common stock excluded from the calculation of Diluted earnings per share because their effect was anti-dilutive. For the three months ended September 30, 2018, there were 2.5 million potential shares of common stock excluded from the calculation of ~~diluted~~Diluted earnings per share because their effect was anti-dilutive. There was no effect for the ~~three~~nine months ended ~~March 31,~~September 30, 2018.

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

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 11 – SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental cash flow ~~information:~~information (in thousands):


	Three Months Ended March 31,				Nine Months Ended September 30,
(dollars in thousands)	2019		2018
					2019		2018
Cash paid for:
Interest	$	32,195	$	40,225	$	65,627	$	80,748
Income taxes	1,456		4,431
Income taxes, net of refunds					2,029		15,868
Non-cash investing activities:
Property and equipment accrued in accounts payable	$	349	$	317	$	604	$	1,240

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

NOTE 12 – SEGMENT REPORTING

Segment information is prepared on the same basis that the Company's ~~chief operating decision maker~~Chief Operating Decision Maker ("CODM") reviews financial information for operational decision making purposes. During the first quarter of 2019, the U.K. ~~subsidiaries~~Subsidiaries met discontinued operations criteria, resulting in two remaining reportable operating segments: the U.S. and Canada.

Management’s evaluation of performance utilizes gross margin and operating profit before the allocation of interest expense and professional services. The following reporting segment results reflect this basis for evaluation and were determined in accordance with the same accounting principles used in the Condensed Consolidated Financial Statements.

The following table illustrates summarized financial information concerning reportable ~~segments.~~segments (in thousands):


	Three Months Ended March 31,				Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in thousands)	2019		2018
					2019		2018			2019		2018
Revenues by segment:
U.S.	$	226,119	$	204,593	$	237,069	$	223,273		$	673,234	$	617,992
Canada	51,820		46,250		60,195		46,209			166,269		139,502
Consolidated revenue	$	277,939	$	250,843	$	297,264	$	269,482		$	839,503	$	757,494
Gross margin by segment:
U.S.	$	89,803	$	91,344	$	77,250	$	60,105		$	232,120	$	215,497
Canada	15,694		14,502		19,389		489			51,197		28,291
Consolidated gross margin	$	105,497	$	105,846	$	96,639	$	60,594		$	283,317	$	243,788
Segment operating income:
Segment operating income (loss):
U.S.	$	31,195	$	26,832	$	28,092	$	(53,624	)	$	76,316	$	(11,430	)
Canada	7,524		9,548		11,134		(5,880		)	26,749		12,202
Consolidated operating profit	$	38,719	$	36,380	$	39,226	$	(59,504	)	$	103,065	$	772
Expenditures for long-lived assets by segment:
U.S.	$	2,430	$	788	$	2,890	$	4,483		$	7,888	$	6,466
Canada	689		754		216		590			1,382		1,564
Consolidated expenditures for long-lived assets	$	3,119	$	1,542	$	3,106	$	5,073		$	9,270	$	8,030

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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


(dollars in thousands)	March 31, 2019		December 31, 2018
					September 30, 2019		December 31, 2018
U.S.	$	321,534	$	361,473	$	370,967	$	361,473
Canada	231,681		210,058		286,648		210,058
Total gross loans receivable	$	553,215	$	571,531	$	657,615	$	571,531

The following table provides 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:~~located (in thousands):


(dollars in thousands)	March 31, 2019		December 31, 2018
					September 30, 2019		December 31, 2018
U.S.	$	46,360	$	47,918	$	42,937	$	47,918
Canada	28,900		28,832		27,444		28,832
Total net long-lived assets	$	75,260	$	76,750	$	70,381	$	76,750

The Company's CODM does not review total assets by segment for purposes of allocating resources or decision-making purposes; therefore, total assets by segment are not disclosed.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

NOTE 13 – CONTINGENT LIABILITIES

Securities Litigation

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

Plaintiffs allege generally that, during the putative class period, the Company made misleading statements and omitted material information regarding its efforts to transition the Canadian inventory of products from Single-Pay loans to Open-End loans. Plaintiffs assert that the Company and the individual defendants made these misstatements and omissions to keep the stock price high. Plaintiffs seek unspecified damages and other relief. The Company filed a motion to dismiss the lawsuit on August 15, 2019.

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

~~Related to this securities litigation matter,~~During the first quarter of 2019, the Company ~~has also~~ received an inquiry from the SEC regarding the Company's public disclosures surrounding its efforts to transition the Canadian inventory of products from Single-Pay loans to Open-End loans.

City of Austin

The Company was cited in July 2016 by the City of Austin, Texas for alleged violations of the Austin ordinance addressing products offered by CSOs. The Austin ordinance regulates aspects of products offered under the Company's credit access bureau ("CAB") program, including loan sizes and repayment terms. 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 the ordinance, when the ordinance is properly construed. The Austin Municipal Court agreed with the Company's position that the 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. To date, a hearing and trial on the merits have not been scheduled. The Company does not anticipate having a final determination of the lawfulness of its CAB program under the Austin ordinance (and similar ordinances in other Texas cities) in the near future. A final adverse decision could potentially

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

result in material monetary liability in Austin and elsewhere in Texas, and would force the Company to restructure the loans it originates in Austin and elsewhere in Texas.

Other Legal Matters

The Company is a defendant in certain litigation matters encountered in the ordinary course of business. Certain of these matters may be covered to an extent by insurance. In the opinion of management, based upon the advice of legal counsel, the likelihood is remote that the impact of any of these pending litigation matters, either individually or in the aggregate, would have a material adverse effect on the Company's consolidated financial condition, results of operations or cash flows.

NOTE 14 – LEASES

The Company entered into operating leases for the buildings in which it operates that expire at various times through ~~2040.~~2033. The Company determines if an arrangement is a lease at inception. Operating leases are included in "Right of use asset - operating leases" and "Lease liability - operating leases" ~~in the Condensed Consolidated Balance Sheets. The Company currently has finance leases which in the aggregate are immaterial and not presented~~ in the Condensed Consolidated Balance Sheets.

ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

The incremental borrowing rate is determined using a portfolio approach based on the rate of interest the Company would pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses quoted interest rates obtained from financial institutions as an input, adjusted for Company specific factors, to derive the incremental borrowing rate as the discount rate for the lease.

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

The ~~Company had~~following table summarizes the operating lease costs of approximately $8.5 million for the period ended March 31, 2019. Some of the leases are with related parties and have terms similar to the non-related party leases previously described. Operating lease costs on unrelated third-party leases was $7.6 million and for related party leases was $0.8 million for the three and nine months ended ~~March 31, 2019.~~September 30, 2019 (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019		2019
Operating lease costs:
Third-Party	$	7,687	$	23,000
Related-Party	865		2,595
Total	$	8,552	$	25,595

During the ~~three~~nine months ended ~~March 31,~~September 30, 2019, cash paid for amounts included in the measurement of the liabilities and the operating cash flows ~~was $8.6~~were $26.0 million. ROU assets obtained in exchange for lease liabilities were $11.1 million.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes the ~~future minimum~~aggregate operating lease ~~payments~~maturities that the Company is contractually obligated to make under operating leases as of ~~March 31, 2019:~~September 30, 2019 (in thousands):


(in thousands)	Third-Party			Related-Party			Total
2019	$	23,222		$	2,764		$	25,986
										Third-Party			Related-Party			Total
Remainder of 2019										$	7,698		$	922		$	8,620
2020	30,338			3,773			34,111			29,596			3,752			33,348
2021	29,918			3,875			33,793			26,450			3,772			30,222
2022	28,906			3,743			32,649			23,387			3,669			27,056
2023	24,411			1,299			25,710			18,674			1,313			19,987
2024										14,088			963			15,051
Thereafter	40,326			1,114			41,440			35,697			3,414			39,111
Total	177,121			16,568			193,689			155,590			17,805			173,395
Less: Imputed interest	(46,823		)	(3,429		)	(50,252		)	(42,920		)	(4,427		)	(47,347		)
Operating lease liabilities	$	130,298		$	13,139		$	143,437		$	112,670		$	13,378		$	126,048

In accordance with the prior guidance, ASC 840, Leases, the future minimum lease payments by fiscal year as determined prior to the adoption of ASC 842, Leases, as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, were as follows (in thousands):



	Third Party		Related Party		Total
2019	$	24,211	$	3,330	$	27,541
2020	20,547		3,285		23,832
2021	17,301		3,324		20,625
2022	14,558		3,322		17,880
2023	10,269		705		10,974
Thereafter	13,446		730		14,176
Total ⁽¹⁾	$	100,332	$	14,696	$	115,028
(1) Future minimum lease payments exclude the U.K. as all U.K. subsidiaries were placed into administration effective February 25, 2019.

As of ~~March 31,~~September 30, 2019, the weighted average remaining lease term was ~~6.1~~6.3 years, and the weighted average operating discount rate used to determine the operating lease liability ~~was~~remained 10.3%.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 15 – DISCONTINUED OPERATIONS

On February 25, 2019, in accordance with the provisions of the U.K. Insolvency Act 1986 and as approved by the boards of directors of the U.K. Subsidiaries, insolvency practitioners from KPMG were appointed as Administrators for the U.K. Subsidiaries. The effect of the U.K. Subsidiaries’ entry into administration was to place their management, affairs, business and property of the U.K. Subsidiaries under the direct control of the Administrators. Accordingly, the Company deconsolidated the U.K. Subsidiaries, which comprised the U.K. reportable operating segment, as of February 25, 2019 and ~~are~~ classified them as Discontinued Operations for all periods presented.

Revenue and expenses related to discontinued operations included activity prior to the deconsolidation of the U.K. Subsidiaries effective February 25, 2019. For the nine months ended September 30, 2019, "Loss on disposition" of $39.4 million included the non-cash effect of eliminating assets and liabilities of the U.K. Subsidiaries as of the date of deconsolidation, as well as the effect of cumulative currency exchange rate differences on the U.S. investment in the U.K.

In connection with the disposition of the U.K. Subsidiaries, the U.S. entity that owned the Company's interests in the U.K. Subsidiaries recognized a loss on investment. This loss resulted in an estimated U.S. federal and state income tax benefit of $46.0 million, which will be available to offset the Company's future U.S. federal and state income tax obligations. During the three months ended September 30, 2019, the Company revised the estimate of the tax basis in the U.K. Subsidiaries, resulting in a $0.6 million reduction in the income tax benefit initially recorded in the first quarter of 2019.

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


	Three Months Ended March 31,							Three Months Ended September 30,							Nine Months Ended September 30, 2019
(in thousands)	2019⁽¹⁾			2018
								2019			2018				2019⁽¹⁾			2018
Revenue	$	6,957		$	10,915			$	—		$	13,522			$	6,957		$	36,251
Provision for losses	1,703			4,148				—			6,831				1,703			16,618
Net revenue	5,254			6,767				—			6,691				5,254			19,633

Cost of providing services
Office	246			528				—			416				246			1,490
Other costs of providing services	61			969				—			120				61			1,213
Advertising	775			1,871				—			2,765				775			7,077
Total cost of providing services	1,082			3,368				—			3,301				1,082			9,780
Gross margin	4,172			3,399				—			3,390				4,172			9,853
Operating expense (income)
Corporate, district and other	3,810			5,025
Corporate, district and other expenses								—			7,690				3,810			18,390
Interest income	(4		)	(5		)		—			(7		)		(4		)	(19		)
Loss on disposition								—			—				39,414			—
Total operating expense	3,806			5,020				—			7,683				43,220			18,371
Income (loss) from operations of discontinued operations	366			(1,621		)
Gain on disposal of discontinued operations, net of estimated income tax benefit of $47,423	8,009			—
Income from discontinued operations	$	8,375		$	(1,621	)
Pre-tax loss from operations of discontinued operations								—			(4,293		)		(39,048		)	(8,518		)
Income tax expense (benefit) related to disposition								598			139				(45,991		)	278
Net (loss) income from discontinued operations								$	(598	)	$	(4,432	)	��	$	6,943		$	(8,796	)
(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.							(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table presents the aggregate carrying amounts of the assets and liabilities of the U.K. ~~Subsidiaries:~~Subsidiaries (in thousands):


(in thousands)	March 31, 2019		December 31, 2018
						September 30, 2019		December 31, 2018
ASSETS
Cash	$	—	$	9,859		$	—	$	9,859
Restricted cash	—		3,384			—		3,384
Gross loans receivable	—		25,256			—		25,256
Less: allowance for loan losses	—		(5,387		)	—		(5,387		)
Loans receivable, net	—		19,869			—		19,869
Prepaid expenses and other	—		1,482			—		1,482
Other	—		267			—		267
Total assets classified as discontinued operations in the Condensed Consolidated Balance Sheets	$	—	$	34,861		$	—	$	34,861
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES						LIABILITIES
Accounts payable and accrued liabilities	$	—	$	8,136		$	—	$	8,136
Deferred revenue	—		180			—		180
Accrued interest	—		(5		)	—		(5		)
Deferred rent	—		149			—		149
Other long-term liabilities	—		422			—		422
Total liabilities classified as discontinued operations in the Condensed Consolidated Balance Sheets	$	—	$	8,882		$	—	$	8,882

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


	Three Months Ended March 31,						Nine Months Ended September 30,
(in thousands)	2019⁽¹⁾			2018
Net cash (used in) / provided by discontinued operating activities	$	(504	)	$	1,411
							2019⁽¹⁾			2018
Net cash (used in) provided by discontinued operating activities							$	(504	)	$	5,562
Net cash used in discontinued investing activities	(14,213		)	(3,782		)	(14,213		)	(24,481		)
Net cash used in discontinued financing activities	—			—			—			—
(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.							(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.

NOTE 16 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In August 2018, CGHC issued $690.0 million of 8.25% Senior Secured Notes due September 1, 2025. The proceeds from issuance of the 8.25% Senior Secured Notes were used to extinguish the February and November 2017 12.00% Senior Secured Notes due March 1, 2022. The redemption was conducted pursuant to the indenture governing the 8.25% Senior Secured Notes. See ~~Note 5, "Long-Term Debt," for additional details.~~

In August 2018, CURO Canada Receivables Limited Partnership, a newly created, bankruptcy-remote special purpose vehicle (the "Canada SPV Borrower") and a wholly-owned subsidiary, entered into a four-year revolving credit facility with Waterfall Asset Management, LLC that provided for C$175.0 million of initial borrowing capacity and the ability to expand such capacity up to C$250.0 million ("Non-Recourse Canada SPV Facility"). See ~~Note 5. "Long-Term Debt"~~ ~~for additional details.~~

In March 2018, CFTC redeemed $77.5 million of the 12.00% Senior Secured Notes at a price equal to 112.00% of the principal amount plus accrued and unpaid interest to the date of redemption. The redemption was conducted pursuant to the indenture governing the 12.00% Senior Secured Notes, dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the Indenture, CFTC used a portion of the cash proceeds from the Company's initial public offering, to redeem the 12.00% Senior Secured Notes.

In November 2017, CFTC issued $135.0 million aggregate principal amount of additional 12.00% Senior Secured Notes in a private offering exempt from the registration requirements of the Securities Act (the "Additional Notes Offering"). CFTC used the proceeds from the Additional Notes Offering, together with available cash, to (i) pay a cash dividend, in an amount of $140.0 million to the Company, CFTC’s sole stockholder, and ultimately the Company's stockholders and (ii) pay fees, expenses, premiums and accrued interest in connection with the Additional Notes Offering. CFTC received the consent of the holders of a majority of

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

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

~~(unaudited)~~

the outstanding principal amount of the current Senior Secured Notes to a one-time waiver with respect to the restrictions contained in Section 5.07(a) of the indenture governing the 12.00% Senior Secured Notes to permit the dividend.

In February 2017, CFTC issued $470.0 million aggregate principal amount 12.00% Senior Secured Notes, the proceeds of which were used together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of CURO Intermediate, (ii) redeem the outstanding 12.00% Senior Cash Pay Notes due 2017 and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. CFTC sold the Senior Secured Notes to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”) or outside the U.S. to non-U.S. persons in compliance with Regulation S of the Securities Act.

The following condensed consolidating ~~financing~~financial information which has been prepared in accordance with the requirements for presentation of Rule 3-10(d) of Regulation S-X promulgated under the Securities Act, presents the condensed consolidating financial informationis presented separately for:


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

~~(ii)~~

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


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


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


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


(v)	Consolidating and eliminating entries representing adjustments to:


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


b.	eliminate the investments in subsidiaries;


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

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

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Condensed Consolidating Balance Sheets


	March 31, 2019																September 30, 2019
(dollars in thousands)	Subsidiary Guarantors			Subsidiary Non-Guarantors		Canada SPV			CURO			Eliminations			CURO Consolidated		Subsidiary Guarantors			Subsidiary Non-Guarantors		Canada SPV			CURO			Eliminations			CURO Consolidated
Assets:
Cash	$	62,729		$	20,130	$	—		$	—		$	—		$	82,859	$	40,683		$	21,524	$	—		$	—		$	—		$	62,207
Restricted cash	15,775			3,084		15,460			—			—			34,319		13,773			3,084		21,897			—			—			38,754
Loans receivable, net	254,622			46,403		157,868			—			—			458,893		293,711			49,362		206,157			—			—			549,230
Right of use asset - operating leases	74,840			60,565		—			—			—			135,405		76,165			42,095		—			—			—			118,260
Deferred income taxes	(6,445		)	5,014		—			6,445			—			5,014		(9,086		)	—		—			10,932			—			1,846
Income taxes receivable	—			—		—			40,872			—			40,872		(960		)	3,974		—			20,952			—			23,966
Prepaid expenses and other	30,459			6,052		—			—			—			36,511		24,148			8,083		(3		)	—			—			32,228
Property and equipment, net	46,360			28,900		—			—			—			75,260		42,937			27,444		—			—			—			70,381
Goodwill	91,131			28,747		—			—			—			119,878		91,131			28,979		—			—			—			120,110
Other intangibles, net	8,165			21,803		—			—			—			29,968		10,687			21,979		—			—			—			32,666
Intercompany receivable	74,174			—		—			—			(74,174		)	—		112,413			—		—			—			(112,413		)	—
Investment in subsidiaries	—			—		—			(36,075		)	36,075			—		—			—		—			37,131			(37,131		)	—
Other	14,473			678		—			—			—			15,151		17,805			679		—			—			—			18,484
Total assets	$	666,283		$	221,376	$	173,328		$	11,242		$	(38,099	)	$	1,034,130	$	713,407		$	207,203	$	228,051		$	69,015		$	(149,544	)	$	1,068,132
Liabilities and Stockholders' equity:
Accounts payable and accrued liabilities	$	39,420		$	2,886	$	9,717		$	19		$	—		$	52,042	$	48,657		$	6,773	$	7,259		$	996		$	—		$	63,685
Deferred revenue	4,574			3,233		44			—			—			7,851		5,639			3,369		44			—			—			9,052
Lease liability - operating leases	82,667			60,745		—			—			—			143,412		83,891			42,157		—			—			—			126,048
Income taxes payable	(26,737		)	4,425		—			26,737			—			4,425		(4,030		)	—		—			4,030			—			—
Accrued interest	2			—		847			4,744			—			5,593		104			—		777			4,744			—			5,625
Payable to CURO Holdings Corp.	738,730			—		—			(738,730		)	—			—		657,895			—		—			(657,895		)	—			—
CSO liability for losses	8,662			—		—			—			—			8,662		10,249			—		—			—			—			10,249
Long-term debt (excluding current maturities)	—			—		88,915			677,153			—			766,068
Subordinated shareholder debt	—			2,243		—			—			—			2,243
Debt																	25,000			—		102,483			677,924			—			805,407
Intercompany payable	—			337		73,837			—			(74,174		)	—		—			18,742		93,671			—			(112,413		)	—
Other liabilities	5,942			744		—			—			—			6,686		8,114			480		—			—			—			8,594
Deferred tax liabilities	(4,171		)	—		—			4,575			—			404		(4,171		)	4,427		—			4,171			—			4,427
Total liabilities	849,089			74,613		173,360			(25,502		)	(74,174		)	997,386		831,348			75,948		204,234			33,970			(112,413		)	1,033,087
Stockholder’s equity	(182,806		)	146,763		(32		)	36,744			36,075			36,744
Total liabilities and stockholder’s equity	$	666,283		$	221,376	$	173,328		$	11,242		$	(38,099	)	$	1,034,130
Stockholders' equity																	(117,941		)	131,255		23,817			35,045			(37,131		)	35,045
Total liabilities and stockholders' equity																	$	713,407		$	207,203	$	228,051		$	69,015		$	(149,544	)	$	1,068,132

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	December 31, 2018																	December 31, 2018
(dollars in thousands)	Subsidiary Guarantors			Subsidiary Non-Guarantors		Canada SPV			CURO			Eliminations			CURO Consolidated			Subsidiary Guarantors			Subsidiary Non-Guarantors		Canada SPV			CURO			Eliminations			CURO Consolidated
Assets:
Cash	$	42,403		$	18,772	$	—		$	—		$	—		$	61,175		$	42,403		$	18,772	$	—		$	—		$	—		$	61,175
Restricted cash	9,993			2,606		12,840			—			—			25,439			9,993			2,606		12,840			—			—			25,439
Loans receivable, net	304,542			56,805		136,187			—			—			497,534			304,542			56,805		136,187			—			—			497,534
Deferred income taxes	—			1,534		—			—			—			1,534			—			1,534		—			—			—			1,534
Income taxes receivable	7,190			—		—			9,551			—			16,741			7,190			—		—			9,551			—			16,741
Prepaid expenses and other	37,866			5,722		—			—			—			43,588			37,866			5,722		—			—			—			43,588
Property and equipment, net	47,918			28,832		—			—			—			76,750			47,918			28,832		—			—			—			76,750
Goodwill	91,131			28,150		—			—			—			119,281			91,131			28,150		—			—			—			119,281
Other intangibles, net	8,418			21,366		—			—			—			29,784			8,418			21,366		—			—			—			29,784
Intercompany receivable	77,009			—		—			—			(77,009		)	—			77,009			—		—			—			(77,009		)	—
Investment in subsidiaries	—			—		—			(101,665		)	101,665			—			—			—		—			(101,665		)	101,665			—
Other	12,253			677		—			—			—			12,930			12,253			677		—			—			—			12,930
Assets from discontinued operations	—			2,406		—			—			32,455			34,861			—			2,406		—			—			32,455			34,861
Total assets	$	638,723		$	166,870	$	149,027		$	(92,114	)	$	57,111		$	919,617		$	638,723		$	166,870	$	149,027		$	(92,114	)	$	57,111		$	919,617
Liabilities and Stockholder's equity:
Accounts payable and accrued liabilities	$	38,240		$	5,734	$	4,980		$	192		$	—		$	49,146		$	38,240		$	5,734	$	4,980		$	192		$	—		$	49,146
Deferred revenue	5,981			3,462		40			—			—			9,483			5,981			3,462		40			—			—			9,483
Income taxes payable	—			1,579		—			—			—			1,579			—			1,579		—			—			—			1,579
Accrued interest	149			—		831			19,924			—			20,904			149			—		831			19,924			—			20,904
Payable to CURO Holdings Corp.	768,345			—		—			(768,345		)	—			—			768,345			—		—			(768,345		)	—			—
CSO liability for losses	12,007			—		—			—			—			12,007			12,007			—		—			—			—			12,007
Deferred rent	9,559			1,292		—			—			—			10,851			9,559			1,292		—			—			—			10,851
Long-term debt	20,000			—		107,479			676,661			—			804,140
Debt																		20,000			—		107,479			676,661			—			804,140
Subordinated shareholder debt	—			2,196		—			—			—			2,196			—			2,196		—			—			—			2,196
Intercompany payable	—			224		44,330			—			(44,554		)	—			—			224		44,330			—			(44,554		)	—
Other liabilities	4,967			833		—			—			—			5,800			4,967			833		—			—			—			5,800
Deferred tax liabilities	15,175			—		—			(1,445		)	—			13,730			15,175			—		—			(1,445		)	—			13,730
Liabilities from discontinued operations	—			8,882		—			—			—			8,882			—			8,882		—			—			—			8,882
Total liabilities	874,423			24,202		157,660			(73,013		)	(44,554		)	938,718			874,423			24,202		157,660			(73,013		)	(44,554		)	938,718
Stockholder’s equity	(235,700		)	142,668		(8,633		)	(19,101		)	101,665			(19,101		)
Total liabilities and stockholder’s equity	$	638,723		$	166,870	$	149,027		$	(92,114	)	$	57,111		$	919,617
Stockholders' equity																		(235,700		)	142,668		(8,633		)	(19,101		)	101,665			(19,101		)
Total liabilities and stockholders' equity																		$	638,723		$	166,870	$	149,027		$	(92,114	)	$	57,111		$	919,617

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Condensed Consolidating Statements of Operations


	Three Months Ended March 31, 2019																Three Months Ended September 30, 2019
(dollars in thousands)	Subsidiary Guarantors			Subsidiary Non-Guarantors			Canada SPV		CURO			Eliminations			CURO Consolidated		Subsidiary Guarantors			Subsidiary Non-Guarantors			Canada SPV		CURO			Eliminations			CURO Consolidated
Revenue	$	226,119		$	26,774		$	25,046	$	—		$	—		$	277,939	$	237,069		$	29,984		$	30,211	$	—		$	—		$	297,264
Provision for losses	84,980			4,099			13,306		—			—			102,385		102,997			7,191			13,679		—			—			123,867
Net revenue	141,139			22,675			11,740		—			—			175,554		134,072			22,793			16,532		—			—			173,397
Cost of providing services:
Salaries and benefits	19,951			8,750			—		—			—			28,701		18,301			9,161			—		—			—			27,462
Occupancy	8,010			6,227			—		—			—			14,237		8,249			5,787			—		—			—			14,036
Office	3,889			1,224			—		—			—			5,113		4,611			1,382			—		—			—			5,993
Other costs of providing services	13,132			1,088			—		—			—			14,220		11,475			1,368			—		—			—			12,843
Advertising	6,354			1,432			—		—			—			7,786		14,186			2,238			—		—			—			16,424
Total cost of providing services	51,336			18,721			—		—			—			70,057		56,822			19,936			—		—			—			76,758
Gross margin	89,803			3,954			11,740		—			—			105,497		77,250			2,857			16,532		—			—			96,639
Operating (income) expense:
Corporate, district and other	41,538			5,183			25		2,342			—			49,088
Operating expense (income) :
Corporate, district and other expenses																	29,930			5,296			472		2,967			—			38,665
Intercompany management fee	(3,403		)	3,395			8		—			—			—		(3,276		)	3,268			8		—			—			—
Interest expense	290			71			2,891		14,438			—			17,690		258			24			2,463		14,619			—			17,364
Loss from equity method investment																	1,384			—			—		—			—			1,384
Intercompany interest (income) expense	(1,071		)	1,071			—		—			—			—		(1,462		)	893			569		—			—			—
Total operating expense	37,354			9,720			2,924		16,780			—			66,778		26,834			9,481			3,512		17,586			—			57,413
Income (loss) from continuing operations before income taxes	52,449			(5,766		)	8,816		(16,780		)	—			38,719		50,416			(6,624		)	13,020		(17,586		)	—			39,226
Provision (benefit) for income tax expense	14,020			1,034			—		(5,008		)	—			10,046		13,700			1,986			—		(4,447		)	—			11,239
Net income (loss) from continuing operations	38,429			(6,800		)	8,816		(11,772		)	—			28,673		36,716			(8,610		)	13,020		(13,139		)	��			27,987
Net loss on discontinued operations	—			8,375			—		—			—			8,375		—			(598		)	—		—			—			(598		)
Net (loss) income	38,429			1,575			8,816		(11,772		)	—			37,048		36,716			(9,208		)	13,020		(13,139		)	—			27,389
Equity in net income (loss) of subsidiaries:
CFTC	—			—			—		48,820			(48,820		)	—		—			—			—		40,528			(40,528		)	—
Guarantor Subsidiaries	38,429			—			—		—			(38,429		)	—		36,716			—			—		—			(36,716		)	—
Non-Guarantor Subsidiaries	1,575			—			—		—			(1,575		)	—		(9,208		)	—			—		—			9,208			—
SPV Subs	8,816			—			—		—			(8,816		)	—		13,020			—			—		—			(13,020		)	—
Net income (loss) attributable to CURO	$	87,249		$	1,575		$	8,816	$	37,048		$	(97,640	)	$	37,048	$	77,244		$	(9,208	)	$	13,020	$	27,389		$	(81,056	)	$	27,389

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	Three Months Ended March 31, 2018																													Three Months Ended September 30, 2018
(dollars in thousands)	CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs		Eliminations			CFTC Consolidated			CURO			Eliminations			CURO Consolidated			CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs		Eliminations			CFTC Consolidated			CURO			Eliminations		CURO Consolidated
Revenue	$	—		$	—		$	128,408		$	46,250		$	76,185	$	—		$	250,843		$	—		$	—		$	250,843		$	—		$	—		$	141,385		$	39,814		$	88,283	$	—		$	269,482		$	—		$	—	$	269,482
Provision for losses	—			—			35,769			12,550			28,564		—			76,883			—			—			76,883			—			—			58,514			5,860			63,318		—			127,692			—			—		127,692
Net revenue	—			—			92,639			33,700			47,621		—			173,960			—			—			173,960			—			—			82,871			33,954			24,965		—			141,790			—			—		141,790
Cost of providing services:
Salaries and benefits	—			—			18,018			8,900			—		—			26,918			—			—			26,918			—			—			17,579			8,936			—		—			26,515			—			—		26,515
Occupancy	—			—			7,646			5,781			—		—			13,427			—			—			13,427			—			—			7,875			5,647			—		—			13,522			—			—		13,522
Office	—			—			5,582			871			—		—			6,453			—			—			6,453			—			—			5,586			1,740			—		—			7,326			—			—		7,326
Other store operating expenses	—			—			12,030			920			481		—			13,431			—			—			13,431			—			—			10,650			1,244			590		—			12,484			—			—		12,484
Advertising	—			—			5,159			2,726			—		—			7,885			—			—			7,885			—			—			17,632			3,717			—		—			21,349			—			—		21,349
Total cost of providing services	—			—			48,435			19,198			481		—			68,114			—			—			68,114			—			—			59,322			21,284			590		—			81,196			—			—		81,196
Gross Margin	—			—			44,204			14,502			47,140		—			105,846			—			—			105,846			—			—			23,549			12,670			24,375		—			60,594			—			—		60,594
Operating (income) expense:
Corporate, district and other	448			7			27,992			4,897			30		—			33,374			2,055			—			35,429
Corporate, district and other expenses																														(886		)	48			20,663			5,134			60		—			25,019			2,476			—		27,495
Intercompany management fee	—			—			(6,443		)	3,035			3,408		—			—			—			—			—			—			—			(6,761		)	2,516			4,245		—			—			—			—		—
Interest expense	18,322			—			(112		)	57			4,087		—			22,354			—			—			22,354			12,503			—			(149		)	(38		)	5,276		—			17,592			5,811			—		23,403
Intercompany interest (income) expense	—			(801		)	(79		)	880			—		—			—			—			—			—			—			(916		)	(455		)	1,371			—		—			—			—			—		—
Loss on extinguishment of debt	11,683			—			—			—			—		—			11,683			—			—			11,683			69,200			—			—			—			—		—			69,200			—			—		69,200
Total operating expense	30,453			(794		)	21,358			8,869			7,525		—			67,411			2,055			—			69,466			80,817			(868		)	13,298			8,983			9,581		—			111,811			8,287			—		120,098
(Loss) income from continuing operations before income taxes	(30,453		)	794			22,846			5,633			39,615		—			38,435			(2,055		)	—			36,380			(80,817		)	868			10,251			3,687			14,794		—			(51,217		)	(8,287		)	—		(59,504		)
(Benefit) provision for income tax expense	(6,841		)	18,497			(1,585		)	1,929			—		—			12,000			(533		)	—			11,467			(17,930		)	6,803			(2,177		)	(1,508		)	—		—			(14,812		)	(2,102		)	—		(16,914		)
Net (loss) income from continuing operations	(23,612		)	(17,703		)	24,431			3,704			39,615		—			26,435			(1,522		)	—			24,913			(62,887		)	(5,935		)	12,428			5,195			14,794		—			(36,405		)	(6,185		)	—		(42,590		)
Net loss from discontinued operations	—			—			—			(1,621		)	—		—			(1,621		)	—			—			(1,621		)	—			—			—			(4,432		)	—		—			(4,432		)	—			—		(4,432		)
Net (loss) income	(23,612		)	(17,703		)	24,431			2,083			39,615		—			24,814			(1,522		)	—			23,292			(62,887		)	(5,935		)	12,428			763			14,794		—			(40,837		)	(6,185		)	—		(47,022		)
Equity in net income (loss) of subsidiaries:
CFTC	—			—			—			—			—		—			—			24,814			(24,814		)	—			—			—			—			—			—		—			—			(40,837		)	40,837		—
CURO Intermediate	(17,703		)	—			—			—			—		17,703			—			—			—			—			(5,935		)	—			—			—			—		5,935			—			—			—		—
Guarantor Subsidiaries	24,431			—			—			—			—		(24,431		)	—			—			—			—			12,428			—			—			—			—		(12,428		)	—			—			—		—
Non-Guarantor Subsidiaries	3,704			—			—			—			—		(3,704		)	—			—			—			—			763			—			—			—			—		(763		)	—			—			—		—
SPV Subs	39,615			—			—			—			—		(39,615		)	—			—			—			—			14,794			—			—			—			—		(14,794		)	—			—			—		—
Net income (loss) attributable to CURO	$	26,435		$	(17,703	)	$	24,431		$	2,083		$	39,615	$	(50,047	)	$	24,814		$	23,292		$	(24,814	)	$	23,292
Net (loss) income attributable to CURO																														$	(40,837	)	$	(5,935	)	$	12,428		$	763		$	14,794	$	(22,050	)	$	(40,837	)	$	(47,022	)	$	40,837	$	(47,022	)

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)



	Nine Months Ended September 30, 2019
(dollars in thousands)	Subsidiary Guarantors			Subsidiary Non-Guarantors			Canada SPV			CURO			Eliminations			CURO Consolidated
Revenue	$	673,234		$	84,920		$	81,349		$	—		$	—		$	839,503
Provision for losses	280,529			17,634			40,099			—			—			338,262
Net revenue	392,705			67,286			41,250			—			—			501,241
Cost of providing services:
Salaries and benefits	55,675			26,574			—			—			—			82,249
Occupancy	24,292			17,913			—			—			—			42,205
Office	12,504			4,059			—			—			—			16,563
Other costs of providing services	36,395			3,522			—			—			—			39,917
Advertising	31,719			5,271			—			—			—			36,990
Total cost of providing services	160,585			57,339			—			—			—			217,924
Gross margin	232,120			9,947			41,250			—			—			283,317
Operating expense (income):
Corporate, district and other expenses	98,486			16,900			(283		)	7,940			—			123,043
Intercompany management fee	(9,576		)	9,553			23			—			—			—
Interest expense	575			103			7,728			43,671			—			52,077
Loss from equity method investment	5,132			—			—			—			—			5,132
Intercompany interest (income) expense	(3,855		)	2,663			1,192			—			—			—
Total operating expense	90,762			29,219			8,660			51,611			—			180,252
Income (loss) from continuing operations before income taxes	141,358			(19,272		)	32,590			(51,611		)	—			103,065
Provision (benefit) for income tax expense	37,309			4,115			—			(12,686		)	—			28,738
Net income (loss) from continuing operations	104,049			(23,387		)	32,590			(38,925		)	—			74,327
Net loss on discontinued operations	—			6,943			—			—			—			6,943
Net income (loss)	104,049			(16,444		)	32,590			(38,925		)	—			81,270
Equity in net income (loss) of subsidiaries:
CFTC	—			—			—			120,195			(120,195		)	—
Guarantor Subsidiaries	104,049			—			—			—			(104,049		)	—
Non-Guarantor Subsidiaries	(16,444		)	—			—			—			16,444			—
SPV Subs	32,590			—			—			—			(32,590		)	—
Net income (loss) attributable to CURO	$	224,244		$	(16,444	)	$	32,590		$	81,270		$	(240,390	)	$	81,270

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)



	Nine Months Ended September 30, 2018
(dollars in thousands)	CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs		Eliminations			CFTC Consolidated			CURO			Eliminations			CURO Consolidated
Revenue	$	—		$	—		$	387,827		$	133,107		$	236,560	$	—		$	757,494		$	—		$	—		$	757,494
Provision for losses	—			—			140,603			32,770			117,549		—			290,922			—			—			290,922
Net revenue	—			—			247,224			100,337			119,011		—			466,572			—			—			466,572
Cost of providing services:
Salaries and benefits	—			—			53,667			26,674			—		—			80,341			—			—			80,341
Occupancy	—			—			23,164			17,105			—		—			40,269			—			—			40,269
Office	—			—			15,416			3,895			—		—			19,311			—			—			19,311
Other store operating expenses	—			—			33,934			3,045			1,537		—			38,516			—			—			38,516
Advertising	—			—			35,200			9,147			—		—			44,347			—			—			44,347
Total cost of providing services	—			—			161,381			59,866			1,537		—			222,784			—			—			222,784
Gross Margin	—			—			85,843			40,471			117,474		—			243,788			—			—			243,788
Operating expense (income):
Corporate, district and other expenses	20			73			74,038			14,789			137		—			89,057			6,847			—			95,904
Intercompany management fee	—			—			(19,718		)	8,425			11,293		—			—			—			—			—
Interest expense	47,410			—			(321		)	26			13,303		—			60,418			5,811			—			66,229
Intercompany interest (income) expense	—			(2,700		)	(526		)	3,226			—		—			—			—			—			—
Loss on extinguishment of debt	80,883			—			—			—			—		—			80,883			—			—			80,883
Total operating expense	128,313			(2,627		)	53,473			26,466			24,733		—			230,358			12,658			—			243,016
(Loss) income from continuing operations before income taxes	(128,313		)	2,627			32,370			14,005			92,741		—			13,430			(12,658		)	—			772
(Benefit) provision for income tax expense	(30,189		)	38,830			(8,220		)	2,521			—		—			2,942			(3,211		)	—			(269		)
Net (loss) income from continuing operations	(98,124		)	(36,203		)	40,590			11,484			92,741		—			10,488			(9,447		)	—			1,041
Net loss from discontinued operations	—			—			—			(8,796		)	—		—			(8,796		)	—			—			(8,796		)
Net (loss) income	(98,124		)	(36,203		)	40,590			2,688			92,741		—			1,692			(9,447		)	—			(7,755		)
Equity in net (loss) income of subsidiaries:
CFTC	—			—			—			—			—		—			—			1,692			(1,692		)	—
CURO Intermediate	(36,203		)	—			—			—			—		36,203			—			—			—			—
Guarantor Subsidiaries	40,590			—			—			—			—		(40,590		)	—			—			—			—
Non-Guarantor Subsidiaries	2,688			—			—			—			—		(2,688		)	—			—			—			—
SPV Subs	92,741			—			—			—			—		(92,741		)	—			—			—			—
Net income (loss) attributable to CURO	$	1,692		$	(36,203	)	$	40,590		$	2,688		$	92,741	$	(99,816	)	$	1,692		$	(7,755	)	$	(1,692	)	$	(7,755	)

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Condensed Consolidating Statements of Cash Flows


	Three Months Ended March 31, 2019																		Nine Months Ended September 30, 2019
(dollars in thousands)	Subsidiary Guarantors			Subsidiary Non-Guarantors			Canada SPV			CURO			Eliminations			CURO Consolidated			Subsidiary Guarantors			Subsidiary Non-Guarantors			Canada SPV			CURO			Eliminations			CURO Consolidated
Cash flows from operating activities
Net cash provided by (used in) continuing operating activities	$	88,291		$	(1,574	)	$	53,969		$	67		$	246		$	140,999
Cash flows from operating activities:
Net cash provided by continuing operating activities																			$	273,564		$	17,201		$	119,898		$	52,311		$	1,319		$	464,293
Net cash used in discontinued operating activities	—			(504		)	—			—			—			(504		)	—			(504		)	—			—			—			(504		)
Cash flows from investing activities:
Purchase of property, equipment and software	(2,430		)	(689		)	—			—			—			(3,119		)	(7,351		)	(1,316		)	—			—			—			(8,667		)
Investment in Cognical Holdings	(1,568		)	—			—			—			—			(1,568		)
Originations of loans, net	(38,226		)	3,652			(30,373		)	—			—			(64,947		)	(261,073		)	(11,042		)	(102,238		)	—			—			(374,353		)
Net cash (used in) provided by continuing investing activities	(42,224		)	2,963			(30,373		)	—			—			(69,634		)
Investment in Zibby																			(8,168		)	—			—			—			—			(8,168		)
Net cash used in continuing investing activities																			(276,592		)	(12,358		)	(102,238		)	—			—			(391,188		)
Net cash used in discontinued investing activities	—			(14,213		)	—			—			—			(14,213		)	—			(14,213		)	—			—			—			(14,213		)
Cash flows from financing activities:
Proceeds from Non-Recourse Canada SPV facility	—			—			3,762			—			—			3,762			—			—			15,992			—			—			15,992
Payments on Non-Recourse Canada SPV facility	—			—			(24,831		)	—			—			(24,831		)	—			—			(24,835		)	—			—			(24,835		)
Proceeds from revolving credit facilities	15,000			15,478			—			—			—			30,478
Payments on revolving credit facilities	(35,000		)	(15,478		)	—			—			—			(50,478		)
Proceeds from credit facilities																			120,000			59,811			—			—			—			179,811
Payments on credit facilities																			(115,000		)	(59,811		)	—			—			—			(174,811		)
Payments on subordinated stockholder debt																			—			(2,252		)	—			—			—			(2,252		)
Payments to net share settle RSUs	—			—			—			(37		)	—			(37		)	—			—			—			(110		)	—			(110		)
Proceeds from exercise of stock options	40			—			—			—			—			40			87			—			—			—			—			87
Debt issuance costs paid	—			—			(169		)	(30		)	—			(199		)	—			—			(169		)	(29		)	—			(198		)
Repurchase of common stock																			—			—			—			(52,172		)	—			(52,172		)
Net cash used in provided by financing activities ⁽¹⁾	(19,960		)	—			(21,238		)	(67		)	—			(41,265		)	5,087			(2,252		)	(9,012		)	(52,311		)	—			(58,488		)

Effect of exchange rate changes on cash and restricted cash	—			1,922			262			—			(246		)	1,938			—			2,114			409			—			(1,319		)	1,204
Net increase (decrease) in cash and restricted cash	26,107			(11,406		)	2,620			—			—			17,321			2,059			(10,012		)	9,057			—			—			1,104
Cash and restricted cash at beginning of period	52,397			34,620			12,840			—			—			99,857			52,397			34,620			12,840			—			—			99,857
Cash at end of period	$	78,504		$	23,214		$	15,460		$	—		$	—		$	117,178		$	54,456		$	24,608		$	21,897		$	—		$	—		$	100,961
(1) Financing activities include continuing operations only and were not impacted by discontinued operations

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	Three Months Ended March 31, 2018																										Nine Months Ended September 30, 2018
(dollars in thousands)	CFTC			CURO Intermediate		Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs			Eliminations			CFTC Consolidated			CURO			CURO Consolidated			CFTC			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs			Eliminations			CFTC Consolidated			CURO			CURO Consolidated
Cash flows from operating activities
Net cash provided (used) in continuing operating activities	$	87,829		$	—	$	(5,956	)	$	15,391		$	29,225		$	9,469		$	135,958		$	(13,215	)	$	122,743
Cash flows from operating activities:
Net cash provided by (used in) continuing operating activities																											$	628,468		$	167,265		$	(5,013	)	$	221,222		$	22,344		$	1,034,286		$	(677,207	)	$	357,079
Net cash provided by (used in) discontinued operating activities	—			—		—			6,958			—			(5,547		)	1,411			—			1,411			—			—			23,737			—			(18,175		)	5,562			—			5,562
Net cash provided by (used in) operating activities																											628,468			167,265			18,724			221,222			4,169			1,039,848			(677,207		)	362,641
Cash flows from investing activities:
Purchase of property, equipment and software	—			—		(788		)	(754		)	—			—			(1,542		)	—			(1,542		)	—			(6,466		)	(1,564		)	—			—			(8,030		)	—			(8,030		)
Originations of loans, net	—			—		(28,277		)	(13,767		)	(14,309		)	—			(56,353		)	—			(56,353		)	—			(162,031		)	(558		)	(249,846		)	—			(412,435		)	—			(412,435		)
Investment in Cognical Holdings	(958		)	—		—			—			—			—			(958		)	—			(958		)
Net cash (used in) provided by continuing operating activities	(958		)	—		(29,065		)	(14,521		)	(14,309		)	—			(58,853		)	—			(58,853		)
Net cash provided by (used in) discontinued investing activities	—			—		—			(3,782		)	—			—			(3,782		)	—			(3,782		)
Investment in Zibby																											(958		)	—			—			—			—			(958		)	—			(958		)
Net cash used in continuing investing activities																											(958		)	(168,497		)	(2,122		)	(249,846		)	—			(421,423		)	—			(421,423		)
Net cash used in discontinued investing activities																											—			—			(24,481		)	—			—			(24,481		)	—			(24,481		)
Net cash used in investing activities																											(958		)	(168,497		)	(26,603		)	(249,846		)	—			(445,904		)	—			(445,904		)
Cash flows from financing activities:
Proceeds from Non-Recourse U.S. SPV facility	—			—		—			—			3,000			—			3,000			—			3,000
Payments on Non-Recourse U.S. SPV facility	—			—		—			—			(12,519		)	—			(12,519		)	—			(12,519		)
Proceeds from revolving credit facilities	10,000			—		—			—			—			—			10,000			—			10,000
Payments on revolving credit facilities	(10,000		)	—		—			—			—			—			(10,000		)	—			(10,000		)
Proceeds from Non-Recourse U.S. and Canada SPV facilities																											—			—			—			106,949			—			106,949			—			106,949
Payments on Non-Recourse U.S. and Canada SPV facilities																											—			—			—			(61,590		)	—			(61,590		)	—			(61,590		)
Proceeds from credit facilities																											39,000			—			26,169			—			—			65,169			—			65,169
Payments on credit facilities																											(10,000		)	—			(26,169		)	—			—			(36,169		)	—			(36,169		)
Net proceeds from issuance of common stock	—			—		—			—			—			—			—			13,135			13,135			11,549			—			—			—			—			11,549			—			11,549
Proceeds from exercise of stock options																											408			—			—			—			—			408			—			408
Payments on 12.00% Senior Secured Notes	(77,500		)	—		—			—			—			—			(77,500		)	—			(77,500		)	(605,000		)	—			—			—			—			(605,000		)	—			(605,000		)
Payments of call premiums from early debt extinguishments	(9,300		)	—		—			—			—			—			(9,300		)	—			(9,300		)	(63,350		)	—			—			—			—			(63,350		)	—			(63,350		)
Debt issuance costs paid	(71		)	—		—			—			—			—			(71		)	—			(71		)	(117		)	—			—			(4,527		)	—			(4,644		)	(12,873		)	(17,517		)
Net cash (used in) provided by financing activities⁽¹⁾	(86,871		)	—		—			—			(9,519		)	—			(96,390		)	13,135			(83,255		)	(627,510		)	—			—			40,832			—			(586,678		)	677,127			90,449

Effect of exchange rate changes on cash	—			—		—			(438		)	—			(3,922		)	(4,360		)	—			(4,360		)	—			—			61			28			(4,169		)	(4,080		)	—			(4,080		)
Net (decrease) increase in cash and restricted cash	—			—		(35,021		)	3,608			5,397			—			(26,016		)	(80		)	(26,096		)	—			(1,232		)	(7,818		)	12,236			—			3,186			(80		)	3,106
Cash and restricted cash at beginning of period	—			—		119,056			48,484			6,871			—			174,411			80			174,491			—			119,056			48,484			6,871			—			174,411			80			174,491
Cash and restricted cash at end of period	$	—		$	—	$	84,035		$	52,092		$	12,268		$	—		$	148,395		$	—		$	148,395		—			117,824			40,666			19,107			—			177,597			—			177,597
(1) Financing activities included continuing operations only and were not impacted by discontinued.
Less: Cash and restricted cash at end of period of Discontinued Operations																											—			—			11,303			—			—			11,303			—			11,303
Cash and restricted cash at end of period of Continuing Operations																											$	—		$	117,824		$	29,363		$	19,107		$	—		$	166,294		$	—		$	166,294
(1) Financing activities include continuing operations only and were not impacted by discontinued operations.																											(1) Financing activities include continuing operations only and were not impacted by discontinued operations.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 17 – SHARE REPURCHASE PROGRAM

In April 2019, the Company's Board of Directors authorized a share repurchase program providing for the repurchase of up to $50.0 million of its common stock. The repurchase program, which commenced June 2019, will continue until completed or terminated. CURO expects the purchases to be made from time-to-time in the open market, in privately negotiated transactions, or both, at the Company's discretion and subject to market conditions and other factors. Any repurchased shares will be available for use in connection with equity plans or other corporate purposes.

Under this program, the Company repurchased 2,156,241 shares of common stock through September 30, 2019. The table below summarizes share repurchase activity during the three and nine months ended September 30, 2019 (in thousands, except for per share amounts and number of share amounts):



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Total number of shares repurchased	1,912,041		2,156,241
Average price paid per share	$	12.27	$	12.04
Total value of shares repurchased	$	23,455	$	25,962

Total authorized repurchase amount for the period presented	$	47,493	$	50,000
Total value of shares repurchased	23,455		25,962
Total remaining authorized repurchase amount	$	24,038	$	24,038

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

NOTE 1718 – SUBSEQUENT EVENTS

Share Repurchase Program

~~In April~~The Company repurchased 868,100 shares from October 1, 2019 ~~the Company's Board~~through November 1, 2019 (in thousands, except per share amounts and number of ~~Directors authorized a~~ share repurchase program providing for the repurchase of up to $50.0 million of its common stock. The repurchase program will continue until completed or terminated. CURO expects the purchases to be made from time-to-time in the open market, in privately negotiated transactions, or both, at the Company's discretion and subject to market conditions and other factors. Any repurchased shares will be available for use in connection with equity plans or other corporate purposes.amounts):

~~Cognical Investment~~

In April 2019, as part of a broader capital structure reorganization, the Company made an additional $2.8 million cash investment in Cognical Holdings, which operates under the Zibby brand. This funding round is expected to remain open through June 11, 2019. As a result of its investments in Cognical as well as Cognical’s overall reorganization, the Company expects to own a 30% to 35% interest in its outstanding shares, dependent upon total new capital contributed by other investors. When the funding round is completed, the Company expects to have financial information to determine the fair market value of its investments in Cognical Holdings.



	October 1 - November 1
	2019
Total number of shares repurchased	868,100
Average price paid per share	$	13.03
Total value of shares repurchased	$	11,311

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 and certain factors that may affect future results, including company-specific, economic and industry-wide factors, should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying notes included herein. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Except as required by applicable law and regulations, we undertake no obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Please see ~~the sections titled~~ “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commissions (the "SEC") on March 18, 2019 ("the "2018 Form 10-K") for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a growth-oriented, technology-enabled, highly-diversified, multi-channel and multi-product consumer finance company serving a wide range of underbanked consumers in the United States ("U.S."), Canada and, through February 25, 2019, the United Kingdom ("U.K.").

History

CURO was founded in 1997 to meet the growing needs of underbanked consumers looking for access to credit. With more than 20 years of experience, we seek to offer a variety of convenient, easily-accessible financial and loan services in all of our markets.

CURO Financial Technologies Corp., previously known as Speedy Cash Holdings Corp. ("CFTC"), was incorporated in Delaware in July 2008. CURO Group Holdings Corp., previously known as Speedy Group Holdings Corp., was incorporated in Delaware in 2013 as the parent company of CFTC. 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. The term "CFTC" refers to CURO Financial Technologies Corp., our wholly-owned subsidiary, and its directly and indirectly owned subsidiaries as a consolidated entity, except where otherwise stated.

Our growth has been fueled by acquisitions in the U.S. and Canada, as well as organically, including the launch of new brands. Recent brand launches include the March 2016 launch of LendDirect, a primarily online Installment and Open-End brand in Alberta, Canada, ~~and~~ the June 2017 launch of Avio Credit, an online Installment and Open-End Loan brand in the U.S. market that is currently available in 11 ~~states.~~

states, and the February 2019 launch of Revolve Finance, discussed below.

Recent Developments

Share Repurchase Program. Our Board of Directors authorized a share repurchase program in April 2019 providing for the repurchase of up to $50.0 million of our common stock. The repurchase program, which commenced June 2019, will continue until completed or terminated. We expect the purchases to be made from time-to-time in the open market and/or in privately negotiated transactions at our 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. Under this program, the Company repurchased 2,156,241 shares of common stock for total consideration of $26.0 million through September 30, 2019.

FFL Repurchase. In August 2019, the Company entered into a Share Repurchase Agreement (the “Share Repurchase Agreement”) with Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated investment funds (“FFL”), a related party. Pursuant to the Share Repurchase Agreement, the Company repurchased 2,000,000 shares of its common stock, par value $0.001 per share, owned by FFL, in a private transaction at a purchase price equal to $13.55 per share of Common Stock. This transaction occurred outside of the share repurchase program authorized in April 2019.

Revolve ~~Finance.~~Finance. In February 2019, we launched Revolve Finance, sponsored by Republic Bank of Chicago, which is being introduced across the Company's U.S. ~~branches.~~stores. This product provides customers ~~with~~ a checking account solution, with FDIC-insured deposits, that combines a Visa-branded debit card, a number of technology-enabled tools and optional overdraft protection.

~~Metabank.~~Bank Partnerships. In ~~April 2018,~~September 2019, we ~~announced that we expect to begin offering U.S. consumers a new line of credit product through a relationship~~terminated the previously disclosed agreement with ~~MetaBank® ("Meta"),~~MetaBank, a wholly-owned subsidiary of Meta Financial Group, Inc. ~~We are working closely with Meta towards~~

California Assembly Bill 539: On September 13, 2019, the California legislature passed Assembly Bill 539 which imposes an ~~eventual product launch. Given that~~interest rate cap on all consumer loans between $2,500 and $10,000 of 36%, plus the ~~agreement with Meta does not contain any exclusive dealing provisions, we are also evaluating opportunities with other potential bank partners~~Federal Funds Rate. On October 10, 2019, Governor Newsom signed the bill into law and it is scheduled to ~~offer similar products.~~become effective on January 1, 2020. Revenue from California Unsecured and Secured Installment loans amounted to 13.0% of total revenue from continuing operations for the trailing 12 months ended September 30, 2019. See "Regulatory Environment and Compliance" for additional details.

Credit ~~facilities.~~Facilities. For recent developments related to our Senior Secured Notes, SPV facilities and other capital resources, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

U.K. ~~Developments.~~Developments. On February 25, 2019, we announced that a proposed Scheme of Arrangement ("SOA"), as described in our Current Report on Form 8-K ~~dated~~filed with the SEC on January 31, 2019, related to Curo Transatlantic Limited and SRC Transatlantic Limited (collectively the "U.K. Subsidiaries"), would not be implemented. We also announced that effective February 25, 2019, in accordance with the provisions of the U.K. Insolvency Act 1986 and as approved by the boards of directors of our U.K. Subsidiaries, insolvency practitioners from KPMG were appointed as administrators ("Administrators") for the U.K. Subsidiaries. The effect of the U.K. Subsidiaries’ entry into administration was to place the management, affairs, business and property of the U.K. Subsidiaries under the direct control of the Administrators. As a result, we deconsolidated the U.K. Subsidiaries as of February 25, 2019 and presented the U.K. Subsidiaries as Discontinued Operations in this Quarterly Report on Form 10-Q ("Form 10-Q").

In our Current Report on Form 8-K ~~dated~~filed with the SEC on January 31, 2019, our results of operations included a $30.3 million expense comprised of (i) a proposed $23.6 million fund to settle historical redress claims and (ii) $6.7 million in advisory and other costs that would be required to execute the SOA. We subsequently concluded that pursuant to ASC 450, Contingencies, the SOA did not represent an estimate of loss for the redress loss contingency but instead was offered in ongoing negotiation of a potential compromised settlement with creditors. Therefore, the settlement offered through the SOA did not meet the recognition threshold pursuant to ASC 450 and should not have been accrued as a contingent liability for customer redress claims as of December 31, 2018. Our Current Report on Form 8-K filed with the SEC on March 1, 2019 appropriately included $4.6 million of fourth quarter 2018 redress costs and related charges which ~~represents~~represented known claims as of December 31, 2018. See "Controls and Procedures" in our 2018 Form 10-K for further discussion.

Refer to the “Regulatory Environment and Compliance” below for additional information regarding recent regulatory developments that may impact our business.

~~Discussion of~~ Revenue by Product and Segment and Related Loan Portfolio Performance

Revenue by Product

~~The following table summarizes revenue by product, including fees for credit services organization ("CSO"), for the periods indicated.~~ Year-over-year comparisons for Open-End were affected by the Q1 2019 Open-End Loss Recognition Change. ~~Throughout~~Additionally, throughout this ~~Form 10-Q,~~release, we ~~do not include information~~removed financial results of our former U.K. operations for ~~our U.K. Subsidiaries~~all periods presented, as ~~they were~~it was discontinued for accounting and reporting purposes in February 2019. See “Results of Discontinued Operations” within this release for additional information.

The following tables summarize revenue by product, including credit services organization ("CSO") fees, for the periods indicated (in thousands, unaudited):


	For the Three Months Ended												For the Three Months Ended
	March 31, 2019						March 31, 2018						September 30, 2019						September 30, 2018
(in thousands)	U.S.		Canada		Total		U.S.		Canada		Total
													U.S.		Canada		Total		U.S.		Canada		Total
Unsecured Installment	$	134,003	$	1,775	$	135,778	$	120,476	$	4,903	$	125,379	$	135,541	$	1,692	$	137,233	$	135,028	$	2,632	$	137,660
Secured Installment	27,477		—		27,477		26,856		—		26,856		28,270		—		28,270		28,562		—		28,562
Open-End	32,593		20,276		52,869		25,834		1,389		27,223		39,605		26,515		66,120		27,554		12,736		40,290
Single-Pay	27,168		19,593		46,761		26,065		34,292		60,357		29,140		20,172		49,312		27,792		22,822		50,614
Ancillary	4,878		10,176		15,054		5,362		5,666		11,028		4,513		11,816		16,329		4,337		8,019		12,356
Total revenue	$	226,119	$	51,820	$	277,939	$	204,593	$	46,250	$	250,843	$	237,069	$	60,195	$	297,264	$	223,273	$	46,209	$	269,482

During the three months ended ~~March 31,~~September 30, 2019, total revenue grew ~~$27.1~~$27.8 million, or ~~10.8%~~10.3%, to ~~$277.9~~$297.3 million, compared to the prior-year period, predominantly driven by growth in ~~Installment and~~ Open-End loans ~~from strong customer demand and product introductions~~ in ~~new markets.~~both countries. Geographically, total revenue in the U.S. and Canada grew ~~10.5%~~6.2% and ~~12.0%~~30.3%, respectively. From a product perspective, Unsecured Installment ~~and~~revenues rose 0.4% in the U.S., offset by a decrease in Canada of 35.7% due to the continued transition to Open-End loans. Secured Installment revenues ~~rose 8.3%~~ and ~~2.3%, respectively, driven by~~ related receivables were consistent year-over-year. Single-Pay loan ~~growth. Year-over-year~~balances stabilized in Canada sequentially but year-over-year Single-Pay usage ~~was~~and product profitability were impacted negatively ~~impacted~~ by regulatory changes in Ontario ~~as well as a continued general product mix shift from Single-Pay~~effective July 1, 2018, and our strategic transition of qualifying customers to ~~Installment and~~ Open-End loans ~~in the U.S. and Canada. Open-End revenues rose 94.2% on organic growth in legacy states in the U.S. and growth in Canada, primarily after the introduction of Open-End products in Ontario in~~during the third quarter of 2018. Open-End loans in Canada grew ~~$26.0~~$18.1 million, or ~~16.4%~~8.3%, sequentially ~~(which means~~(defined within this Form 10-Q as the change from the ~~fourth~~second quarter of ~~2018~~2019 to the ~~first~~third quarter of ~~2019) and Single-Pay loan balances stabilized~~2019, or comparable periods for 2018 sequential metrics). Open-End loans in Canada ~~sequentially.~~grew $98.6 million, or 71.1%, from September 30, 2018, resulting in year-over-year revenue growth of $13.8 million, or 108.2%. U.S. Open-End revenue rose 43.7% on related loan growth of 71.2%. Ancillary revenues increased ~~36.5%~~32.2% versus the same quarter a year ago, primarily due to the sale of insurance products to Installment and Open-End loan customers in Canada.



	For the Nine Months Ended
	September 30, 2019						September 30, 2018
	U.S.		Canada		Total		U.S.		Canada		Total
Unsecured Installment	$	390,026	$	5,093	$	395,119	$	366,749	$	11,227	$	377,976
Secured Installment	81,823		—		81,823		81,195		—		81,195
Open-End	104,516		69,445		173,961		76,649		18,086		94,735
Single-Pay	82,733		58,872		141,605		78,835		90,461		169,296
Ancillary	14,136		32,859		46,995		14,565		19,727		34,292
Total revenue	$	673,234	$	166,269	$	839,503	$	617,993	$	139,501	$	757,494

For the nine months ended September 30, 2019, total revenue grew $82.0 million, or 10.8%, to $839.5 million, compared to the prior-year period, predominantly driven by growth in Open-End loans in both countries. Geographically, total revenue in the U.S. and Canada grew 8.9% and 19.2%, respectively. From a product perspective, Unsecured Installment revenues rose 6.3% in the U.S., offset by a decrease in Canada of 54.6% due to the continued transition to Open-End loans. Secured Installment revenues and related receivables remained consistent year-over-year. Canadian Single-Pay usage and product profitability were impacted negatively year-over-year by regulatory changes in Ontario effective July 1, 2018, and the strategic transition of qualifying customers to Open-End loans. Open-End revenues rose 83.6% on related loan growth in both countries. Ancillary revenues increased 37.0% versus the same quarter a year ago, primarily due to the sale of insurance to Installment and Open-End loan customers in Canada.

The following charts present revenue composition, including CSO fees, of the products and services that we currently offer for the ~~three months ended March 31, 2019 and 2018:~~periods indicated:

For the three months ended ~~March 31,~~September 30, 2019 and 2018, revenue generated through our online channel was 46% and ~~41%~~44%, respectively, of consolidated revenue.

For the nine months ended September 30, 2019 and 2018, revenue generated through our online channel was 45% and 42%, respectively, of consolidated revenue.

Loan Volume and Portfolio Performance Analysis

Unsecured Installment Loans

Unsecured Installment revenue and gross combined loans receivable ~~increased~~decreased from the ~~prior year~~comparable prior-year quarter due to ~~growth~~the continued mix shift to Open-End loans in ~~the U.S., primarily~~Canada and portfolio optimization in California ~~and CSO.~~to manage upcoming January 1, 2020 regulatory changes. Unsecured Installment gross combined loans receivable ~~grew $11.2~~decreased $15.7 million, or ~~5.3%~~6.0%, compared to ~~March 31, 2018, despite a decline in Canada of $22.6 million due to mix shift to Open-End loans. In the U.S.,~~September 30, 2018. Unsecured Installment ~~gross combined~~ loans ~~receivable increased 19.5% year-over-year. Canada was negatively impacted~~Guaranteed by the ~~growth and customer preference of Open-End during 2018, as further discussed below. In Canada, total Unsecured Installment loan originations~~Company declined ~~$14.5~~$5.1 million ~~or 66.3%, from the first quarter of 2018 also~~year-over-year due to ~~mix shift. U.S. originations were up $12.1 million, or 9.5%, versus~~

regulatory change in Ohio, which became effective in April 2019, and the ~~prior-year quarter.~~subsequent conversion of Ohio CSO volume to Company-Owned loans, partially offset by growth in Texas.

The ~~net charge-off (“NCO”)~~NCO rate for Company Owned Unsecured Installment gross loans receivables in the ~~first~~third quarter of 2019 increased approximately ~~377~~125 bps from the ~~first~~third quarter of 2018 ~~primarily~~ due to geographic mix shift from Canada to the U.S. ~~Canadian balances were down $22.6 million compared to the prior year~~, and increases in U.S. NCO rates due to ~~shifting customer preference from Installment to Open-End, while U.S. balances grew $28.4 million due to customer demand~~product and ~~higher advertising spend. As a result, the U.S. percentage mix of total Company Owned Unsecured Installment gross loans receivable rose from 76.4% last year to 91.2% this year.~~credit policy decisions. The absolute level of NCO rates in the U.S. is higher than Canada, so the relative growth in the U.S. balances resulted in an overall increase in the consolidated NCO rate for Company Owned Unsecured Installment loans. In addition, the NCO rate in the U.S. rose from ~~20.5%~~16.8% in the ~~first~~third quarter of 2018 to ~~23.3%~~18.5% in the ~~first~~third quarter of 2019, ~~because~~primarily due to credit limit increases. While credit limit increases generally result in modestly higher NCO rates in the related loan vintages, historically the growth in net revenue over the life of ~~both credit-line increases and expansion of~~such vintages has more than covered the ~~Avio brand. As an immature portfolio, Avio has~~ higher ~~relative~~ NCO rates.

The ~~required~~ Unsecured Installment Allowance for loan losses as a percentage of Company Owned Unsecured Installment gross loans receivable ("allowance coverage") increased ~~sequentially~~year-over-year from ~~19.8%~~19.5% as of September 30, 2018 to ~~20.8%,~~21.9% as of September 30, 2019, primarily as a result of related higher NCO rates. ~~Past-due Company Owned Unsecured Installment gross loans receivable~~Past due receivables as a percentage of ~~related~~ total ~~receivables~~Gross Receivables remained consistent with the same quarter a year ago. Sequentially, the allowance coverage increased ~~230 bps~~slightly, from 21.4% to ~~25.2% from 22.9% in the prior-year quarter on a consolidated basis.~~ 21.9% as of September 30, 2019.

NCO rates for Unsecured Installment loans Guaranteed by the Company ~~decreased 314~~improved nearly 60 bps compared to the same quarter ~~in 2018.~~a year ago. The ~~required~~ CSO liability for losses ~~decreased~~remained consistent sequentially from ~~15.0%~~14.5% to 14.4% ~~during~~for the ~~first~~third quarter of ~~2019 due to improving NCO and past-due rate comparisons.~~2019.


	2019			2018												2019									2018
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
Unsecured Installment loans:
Revenue - Company Owned	$	65,542		$	69,748		$	64,146		$	54,868		$	58,437		$	65,809		$	59,814		$	65,542		$	69,748		$	64,146
Provision for losses - Company Owned	33,845			39,565			32,946			23,219			24,739			31,891			33,514			33,845			39,565			32,946
Net revenue - Company Owned	$	31,697		$	30,183		$	31,200		$	31,649		$	33,698		$	33,918		$	26,300		$	31,697		$	30,183		$	31,200
Net charge-offs - Company Owned	$	37,919		$	37,951		$	27,308		$	26,527		$	30,001		$	28,973		$	31,970		$	37,919		$	37,951		$	27,308
Revenue - Guaranteed by the Company	$	70,236		$	75,559		$	73,514		$	60,069		$	66,942		$	71,424		$	62,298		$	70,236		$	75,559		$	73,514
Provision for losses - Guaranteed by the Company	27,422			37,352			39,552			26,974			23,556			36,664			28,336			27,422			37,352			39,552
Net revenue - Guaranteed by the Company	$	42,814		$	38,207		$	33,962		$	33,095		$	43,386		$	34,760		$	33,962		$	42,814		$	38,207		$	33,962
Net charge-offs - Guaranteed by the Company	$	30,421		$	38,522		$	37,995		$	25,667		$	30,743		$	35,916		$	27,486		$	30,421		$	38,522		$	37,995
Unsecured Installment gross combined loans receivable:
Company Owned	$	161,716		$	190,403		$	185,130		$	160,285		$	155,957		$	174,489		$	164,722		$	161,716		$	190,403		$	185,130
Guaranteed by the Company ⁽¹⁾⁽²⁾	59,740			77,451			75,807			66,351			54,332			70,704			65,055			59,740			77,451			75,807
Unsecured Installment gross combined loans receivable ⁽¹⁾⁽²⁾	$	221,456		$	267,854		$	260,937		$	226,636		$	210,289		$	245,193		$	229,777		$	221,456		$	267,854		$	260,937
Average gross loans receivable:
Average Unsecured Installment gross loans receivable - Company Owned(3)	$	176,060		$	187,767		$	172,708		$	158,121		$	168,773		$	169,606		$	163,219		$	176,060		$	187,767		$	172,708
Average Unsecured Installment gross loans receivable - Guaranteed by the Company(3)	$	68,596		$	76,629		$	71,079		$	60,342		$	64,744		$	67,880		$	62,398		$	68,596		$	76,629		$	71,079
Allowance for loan losses and CSO liability for losses:
Unsecured Installment Allowance for loan losses ⁽³⁾	$	33,666		$	37,716		$	36,160		$	30,291		$	33,638		$	38,127		$	35,223		$	33,666		$	37,716		$	36,160
Unsecured Installment CSO liability for losses ⁽³⁾	$	8,584		$	11,582		$	12,750		$	11,193		$	9,886		$	10,181		$	9,433		$	8,584		$	11,582		$	12,750
Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable	20.8		%	19.8		%	19.5		%	18.9		%	21.6		%	21.9		%	21.4		%	20.8		%	19.8		%	19.5		%
Unsecured Installment CSO liability for losses as a percentage of Unsecured Installment gross loans guaranteed by the Company	14.4		%	15.0		%	16.8		%	16.9		%	18.2		%	14.4		%	14.5		%	14.4		%	15.0		%	16.8		%
Unsecured Installment past-due balances:
Unsecured Installment gross loans receivable	$	40,801		$	49,087		$	49,637		$	36,125		$	35,647		$	46,537		$	38,037		$	40,801		$	49,087		$	49,637
Unsecured Installment gross loans guaranteed by the Company	$	7,967		$	11,708		$	12,120		$	10,319		$	8,410		$	11,842		$	10,087		$	7,967		$	11,708		$	12,120
Past-due Unsecured Installment gross loans receivable -- percentage ⁽²⁾	25.2		%	25.8		%	26.8		%	22.5		%	22.9		%	26.7		%	23.1		%	25.2		%	25.8		%	26.8		%
Past-due Unsecured Installment gross loans guaranteed by the Company -- percentage ⁽²⁾	13.3		%	15.1		%	16.0		%	15.6		%	15.5		%	16.7		%	15.5		%	13.3		%	15.1		%	16.0		%
Unsecured Installment other information:
Originations - Company Owned	$	78,515		$	114,182		$	121,415		$	114,038		$	89,183		$	107,275		$	102,792		$	78,515		$	114,182		$	121,415
Originations - Guaranteed by the Company ⁽¹⁾	$	68,899		$	89,319		$	91,828		$	84,082		$	60,593		$	89,644		$	80,445		$	68,899		$	89,319		$	91,828
Unsecured Installment ratios:
Provision as a percentage of gross loans receivable - Company Owned	20.9		%	20.8		%	17.8		%	14.5		%	15.9		%	18.3		%	20.3		%	20.9		%	20.8		%	17.8		%
Provision as a percentage of gross loans receivable - Guaranteed by the Company	45.9		%	48.2		%	52.2		%	40.7		%	43.4		%	51.9		%	43.6		%	45.9		%	48.2		%	52.2		%
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.	(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.															(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.
(2) Non-GAAP measure - Refer to "Non-GAAP Financial Measures" for further details.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.
(2) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."																(2) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."
(3) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable.																(3) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable.
(4) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.																(4) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.

Secured Installment Loans

Secured Installment revenue and the related gross combined loans receivable ~~balances~~balance as of ~~March 31,~~September 30, 2019 ~~increased by $0.6 million, or 0.7%, compared to March 31, 2018 while related Secured Installment revenue grew 2.3%. The NCO rate was fairly stable and the past-due rate improved 120 bps~~remained consistent year-over-year. Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable decreased year-over-year from 12.4% to 11.3% for the third quarter of 2019 and decreased sequentially from ~~13.2%~~11.5% to ~~11.9%~~11.3% during the ~~first~~third quarter of ~~2019.~~

2019, primarily as a result of an 80 bps improvement in the NCO rate.


	2019			2018												2019									2018
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
Secured Installment loans:
Revenue	$	27,477		$	29,482		$	28,562		$	25,777		$	26,856		$	28,270		$	26,076		$	27,477		$	29,482		$	28,562
Provision for losses	7,080			12,035			10,188			7,650			6,640			8,819			7,821			7,080			12,035			10,188
Net revenue	$	20,397		$	17,447		$	18,374		$	18,127		$	20,216		$	19,451		$	18,255		$	20,397		$	17,447		$	18,374
Net charge-offs	$	9,822		$	11,132		$	9,285		$	9,003		$	8,669		$	8,455		$	7,630		$	9,822		$	11,132		$	9,285
Secured Installment gross combined loan balances:
Secured Installment gross combined loans receivable ⁽³⁾⁽²⁾	$	83,087		$	95,922		$	94,194		$	87,434		$	82,534		$	92,478		$	87,718		$	83,087		$	95,922		$	94,194
Average Secured Installment gross combined loans receivable(3)	$	89,505		$	95,058		$	90,814		$	84,984		$	87,676		$	90,098		$	85,403		$	89,505		$	95,058		$	90,814
Secured Installment Allowance for loan losses and CSO liability for losses ⁽³⁾⁽²⁾	$	9,874		$	12,616		$	11,714		$	10,812		$	12,165		$	10,431		$	10,067		$	9,874		$	12,616		$	11,714
Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable	11.9		%	13.2		%	12.4		%	12.4		%	14.7		%	11.3		%	11.5		%	11.9		%	13.2		%	12.4		%
Secured Installment past-due balances:
Secured Installment past-due gross loans receivable and gross loans guaranteed by the Company	$	13,866		$	17,835		$	17,754		$	15,246		$	14,756		$	17,645		$	14,570		$	13,866		$	17,835		$	17,754
Past-due Secured Installment gross loans receivable and gross loans guaranteed by the Company -- percentage ⁽²⁾⁽¹⁾	16.7		%	18.6		%	18.8		%	17.4		%	17.9		%	19.1		%	16.6		%	16.7		%	18.6		%	18.8		%
Secured Installment other information:
Originations⁽¹⁾⁽⁴⁾	$	33,490		$	49,217		$	51,742		$	53,597		$	34,750		$	45,990		$	49,051		$	33,490		$	49,217		$	51,742
Secured Installment ratios:
Provision as a percentage of gross combined loans receivable	8.5		%	12.5		%	10.8		%	8.7		%	8.0		%	9.5		%	8.9		%	8.5		%	12.5		%	10.8		%
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.
(2) Non-GAAP measure - Refer to "Non-GAAP Financial Measures" for further details.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.
(1) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."																(1) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."
(2) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.																(2) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.
(3) Average gross loans receivable calculated as beginning of quarter and end of quarter gross loans receivable.																(3) Average gross loans receivable calculated as beginning of quarter and end of quarter gross loans receivable.
(4) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.																(4) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.

Open-End Loans

Open-End loan balances as of ~~March 31,~~September 30, 2019 increased by ~~$189.2~~$130.9 million when compared to ~~March 31,~~September 30, 2018, primarily due to the ~~launch of~~continued growth in Canada. The Q1 2019 Open-End inLoss Recognition Change, discussed further below, impacted comparability as Canada ~~in late 2017, which accounted for $167.1~~included $19.2 million of past-due Open-End loans as of September 30, 2019 that would have been charged off under the ~~total loan growth.~~former policy. Sequentially, Open-End balances in Canada grew ~~$26.0~~$18.1 million ~~sequentially from the fourth quarter of 2018~~ ($~~22.2~~20.9 million on a constant currency basis). due to organic growth of the product and the introduction of Open-End loans in British Columbia during the third quarter of 2019. Remaining year-over-year loan growth was driven by the organic growth in seasoned U.S. markets, such as ~~Virginia,~~ Tennessee and ~~Kansas.~~Kansas, and the relatively newer Virginia market. Similar to Canada, the Q1 2019 Open-End Loss Recognition Change affected comparability in the U.S., with the inclusion of $26.8 million of past-due Open-End loans as of September 30, 2019 that would have been charged off under the former policy.

The Open-End NCO rate during the third quarter of 2019 was 9.4%, compared to 17.1% in the same quarter in the prior year, as a result of a modest improvement in the U.S. and seasoning of the Canada portfolio. Sequentially, on a non-GAAP pro forma basis, as described below, NCO rates improved 130 bps, primarily on portfolio improvements in Canada.

Q1 2019 Open-End Loss Recognition Change

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

The aforementioned change was treated as a change in accounting estimate for accounting purposes and applied prospectively beginning January 1, 2019.

The change affects comparability to prior periods as follows:

Gross combined loans ~~receivable:~~receivable: balances as of ~~March 31,~~September 30, 2019 include ~~$32.4~~$46.1 million of Open-End loans that are up to 90 days past-due with related accrued interest, while such balances for periods prior ~~periods~~to March 31, 2019 do not include any past-due loans.

~~Revenues:~~Revenues: for the ~~quarter~~three and nine months ended ~~March 31,~~September 30, 2019, gross revenues include ~~accrued~~ interest earned on past-due loan balances of ~~$8.9~~approximately $15 million and $35 million, respectively, while revenues in ~~prior~~prior-year periods do not include comparable amounts.

Provision for Losses: prospectively from January 1, 2019, past-due, unpaid balances plus related accrued interest charge-off on day 91. Provision expense is affected by ~~total~~NCOs (total charge-offs less total ~~recoveries ("NCOs")~~recoveries) plus changes to the ~~required allowance~~Allowance for loan losses. Because NCOs prospectively include unpaid principal and up to 90 days of related accrued interest, NCO amounts and rates are higher and the ~~required~~ Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable is higher. The Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable ~~rose from 9.6% as of December 31, 2018~~increased to ~~19.5% as of March 31, 2019.~~17.2% at September 30, 2019, compared to 9.8% in the comparable prior-year period.

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


	2019			2018												2019									2018
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
Open-End loans:
Revenue	$	52,869		$	47,228		$	40,290		$	27,222		$	27,223		$	66,120		$	54,972		$	52,869		$	47,228		$	40,290
Provision for losses	25,317			28,337			31,686			14,848			11,428			31,220			29,373			25,317			28,337			31,686
Net revenue	$	27,552		$	18,891		$	8,604		$	12,374		$	15,795		$	34,900		$	25,599		$	27,552		$	18,891		$	8,604
Net charge-offs(1)	$	(1,521	)	$	25,218		$	23,579		$	11,924		$	10,972		$	28,202		$	25,151		$	(1,521	)	$	25,218		$	23,579
Open-End gross loan balances:
Open-End gross loans receivable	$	240,790		$	207,333		$	184,067		$	91,033		$	51,564		$	314,971		$	283,311		$	240,790		$	207,333		$	184,067
Average Open-End gross loans receivable(1)	$	224,062		$	195,700		$	137,550		$	71,299		$	49,756		$	299,141		$	262,051		$	224,062		$	195,700		$	137,550
Open-End allowance for loan losses:
Allowance for loan losses	$	46,963		$	19,901		$	18,013		$	9,717		$	6,846		$	54,233		$	51,717		$	46,963		$	19,901		$	18,013
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable	19.5		%	9.6		%	9.8		%	10.7		%	13.3		%	17.2		%	18.3		%	19.5		%	9.6		%	9.8		%
Open-End past-due balances:
Open-End past-due gross loans receivable	$	32,444		$	—		$	—		$	—		$	—		$	46,053		$	35,395		$	32,444		$	—		$	—
Past-due Open-End gross loans receivable - percentage	13.5		%	—		%	—		%	—		%	—		%	14.6		%	12.5		%	13.5		%	—		%	—		%
(1) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable.																(1) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable.

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

Pro Forma 2019
(dollars in thousands, unaudited) First Quarter
Open-End loans:
Revenue $ 52,869
Provision for losses 25,317
Net revenue $ 27,552
Net charge-offs $ 31,788
Open-End gross loan balances:
Open-End gross loans receivable $ 240,790
Average Open-End gross loans receivable $ 245,096
Net-charge offs as a percentage of average gross loans receivable 13.0 %
Open-End allowance for loan losses:
Allowance for loan losses $ 46,963
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable 19.5 %
Open-End past-due balances:
Open-End past-due gross loans receivable $ 32,444
Past-due Open-End gross loans receivable - percentage 13.5 %



Pro Forma	2019
(dollars in thousands, unaudited)	Third Quarter			Second Quarter			First Quarter
Open-End loans:
Revenue	$	66,120		$	54,972		$	52,869
Provision for losses	31,220			29,373			25,317
Net revenue	$	34,900		$	25,599		$	27,552
Net charge-offs	$	29,762		$	29,648		$	31,788
Open-End gross loan balances:
Open-End gross loans receivable	$	314,971		$	283,311		$	240,790
Average Open-End gross loans receivable ⁽¹⁾	$	299,141		$	262,051		$	245,096
Net-charge offs as a percentage of average gross loans receivable	9.9		%	11.3		%	13.0		%
Open-End allowance for loan losses:
Allowance for loan losses	$	54,233		$	51,717		$	46,963
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable	17.2		%	18.3		%	19.5		%
Open-End past-due balances:
Open-End past-due gross loans receivable	$	46,053		$	35,395		$	32,444
Past-due Open-End gross loans receivable - percentage	14.6		%	12.5		%	13.5		%
(1) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable.

Single-Pay

Single-Pay revenue ~~and related loans receivable~~ during the three months ended ~~March 31,~~September 30, 2019 ~~declined year-over-year~~decreased compared to the three months ended ~~March 31,~~September 30, 2018, primarily due to regulatory changes in Canada (rate and product changes in Ontario and British Columbia) that accelerated the shift to Open-End ~~loans, as well~~products. U.S. Single-Pay receivables increased $1.7 million, or 4.1%, offset by a decrease in Canada receivables of $1.0 million, or 2.8%. Canada Single-Pay balances were stable sequentially from the second quarter of 2019. The Single-Pay Allowance for loan losses as a continued general product shift away from Single-Pay to Installment and Open-End loans in the U.S. and Canada. The aforementioned Open-End growth in Canada ($167.1 million year-over-year) in part came at the expensepercentage of Single-Pay ~~loan balances, which shrank year-over-year by $15.4 million. The Single-Pay~~gross loans receivable increased sequentially from 6.5% to 7.3%, and the NCO rate ~~improved 160~~increased 215 bps ~~year-over-year.~~year-over-year, as a result of mandated extended payment options for certain Canada Single-Pay loans.


	2019			2018												2019									2018
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
Single-pay loans:
Revenue	$	46,761		$	49,696		$	50,614		$	58,325		$	60,357		$	49,312		$	45,528		$	46,761		$	49,696		$	50,614
Provision for losses	8,268			12,825			12,757			13,101			9,892			14,736			12,446			8,268			12,825			12,757
Net revenue	$	38,493		$	36,871		$	37,857		$	45,224		$	50,465		$	34,576		$	33,082		$	38,493		$	36,871		$	37,857
Net charge-offs	$	8,610		$	11,838		$	12,892		$	12,976		$	11,518		$	13,913		$	11,458		$	8,610		$	11,838		$	12,892
Single-Pay gross loan balances:
Single-Pay gross loans receivable	$	69,753		$	80,823		$	77,390		$	84,665		$	82,041		$	78,039		$	76,126		$	69,753		$	80,823		$	77,390
Average Single-Pay gross loans receivable(1)	$	75,288		$	79,107		$	81,028		$	83,353		$	88,285		$	77,083		$	72,940		$	75,288		$	79,107		$	81,028
Single-Pay Allowance for loan losses	$	3,897		$	4,189		$	3,293		$	3,604		$	3,514		$	5,662		$	4,941		$	3,897		$	4,189		$	3,293
Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable	5.6		%	5.2		%	4.3		%	4.3		%	4.3		%	7.3		%	6.5		%	5.6		%	5.2		%	4.3		%
(1) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable.																(1) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable.

Gross Combined Loans Receivable

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


	For the Period Ended										As of
(in millions)	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
											September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
Company Owned gross loans receivable	$	553.2	$	571.5	$	537.8	$	420.6	$	369.3	$	657.6	$	609.6	$	553.2	$	571.5	$	537.8
Gross loans receivable Guaranteed by the Company	61.9		80.4		78.8		69.2		57.1		73.1		67.3		61.9		80.4		78.8
Gross combined loans receivable(1)	$	615.1	$	651.9	$	616.6	$	489.8	$	426.4	$	730.7	$	676.9	$	615.1	$	651.9	$	616.6
(1) See "Non-GAAP Financial Measures" below for definition and additional information.

Gross combined loans receivable by product are presented below (year-over-year sequential comparisons for Open-End are affected by the Q1 2019 Open-End Loss Recognition Change):

Gross combined loans receivable increased ~~$188.7~~$114.1 million, or ~~44.2%~~18.5%, to ~~$615.1~~$730.7 million as of ~~March 31,~~September 30, 2019 ~~compared to $426.4~~from $616.6 million as of ~~March 31,~~September 30, 2018. Geographically, gross combined loans receivable grew ~~18.4%~~5.0% and ~~125.8%~~48.1%, respectively, in the U.S. and Canada, explained further by product in the following sections. Sequentially, gross combined loans receivable declined $36.8 million, or 5.7%, for the three months ended March 31, 2019 compared to $65.6 million, or 13.3%, for the three months ended March 31, 2018 on expected and normal seasonal trends from U.S. federal income tax refunds. The sequential decline for the three months ended March 31, 2019 was offset by continued growth in Canada Open-End products, discussed further below.

Results of Operations - CURO Group Consolidated Operations

Condensed Consolidated Statements of Operations

~~(Unaudited)~~(in thousands, unaudited)


(in thousands, unaudited)	Three Months Ended March 31,
	2019		2018			Change $			Change %
											Three Months Ended September 30,											Nine Months Ended September 30,
											2019			2018			Change $			Change %		2019		2018			Change $			Change %
Revenue	$	277,939	$	250,843		$	27,096		10.8	%	$	297,264		$	269,482		$	27,782		10.3	%	$	839,503	$	757,494		$	82,009		10.8	%
Provision for losses	102,385		76,883			25,502			33.2	%	123,867			127,692			(3,825		)	(3.0	)%	338,262		290,922			47,340			16.3	%
Net revenue	175,554		173,960			1,594			0.9	%	173,397			141,790			31,607			22.3	%	501,241		466,572			34,669			7.4	%
Advertising costs	7,786		7,885			(99		)	(1.3	)%	16,424			21,349			(4,925		)	(23.1	)%	36,990		44,347			(7,357		)	(16.6	)%
Non-advertising costs of providing services	62,271		60,229			2,042			3.4	%	60,334			59,847			487			0.8	%	180,934		178,437			2,497			1.4	%
Total cost of providing services	70,057		68,114			1,943			2.9	%	76,758			81,196			(4,438		)	(5.5	)%	217,924		222,784			(4,860		)	(2.2	)%
Gross margin	105,497		105,846			(349		)	(0.3	)%	96,639			60,594			36,045			59.5	%	283,317		243,788			39,529			16.2	%

Operating expense
Corporate, district and other expenses	49,088		35,429			13,659			38.6	%	38,665			27,495			11,170			40.6	%	123,043		95,904			27,139			28.3	%
Interest expense	17,690		22,354			(4,664		)	(20.9	)%	17,364			23,403			(6,039		)	(25.8	)%	52,077		66,229			(14,152		)	(21.4	)%
Loss on extinguishment of debt	—		11,683			(11,683		)	#		—			69,200			(69,200		)	#		—		80,883			(80,883		)	#
Loss from equity method investment											1,384			—			1,384			#		5,132		—			5,132			#
Total operating expense	66,778		69,466			(2,688		)	(3.9	)%	57,413			120,098			(62,685		)	(52.2	)%	180,252		243,016			(62,764		)	(25.8	)%
Income from continuing operations before income taxes	38,719		36,380			2,339			6.4	%
Provision for income taxes	10,046		11,467			(1,421		)	(12.4	)%
Net income from continuing operations	28,673		24,913			3,760			15.1	%
Net income (loss) from discontinued operations, net of tax	8,375		(1,621		)	9,996			#
Net income	$	37,048	$	23,292		$	13,756		59.1	%
# - Change greater than 100% or not meaningful.
Net income (loss) from continuing operations before income taxes											39,226			(59,504		)	98,730			#		103,065		772			102,293			#
Provision (benefit) for income taxes											11,239			(16,914		)	28,153			#		28,738		(269		)	29,007			#
Net income (loss) from continuing operations											27,987			(42,590		)	70,577			#		74,327		1,041			73,286			#
Net (loss) income from discontinued operations, net of tax											(598		)	(4,432		)	3,834			(86.5	)%	6,943		(8,796		)	15,739			#
Net income (loss)											$	27,389		$	(47,022	)	$	74,411		#		$	81,270	$	(7,755	)	$	89,025		#
# - Variance greater than 100% or not meaningful											# - Variance greater than 100% or not meaningful

For the three months ended ~~March 31,~~September 30, 2019 and 2018

Revenue and Net Revenue

Revenue increased ~~$27.1~~$27.8 million, or ~~10.8%~~10.3%, to ~~$277.9~~$297.3 million for the three months ended ~~March 31,~~September 30, 2019, from ~~$250.8~~$269.5 million for the three months ended ~~March 31,~~September 30, 2018. Revenue for the three months ended ~~March 31,~~September 30, 2019 ~~includes accrued~~included interest earned on past-due Open-End loan balances of ~~$8.9~~approximately $15 million from the Q1 2019 Open-End Loss Recognition ~~Change, offset by higher provision rate and higher allowance discussed further below.~~Change. U.S. revenue increased ~~10.5%~~6.2%, driven by volume growth. Canadian revenue increased ~~12.0% (13.9%~~30.3% (31.6% on a constant currency basis), as volume growth offset yield compression from negative regulatory impacts on Single-Pay loan rates and the significant product mix-shift to Open-End loans.

Provision for losses ~~increased $25.5~~decreased $3.8 million, or ~~33.2%~~3.0%, to ~~$102.4~~$123.9 million for the three months ended ~~March 31,~~September 30, 2019, from ~~$76.9~~$127.7 million for the three months ended ~~March 31, 2018 because~~September 30, 2018. This decrease included incremental provision expense from the Q1 2019 Open-End Loss Recognition Change, consistent with the incremental revenue impact. Excluding the impact of the Q1 2019 Open-End Loss Recognition Change, ~~increased earning asset volume~~provision expense declined year-over-year, ~~and higher NCO rates as further described~~primarily due to lower sequential loan growth than in ~~"--Segment Analysis" below.~~the prior-year's quarter. For the three months ended September 30, 2019, gross combined loans receivable grew sequentially by $53.7 million, or 7.9%, compared to sequential growth of $126.8 million, or 25.9% for the three months ended September 30, 2018.

Cost of Providing Services

The total cost of providing services ~~increased $1.9~~decreased $4.4 million, or ~~2.9%~~5.5%, to ~~$70.1~~$76.8 million in the three months ended ~~March 31,~~September 30, 2019, compared to ~~$68.1~~$81.2 million in the three months ended ~~March 31,~~September 30, 2018, primarily because of ~~increased~~lower advertising costs. The decline in advertising costs was primarily the result of repositioning our California Installment loan ~~servicing costs on higher volume, higher performance-based variable compensation~~portfolio in advance of regulatory changes and ~~$0.2 million~~mix-shift, and stability in our Canadian portfolio following the Ontario deployment of ~~restructuring costs to better align our store staffing with in-store customer traffic growth as more~~Open-End loans in the third quarter of ~~our customers transact with us digitally.~~2018.

Operating Expenses

~~Corporate,~~

Excluding share-based compensation of $2.8 million, legal and related costs of $0.9 million and U.K. related costs of $0.3 million, corporate, district and other expenses increased ~~$13.7~~$8.1 million, or ~~38.6%~~30.4%, primarily ~~as a result of $7.8 million for the bondholder consent associated with discontinuing~~due to higher variable compensation tied to our U.K. operations and other related U.K. separation costs, $1.5 million of restructuring costs from our previously-announced reduction-in-force during January 2019, higher professional fees associated with our first year-end for full compliance with Sarbanes-Oxley, and higher performance-based variable compensation.financial performance.

~~Provision~~Our investment in Cognical Holdings, Inc. ("Zibby") is accounted for ~~Income Taxes~~

~~The effective~~under the equity method. We record our pro rata share of Zibby's income ~~tax rate from continuing operations for~~or losses in the income statement with a corresponding adjustment to the carrying value of our investment in "Other" on the Condensed Consolidated Balance Sheet. Estimated losses recorded in the three months ended ~~March 31,~~September 30, 2019 was ~~25.9%, compared to 31.5%~~$1.4 million and represents our share of losses during the period in which we held a greater than 20% investment, typically considered the threshold for the three months ended March 31, 2018. As a result of the Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act"), the corporate income tax rate for the U.S. decreased from 35% in 2017 to 21%, effective 2018. The income tax provision for the three months ended March 31, 2018 included accruals of $1.2 million for adjustments to estimates of the tax on prior years' foreign repatriation and $0.6 million for the then-new Global Intangible Low-Taxed Income ("GILTI") tax. The $1.2 million additional provision on prior years' foreign repatriation was the result of additional interpretative guidance from the IRS issued during theequity method accounting.

first quarter of 2018. These two items increased the effective income tax rate by 4.9 percentage points. Excluding the impact of these items, the effective income tax rate for the three months ended March 31, 2018 would have been 26.6%.Interest Expense

~~Segment Analysis~~

~~We report financial results for two reportable segments: the U.S. and Canada. Following is a summary of results of operations for the segment and period indicated:~~

U.S. Segment Results Three Months Ended March 31,
(dollars in thousands, unaudited) 2019 2018 Change $ Change %
Revenue $ 226,119
$ 204,593
$ 21,526
10.5 %
Provision for losses 84,980
64,333
20,647
32.1 %
Net revenue 141,139
140,260
879
0.6 %
Advertising costs 6,354
5,159
1,195
23.2 %
Non-advertising costs of providing services 44,982
43,757
1,225
2.8 %
Total cost of providing services 51,336
48,916
2,420
4.9 %
Gross margin 89,803
91,344
(1,541 ) (1.7 )%
Corporate, district and other expenses 43,880
30,532
13,348
43.7 %
Interest expense 14,728
22,297
(7,569 ) (33.9 )%
Loss on extinguishment of debt —
11,683
(11,683 ) #
Total operating expense 58,608
64,512
(5,904 ) (9.2 )%
Segment operating income 31,195
26,832
4,363
16.3 %
Interest expense 14,728
22,297
(7,569 ) (33.9 )%
Depreciation and amortization 3,726
3,407
319
9.4 %
EBITDA 49,649
52,536
(2,887 ) (5.5 )%
Loss on extinguishment of debt —
11,683
(11,683 )
Restructuring and other costs 1,617
—
1,617

Other adjustments (105 ) (59 ) (46 )
Transaction-related costs 7,817
—
7,817

Share-based cash and non-cash compensation 2,172
1,842
330

Adjusted EBITDA $ 61,150
$ 66,002
$ (4,852 ) (7.4 )%
# - Change greater than 100% or not meaningful.

~~U.S. Segment Results - For the three months ended March 31, 2019 and 2018~~

First quarter U.S. revenues increased by $21.5 million, or 10.5%, to $226.1 million. U.S. revenue growth was driven by a $59.6 million, or 18.4%, increase in gross combined loans receivable to $383.4 million at March 31, 2019, compared to $323.8 million at March 31, 2018. Additionally, U.S. revenue for the three months ended March 31, 2019 includes accrued interest on past-due Open-End loan balances of $7.6 million from the Q1 2019 Open-End Loss Recognition Change, offset by higher provision rate and higher allowance discussed further below. Unsecured Installment receivables increased year-over-year $33.8 million, or 19.5%. Open-End receivables increased $22.2 million, or 64.2% year-over-year, primarily because of organic growth in Virginia, Tennessee and Kansas. Secured Installment gross combined receivables increased from the prior year period by $0.6 million, or 0.7%, while Single-Pay receivables grew $3.1 million, or 9.3%.

The increase of $20.6 million, or 32.1%, in the provision for losses was due to (i) the Q1 2019 Open-End Loss Recognition Change, (ii) year-over-year higher earning asset volume for Unsecured Installment loans, (iii) higher NCO rates, primarily for Company Owned Unsecured Installment loans, and (iv) the first quarter 2018 provision for losses, which was impacted favorably by adjustments to allowance coverage levels. The provision for loan losses and related loan portfolio performance is further analyzed under "Loan Volume and Performance Analysis" above.

U.S. cost of providing services for the three months ended March 31, 2019 was $51.3 million, an increase of $2.4 million, or 4.9%, compared to $48.9 million for the three months ended March 31, 2018. The increase was due to $1.2 million, or 23.2%, higher advertising costs, concentrated in the online channel. Advertising as a percentage of revenue was 2.8% for the three months ended March 31, 2019, up slightly from the prior-year period of 2.5%. The remaining increase is due to higher performance-based variable compensation costs and the aforementioned restructuring costs.

Corporate, district and other operating expenses increased $13.3 million, or 43.7%, compared to the same period in the prior year, primarily due to $7.8 million of U.K. disposition-related costs, $1.9 million higher performance-based variable compensation costs, $1.4 million of restructuring costs and $1.3 million higher professional fees.

~~U.S. interest~~Interest expense for the ~~first~~third quarter of 2019 decreased by ~~$7.6~~$6.0 million compared to the prior-year period, primarily due to our refinancing activities in 2018. During the third quarter of 2018, we issued $690.0 million of 8.25% Senior Secured Notes and used the proceeds from the issuance to extinguish our ~~higher interest-rate~~ $527.5 million 12.00% Senior Secured ~~Notes.~~Notes and our Non-Recourse U.S. SPV Facility. In addition, we entered into a Non-Recourse Canada SPV Facility in the third quarter of 2018 with a lower interest rate than our previous Non-Recourse U.S. SPV ~~facility,~~Facility.

Provision for Income Taxes

The effective income tax rate for the three months ended September 30, 2019 was 28.7%, compared to 28.4% for the three months ended September 30, 2018. The third quarter 2019 effective income tax rate included unfavorable impacts from the non-tax deductible loss on our equity method investment and changes in state income apportionment and a mix shift in taxable income between the U.S. and Canada. Excluding the impact of the loss on equity method investment, the effective tax rate for the three months ended September 30, 2019 was 27.7%.

For the nine months ended September 30, 2019 and 2018

Revenue and Net Revenue

Revenue increased $82.0 million, or 10.8%, to $839.5 million for the nine months ended September 30, 2019 from $757.5 million for the nine months ended September 30, 2018. Revenue for the nine months ended September 30, 2019 included interest earned on past-due Open-End loan balances of approximately $35 million from the Q1 2019 Open-End Loss Recognition Change, offset by a higher provision rate and the higher allowance discussed further below. U.S. revenue increased 8.9%, driven by volume growth. Canadian revenue increased 19.2% (23.1% on a constant currency basis), as volume growth more than offset yield compression from negative regulatory impacts on Single-Pay loan rates and the significant product mix-shift to Open-End loans.

Provision for losses increased $47.3 million, or 16.3%, to $338.3 million for the nine months ended September 30, 2019, from $290.9 million for the nine months ended September 30, 2018, primarily due to the Q1 2019 Open-End Loss Recognition Change. The nine months ended September 30, 2018 included $14.6 million of provision benefit from changes which included allowance coverage rates whereas the nine months ended 2019 included $5.1 million of benefit. Excluding the impact of the allowance coverage change, provision for losses increased $37.9 million, or 12.4%, because of the Q1 2019 Open-End Loss Recognition Change and increased earning asset volume year-over-year as further described in "Segment Analysis" below.

Cost of Providing Services

The total cost of providing services decreased $4.9 million, or 2.2%, to $217.9 million in the nine months ended September 30, 2019, compared to $222.8 million in the nine months ended September 30, 2018, primarily because of lower advertising costs, offset by increased loan servicing costs on higher volume. The decline in advertising costs was primarily the result of repositioning our California Installment loan portfolio in advance of regulatory changes and mix-shift, and stability in our Canadian portfolio following the Ontario deployment of Open-End loans in the third quarter of 2018.

Operating Expenses

Corporate, district and other expenses increased $27.1 million, or 28.3%, primarily as a result of $8.8 million for obtaining the consent of our holders of the 8.25% Senior Secured Notes and our bondholders associated with discontinuing our U.K. operations and other related U.K. separation costs, $2.0 million of legal and related costs as described above, $1.8 million of restructuring costs from our reduction-in-force implemented in January 2019 and $1.5 million of additional share-based compensation. Excluding these aforementioned costs, corporate, district and other expenses increased by $13.0 million, or 14.3%, primarily due to higher professional fees associated with our second year-end for full compliance with Sarbanes-Oxley and higher variable compensation tied to our financial performance.

Our investment in Zibby is accounted for under the equity method. We record our pro rata share of Zibby's income or losses in the income statement with a corresponding adjustment to the carrying value of our investment in "Other" on the Condensed Consolidated Balance Sheet. Our share of estimated losses for the nine months ended September 30, 2019 was $5.1 million, which includes a $3.7 million loss to adjust the Company's carrying value of Zibby. The carrying value was further adjusted by the Company's pro rata share of Zibby's losses during the period in which the Company held a greater than 20% investment, typically considered the threshold for equity method accounting.

Interest Expense

Interest expense decreased by $14.2 million compared to the prior-year period, primarily due to our refinancing activities in 2018. During the third quarter of 2018, we ~~fully repaid with~~issued $690.0 million of 8.25% Senior Secured Notes and used the proceeds from the issuance to extinguish our $527.5 million 12.00% Senior Secured Notes and our Non-Recourse U.S. SPV Facility. In addition, we entered into a Non-Recourse Canada SPV Facility in the third quarter of 2018 with a lower interest rate than our previous Non-Recourse U.S. SPV Facility.

Provision for Income Taxes

The effective income tax rate for the nine months ended September 30, 2019 was 27.9%, compared to (34.8%) for the nine months ended September 30, 2018. Excluding the non-tax-deductible loss from our equity method investment, the effective income tax rate from continuing operations for the nine months ended September 30, 2019 was 26.6%. Excluding non-GAAP adjustments to Net income related to the 2017 Tax Act as presented in the reconciliation of Net Income to Adjusted Net Income, the effective income tax rate from continuing operations for the nine months ended September 30, 2018 was 24.1%.

Segment Analysis

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



U.S. Segment Results	Three Months Ended September 30,										Nine Months Ended September 30,
	2019		2018			Change $			Change %		2019			2018			Change $			Change %
Revenue	$	237,069	$	223,273		$	13,796		6.2	%	$	673,234		$	617,992		$	55,242		8.9	%
Provision for losses	102,997		103,256			(259		)	(0.3	)%	280,529			239,576			40,953			17.1	%
Net revenue	134,072		120,017			14,055			11.7	%	392,705			378,416			14,289			3.8	%
Advertising costs	14,186		17,632			(3,446		)	(19.5	)%	31,719			35,200			(3,481		)	(9.9	)%
Non-advertising costs of providing services	42,636		42,280			356			0.8	%	128,866			127,719			1,147			0.9	%
Total cost of providing services	56,822		59,912			(3,090		)	(5.2	)%	160,585			162,919			(2,334		)	(1.4	)%
Gross margin	77,250		60,105			17,145			28.5	%	232,120			215,497			16,623			7.7	%
Corporate, district and other expenses	32,897		22,360			10,537			47.1	%	106,426			81,113			25,313			31.2	%
Interest expense	14,877		22,169			(7,292		)	(32.9	)%	44,246			64,931			(20,685		)	(31.9	)%
Loss on extinguishment of debt	—		69,200			(69,200		)	#		—			80,883			(80,883		)	#
Loss from equity method investment	1,384		—			1,384			#		5,132			—			5,132			#
Total operating expense	49,158		113,729			(64,571		)	(56.8	)%	155,804			226,927			(71,123		)	(31.3	)%
Segment operating income (loss)	28,092		(53,624		)	81,716			#		76,316			(11,430		)	87,746			#
Interest expense	14,877		22,169			(7,292		)	(32.9	)%	44,246			64,931			(20,685		)	(31.9	)%
Depreciation and amortization	3,390		3,536			(146		)	(4.1	)%	10,553			10,322			231			2.2	%
EBITDA	46,359		(27,919		)	74,278			#		131,115			63,823			67,292			#
Loss on extinguishment of debt	—		69,200			(69,200		)			—			80,883			(80,883		)
Restructuring costs	—		—			—					1,617			—			1,617
Legal and related costs	870		(1,297		)	2,167					870			(1,297		)	2,167
Other adjustments	42		(99		)	141					(206		)	(224		)	18
U.K. related costs	348		—			348					8,844			—			8,844
Share-based compensation	2,771		2,089			682					7,587			6,112			1,475
Loss from equity method investment	1,384		—			1,384					5,132			—			5,132
Adjusted EBITDA	$	51,774	$	41,974		$	9,800		23.3	%	$	154,959		$	149,297		$	5,662		3.8	%
# - Variance greater than 100% or not meaningful.

U.S. Segment Results - For the three months ended September 30, 2019 and 2018

Third quarter 2019 U.S. revenues increased by $13.8 million, or 6.2%, to $237.1 million, compared to the prior-year period. U.S. revenue growth was driven by a $21.0 million, or 5.0%, increase in gross combined loans receivable to $444.0 million at

September 30, 2019, compared to $423.0 million at September 30, 2018. Additionally, U.S. revenue for the three months ended September 30, 2019 included interest earned on past-due Open-End loan balances of approximately $13 million from the Q1 2019 Open-End Loss Recognition Change.

The provision for losses was consistent year-over-year despite the increase in loan receivables. The year-over-year provision change included incremental provision expense from the Q1 2019 Open-End Loss Recognition Change, consistent with the incremental revenue impact. Excluding the impact of the Q1 2019 Open-End Loss Recognition Change, provision expense declined year-over-year due to lower sequential growth in gross loans receivable compared to the prior year, offset by the aforementioned NCO rate increases. U.S. gross combined loans receivable grew $35.7 million, or 8.7%, sequentially during the third quarter of 2019, compared to sequential growth of $55.3 million, or 15.0%, during the prior-year period.

U.S. cost of providing services for the three months ended September 30, 2019 was $56.8 million, a decrease of $3.1 million, or 5.2%, compared to $59.9 million for the three months ended September 30, 2018, primarily due to lower advertising costs associated with repositioning our California Installment loan portfolio in advance of regulatory changes.

Corporate, district and other operating expenses increased $10.5 million, or 47.1%, compared to the same period in the prior year, primarily due to $5.3 million of higher performance-based variable compensation costs, $0.9 million related to certain litigation matters and $0.7 million of additional share-based compensation.

U.S. interest expense for the third quarter of 2019 decreased by $7.3 million compared to the prior-year period, primarily due to our refinancing activities in 2018. During the third quarter of 2018, we issued $690.0 million of 8.25% Senior Secured ~~Notes.~~Notes and used the proceeds from the issuance to extinguish our $527.5 million 12.00% Senior Secured Notes and U.S. SPV facility.

U.S. Segment Results - For the nine months ended September 30, 2019 and 2018

For the nine months ended September 30, 2019, U.S. revenues increased by $55.2 million, or 8.9%, to $673.2 million. U.S. revenue growth was driven by a $21.0 million, or 5.0%, increase in gross combined loans receivable, to $444.0 million at September 30, 2019, compared to $423.0 million at September 30, 2018. Additionally, U.S. revenue for the nine months ended September 30, 2019 included interest earned on past-due Open-End loan balances of approximately $30 million from the Q1 2019 Open-End Loss Recognition Change, offset by related higher provision rate and higher provision for losses.

The provision for losses' increase of $41.0 million, or 17.1%, was primarily due to changes in allowance coverage in the prior year. The nine months ended September 30, 2018 included $12.5 million of provision benefit from changes in allowance coverage rates, whereas the nine months ended September 30, 2019 included $1.7 million of incremental expense. Excluding the impact of the allowance coverage change, provision for losses increased $30.1 million, or 12.0%, because of the Q1 2019 Open-End Loss Recognition Change.

U.S. cost of providing services for the nine months ended September 30, 2019 was $160.6 million, a decrease of $2.3 million, or 1.4%, compared to $162.9 million for the nine months ended September 30, 2018, primarily due to lower advertising costs associated with repositioning our California Installment loan portfolio in advance of regulatory changes.

Corporate, district and other operating expenses increased $25.3 million, or 31.2%, compared to the same period in the prior year, primarily due to $8.8 million of U.K. disposition-related costs, $7.7 million higher performance-based variable compensation costs, $3.1 million higher professional fees and $1.6 million of restructuring costs.

U.S. interest expense for the first nine months of 2019 decreased by $20.7 million compared to the prior-year period, primarily due to our refinancing activities in 2018. During the third quarter of 2018, we issued $690.0 million of 8.25% Senior Secured Notes and used the proceeds from the issuance to extinguish our $527.5 million 12.00% Senior Secured Notes and our U.S. SPV facility.


Canada Segment Results	Three Months Ended March 31,										Three Months Ended September 30,										Nine Months Ended September 30,
(dollars in thousands, unaudited)	2019			2018		Change $			Change %
											2019		2018			Change $			Change %		2019		2018		Change $			Change %
Revenue	$	51,820		$	46,250	$	5,570		12.0	%	$	60,195	$	46,209		$	13,986		30.3	%	$	166,269	$	139,502	$	26,767		19.2	%
Provision for losses	17,405			12,550		4,855			38.7	%	20,870		24,436			(3,566		)	(14.6	)%	57,733		51,346		6,387			12.4	%
Net revenue	34,415			33,700		715			2.1	%	39,325		21,773			17,552			80.6	%	108,536		88,156		20,380			23.1	%
Advertising costs	1,432			2,726		(1,294		)	(47.5	)%	2,238		3,717			(1,479		)	(39.8	)%	5,271		9,147		(3,876		)	(42.4	)%
Non-advertising costs of providing services	17,289			16,472		817			5.0	%	17,698		17,567			131			0.7	%	52,068		50,718		1,350			2.7	%
Total cost of providing services	18,721			19,198		(477		)	(2.5	)%	19,936		21,284			(1,348		)	(6.3	)%	57,339		59,865		(2,526		)	(4.2	)%
Gross margin	15,694			14,502		1,192			8.2	%	19,389		489			18,900			#		51,197		28,291		22,906			81.0	%
Corporate, district and other expenses	5,208			4,897		311			6.4	%	5,768		5,135			633			12.3	%	16,617		14,791		1,826			12.3	%
Interest expense	2,962			57		2,905			#		2,487		1,234			1,253			#		7,831		1,298		6,533			#
Total operating expense	8,170			4,954		3,216			64.9	%	8,255		6,369			1,886			29.6	%	24,448		16,089		8,359			52.0	%
Segment operating income	7,524			9,548		(2,024		)	(21.2	)%
Segment operating income (loss)											11,134		(5,880		)	17,014			#		26,749		12,202		14,547			#
Interest expense	2,962			57		2,905			#		2,487		1,234			1,253			#		7,831		1,298		6,533			#
Depreciation and amortization	1,194			1,128		66			5.9	%	1,219		1,087			132			12.1	%	3,627		3,306		321			9.7	%
EBITDA	11,680			10,733		947			8.8	%	14,840		(3,559		)	18,399			#		38,207		16,806		21,401			#
Restructuring and other costs	135			—		135
Restructuring costs											—		—			—					135		—		135
Legal and related costs											—		119			(119		)			—		119		(119		)
Other adjustments	(111		)	16		(127		)			441		50			391					297		223		74
Adjusted EBITDA	$	11,704		$	10,749	$	955		8.9	%	$	15,281	$	(3,390	)	$	18,671		#		$	38,639	$	17,148	$	21,491		#
# - Change greater than 100% or not meaningful.	# - Change greater than 100% or not meaningful.										# - Change greater than 100% or not meaningful.

Canada Segment Results - For the three months ended ~~March 31,~~September 30, 2019 and 2018

Canada revenue increased ~~$5.6~~$14.0 million, or ~~12.0%~~30.3%, to ~~$51.8~~$60.2 million for the three months ended ~~March 31,~~September 30, 2019, from ~~$46.3~~$46.2 million in the ~~prior year~~prior-year period. On a constant currency basis, revenue increased ~~$6.5~~$14.6 million, or ~~13.9%~~31.6%. Revenue growth in Canada was impacted favorably by the significant asset growth and ~~product mix shift from~~ the ~~accelerated~~product transition from Single-Pay and Unsecured Installment loans to Open-End ~~loans that have a lower yield.~~loans. Additionally, Canada ~~revenues~~revenue for the three months ended ~~March 31,~~September 30, 2019 ~~includes accrued~~included interest earned on past-due Open-End loan balances of ~~$1.3~~approximately $2 million from the Q1 2019 Open-End Loss Recognition Change, offset by higher provision rate and higher allowance discussed further below. Single-Pay yields were negatively affected by regulatory rate changes in Ontario and British Columbia. On a constant currency basis, total gross loan receivables grew by $137.3 million, or 133.8%, compared to the same period in the prior year.Change.

~~As expected,~~

Single-Pay revenue decreased ~~$14.7~~$2.7 million, or ~~42.9%~~11.6%, to ~~$19.6~~$20.2 million for the three months ended ~~March 31,~~September 30, 2019, and Single-Pay receivables decreased ~~$15.4~~$1.0 million, or ~~31.5%~~2.8%, to ~~$33.4~~$35.1 million from ~~$48.7~~$36.1 million in the prior year. The decreases in Single-Pay revenue and receivables were due to the continued product mix shift in Canada from Single-Pay loans to Open-End loans and by regulatory changes effective January and July 2018 that lowered Single Pay pricing year-over-year.

~~Canadian~~Canada non-Single-Pay revenue increased ~~$20.3~~$16.6 million, or ~~169.5%~~71.1%, to ~~$32.2~~$40.0 million compared to ~~$12.0~~$23.4 million the same quarter a year ago, on ~~$144.5~~growth of $94.1 million, or ~~268.2%~~59.8%, in related loan balances. The increase was primarily related to the launch of Open-End products in Alberta and Ontario in the fourth quarter of 2017, and significant expansion of the Open-End product in Ontario in late 2018. Additionally, as a result of the increase in Open-End loans, ancillary revenue increased $3.8 million versus the same quarter a year ago, primarily driven by an increase in sales of insurance to Open-End loan customers.

The provision for losses decreased $3.6 million, or 14.6%, to $20.9 million for the three months ended September 30, 2019, compared to $24.4 million in the prior-year period. This decrease included incremental provision expense from the Q1 2019 Open-End Loss Recognition Change, consistent with the incremental revenue impact. Excluding the impact of the Q1 2019 Open-End Loss Recognition Change, provision expense declined year-over-year because of lower sequential gross receivable growth and seasoning of the Open-End loans. Total Open-End and Installment loans grew $18.0 million sequentially during the third quarter of 2019, compared to sequential growth of $82.7 million during the same prior-year period. Total Canada NCO rates improved 425 bps year-over-year due to the seasoning of Open-End loans. On a constant currency basis, provision for losses decreased by $3.4 million, or 13.8%, compared to the prior-year period.

Canada cost of providing services for the three months ended September 30, 2019 was $19.9 million, a decrease of $1.3 million, or 6.3%, compared to $21.3 million for the three months ended September 30, 2019, primarily due to lower advertising costs from mix-shift and stability in our Canadian portfolio following the Ontario deployment of Open-End loans in the third quarter of 2018. There was no material impact on the cost of providing services from exchange rate changes.

Canada operating expenses increased $1.9 million, or 29.6%, to $8.3 million in the three months ended September 30, 2019 from $6.4 million in the prior-year period, primarily due to interest expense on the Non-Recourse Canada SPV Facility that began in August 2018.

Canada Segment Results - For the nine months ended September 30, 2019 and 2018

Canada revenue increased $26.8 million, or 19.2%, to $166.3 million for the nine months ended September 30, 2019 from $139.5 million in the prior-year period. On a constant currency basis, revenue increased $32.2 million, or 23.1%. Revenue growth in Canada was impacted favorably by the significant asset growth and product transition from Single-Pay and Unsecured Installment loans to Open-End loans that have a lower yield. Additionally, Canada revenues for the nine months ended September 30, 2019 included interest earned on past-due Open-End loan balances of approximately $5 million from the Q1 2019 Open-End Loss Recognition Change, offset by higher provision rate and higher provision for losses.

Single-Pay revenue decreased $31.6 million, or 34.9%, to $58.9 million for the nine months ended September 30, 2019, and Single-Pay receivables decreased $1.0 million, or 2.8%, to $35.1 million from $36.1 million in the prior year. The decreases in Single-Pay revenue and receivables were due to the continued product mix shift in Canada from Single-Pay loans to Open-End loans and by regulatory changes effective January and July 2018 that lowered Single Pay pricing year-over-year.

Canada non-Single-Pay revenue increased $58.4 million, or 119.0%, to $107.4 million compared to $49.0 million for the prior-year period, on $94.1 million, or 59.8%, growth in related loan balances. The increase was primarily related to the launch of Open-End products in Alberta and Ontario in the fourth quarter of 2017, and significant expansion of the Open-End product in Ontario in late 2018. As a result of the increase in Open-End loans, ancillary revenue increased $13.1 million versus the same period a year ago, primarily driven by an increase in sales of insurance to Open-End loan customers.

The provision for losses increased ~~$4.9~~$6.4 million, or ~~38.7%~~12.4%, to ~~$17.4~~$57.7 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 compared to ~~$12.6~~$51.3 million in the prior-year period ~~because of upfront~~primarily due to provisioning on Open-End ~~loan volumes~~loans and mix shift from Single-Pay loans and Unsecured Installment to Open-End loans. Total Open-End ~~and Installment~~ loans grew by ~~$24.8~~$18.1 million sequentially during the ~~first~~third quarter of 2019, compared to sequential growth of ~~$1.9~~$87.4 million in the ~~first~~third quarter of 2018. On a constant currency basis, provision for losses increased by ~~$5.1~~$8.3 million, or ~~41.0%.~~16.1%, compared to the prior-year period.

The total cost of providing services in Canada ~~remained consistent~~decreased $2.5 million, or 4.2%, to $57.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 compared to $59.9 million in the prior-year period. Advertising costs ~~were lower~~decreased by ~~$1.3~~$3.9 million, or ~~47.5%~~42.4%, primarily from mix-shift and stability in our Canadian portfolio following the Ontario deployment of Open-End loans in the third quarter of 2018, partially offset by an increase in non-advertising cost of providing services of ~~$0.8~~$1.4 million. There was no material impact on the cost of providing services from exchange rate changes.

Canada operating expenses increased ~~$3.2~~$8.4 million, or ~~64.9%~~52.0%, to ~~$8.2~~$24.4 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2019 from ~~$5.0~~$16.1 million in the ~~prior year~~prior-year period primarily due to interest expense on the Non-Recourse Canada SPV Facility that began in August 2018.

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 from continuing operations plus or minus gain (loss) on extinguishment of debt, restructuring and other costs, certain legal and related costs, loss from equity method investment, goodwill and intangible asset impairments, certain costs related to the disposition of U.K., transaction-related costs, share-based compensation, intangible asset amortization and cumulative tax effect of 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 our Condensed Consolidated Financial Statements).

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

We believe that investors regularly rely on non-GAAP financial measures, such as Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA, to assess operating performance and that such measures may highlight trends in 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 below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe that Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors

and other interested parties in the evaluation of public companies in our industry, many of which present Adjusted Net Income, Adjusted Earnings per Share, EBITDA and/or Adjusted EBITDA when reporting their results.

In addition to reporting loans receivable information in accordance with 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 our U.S. GAAP Condensed Consolidated Financial Statements. Adjusted Net Income, Adjusted Earnings per Share, EBITDA, Adjusted EBITDA and Gross Combined Loans Receivable should not be considered as alternatives to income from continuing operations, segment operating income or any other performance measure derived in accordance with U.S. 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 we record a loss from continuing operations under ~~U.S.~~US GAAP, shares outstanding utilized to calculate Diluted Earnings per Share from continuing operations are equivalent to basic shares outstanding. Shares outstanding utilized to calculate Adjusted Earnings per Share from continuing

operations reflect the number of diluted shares we would have reported if reporting net income from continuing operations under ~~U.S.~~US GAAP.

As noted above, Gross Combined Loans Receivable includes loans originated by third-party lenders through CSO programs which are not included in the Condensed Consolidated Financial Statements but from which we earn revenue and for which we provide a guarantee to the lender. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.

We evaluate our stores based on revenue per store, provision for losses at each store and store-level EBITDA, with consideration given to the length of time a store has been open and its geographic location. We monitor newer stores for their progress to profitability and their rate of revenue growth.

We believe Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and 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 from continuing operations 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 March 31,										Three Months Ended September 30,									Nine Months Ended September 30,
(in thousands except per share data, unaudited)	2019			2018			Change $		Change %
Net income from continuing operations	$	28,673		$	24,913		$	3,760	15.1	%
											2019			2018			Change $		Change %	2019			2018			Change $		Change %
Net income (loss) from continuing operations											$	27,987		$	(42,590	)	$	70,577	#	$	74,327		$	1,041		$	73,286	#
Adjustments:
Loss on extinguishment of debt ⁽¹⁾	—			11,683							—			72,165						—			83,848
Restructuring costs ⁽²⁾	1,752			—							—			—						1,752			—
U.K. related costs ⁽³⁾	7,817			—
Share-based cash and non-cash compensation ⁽⁴⁾	2,172			1,842
Legal and related costs ⁽³⁾											870			(1,178		)				870			(1,178		)
U.K. related costs ⁽⁴⁾											348			—						8,844			—
Loss from equity method investment ⁽⁵⁾											1,384			—						5,132			—
Share-based compensation ⁽⁶⁾											2,771			2,089						7,587			6,112
Intangible asset amortization	796			663							751			714						2,308			2,017
Impact of tax law changes ⁽⁵⁾	—			1,800
Impact of tax law changes ⁽⁷⁾											—			(600		)				—			1,200
Cumulative tax effect of adjustments	(3,260		)	(3,689		)					(1,232		)	(19,185		)				(5,554		)	(23,579		)
Adjusted Net Income	$	37,950		$	37,212		$	738	2.0	%	$	32,879		$	11,415		$	21,464	#	$	95,266		$	69,461		$	25,805	37.2	%

Net income from continuing operations	$	28,673		$	24,913
Net income (loss) from continuing operations											$	27,987		$	(42,590	)				$	74,327		$	1,041
Diluted Weighted Average Shares Outstanding	47,319			47,416							46,010			45,853						46,887			48,061
Adjusted Diluted Average Shares Outstanding											46,010			48,352						46,887			48,061
Diluted Earnings per Share from continuing operations	$	0.61		$	0.53		$	0.08	15.1	%	$	0.61		$	(0.93	)	$	1.54	#	$	1.59		$	0.03		$	1.56	#
Per Share impact of adjustments to Net Income	0.19			0.25							0.10			1.17						0.44			1.42
Adjusted Diluted Earnings per Share	$	0.80		$	0.78		$	0.02	2.6	%	$	0.71		$	0.24		$	0.47	#	$	2.03		$	1.45		$	0.58	40.0	%

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


	Three Months Ended March 31,											Three Months Ended September 30,											Nine Months Ended September 30,
(in thousands, except per share data, unaudited)	2019			2018			Change $			Change %
Net income from continuing operations	$	28,673		$	24,913		$	3,760		15.1	%
												2019			2018			Change $			Change %		2019			2018			Change $			Change %
Net income (loss) from continuing operations												$	27,987		$	(42,590	)	$	70,577		#		$	74,327		$	1,041		$	73,286		#
Provision for income taxes	10,046			11,467			(1,421		)	(12.4	)%	11,239			(16,914		)	28,153			#		28,738			(269		)	29,007			#
Interest expense	17,690			22,354			(4,664		)	(20.9	)%	17,364			23,403			(6,039		)	(25.8	)%	52,077			66,229			(14,152		)	(21.4	)%
Depreciation and amortization	4,920			4,535			385			8.5	%	4,609			4,623			(14		)	(0.3	)%	14,180			13,628			552			4.1	%
EBITDA	61,329			63,269			$	(1,940	)	(3.1	)%	61,199			(31,478		)	92,677			#		169,322			80,629			88,693			#
Loss on extinguishment of debt ⁽¹⁾	—			11,683								—			69,200								—			80,883
Restructuring costs ⁽²⁾	1,752			—								—			—								1,752			—
U.K. related costs ⁽³⁾	7,817			—
Share-based cash and non-cash compensation ⁽⁴⁾	2,172			1,842
Other adjustments ⁽⁶⁾	(216		)	(43		)
Legal and related costs ⁽³⁾												870			(1,178		)						870			(1,178		)
U.K. related costs ⁽⁴⁾												348			—								8,844			—
Loss from equity method investment ⁽⁵⁾												1,384			—								5,132			—
Share-based compensation ⁽⁶⁾												2,771			2,089								7,587			6,112
Other adjustments ⁽⁸⁾												483			(49		)						91			(1		)
Adjusted EBITDA	72,854			76,751			(3,897		)	(5.1	)%	$	67,055		$	38,584		$	28,471		73.8	%	$	193,598		$	166,445		$	27,153		16.3	%
Adjusted EBITDA Margin	26.2		%	30.6		%						22.6		%	14.3		%						23.1		%	22.0		%



(1)	For the ~~three~~nine months ended ~~March 31,~~September 30, 2018, the ~~$11.7~~$80.9 million of loss on extinguishment of debt ~~was~~is comprised of (i) $11.7 million incurred in the first quarter of 2018 for the redemption of $77.5 million of the CURO Financial Technologies Corp.'s ("CFTC") 12.00% Senior Secured Notes due 2022 ~~issued by CFTC.~~and (ii) $69.2 million incurred in the third quarter of 2018 for the redemption of the remaining $525.7 million of these notes. The $69.2 million of third quarter loss on extinguishment of debt is comprised of $54.0 million make whole premium and $15.2 million of deferred financing costs, net of premium/discounts. An additional $3.0 million is included in related costs for the three and nine months ended September 30, 2018 for duplicative interest paid through September 30, 2018 prior to repayment of the remaining 12.00% Senior Secured Notes and the Non-Recourse U.S. SPV Facility.
(2)	Restructuring costs of ~~$1.7~~$1.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 were due to eliminating 121 positions in North America. The store employee reductions help better align store staffing with in-store customer traffic and volume patterns, as more of our growth comes from online channels and as store customers require less time in stores as they conduct more of the follow-up activities online. The elimination of certain corporate positions relate to efficiency initiatives and ~~will allow~~has allowed the Company to reallocate investment to strategic growth activities.
(3)	Legal and related costs for the three and nine months ended September 30, 2019 include costs related to certain securities litigation and related matters of $0.6 million and legal and advisory costs of $0.3 million related to the repurchase of shares from FFL. Legal and related costs for the three and nine months ended September 30, 2018 includes (i) a $1.8 million reduction of the liability related to our offer to reimburse certain bank overdraft or non-sufficient funds fees because of possible borrower confusion about certain electronic payments we initiated on their loans and (ii) settlement of certain matters in California and Canada. For more information, see Note 18 - "Contingent Liabilities" of the Notes to Consolidated Financial Statements included in our Form 10-K filed with the SEC on March 18, 2019.
(4)	U.K. related costs of ~~$7.8~~$8.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 relate to placing the U.K. ~~Subsidiaries~~subsidiaries into administration on February 25, 2019, which ~~includes~~included $7.6 million to obtain consent from the holders of the 8.25% Senior Secured Notes to deconsolidate the U.K. Segment and ~~$0.2~~$1.2 million for other costs.
~~(4)~~(5)	The Loss from equity method investment for the nine months ended September 30, 2019 of $5.1 million includes (i) our share of the estimated GAAP net loss of Zibby and (ii) a $3.7 million loss recognized during the second quarter of 2019. From April through July of 2019, Zibby completed an equity raising round at a value per share less than the value per share raised in prior raises. As of September 30, 2019, we owned 42.3% of the outstanding shares of Zibby on a fully diluted basis.
(6)	We approved the adoption of share-based compensation plans during 2010 and 2017 for key members of senior management. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period.
~~(5)~~(7)	As a result of the Tax Cuts and Jobs Act of 2017 ("2017 Tax ~~Act,~~Act"), which became law on December 22, 2017, we provided an estimate of the new repatriation tax as of December 31, 2017. Subsequent to further guidance published in the first quarter of 2018, we booked additional tax expense of $1.2 million for the 2017 repatriation tax. Additionally, the 2017 Tax Act provided for ~~the GILTI~~a new Global Intangible Low-Taxed Income tax starting in 2018 and we estimated and provided tax expense of $0.6 million asin the first quarter of ~~March 31, 2018.~~2018.We revised this expense in the third quarter of 2018 based on changes in our geographic mix of income.
~~(6)~~(8)	Other adjustments include deferred rent and the intercompany foreign exchange impact. Deferred rent represents the non-cash component of rent expense.

Currency Information

We operate in the U.S. and Canada and ~~discontinued operating in the U.K. as of February 25, 2019. Our~~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.

Constant Currency Analysis

We have operations in the U.S. and Canada. In the three months ended ~~March 31,~~September 30, 2019 and 2018, ~~approximately 18.6%~~20.2% and ~~18.4%~~17.1%, 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.

Three Months Ended ~~March 31,~~September 30, 2019 and 2018

Average Exchange Rates
Three Months Ended March 31, Change
2019 2018 $ %
Canadian Dollar $ 0.7525
$ 0.7912

($0.0387 ) (4.9 )%



	Average Exchange Rates
	Three Months Ended September 30,				Change
	2019		2018		$			%
Canadian Dollar	$	0.7576	$	0.7652		($0.0076	)	(1.0	)%

Nine Months Ended September 30, 2019 and 2018



	Average Exchange Rates
	Nine Months Ended September 30,				Change
	2019		2018		$			%
Canadian Dollar	$	0.7526	$	0.7771		($0.0245	)	(3.2	)%

The following constant currency analysis removes the impact of the fluctuation in foreign exchange rates and utilizes constant currency results in our analysis of segment performance. Our constant currency assessment assumes foreign exchange rates in the current fiscal periods remained the same as in the prior fiscal periods. All conversion rates below are based on the U.S. Dollar equivalent to 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.

The revenues and gross margin below during the three months ended ~~March 31,~~September 30, 2019 were calculated using the actual average exchange rate during the three months ended ~~March 31, 2018.~~September 30, 2018 (in thousands, unaudited).


	Three Months Ended March 31,				Change					Three Months Ended September 30,				Change
(dollars in thousands)	2019		2018		$		%
										2019		2018		$		%
Canada – constant currency basis:
Revenues	$	52,701	$	46,250	$	6,451	13.9	%		$	60,805	$	46,209	$	14,596	31.6	%
Gross Margin	15,970		14,502		1,468		10.1	%		19,597		489		19,108		#
# - variance greater than 100% or not meaningful									# - variance greater than 100% or not meaningful

The revenues and gross margin below during the nine months ended September 30, 2019 were calculated using the actual average exchange rate during the nine months ended September 30, 2018 (in thousands, unaudited).



	Nine Months Ended September 30,				Change
	2019		2018		$		%
Canada – constant currency basis:
Revenues	$	171,664	$	139,502	$	32,162	23.1	%
Gross Margin	52,861		28,291		24,570		86.8	%

LIQUIDITY AND CAPITAL RESOURCES

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

As of ~~March 31,~~September 30, 2019, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. We anticipate that our primary use of cash will be to fund growth in our working capital, finance capital expenditures, meet our debt obligations, and fund our share repurchase program. Our level of cash flow provided by operating activities typically experiences some seasonal fluctuation related to our levels of net income and changes in working capital levels, particularly loans receivable.

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

Borrowings

Our ~~long-term~~ debt consisted of the following as of ~~March 31,~~September 30, 2019 and December 31, 2018 (net of deferred financing costs) (in thousands):


	March 31,		December 31,		September 30,		December 31,
(dollars in thousands)	2019		2018
					2019		2018
8.25% Senior Secured Notes (due 2025)	$	677,153	$	676,661	$	677,924	$	676,661
Non-Recourse Canada SPV Facility	88,915		107,479		102,483		107,479
Senior Revolver	—		20,000		25,000		20,000
Cash Money Revolving Credit Facility	—		—
Long-term debt	$	766,068	$	804,140
Debt					$	805,407	$	804,140

~~Available~~ Credit Facilities and Other Resources

8.25% Senior Secured Notes

As noted above, we issued our 8.25% Senior Secured Notes in August 2018. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year. In connection with the 8.25% Senior Secured Notes, we capitalized financing costs of ~~approximately~~ $12.9 million, the balance of which is included in the Condensed Consolidated Balance Sheets as a component of ~~Long-Term~~ Debt, and is being amortized over the term of the 8.25% Senior Secured Notes and included as a component of interest expense.

12.00% Senior Secured Notes

In February and November 2017, CFTC issued $470.0 million and $135.0 million, respectively, of 12.00% Senior Secured Notes ("12.00% Senior Secured Notes"). Interest on the 12.00% Senior Secured Notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The February 2017 issuance refinanced similar notes that were nearing maturity. The extinguishment of the existing notes resulted in a pretax loss of ~~$12.5~~$80.9 million during ~~the~~ September 2018. In connection with these 2017 debt issuances we capitalized financing costs of ~~approximately~~ $18.3 million, the balance of which is included in the Condensed Consolidated Balance Sheets as a component of ~~Long-Term~~ Debt, and is being amortized over the term of the 12.00% Senior Secured Notes ~~and included~~ as a component of interest expense.

On March 7, 2018, CFTC redeemed $77.5 million of its 12.00% Senior Secured Notes using a portion of the proceeds from our initial public offering as required by the underlying indentures (the transaction whereby the 12.00% Senior Secured Notes were partially redeemed, the “Redemption”) at a price equal to 112.00% of the principal amount of the 12.00% Senior Secured Notes redeemed, plus accrued and unpaid interest paid thereon to the date of Redemption. Following the Redemption, $527.5 million of the original outstanding principal amount of the 12.00% Senior Secured Notes remain outstanding. The Redemption was conducted pursuant to the Indenture governing the 12.00% Senior Secured Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent.

The remainder of the 12.00% Senior Secured Notes were extinguished effective September 7, 2018 as a result of the issuance of the 8.25% Senior Secured Notes as described above.

Non-Recourse U.S. SPV Facility

In November 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the “SPV Borrower”) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provided for an $80.0 million term loan and $70.0 million of revolving borrowing capacity that ~~can~~could expand over time (“Non-Recourse U.S. SPV Facility”). The loans ~~bear~~bore interest at an annual rate of up to 12.00% plus the greater of (i) 1.0% per annum and (ii) ~~the~~ three-month LIBOR. The SPV Borrower also pays a 0.50% per annum ~~commitment~~ fee on the unused portion of the commitments. In connection with this facility, wethe capitalized financing costs at the time of ~~approximately~~extinguishment, as discussed below, were $5.3 million, ~~the balance~~net of ~~which we include~~amortization. These capitalized financing costs were included in the Condensed ~~Consolidating~~Consolidated Balance ~~Sheets~~Sheet as a component of ~~Long-term debt~~"Debt" and ~~was being~~were amortized over the term of the Non-Recourse U.S. SPV Facility. During September 2018, a portion of the proceeds from the 8.25% Senior Secured Notes were used to extinguish the revolver's balance of $42.4 million.

On October 11, 2018, we extinguished the remaining term loan balance of $80.0 million. We made the final termination payment of $2.7 million on October 26, 2018, resulting in a loss on the extinguishment of debt of $9.7 million for the quarter ~~ending~~ended December 31, 2018.

Non-Recourse Canada SPV Facility

On August 2, 2018, CURO Canada Receivables Limited Partnership, a newly created, bankruptcy-remote special purpose vehicle (the “Canada SPV Borrower”) and a wholly-owned subsidiary, entered into a four-year revolving credit facility with Waterfall Asset Management, LLC that provides for C$175.0 million of initial borrowing capacity and the ability to expand such capacity up to C$250.0 million (“Non-Recourse Canada SPV Facility”). The loans bear interest at an annual rate of 6.75% plus the three-month CDOR. As of ~~March 31,~~September 30, 2019, ~~the carrying amount of~~ outstanding borrowings ~~from~~under the Non-Recourse Canada SPV Facility ~~was $88.9~~were $102.5 million, ~~after a reduction~~net of ~~net balances drawn~~deferred financing costs of ~~$20.9 million during the quarter.~~$3.3 million.

Senior Revolver

On September 1, 2017, we closed on a $25.0 million Senior Secured Revolving Loan Facility (the "Senior Revolver"). In February 2018, the Senior Revolver capacity was increased to $29.0 million. In November 2018, the Senior Revolver capacity was increased to $50.0 million as permitted by the Indenture to the Senior Secured Notes. The Senior Revolver is now syndicated with participation by four banks. The negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for our 8.25% Senior Secured Notes. We believe this facility complements our other financing sources, while providing seasonal short-term liquidity. Under the Senior Revolver, there is $50.0 million maximum availability, including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR (which may not be negative) plus 5% per annum and is repayable on demand. The terms of the Senior Revolver require that the outstanding balance be ~~reduced to~~ zero for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all of our subsidiaries that guarantee our 8.25% Senior Secured Notes and is secured by a lien on substantially all of our assets and the guarantor subsidiaries that is senior to the lien securing our 8.25% Senior Secured Notes. The Senior Revolver ~~was undrawn at March 31, 2019, after paying down the~~had an outstanding balance of ~~$20.0~~$25.0 million ~~during the quarter.~~at September 30, 2019.

In connection with this facility we capitalized financing costs of ~~approximately~~ $0.1 million, the balance of which we included in the Condensed Consolidated Balance Sheets as a component of “Other assets,” and are being amortized over the term of the facility and included as a component of interest expense.

Cash Money Revolving Credit Facility

Cash Money Cheque Cashing, Inc., one of our Canadian subsidiaries, maintains a C$10 million revolving credit facility with Royal Bank of Canada. The Cash Money Revolving Credit Facility provides short-term liquidity required to meet the working capital needs of our Canadian operations. Aggregate draws under the revolving credit facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and (ii) C$10 million. As of ~~March 31,~~September 30, 2019 and December 31, 2018, the borrowing capacity under our revolving credit facility was reduced by C$0.3 million in stand-by-letters of credit.

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

The Cash Money Revolving Credit Facility was undrawn at ~~March 31,~~September 30, 2019 and December 31, 2018.

Cash Flows

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


	Three Months Ended March 31,						Nine Months Ended September 30,
(dollars in thousands)	2019			2018
							2019			2018
Net cash provided by continuing operating activities	$	140,999		$	122,743		$	464,293		$	357,079
Net cash used in continuing investing activities	(69,634		)	(58,853		)	(391,188		)	(421,423		)
Net cash used in continuing financing activities	(41,265		)	(83,255		)
Net cash (used in) provided by continuing financing activities							(58,488		)	90,449

Continuing Operating Activities

Net cash provided by continuing operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 was ~~$141.0~~$464.3 million, primarily attributable to net income from continuing operations of ~~$28.7~~$74.3 million, the effect of non-cash reconciling items of $364.3 million, which includes provision for loan losses of ~~$102.4~~$338.3 million, and changes in our operating assets and liabilities ~~of $12.1 million, partially offset by other non-cash expenses of $2.1~~which provided $25.6 million. ~~Major components of non-cash expenses include depreciation and amortization, provision for loan losses, and share-based compensation expense.~~

Net cash provided by continuing operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 was ~~$122.7 million, primarily attributable~~$357.1 million. Contributing to current year net ~~income of $24.9 million, and~~cash provided by continuing operating activities non-cash ~~expenses,~~reconciling items, such as depreciation and amortization, ~~and the~~ provision for

loan losses and loss on extinguishment of debt for a total of ~~$94.0 million, partially~~$398.1 million. Contributions from non-cash reconciling items were offset by changes in our operating assets and liabilities of ~~$3.9~~$42.1 million. ~~Fees and service charges on our loans receivable change represented $5.1 million of the total change in operating assets and liabilities.~~

Continuing Investing Activities

Net cash used in continuing investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 was ~~$69.6~~$391.2 million, primarily reflecting the net origination of loans of ~~$64.9~~$374.4 million. In addition, we used cash to purchase ~~approximately $3.1~~$8.7 million of property and equipment, including software ~~licenses.~~licenses and $8.2 million of additional investment in Zibby.

Net cash used in continuing investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 was ~~$58.9~~$421.4 million, primarily reflecting the net origination of loans of ~~$56.4~~$412.4 million. In addition, we used cash to purchase ~~approximately $1.5~~$8.0 million of property and equipment, including software licenses, and to purchase $1.0 million of ~~Cognical Holding~~Zibby preferred shares.

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

Continuing Financing Activities

Net cash used in continuing financing activities for the nine months ended September 30, 2019 was $58.5 million, primarily due to (i) $27.1 million of cash used to repurchase 2,000,000 shares of our common stock, at a price of $13.55 per share, owned by FFL and (ii) $25.1 million of cash used to repurchase 2,089,644 shares of our common stock under the share repurchase program which began during the second quarter of 2019.

Net cash provided by continuing financing activities for the ~~three~~nine months ended ~~March 31, 2019~~September 30, 2018 was ~~$41.3~~$90.4 million. During the quarter, we ~~made a $20.0 million payment on the Senior Revolver to reduce the outstanding balance to zero and made net repayments of $20.9 million on the Non-Recourse Canada SPV Facility.~~

~~Net cash used in continuing financing activities for the three months ended March 31, 2018 was $83.3 million. We redeemed $77.5~~extinguished $527.5 million of our 12.00% Senior Secured Notes ~~for $86.8 million (which included $9.3~~from the issuance of our 8.25% Senior Secured Notes of $690.0 million. As part of the extinguishment, we paid $63.4 million of call premium). The underwriters of our 2017 initial public offering exercised their over-allotment option on January 5, 2018 and acquired one million shares of our common stock, providing net proceeds to us of $13.1 million.premium. We also ~~had~~entered into a Non-Recourse Canada SPV facility during the quarter, which provided $89.9 million of proceeds and was offset by net ~~borrowings of $9.5 million from~~payments on our U.S. SPV ~~Facility~~facility of $44.6 million. Net proceeds from the issuance of common stock and ~~our ABL Facility.~~proceeds from the exercise of stock options were $12.0 million as of September 30, 2018.

Contractual Obligations

There have been no significant developments with respect to our contractual obligations since December 31, 2018, as described in our 2018 Form 10-K.

Regulatory Environment and Compliance

There have been no significant developments with respect to our regulatory environment and compliance since December 31, 2018, as described in our 2018 Form 10-K except for the ~~year~~following:

California Assembly Bill 539

On September 13, 2019, the California legislature passed Assembly Bill 539 which imposes an interest rate cap on all consumer loans between $2,500 and $10,000 of 36%, plus the Federal Funds Rate. On October 10, 2019, Governor Newsom signed the bill into law and it is scheduled to become effective on January 1, 2020. Revenue from California Unsecured and Secured Installment loans amounted to 11.8% and 13.0% of total revenue from continuing operations for the trailing three and 12 months ended, respectively, September 30, 2019. As of September 30, 2019, California Unsecured and Secured Installment gross loans receivable were $86.4 million and $41.4 million, respectively. While we continue to optimize our installment loan portfolio in California as a result of this bill, we continue to evaluate the effect on our results of operations and financial condition and alternatives available to service customers in the California market. Refer to “Risk Factors” in Item 1A. of Part II of this Form 10-Q for additional information regarding the impact of this bill to our business.

California Consumer Privacy Act

In 2018, the California Consumer Privacy Act (“CCPA”) was passed into law, effective January 1, 2020. CCPA broadens consumer rights with respect to personal information, imposing expanded obligations to disclose the categories and uses of personal information a business collects, providing consumers a right to access that information, a right to opt out of the sale of personal information and the right to request that a business delete personal information about the consumer subject to certain exemptions. CCPA provides for civil penalties for violations, as well as a private right of action for data breaches, which may increase the costs of data breach litigation. CCPA has been subject to a handful of amendments, of which AB25 is most impactful to us. Although AB25 sunsets January 2021, it narrows the definition of who constitutes a consumer, thereby excluding employees from CCPA rights other than notice and a private right of action for data breach. The State Attorney General has proposed regulations to help interpret the CCPA; final adoption is expected in February 2020. A potential ballot initiative may have additional impact should it make it to the polls in November 2020. Despite amendments and regulations, the CCPA remains ambiguous in many regards, and we anticipate further amendments both for CCPA and specifically addressing employee data next year. Other states and possibly the federal government may adopt laws similar to the CCPA. While it is too early to know its full impact, these developments could ultimately result in the imposition of requirements on CURO and other consumer financial service providers that could increases costs or otherwise adversely affect our business.

British Columbia Business Practices and Consumer Amendment Act

Effective January 1, 2017, the British Columbia Ministry of Public Safety and Solicitor General (the "Ministry") reduced the total cost of borrowing from C$23 per C$100 lent to C$17 per C$100 lent. A further reduction to C$15 per C$100 lent came into effect on September 1, 2018. On February 26, 2019, the Minister of Public Safety and Solicitor General introduced in Parliament Bill 7 titled “Business Practices and Consumer Amendment Act." This bill received Royal Assent on May 16, 2019 and became law. There are no material changes to our current operations as a result of this legislation. The bill primarily allows the Ministry to (i) define a high cost credit product and (ii) require licensing and consumer protection oversight. It also authorizes the Ministry to prescribe regulations regarding high cost credit products including a cooling off period between loans, cost/optional services disclosure requirements, and prohibition of concurrent loan products. It is too early to predict the outcome of the regulations setting process and its impact on our operations.

CFPB Rulemaking Update

In February 2019, the CFPB issued two notices of proposed rulemaking proposing (i) to delay the August 19, 2019 compliance date for the so-called "Mandatory Underwriting Provisions" of the 2017 Final Payday, Vehicle Title, and Certain High-Cost Installment Loans (the "2017 Final Rule") Rule to November 19, 2020 and (ii) to rescind such Mandatory Underwriting Provisions (the “2019 Proposed Rule”). The CFPB issued a final rule on June 6, 2019 delaying the compliance date for the Mandatory Underwriting Provisions of the 2017 Final Rule to November 19, 2020. The Mandatory Underwriting Provisions which the 2019 Proposed Rule would rescind, which are still under consideration include: (i) a provision that it is an unfair and abusive practice for a lender to make a covered short-term or longer-term balloon-payment loan, including our payday and vehicle title loans with a term of 45 days or less, without reasonably determining that consumers have the ability to repay those loans according to their terms; (ii) a provision that prescribes mandatory underwriting requirements for making this ability-to-repay determination; (iii) a provision that exempts certain loans from the mandatory underwriting requirements; and (iv) a provision that establishes related definitions, reporting, and recordkeeping requirements. The 2017 Final Rule is stayed, however, based on an order entered August 6, 2019 by the Western District of Texas, Austin Division (the "Court Order"). The parties in the litigation are required to file a Joint Status Report with the court no later than December ~~31,~~6, 2019.

The compliance date for the "Payment Provision" of the 2017 Final Rule was August 19, 2019, but is also currently stayed pursuant to the Court Order. Under the proposed "Payment Provisions":

If two consecutive attempts to collect money from a particular account of the borrower, made through any channel (e.g., paper check, ACH, prepaid card) are returned for insufficient funds, the lender cannot make any further attempts to collect from such account unless the borrower has provided a new and specific authorization for additional payment transfers. The 2017 Final Rule contains specific requirements and conditions for the authorization. While the CFPB has explained that these provisions are designed to limit bank penalty fees to which consumers may be subject, and while banks do not charge penalty fees on debit card authorization requests, the 2017 Final Rule nevertheless treats card authorization requests as payment attempts subject to these limitations.

A lender generally must give the consumer at least three business days advance notice before attempting to collect payment by accessing a consumer’s checking, savings, or prepaid account. The notice must include information such as the date of the payment request, payment channel and payment amount (broken down by principal, interest, fees, and other charges), as well as additional information for “unusual attempts,” such as when the payment is for a different amount than the regular payment, initiated on a date other than the date of a regularly scheduled payment or initiated in a different channel that the immediately preceding payment attempt. A lender must also provide the borrower with a "consumer rights notice" in a prescribed form after two consecutive failed payment attempts.

The CFPB has indicated it has received a formal request to revisit the treatment of debit cards under the Payment Provisions and intends to examine the Payment Provisions further. If the CFPB determines that further action is warranted, it may commence a separate rulemaking initiative.

CFPB Supervision and Examination: The CFPB has supervisory powers over many providers of consumer financial products and services, including explicit authority to examine (and require registration) of payday lenders. The CFPB released its Supervision and Examination Manual, which includes a section on Short-Term, Small-Dollar Lending Procedures, and began field examinations of industry participants in 2012. The CFPB commenced its first supervisory examination of us in October 2014. The scope of the CFPB’s examination included a review of our Compliance Management System, our Short-Term Small Dollar lending procedures, and our compliance with Federal consumer financial protection laws. The 2014 examination had no material impact on our financial condition or results of operations, and we received the final CFPB Examination Report in September 2015.

The CFPB commenced its second examination of us in February 2017 and completed the related field work in June 2017. The scope of the 2017 examination included a review of our Compliance Management System, our substantive compliance with applicable federal laws, and matters requiring attention. The 2017 examination had no material impact on our financial condition or results of operations, and we received the final CFPB Examination Report in February 2018.

The CFPB commenced its third examination of us on October 7, 2019. This examination is a limited scope review to ensure continued compliance. While we do not expect that matters arising from this examination will have a material impact on us, we have made in recent years and are continuing to make, at least in part to meet CFPB expectations, certain enhancements to our compliance procedures and consumer disclosures.

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 2018 Form 10-K for the year ended December 31, 2018. There have been no material changes to the amounts presented therein.

LIBOR is used as a reference rate for certain of our financial instruments, such as our revolving credit facilities. LIBOR is set to be phased out at the end of 2021. We are currently reviewing how the LIBOR phase-out will affect the Company, but we do not expect the impact to be material.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including without limitation, controls and procedures designed to ensure that information required to be disclosed in reports 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.

Based on an evaluation of our disclosure controls and procedures as disclosed in Item 9A of our 2018 Form 10-K, ~~for the year ended December 31, 2018,~~ our management concluded that our internal control over financial reporting was not effective at December 31, 2018 because of the identification of a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Remediation and changes in internal control over financial reporting

We are taking actions to improve our internal control over financial reporting, including implementing plans as identified in Item 9A of our 2018 Form 10-K, ~~filed with the SEC on March 18, 2019,~~ to address our material weakness. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed in 2019.

Except as noted above, 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 ~~March 31,~~September 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitation on the effectiveness of controls

Our management, including our ~~CEO~~Chief Executive Officer and ~~CFO,~~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.

PART 2.II. OTHER INFORMATION

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

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

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

There were no material changes to our risk factors as described in our 2018 Form 10-K for the year ended December 31, ~~2018.~~2018, except for the following:

Our industry is strictly regulated everywhere we operate, and these regulations could have a material adverse effect on our business and results of operations.

We are subject to substantial regulation everywhere we operate. In the U.S. and Canada, our business is subject to a variety of statutes and regulations enacted by government entities at the federal, state or provincial, and municipal levels. These regulations affect our business in many ways, and include regulations relating to:

the amount we may charge in interest rates and fees;

the terms of our loans (such as maximum and minimum durations), repayment requirements and limitations, number and frequency of loans, maximum loan amounts, renewals and extensions, required repayment plans and reporting and use of state-wide databases;

underwriting requirements;

collection and servicing activity, including initiation of payments from consumer accounts;

the establishment and operation of CSOs or CABs;

licensing, reporting and document retention;

unfair, deceptive and abusive acts and practices;

discrimination;

disclosures, notices, advertising and marketing;

loans to members of the military and their dependents;

requirements governing electronic payments, transactions, signatures and disclosures;

check cashing;

money transmission;

currency and suspicious activity recording and reporting;

privacy and use of personally identifiable information and consumer data, including credit reports;

anti-money laundering and counter-terrorist financing requirements, including currency and suspicious transaction recording and reporting;

posting of fees and charges; and

repossession practices in certain jurisdictions where we operate as a title lender, including requirements regarding notices and prompt remittance of excess proceeds for the sale of repossessed automobiles.

For a more detailed description of the regulations to which we are subject and the regulatory environment in the jurisdictions in which we operate see “Regulatory Environment and Compliance” in our 2018 Form 10-K and in this Form 10-Q.

These regulations, outside of our control, affect our business in many ways, including affecting the loans and other products we can offer, the prices we can charge, the other terms of our loans and other products, the customers to whom we are allowed to lend, how we obtain our customers, how we communicate with our customers, how we pursue repayment of our loans and many others. Consequently, these restrictions adversely affect our loan volume, revenues, delinquencies and other aspects of our business, including our results of operations.

For example, in June 2018, we discontinued the use of secondary payment cards for affected borrowers who do not explicitly reauthorize the use of secondary payment cards. For these borrowers, in the event we cannot obtain payment through the bank account or payment card listed on the borrower’s application and as authorized by the borrower, we must rely exclusively on other collection methods, such as delinquency notices and/or collection calls. The discontinuation for affected borrowers of our current use of secondary cards which have not been reauthorized by the borrower will increase collections costs and reduce collections effectiveness. Even in advance of the effective date of the 2017 Final CFPB Rule (and even if the 2017 Final CFPB Rule does not become effective), it is possible that we will make further changes to our payment practices in a manner that will increase costs and/or reduce revenues.

In addition, on September 13, 2019, the California legislature passed Assembly Bill 539 which imposes an interest rate cap on all consumer loans between $2,500 and $10,000 of 36% plus the Federal Funds Rate. On October 10, 2019, Governor Newsom

signed the bill into law and it is scheduled to become effective on January 1, 2020. Revenue from California Unsecured and Secured Installment loans amounted to 11.8% and 13.0% of total revenue from continuing operations for the trailing three and 12 months, respectively, for the period ended September 30, 2019. As of September 30, 2019, California Unsecured and Secured Installment gross loans receivable were $86.4 million and $41.4 million, respectively. We continue to evaluate the effect on our results of operations and financial condition as a result of this bill and alternatives available to service customers in the California market. If we are unsuccessful in managing the transition of our California business and operations from affected installment loans to existing and alternative products, Assembly Bill 539 could have a material adverse effect on our business and results of operations.

Further, during 2018, the California Consumer Privacy Act (“CCPA”) was passed into law, effective January 1, 2020. CCPA broadens consumer rights with respect to their personal information, imposing expanded obligations to disclose the categories and uses of personal information a business collects, providing consumers a right to access that information, a right to opt out of the sale of personal information and the right to request that a business delete personal information about the consumer subject to certain exemptions. CCPA provides for civil penalties for violations, as well as a private right of action for data breaches, which may increase the costs of data breach litigation. CCPA has been subject to a handful of amendments, of whichAB25 is the most impactful to us. Although AB25 sunsets January 2021, it narrows the definition of who constitutes a consumer, thereby excluding employees from CCPA rights other than notice and a private right of action for data breach. The State Attorney General has proposed regulations to help interpret the CCPA; final adoption is expected in February 2020. A potential ballot initiative may have additional impact should it make it to the polls in November 2020. Despite amendments and regulations, the CCPA remains ambiguous in many regards, and we anticipate further amendments both for CCPA and specifically addressing employee data next year. Other states and possibly the federal government may adopt laws similar to the CCPA. While it is too early to know its full impact, these developments could ultimately result in the imposition of requirements on CURO and other consumer financial service providers that could increases costs or otherwise adversely affect our business.

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

~~None.~~The 2017 Incentive Plan permits the netting of common stock upon vesting of restricted stock units to satisfy individual tax withholding requirements. During the quarter ended September 30, 2019, we did not reacquire any shares of common stock related to such tax withholdings.

In April 2019, our Board of Directors authorized a share repurchase program providing for the repurchase of up to $50.0 million of our common stock. The repurchase program, which began June 2019, will continue until completed or terminated. We expect the purchases to be made from time-to-time in the open market, in privately negotiated transactions, or both, at our discretion and subject to market conditions and other factors. Any repurchased shares will be available for use in connection with equity plans or other corporate purposes.

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

The following table provides information with respect to purchases we made of our common stock during the quarter ended September 30, 2019.



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that may yet be Purchased under the Plans or Programs⁽¹⁾ (In millions)
July 2019	907,500	$	10.68	907,500	$	37.8
August 2019	611,694	13.33		611,694	29.6
September 2019	392,847	14.28		392,847	24.0
Total	1,912,041	$	12.27	1,912,041	$	24.0
(1) As of the end of the period.

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

None.

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

None.

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

(a) Disclosure of Unreported 8-K Information

None.

(b) Material Changes to Director Nominee Procedures

None.

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



Exhibit no.		Exhibit Description
3.1		Amended and Restated Certificate of Incorporation of the Registrant (previously filed as Exhibit 3.1 to the Current Report on Form 8-K filed on December 11, 2017)
3.2		Form of Amended and Restated Bylaws of the Registrant (previously filed as Exhibit 3.2 to the Current Report on Form 8-K filed on December 11, 2017)
10.1		Employment and Non-Competition Agreement, dated October 24, 2019, by and between Donald F. Gayhardt, CURO Group Holdings, Corp. and CURO Management LLC +*
10.2		Employment and Non-Competition Agreement, dated October 24, 2019, ~~Short-Term Incentive Compensation Program (previously filed as~~by and between Roger Dean, CURO Group Holdings, Corp. and CURO Management LLC+*
10.3		Employment and Non-Competition Agreement, dated October 24, 2019, by and between William Baker, CURO Group Holdings, Corp. and CURO Management LLC+*
10.4		Employment and Non-Competition Agreement, dated October 24, 2019, by and between Terry Pittman, CURO Group Holdings, Corp. and CURO Management LLC+*
10.5		Employment and Non-Competition Agreement, dated October 24, 2019, by and between E.M. (Vin) Thomas IV, CURO Group Holdings, Corp. and CURO Management LLC+*
10.6		Share Repurchase Agreement between CURO Group Holdings Corp. and Friedman, Fleisher & Lowe Capital Partners II, L.P. and affiliated investment funds, dated August 30, 2019 (Incorporated by reference to Exhibit ~~99.1~~10.1 to the Company's Current Report on Form 8-K filed on ~~March 19, 2019)~~
~~10.2~~		~~CURO Group Holdings Corp. 2019 U.S. Long-Term Incentive Compensation Program (previously filed as Exhibit 99.2 to the Current Report on Form 8-K filed on March 19, 2019)~~
~~10.3~~		~~CURO Group Holdings Corp. 2019 non-U.S. Long-Term Incentive Compensation Program (previously filed as Exhibit 99.3 to the Current Report on Form 8-K filed on March 19,~~September 3, 2019)
31.1		Certifications of Chief Executive Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certifications of Chief Financial Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended
101		The following unaudited financial information from the Company's Quarterly Report on Form 10-Q for the period ended ~~March 31,~~September 30, 2019, filed with the SEC on ~~May 6,~~November 4, 2019, formatted in Extensible Business Reporting Language (“XBRL”) includes: (i) Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2019 and December 31, 2018, (ii) Condensed Consolidated Statements of Operations for the quarter ended ~~March 31,~~September 30, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Income for the quarter ended ~~March 31,~~September 30, 2019 and 2018, (iv) Condensed Consolidated Statements of Cash Flows for the quarter ended ~~March 31,~~September 30, 2019 and 2018, and (v) Notes to Condensed Consolidated Financial Statements**

* Filed herewith.

+ Indicates management contract or compensatory plan, contract or arrangement.

~~SIGNATURE~~Signature

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

Dated: ~~May 6,~~November 4, 2019 CURO Group Holdings Corp.



	By:	/s/ Roger Dean
		Roger Dean
		Executive Vice-President and Chief Financial Officer

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