What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-03 compared with 2024-02-05 · 141 added, 177 removed, 468 unchanged (40% of the section changed)

7 unchanged sentences

The Company is also a leading provider of technology-driven, retail POS payment solutions focused on serving credit-constrained consumers.

The Company’s retail POS payment solutions business line consists solely of the operations of AFF, which focuses on LTO products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners in all 50 states in the U.S., the District of Columbia and Puerto Rico.

and Puerto Rico.

AFF’s retail partners provide consumer goods and services to their customers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions.

The Company’s two business lines are organized into three reportable segments.

pawn segment consists of pawn operations in the U.S., while the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, Colombia and El Salvador.

pawn segment consists of pawn operations in the U.S.

while the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, El Salvador and Colombia.

The retail POS payment solutions segment consists of the operations of AFF in the U.S.

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The Company has determined no allowance related to credit losses on pawn loans is required, as the fair value of the pledged collateral is significantly in excess of the pawn loan amount.

Pawn inventories and revenue recognition — Pawn inventories represent merchandise acquired from forfeited pawn loans and merchandise purchased directly from the general public.

The Company also retails limited quantities of new or refurbished merchandise obtained directly from wholesalers and manufacturers.

Pawn inventories from forfeited pawn loans are recorded at the amount of the pawn principal on the unredeemed goods, exclusive of accrued interest.

Pawn inventories purchased directly from customers, wholesalers and manufacturers are recorded at cost.

The cost of pawn inventories is determined on the specific identification method.

Pawn inventories are stated at the lower of cost or net realizable value and, accordingly, valuation allowances are established if pawn inventory carrying values are in excess of estimated selling prices, net of direct costs of disposal.

Management has evaluated pawn inventories and determined that a valuation allowance is not necessary.

The Company’s merchandise sales are primarily retail sales to the general public in its pawn stores.

The Company records sales revenue at the time of the sale.

The Company presents merchandise sales net of any sales or value-added taxes collected.

Some jewelry inventory is melted and processed at third-party facilities, and the precious metal and diamond content is sold at either

prevailing market commodity prices or a previously agreed upon price with a commodity buyer.

The Company records revenue from these wholesale scrap jewelry transactions when a price has been agreed upon and the Company ships the commodity to the buyer.

Leased merchandise and revenue recognition — The Company provides merchandise, consisting primarily of furniture and mattresses, appliances, jewelry, electronics and automotive products, to customers of its merchant partners for lease under certain terms agreed to by the customer.

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pawn, Latin America pawn and retail POS payment solutions.

The Company assesses goodwill for impairment at a reporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors, such as strategy and changes in key personnel, and overall financial performance.

The Company may assess goodwill for impairment at a reporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors, such as strategy and changes in key personnel, and overall financial performance.

If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to the quantitative impairment testing methodology, or at the Company’s option, it may proceed directly to the quantitative impairment testing methodology for a reporting unit.

See Note 14 of Notes to Consolidated Financial Statements.

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Operating Results for the Twelve Months Ended December 31, 2024 Compared to the Twelve Months Ended December 31, 2023

The COVID-19 pandemic and government responses thereto had an initial adverse and material impact on pawn loan demand in 2020, which negatively impacted pawn receivables, inventories and revenues.

This initial adverse impact in pawn loan demand was offset in large part by a positive impact in merchandise sales, especially among stay-at-home products, which were enhanced by federal stimulus payments directly to consumers.

Throughout 2021 and 2022, as the contributory impacts of the pandemic normalized, pawn loan demand steadily recovered and pawn receivables, inventories and revenues are now ahead of pre-pandemic levels.

Inflationary pressures on the Company’s customer base helped drive further demand for consumer credit, which contributed to the recovery in pawn loan demand.

The following tables and related discussion set forth key operating and financial data for the Company’s operations by reporting segment as of and for the years ended December 31, 2024 and 2023.

8 unchanged sentences

Retail merchandise sales (1)

$ 969,371 $ 854,190 13 %

Pawn loan fees 505,262 435,762 16 %

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Cost of retail merchandise sold (2)

560,970 490,544 14 %

Cost of wholesale scrap jewelry sold 77,683 64,545 20 %

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Segment pre-tax operating margin 25 % 25 %

(1) Includes $4.1 million and $6.5 million of retail merchandise sales from intersegment transactions during 2024 and 2023, respectively, related to the Company offering AFF’s LTO payment solution in its U.S.

pawn stores that are eliminated upon consolidation.

Excluding these intersegment sales, consolidated U.S.

retail merchandise sales during 2024 and 2023 totaled $965.3 million and $847.7 million, respectively.

(2) Includes $2.2 million and $3.5 million of cost of retail merchandise sold from intersegment transactions during 2024 and 2023, respectively, related to the Company offering AFF’s LTO payment solution in its U.S.

pawn stores that are eliminated upon consolidation.

Excluding these intersegment sales, consolidated U.S.

cost of retail merchandise sold during 2024 and 2023 totaled $558.8 million and $487.1 million, respectively.

The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the U.S.

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Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories) 2.8 times 2.8 times

1,200 1,183 1 %

Average store count

1,195 1,135 5 %

Retail Merchandise Sales Operations

retail merchandise sales increased 13% to $969.4 million during 2024 compared to $854.2 million for 2023.

Same-store retail sales decreased 2% during 2023 compared to 2022.

The increase in total retail sales was primarily due to sales contributions from acquired stores, whereas the decrease in same-store retail sales was primarily due to lower than normal inventory levels in these locations during much of 2023 compared to 2022.

Same-store retail sales increased 6% during 2024 compared to 2023.

The increase in total retail sales was primarily due to incremental sales contributions from acquired stores and an increase in same-store sales.

During 2024, the gross profit margin on retail merchandise sales in the U.S.

was 42% compared to a margin of 43% during 2023, reflecting continued demand for value-priced, pre-owned merchandise and low levels of aged inventory.

inventories increased 10% from $202.6 million at December 31, 2022 to $221.8 million at December 31, 2023.

The increase was primarily due to inventories at acquired stores and a modest increase in same-store inventories.

inventories increased 11% to $245.5 million at December 31, 2024 compared to $221.8 million at December 31, 2023.

The increase was primarily due to incremental inventories from acquired stores and an increase in same-store inventories as a result of the higher pawn loan balances noted below.

Inventories aged greater than one year in the U.S.

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pawn loan receivables as of December 31, 2024 increased 15% in total and 12% on a same-store basis compared to December 31, 2023.

The increase in total pawn receivables was due to incremental pawn loans from acquired stores and an increase in same-store pawn receivables, which the Company believes was primarily due to continued inflationary pressures driving additional demand for pawn loans and tightened underwriting for other competing forms of consumer credit.

The Company believes the increase in same-store pawn receivables was primarily due to continued inflationary pressures driving additional demand for pawn loans and higher gold prices, which increased customers’ jewelry collateral value.

pawn loan fees increased 16% to $505.3 million during 2024 compared to $435.8 million for 2023.

Same-store pawn loan fees increased 11% during 2024 compared to 2023.

The increase in total and same-store pawn loan fees was primarily due to higher average pawn receivables and increased portfolio yield, driven by slightly improved customer redemption rates.

The increase in total and same-store pawn loan fees was primarily due to store growth and increased same-store pawn receivables.

Segment Expenses

store operating expenses increased 11% to $451.5 million during 2023 compared to $407.0 million during 2022.

The increase in operating expenses was primarily due to acquired stores and a 5% increase in same-store operating expenses primarily due to inflationary increases in wages and certain other operating costs and increased store-level incentive compensation, driven by increased net revenues and segment profit during 2023 compared to 2022.

store operating expenses increased 12% to $503.6 million during 2024 compared to $451.5 million during 2023 while same-store operating expenses increased 5% compared with the prior year.

The increase in operating expenses was primarily due to an increase in the average store count.

Segment Pre-Tax Operating Income

segment pre-tax operating income for 2024 was $397.3 million, which generated a pre-tax segment operating margin of 25% compared to $336.3 million and 25% in the prior year, respectively.

The increase in the segment pre-tax operating income and margin reflected an improved net revenue margin partially offset by the increase in segment expenses.

The increase in the segment pre-tax operating income reflected increased net revenue from both acquired and existing stores, partially offset by an increase in segment expenses.

Latin America Pawn Segment

Latin America pawn segment pre-tax operating income for 2023 compared to 2022 benefited from an 11% favorable change in the average value of the Mexican peso compared to the U.S.

The translated value of Latin American earning assets as of December 31, 2023 compared to December 31, 2022 also benefited from a 13% favorable change in the end-of-period Mexican peso compared to the U.S.

Latin America pawn segment pre-tax operating income for 2024 compared to 2023 was impacted by a 3% unfavorable change in the average value of the Mexican peso compared to the U.S.

The translated value of Latin American earning assets as of December 31, 2024 compared to December 31, 2023 was also impacted by a 20% unfavorable change in the end-of-period Mexican peso compared to the U.S.

Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates.

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Year Ended December 31, Increase /

December 31, 2023 (Decrease)

2023 2022 Increase (Non-GAAP) (Non-GAAP)

December 31, Increase / 2024 (Decrease)

2024 2023 (Decrease) (Non-GAAP) (Non-GAAP)

Latin America Pawn Segment

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Constant Currency Basis

December 31, Increase /

As of December 31, 2023 (Decrease)

2023 2022 Increase (Non-GAAP) (Non-GAAP)

As of December 31, 2024 Increase

2024 2023 (Decrease) (Non-GAAP) (Non-GAAP)

Latin America Pawn Segment

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Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories) 4.2 times 4.4 times

1,826 1,814 1 %

Average store count

1,821 1,791 2 %

Retail Merchandise Sales Operations

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Same-store retail sales increased 1% (4% on a constant currency basis) during 2024 compared to 2023.

The increase in total and same-store retail sales was primarily due to greater demand for value-priced consumer goods, with such demand believed to be driven in part by the impact of increases in government-mandated minimum wage and benefit programs in Mexico benefiting many cash-constrained consumers.

The gross profit margin on retail merchandise sales was 35% during 2023 compared to 36% during 2022.

Latin America inventories increased 5% (8% decrease on a constant currency basis) from $85.7 million at December 31, 2022 to $90.2 million at December 31, 2023.

The decrease in constant currency inventories was primarily due to the greater demand for value-priced consumer goods mentioned above and slightly lower pawn loan forfeiture rates in 2023 compared to 2022.

The increase in total and same-store retail sales was primarily due to increased inventory levels throughout 2024 and greater demand for value-priced, pre-owned merchandise.

The gross profit margin on retail merchandise sales was 35% during both 2024 and 2023.

Latin America inventories decreased 1% (17% increase on a constant currency basis) to $89.1 million at December 31, 2024 compared to $90.2 million at December 31, 2023.

The increase in constant currency inventories was primarily due to increases in pawn loan receivable balances over the past several quarters creating more forfeited inventory.

Inventories aged greater than one year in Latin America were 1% at both December 31, 2024 and 2023.

Pawn Lending Operations

Latin America pawn loan receivables increased 18% (3% on a constant currency basis) as of December 31, 2023 compared to December 31, 2022.

On a same-store basis, pawn loan receivables increased 17% (3% on a constant currency basis) as of December 31, 2023 compared to December 31, 2022.

The smaller than expected increase in constant currency total and same-store pawn receivables is believed to be driven in part by the impact of increases in government-mandated minimum wage and benefit programs in Mexico that benefited many cash-constrained consumers.

Latin America pawn loan receivables decreased 5% (13% increase on a constant currency basis) as of December 31, 2024 compared to December 31, 2023.

On a same-store basis, pawn loan receivables decreased 6% (12% increase on a constant currency basis) as of December 31, 2024 compared to December 31, 2023.

The increase in constant currency total and same-store pawn receivables is primarily due to increasing demand for pawn loans and larger loan sizes, driven in part by higher gold prices and a slightly increased mix of higher value jewelry loans.

Latin America pawn loan fees increased 4% (7% on a constant currency basis) to $231.9 million during 2024 compared to $222.8 million for 2023.

Same-store pawn loan fees increased 18% (5% on a constant currency basis) during 2023 compared to 2022.

The increase in total and same-store constant currency pawn loan fees was primarily due to increased pawn receivable balances.

Same-store pawn loan fees also increased 4% (7% on a constant currency basis) during 2024 compared to 2023.

The constant currency increase in total and same-store pawn loan fees was primarily due to increased average pawn receivable balances outstanding during 2024.

Segment Expenses

Store operating expenses increased 26% (13% on a constant currency basis) to $243.1 million during 2023 compared to $193.3 million during 2022.

Operating expenses increased 7% (9% on a constant currency basis) to $259.3 million during 2024 compared to $243.1 million during 2023.

Same-store operating expenses increased 6% (9% on a constant currency basis) compared to the prior year.

The increase in total and same-store operating expenses was primarily driven by general inflationary impacts and increases in the federally mandated minimum wage and increased costs of required employee benefit programs.

The increase in total and same-store operating expenses was primarily driven by increased store counts, accelerated store opening activity, general inflationary impacts and continued increases in the federally mandated minimum wage and increased costs associated with required employee benefit programs.

Segment Pre-Tax Operating Income

The segment pre-tax operating income for 2024 was $150.2 million, which generated a pre-tax segment operating margin of 19% compared to $156.2 million and 19% in the prior year, respectively.

The increase in the segment pre-tax operating income reflected an increase in net revenue, partially offset by the increase in segment expenses.

The decrease in the segment pre-tax operating income reflected an increase in segment expenses, partially offset by the increase in net revenue.

Retail POS Payment Solutions Segment

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Operating expenses include salary and benefit expenses of certain operations-focused departments, merchant partner incentives, bank and other payment processing charges, credit reporting costs, information technology costs, advertising costs and other operational costs incurred by AFF.

2022 Increase

2023 2022 Increase (Non-GAAP) (Non-GAAP)

Administrative expenses and amortization expense of intangible assets related to the purchase of AFF are not included in the segment pre-tax operating income.

2024 2023 (Decrease)

Retail POS Payment Solutions Segment

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Depreciation of leased merchandise (1)

434,915 413,546 5 %

Provision for lease losses (2)

163,937 177,418 (8) %

Provision for loan losses 143,827 123,030 17 %

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Segment pre-tax operating income $ 128,629 $ 132,016 (3) %

(1) As a result of purchase accounting, AFF’s as reported amounts for 2022 contain significant fair value adjustments.

The adjusted amounts for 2022 exclude these fair value purchase accounting adjustments.

(1) Includes $1.6 million and $2.1 million of depreciation of leased merchandise from intersegment transactions during 2024 and 2023, respectively, related to the Company offering AFF’s LTO payment solution in its U.S.

pawn stores that are eliminated upon consolidation.

Excluding these intersegment transactions, consolidated depreciation of leased merchandise during 2024 and 2023 totaled $433.3 million and $411.5 million, respectively.

(2) Includes $0.5 million and $1.6 million of provision for lease losses from intersegment transactions during 2024 and 2023, respectively, related to the Company offering AFF’s LTO payment solution in its U.S.

pawn stores that are eliminated upon consolidation.

Excluding these intersegment transactions, consolidated provision for lease losses during 2024 and 2023 totaled $163.4 million and $175.9 million, respectively.

The following table provides a detail of gross transaction volumes originated during the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands):

2023 2022 Increase

December 31, Increase /

2024 2023 (Decrease)

Leased merchandise $ 568,635 $ 623,069 (9) %

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The following table details retail POS payment solutions earning assets as of December 31, 2024 as compared to December 31, 2023 (dollars in thousands):

As of December 31,

2023 2022 Increase

As of December 31, Increase /

2024 2023 (Decrease)

Leased merchandise, net:

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pawn stores that are eliminated upon consolidation.

Excluding the intersegment transactions, consolidated net leased merchandise as of December 31, 2023 and 2022 totaled $171.2 million and $153.3 million, respectively.

Excluding these intersegment transactions, consolidated net leased merchandise as of December 31, 2024 and 2023 totaled $128.4 million and $171.2 million, respectively.

The following table details the changes in the allowance for lease and loan losses and other portfolio metrics during the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands):

2022 Increase

2023 2022 Increase (Non-GAAP) (Non-GAAP)

2024 2023 (Decrease)

Allowance for lease losses:

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20.0 % 21.8 %

(1) Includes a provision increase of $1.6 million and $0.6 million from intersegment transactions during 2023 and 2022, respectively, related to the Company offering AFF’s LTO payment solution in its U.S.

(1) Includes $0.5 million and $1.6 million of provision for lease losses from intersegment transactions during 2024 and 2023, respectively, related to the Company offering AFF’s LTO payment solution in its U.S.

pawn stores that are eliminated upon consolidation.

Excluding the intersegment transactions, the provision for lease losses during 2023 and 2022 totaled $175.9 million and $139.5 million, respectively.

Excluding these intersegment transactions, consolidated provision for lease losses during 2024 and 2023 totaled $163.4 million and $175.9 million, respectively.

(2) Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.

(3) Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses (adjusted to exclude any fair value purchase accounting adjustments, as applicable).

(3) Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.

(4) Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due).

(5) As a result of purchase accounting, AFF’s as reported allowance for lease losses during 2022 contains significant fair value adjustments.

The adjusted amounts during 2022 exclude these fair value purchase accounting adjustments.

As a result of the significance of these accounting adjustments, the Company does not believe that the unadjusted leased merchandise portfolio metrics during 2022 provide a useful comparison against the 2023 amounts.

LTO Operations

Leased merchandise, before allowance for lease losses, increased 14% as of December 31, 2023 compared to December 31, 2022.

This increase was primarily due to increased transaction volumes from new merchant locations added since December 31, 2022.

The allowance for lease losses increased 20% to $95.8 million as of December 31, 2023 compared to $79.6 million as of December 31, 2022.

As a percentage of lease merchandise, the allowance increased from 34% at December 31, 2022 to 36% at December 31, 2023.

This increase was primarily due to the 20% increase in gross transaction volume and a slight increase in lease loss provisioning rates used during 2023 compared to 2022.

Leased merchandise income increased 21% to $752.7 million during 2023 compared to $622.2 million during 2022, which was primarily due to the higher leased merchandise balances.

Leased merchandise, before allowance for lease losses, decreased 22% as of December 31, 2024 compared to December 31, 2023.

The decrease was primarily due to decreased gross transaction volumes originated due to weakness in furniture originations and the bankruptcy filings in 2024 for two of AFF’s larger retail furniture merchant partners.

The allowance for lease losses decreased 16% to $80.7 million as of December 31, 2024 compared to $95.8 million as of December 31, 2023, which was primarily due to the decrease in leased merchandise, partially offset by slightly higher lease loss provisioning rates used during 2024 as compared to 2023.

As a percentage of lease merchandise, the allowance was 39% at December 31, 2024 and 36% at December 31, 2023.

Leased merchandise income increased 2% to $766.2 million during 2024 compared to $752.7 million during 2023, which was primarily due to slightly higher average rental rates, partially offset by slightly lower average leased merchandise balances outstanding during 2024 compared to 2023.

Depreciation of leased merchandise increased 5% to $434.9 million during 2024 compared to $413.5 million during 2023.

On an adjusted basis, excluding the impacts of fair value purchase accounting, depreciation of leased merchandise increased 19%.

The increase was primarily due to higher leased merchandise balances.

As a percentage of leased merchandise income, depreciation of leased merchandise decreased slightly from 56% during 2022 (adjusted to exclude purchase accounting adjustments) to 55% during 2023.

Provision for lease losses increased 27% to $177.4 million during 2023 compared to $140.1 million during 2022, which was primarily due to the 20% increase in gross transaction volumes and an increase in lease loss provisioning rates used during 2023 compared to 2022, as a result of slightly higher net charge-off rates during 2023 compared to 2022 and slightly higher delinquency rates as of December 31, 2023 compared to December 31, 2022.

As a percentage of gross transaction volume, the provision for lease losses increased from 27% during 2022 to 28% during 2023.

As a percentage of leased merchandise income, depreciation of leased merchandise increased to 57% during 2024 compared to 55% during 2023, primarily as a result of a slight increase in customers taking advantage of early buyout or other early payment options.

Provision for lease losses decreased 8% to $163.9 million during 2024 compared to $177.4 million during 2023, which was primarily due to the 9% decrease in gross transaction volumes.

As a percentage of gross transaction volume, the provision for lease losses increased to 29% during 2024 compared to 28% during 2023.

Retail Finance Operations

Finance receivables, before allowance for loan losses, increased 26% as of December 31, 2024 compared to December 31, 2023.

This increase in the outstanding receivable balance was primarily due to increased transaction volumes from new merchant locations added since December 31, 2022.

The allowance for loan losses increased 14% to $96.5 million as of December 31, 2023 compared to $84.8 million as of December 31, 2022.

As a percentage of finance receivables, the allowance increased from 45% at December 31, 2022 to 46% at December 31, 2023.

This increase was primarily due to the 22% increase in gross transaction volume compared to 2022.

The increase was primarily due to increased gross transaction volumes in certain non-furniture industry verticals.

The allowance for loan losses increased 21% to $117.0 million as of December 31, 2024 compared to $96.5 million as of December 31, 2023, which was primarily due to the increase in finance receivables, partially offset by slightly lower loan loss provisioning rates used during 2024 as compared to 2023.

As a percentage of finance receivables, the allowance was 44% at December 31, 2024 compared to 46% at December 31, 2023.

Interest and fees on finance receivables increased 5% to $245.9 million during 2024 compared to $233.8 million during 2023.

On an adjusted basis, excluding the impacts of fair value purchase accounting, interest and fees on finance receivables increased 4% which was primarily due to higher average year-over-year finance receivable balances, partially offset by a slight decline in portfolio yield primarily as a result of AFF expanding its offerings and merchant relationships in certain services sector verticals in 2023, some of which provide slightly lower interest rates.

Provision for loan losses increased 4% to $123.0 million during 2023 compared to $118.5 million during 2022, which was primarily due to the 22% increase in gross transaction volumes, mostly offset by a decrease in loan loss provisioning rates used during 2023 compared to 2022.

As a percentage of gross transaction volume, the provision for loan losses decreased from 36% during 2022 to 30% during 2023.

The 2022 loan loss provisioning rates, especially during the third and fourth quarters of 2022, were elevated as a result of slightly higher expected charge-offs on certain loan products.

However, those actual charge-offs came in lower than expected, resulting in some release of loan loss reserves in the first half of 2023.

The increase was primarily due to the higher year-over-year finance receivable balances, partially offset by a slight decline in portfolio yield primarily as a result of AFF expanding its offerings and merchant relationships in certain services sector verticals during 2024, some of which are provided at lower interest rates.

Provision for loan losses increased 17% to $143.8 million during 2024 compared to $123.0 million during 2023, which was primarily due to the 26% increase in gross transaction volumes, partially offset by a slight decrease in the net provisioning rates used during 2024 based on lower than expected loss rates on older vintages.

As a percentage of gross transaction volume, the provision for loan losses decreased to 28% during 2024 compared to 30% during 2023.

Segment Expenses

Operating expenses increased 7% to $137.5 million during 2023 compared to $128.6 million during 2022, which was primarily due to the 21% increase in gross transaction volumes, partially offset by lower receivable acquisition costs and the realization of information technology cost synergies from the Company’s acquisition of AFF.

As a percentage of segment revenues, operating expenses decreased slightly from 15% during 2022 (adjusted to exclude purchase accounting adjustments) to 14% during 2023.

Operating expenses were flat at $138.0 million during 2024 compared to $137.5 million during 2023.

As a percentage of segment revenues, operating expenses were 14% during both 2024 and 2023.

Segment Pre-Tax Operating Income

The retail POS payment solutions segment pre-tax operating income during 2024 was $128.6 million compared to $132.0 million during 2023.

The increase was primarily the result of fair value purchase accounting and increased segment income resulting from increases in net revenue, partially offset by the increase in segment expenses.

On an adjusted basis, excluding the impacts of fair value purchase accounting, segment pre-tax operating income during 2022 was $109.5 million.

The decrease was primarily the result of the slight decrease in net revenue.

Consolidated Results of Operations

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Interest income (1,935) (1,469) 32 %

Gain on foreign exchange

Loss (gain) on foreign exchange

2,641 (1,529) (273) %

Merger and acquisition expenses 2,228 7,922 (72) %

Gain on revaluation of contingent acquisition consideration

— (109,549) 100 %

Other expenses (income), net (522) (1,402) (63) %

3 unchanged sentences

Net income $ 258,815 $ 219,301 18 %

(1) The AFF segment results for 2022 are significantly impacted by certain purchase accounting adjustments, as noted in the retail POS payment solutions segment results of operations above.

Adjusted retail POS payment solutions segment pre-tax operating income, excluding such purchase accounting adjustments, was $109.5 million for 2022.

(1) Represents the elimination of intersegment transactions related to the Company offering AFF’s LTO payment solution in its U.S.

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Corporate Expenses and Taxes

Administrative expenses increased 19% to $176.3 million during 2023 compared to $147.9 million during 2022, primarily due to increased incentive compensation expense, certain non-recurring AFF administrative expenses, the increase in pawn store count, including recent acquisitions, and an 11% change in the average value of the Mexican peso resulting in higher U.S.

dollar translated administrative expenses in Latin America.

As a percentage of revenue, administrative expenses increased from 5% during 2022 to 6% during 2023.

Interest expense increased 32% to $93.2 million during 2023 compared to $70.7 million for 2022, primarily due to both higher floating interest rates and increased amounts outstanding on the Company’s unsecured bank credit facilities.

Administrative expenses decreased 2% to $173.2 million during 2024 compared to $176.3 million during 2023.

As a percentage of revenue, administrative expenses decreased to 5% during 2024 compared to 6% during 2023.

Depreciation and amortization decreased 11% to $52.8 million during 2024 compared to $59.2 million during 2023, primarily due to a scheduled $6.9 million decrease in amortization of acquired AFF intangible assets.

Interest expense increased 13% to $105.2 million during 2024 compared to $93.2 million for 2023, primarily due to higher average total long-term debt balances outstanding.

See Note 11 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”

Merger and acquisition expenses increased 112% to $7.9 million during 2023 compared to $3.7 million during 2022, reflecting an increased level of acquisition activity in 2023 compared to 2022.

The Company recognized a gain on revaluation of contingent acquisition consideration of $109.5 million during 2022 as a result of a decrease in the liability for the estimated fair value of certain contingent consideration related to the AFF Acquisition.

See Note 6 of Notes to Consolidated Financial Statements.

Merger and acquisition expenses decreased 72% to $2.2 million during 2024 compared to $7.9 million during 2023, reflecting a decreased level of acquisition activity in 2024 compared to 2023.

Consolidated effective income tax rates for 2024 and 2023 were 24.5% and 25.1%, respectively.

The increase in the effective tax rate was primarily due to a $4.6 million permanent domestic tax benefit recognized during 2022 related to the $109.5 million gain on revaluation of certain contingent consideration related to the AFF acquisition and a decreased foreign permanent tax benefit recorded in 2023 compared to 2022, all related to a decreased inflation index adjustment allowed in Mexico as a result of moderating inflation.

The decrease in the effective tax rate was primarily due to an increase in U.S.-sourced income as a result of the U.S.

store acquisition activity since the beginning of 2023, which is taxed at a lower rate than the Latin American countries in which the Company operates.

See Note 12 of Notes to Consolidated Financial Statements.

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Material Capital Requirements

The Company’s primary capital requirements include the following:

• Expand pawn operations through growth of pawn receivables and inventories in existing stores, new store openings, strategic acquisitions of pawn stores and purchases of underlying real estate at existing locations;

• Expand retail POS payment solutions operations through growth of the business generated from new and existing merchant partners;

• Return capital to shareholders through dividends and stock repurchases.

The Company’s primary capital requirements include:

• The expansion of pawn operations through growth of pawn receivables and inventories in existing stores, new store openings, strategic acquisitions of pawn stores and purchases of underlying real estate at existing locations;

• The expansion of retail POS payment solutions operations through growth of the business generated from new and existing merchant partners;

• The return of capital to shareholders through dividends and stock repurchases.

Other material capital requirements include operating expenses (see Note 4 of Notes to Consolidated Financial Statements regarding operating lease commitments), maintenance capital expenditures related to its facilities, technology platforms, general corporate operating activities, income tax payments and debt service, among others.

Net interest expense is expected to increase in 2024 compared to 2023 due to (i) increased borrowings primarily undertaken to fund recent acquisitions and (ii) anticipated higher floating interest rates on the borrowings under the revolving credit facilities.

The Company believes that net cash provided by operating activities and available and unused funds under its revolving unsecured credit facilities will be adequate to meet its liquidity and capital needs for these items over the next 12 months and also in the longer term beyond the next 12 months.

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The Company intends to continue expansion of its pawn operations through growth of pawn receivables and inventories in existing stores along with new store openings and acquisitions.

During 2023, the Company acquired 91 pawn stores in the U.S.

and acquired two pawn licenses to open pawn stores in the state of Nevada for a cumulative purchase price of $178.6 million, net of cash acquired and subject to future post-closing adjustments.

During 2024, the Company acquired 28 pawn stores in the U.S., acquired 10 pawn stores in Mexico and acquired one pawn license that was used to open a new pawn store in the state of Nevada for a cumulative purchase price of $107.6 million, net of cash acquired and subject to future post-closing adjustments.

The Company evaluates potential acquisitions based upon growth potential, purchase price, available liquidity, strategic fit and quality of management personnel, among other factors.

For 2024, the Company expects to add approximately 75 store locations through new store openings and acquisitions.

Future store openings are subject to the Company’s ability to identify locations in markets with attractive demographics, available real estate with favorable leases and limited competition.

During 2024, the Company also opened 60 new locations in Latin America and one location in the U.S.

The combined investment in leasehold improvements and other fixed assets for these new locations totaled $19.3 million.

For 2025, the Company expects to continue adding store locations through new (“de novo”) store openings and acquisitions.

Future store openings and acquisitions are subject to the Company’s ability to identify acquisition opportunities and new location sites in markets with attractive demographics and favorable regulatory environments.

Although viewed by management as a discretionary expenditure not required to operate its pawn stores, the Company may continue to strategically purchase real estate from its landlords at existing stores or in conjunction with pawn store acquisitions as opportunities arise at reasonable valuations.

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During 2024, the Company repurchased a total of 721,000 shares of common stock at an aggregate cost of $85.0 million and an average cost per share of $117.90.

The aggregate cost and average cost per share does not include the effect of the 1% excise tax on certain share repurchases enacted under the inflation Reduction Act of 2022.

The Company incurred $1.1 million of excise taxes during 2023.

During 2023, the Company repurchased 1,248,000 shares of common stock at an aggregate cost of $114.4 million and an average cost per share of $91.58.

All repurchases during 2023 were conducted under the Company’s $100.0 million share repurchase program authorized in April 2022 and the $100.0 million share repurchase program authorized in October 2022 and such repurchases complete the authorizations under these programs.

In July 2023, the Company’s Board of Directors authorized a new common stock repurchase program for up to $200.0 million of the Company’s outstanding common stock, of which the entire $200.0 million is currently remaining.

The Company intends to continue repurchases under its active share repurchase program, including through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act of 1934, as amended, subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, the Company’s dividend policy and the availability of alternative investment opportunities.

The aggregate cost and average cost per share do not include the effect of the 1% excise tax on certain share repurchases enacted under the inflation Reduction Act of 2022.

The Company incurred $0.9 million and $1.1 million of excise taxes during 2024 and 2023, respectively.

In July 2023, the Board authorized a common stock repurchase program for up to $200.0 million of the Company’s outstanding common stock, of which $115.0 million is currently remaining.

The Company intends to continue repurchases under its active share repurchase program, including through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, the Company’s dividend policy and the availability of alternative investment opportunities.

Sources of Liquidity

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The Company had working capital of $1,064.3 million as of December 31, 2024.

On October 18, 2023, the Company amended its domestic Credit Facility.

The total lender commitment under the amended facility, which is provided by a group of twelve commercial banks, was increased by $50.0 million, from $590.0 million to $640.0 million.

The amended credit facility remains unsecured, and all other terms remained unchanged.

In addition, in August 2023, the Company renewed and extended into 2027 the Mexico Credit Facility in the amount of $600.0 million Mexican pesos.

The Company’s cash and cash equivalents as of December 31, 2024 included $70.9 million held by its foreign subsidiaries.

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through funding of capital expenditures, acquisitions, operating expenses or other similar cash needs of the Company’s foreign operations.

The Company elected to repatriate cash of $31.0 million from certain foreign subsidiaries during 2023.

The Company’s liquidity is affected by a number of factors, including changes in general customer traffic and demand, pawn loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, LTO merchandise, finance receivable balances, collection of lease and finance receivable payments, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, litigation-related expenses, tax rates, gold prices, foreign currency exchange rates and the pace of new pawn store expansion and acquisitions.

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Business—Governmental Regulation.”

If needed, the Company could seek to raise additional funds from a variety of sources, including, but not limited to, repatriation of excess cash held in Latin America, the sale of assets, reductions in operating expenses, capital expenditures and dividends, the forbearance or deferral of operating expenses, the issuance of debt or equity utilizing other structured financing arrangements, the leveraging of currently unencumbered real estate owned by the Company and/or changes to its management of current assets.

of current assets.

The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory, which accounts for 52% of total inventory, give the Company flexibility to quickly increase cash flow if necessary.

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(441,591) (462,332) (336,443)

Cash flow provided by (used in) financing activities

Cash flow (used in) provided by financing activities

(38,193) 51,313 (139,273)

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Cash Flow Provided by Operating Activities

Net cash provided by operating activities decreased $53.2 million, or 11%, from $469.3 million for 2022 to $416.1 million for 2023, as a decrease in net income of $34.2 million was partially offset by net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows).

Net cash provided by operating activities increased $123.8 million, or 30%, from $416.1 million for 2023 to $540.0 million for 2024 due to net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows) and an increase in net income of $39.5 million.

Cash Flow Used in Investing Activities

Net cash used in investing activities increased $125.9 million, or 37%, from $336.4 million during 2022 to $462.3 million during 2023.

Net cash used in investing activities decreased $20.7 million, or 4%, from $462.3 million during 2023 to $441.6 million during 2024.

Cash flows from investing activities are utilized primarily to fund acquisitions, purchases of furniture, fixtures, equipment and improvements, which includes capital expenditures for improvements to existing pawn stores and for new pawn store openings and other corporate assets, and discretionary purchases of store real property.

In addition, cash flows related to the funding of new pawn loans, net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral and changes in net finance receivables, are included in investing activities.

During 2022, the portion of the AFF Acquisition consideration paid in cash, net of cash acquired, was $25.0 million.

The Company paid $68.2 million for furniture, fixtures, equipment and improvements and $86.1 million for discretionary pawn store real property purchases during 2024 compared to $60.1 million and $70.5 million in 2023, respectively.

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The Company funded a net increase in finance receivables of $139.3 million during 2024 and $115.4 million during 2023.

Cash Flow Provided by Financing Activities

Net cash provided by financing activities increased $190.6 million, or 137%, from net cash used in financing activities of $139.3 million during 2022 to net cash provided by financing activities of $51.3 million during 2023.

Net borrowings on the credit facilities were $230.3 million during 2023 compared to net borrowings of $80.0 million during 2022.

Cash Flow Used in Financing Activities

Net cash provided by financing activities decreased $89.5 million, or 174%, from net cash provided by financing activities of $51.3 million during 2023 to net cash used in financing activities of $38.2 million during 2024.

Net payments on the credit facilities were $370.0 million during 2024 compared to net borrowings of $230.3 million during 2023.

During 2024, the Company received $500.0 million in proceeds from the private offering of senior unsecured notes which was used to repay a portion of the outstanding balance on the Credit Facility, after payment of fees and expenses related to the offering.

The Company paid debt issuance costs of $10.4 million during 2024 compared to $0.3 million during 2023.

The Company funded $85.0 million for share repurchases and paid dividends of $65.8 million during 2024, compared to funding $114.4 million of share repurchases and dividends paid of $61.9 million during 2023.

In addition, the Company paid withholding taxes on net share settlements of restricted stock awards during 2023 of $2.5 million.

In addition, the Company paid withholding taxes on net share settlements of restricted stock awards during 2024 of $7.0 million compared to $2.5 million during 2023.

Non-GAAP Financial Information

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Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies.

While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses, including the Company’s transaction expenses incurred in connection with its acquisition of AFF and the impacts of purchase accounting with respect to the AFF Acquisition, in order to allow more accurate comparisons of the financial results to prior periods.

In addition, the Company does not consider these merger and acquisition expenses to be related to the organic operations of the acquired businesses or its continuing operations, and such expenses are generally not relevant to assessing or estimating the long-term performance of the acquired businesses.

The Company does not consider these items to be related to the organic operations of the acquired businesses or its continuing operations and are generally not relevant to assessing or estimating the long-term performance of the acquired businesses.

In addition, excluding these items allows for more accurate comparisons of the financial results to prior periods.

Merger and acquisition expenses include incremental costs directly associated with merger and acquisition activities, including professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to the consolidation of technology systems and corporate facilities, among others.

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The lease liability of these U.S.-dollar-denominated leases, which is considered a monetary liability, is remeasured into Mexican pesos using current period exchange rates, resulting in the recognition of foreign currency exchange gains or losses.

The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses (i) because they are non-cash, non-operating items that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured and (ii) to improve comparability of current periods presented with prior periods.

In conjunction with the Cash America merger in 2016, the Company recorded certain lease intangibles related to above- or below-market lease liabilities of Cash America, which are included in the operating lease right of use asset on the consolidated balance sheets.

As the Company continues to opportunistically purchase real estate from landlords at certain Cash America stores, the associated lease intangible, if any, is written off and gain or loss is recognized.

The Company has adjusted the applicable financial measures to exclude these gains or losses given the variability in size and timing of these transactions and because they are non-cash, non-operating gains or losses.

The Company believes this improves comparability of operating results for current periods presented with prior periods.

The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses (1) because they are non-cash, non-operating items that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured and (2) to improve comparability of current periods presented with prior periods.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and not representative of the Company’s core operating performance.

Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and are not representative of the Company’s core operating performance.

In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with the prior periods presented.

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2024 2023 2022 2024 2023 2022

In Thousands Per Share In Thousands Per Share In Thousands Per Share

In Thousands In Thousands In Thousands Per Share Per Share Per Share

Net income and diluted earnings per share, as reported $ 258,815 $ 219,301 $ 253,495 $ 5.73 $ 4.80 $ 5.36

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Merger and acquisition expenses 1,706 6,089 2,878 0.04 0.13 0.06

Non-cash foreign currency (gain) loss related to lease liability

Non-cash foreign currency loss (gain) related to lease liability

2,627 (1,778) (930) 0.06 (0.04) (0.02)

AFF purchase accounting and other adjustments 38,289 54,341 82,432 0.85 1.19 1.74

54,341 1.19 82,432 1.74 37,278 0.91

Gain on revaluation of contingent acquisition consideration

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Adjusted net income and diluted earnings per share $ 302,680 $ 276,874 $ 245,737 $ 6.70 $ 6.06 $ 5.19

(1) See detail of the AFF purchase accounting and other adjustments in tables below.

The following table provides a reconciliation of the gross amounts, the impact of income taxes and the net amounts for the adjustments included in the table above (unaudited, in thousands):

Year Ended December 31,

2023 2022 2021

Pre-tax Tax After-tax Pre-tax Tax After-tax Pre-tax Tax After-tax

Merger and acquisition expenses $ 7,922 $ 1,833 $ 6,089 $ 3,739 $ 861 $ 2,878 $ 15,449 $ 3,577 $ 11,872

Non-cash foreign currency (gain) loss related to lease liability

(2,540) (762) (1,778) (1,329) (399) (930) 644 193 451

AFF purchase accounting and other adjustments (i)

70,574 16,233 54,341 107,055 24,623 82,432 48,413 11,135 37,278

Gain on revaluation of contingent acquisition consideration

— — — (109,549) (19,514) (90,035) (17,871) (4,110) (13,761)

Other expenses (income), net (1,402) (323) (1,079) (2,731) (628) (2,103) 949 219 730

Total adjustments $ 74,554 $ 16,981 $ 57,573 $ (2,815) $ 4,943 $ (7,758) $ 47,584 $ 11,014 $ 36,570

(i) The following table details AFF purchase accounting and other adjustments (in thousands):

Year Ended December 31,

2023 2022 2021

Pre-tax Tax After-tax Pre-tax Tax After-tax Pre-tax Tax After-tax

Amortization of fair value adjustment on acquired finance receivables $ — $ — $ — $ 42,657 $ 9,811 $ 32,846 $ 1,708 $ 392 $ 1,316

Amortization of fair value adjustment on acquired leased merchandise — — — 7,697 1,772 5,925 404 93 311

Amortization of acquired intangible assets 56,606 13,020 43,586 56,701 13,040 43,661 2,051 472 1,579

Other non-recurring costs included in administrative expenses related to a discontinued finance product

13,968 3,213 10,755 — — — — — —

Provision for loan losses (establish initial allowance for expected lifetime credit losses for non-purchase credit deteriorated (”PCD”) loans) — — — — — — 44,250 10,178 34,072

Total AFF purchase accounting and other adjustments

$ 70,574 $ 16,233 $ 54,341 $ 107,055 $ 24,623 $ 82,432 $ 48,413 $ 11,135 $ 37,278

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

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Depreciation and amortization (1)

104,941 109,161 103,832

Interest expense 105,226 93,243 70,708

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Merger and acquisition expenses 2,228 7,922 3,739

Non-cash foreign currency (gain) loss related to lease liability

Non-cash foreign currency loss (gain) related to lease liability

3,755 (2,540) (1,329)

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Adjusted EBITDA $ 558,437 $ 511,732 $ 437,344

(1) Excludes $56.6 million, $56.7 million and $2.1 million of amortization expense related to identifiable intangible assets as a result of the AFF Acquisition for 2023, 2022 and 2021, respectively, which is already included in the add-back of depreciation and amortization to net income used to calculate EBITDA.

See detail of AFF purchase accounting and other adjustments in the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.

(1) Includes $49.7 million, $56.6 million and $56.7 million of amortization expense related to identifiable intangible assets as a result of the AFF acquisition for 2024, 2023 and 2022, respectively.

(2) The following table details AFF purchase accounting and other adjustments (in thousands):

Year Ended December 31,

2024 2023 2022

Pre-tax Pre-tax Pre-tax

Amortization of fair value adjustment on acquired finance receivables $ — $ — $ 42,657

Amortization of fair value adjustment on acquired leased merchandise — — 7,697

Other non-recurring costs included in administrative expenses related to a discontinued finance product

Total AFF purchase accounting and other adjustments

$ — $ 13,968 $ 50,354

Free Cash Flow and Adjusted Free Cash Flow

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These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity.

However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP.

However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other

income statement data prepared in accordance with GAAP.

The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (unaudited, in thousands):

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Management believes the presentation of certain retail POS payment solutions segment metrics, adjusted to exclude the impacts of purchase accounting, provides investors with greater transparency and provides a more complete understanding of AFF’s financial performance and prospects for the future by excluding the impacts of purchase accounting, which management believes is non-operating in nature and not representative of AFF’s core operating performance.

See the retail POS payment solutions segment tables in “Results of Operations” above for additional reconciliation of certain amounts adjusted to exclude the impacts of purchase accounting to as reported GAAP amounts.

Additionally, the following table provides reconciliations of total revenue and total net revenue, presented in accordance with GAAP, to adjusted total revenue and adjusted net revenue, which excludes the impacts of purchase accounting (in thousands):

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AFF purchase accounting and other adjustments (1)

— 42,657 1,708

Adjusted total revenue $ 3,388,514 $ 3,151,796 $ 2,771,599

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AFF purchase accounting and other adjustments (1)

— 50,354 46,362

Adjusted total net revenue $ 1,629,532 $ 1,507,239 $ 1,314,940

(1) As a result of purchase accounting, AFF’s as reported amounts for 2022 and 2021 contain significant fair value adjustments.

The adjusted amounts for 2022 and 2021 exclude these fair value purchase accounting adjustments.

(1) As a result of purchase accounting, AFF’s as reported amount for 2022 contains significant fair value adjustments.

The adjusted amount for 2022 excludes these fair value purchase accounting adjustments.

Constant Currency Results

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The Company believes constant currency results provide valuable supplemental information regarding the underlying performance of its business operations in Latin America, consistent with how the Company’s management evaluates such performance and operating results.

Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons.

evaluating period-over-period comparisons.

See the Latin America pawn segment tables in “Results of Operations” above for additional reconciliation of certain constant currency amounts to as reported GAAP amounts.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis