CURO Group Holdings Q Investor Presentation

Transcription

1 CURO Group Holdings Q Investor Presentation

2 Disclaimer IMPORTANT: You must read the following before continuing. This presentation has been prepared by CURO Group Holdings Corp. and its subsidiaries (collectively, the Company ) and is being provided to you for informational purposes only. The Company has filed a registration statement on Form S-1, including a preliminary prospectus, with the U.S. Securities and Exchange Commission (the SEC ) in connection with the offering to which this presentation relates, which has not yet become effective as of the date hereof. An offering may only be made by means of an effective registration statement (including a prospectus) filed with the SEC. Before you invest in the Company s securities, you should read the preliminary prospectus included in the Company s registration statement on Form S-1 for more complete information about the Company and the offering. You may obtain those documents for free, including after the registration statement on Form S-1 becomes effective, by visiting EDGAR on the SEC website at This presentation contains forward-looking statements. All statements other than statements of historical fact included in the presentation are forward-looking statements. Forwardlooking statements give the Company s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as target, believe, expect, aim, intend, may, anticipate, assume, budget, continue, estimate, future, objective, outlook, plan, potential, predict, project, will, can have, likely, should, would, could and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company s control that could cause the Company s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which it will operate in the future. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements herein speak only as of the date hereof. Factors or events that could cause our actual results to differ from the statements contained herein may emerge from time to time, and it is not possible for us to predict all of them. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. The Company discloses EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin, which are not measures defined by U.S. generally accepted accounting principles ( GAAP ). Such measures are intended as a supplemental measure of the Company s performance that are not required by, or presented in accordance with, GAAP. The Company presents EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin because it believes that, when viewed with the Company s GAAP results and the accompanying reconciliation, such measures provide useful information for comparing the Company s performance over various reporting periods as they remove from the Company s operating results the impact of items that the Company believes do not reflect its core operating performance. EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin are not substitutes for net earnings, cash flows provided by operating activities or any other measure prescribed by GAAP. There are limitations to using non-gaap measures such as EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin. Although the Company believes that EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin can make an evaluation of its operating performance more consistent because they remove items that do not reflect its core operations, other companies in the Company s industry may define EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin differently than the Company does. As a result, it may be difficult to use EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin to compare the performance of those companies to the Company s performance. EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin should not be considered as measures of the income generated by the Company s business or discretionary cash available to it to invest in the growth of its business. The Company s management compensates for these limitations by reference to its GAAP results and using EBITDA, Adjusted EBITDA, Adjusted Earnings, Gross Combined Loans Receivable and Adjusted EBITDA Margin as supplemental measures. A reconciliation of EBITDA and Adjusted EBITDA to net income can be found on slide 28 of this presentation. A reconciliation of Adjusted Earnings to net income can be found on slide 29 of this presentation. A reconciliation of Gross Combined Loans Receivable to Company-owned Gross Loans Receivable can be found on slide 24 of this presentation. The presentation is confidential and may not be reproduced, redistributed, published or passed on to any other person, directly or indirectly, in whole or in part, for any purpose. This document may not be removed from the premises, and by accepting this document and attending the presentation, you agree to be bound by the foregoing limitations. If this document has been received in error it must be returned immediately to the Company. 1

3 Our mission, vision and values Powering innovation for underbanked consumers Winning with integrity curo cur o \ˈkyu r-ō Leading with humility Thriving on change origin: Latin verb: to provide money Keeping our commitments Building relationships based on trust, honesty and respect Executing with urgency and passion 2

4 Key investment highlights I Leading large scale lender to underbanked consumers with track record of profitability across credit cycles II Omni-channel platform supports strategy, enhances customer experience and drives superior performance III Diversified revenue base derived from comprehensive product offerings and broad geographic footprint IV Large and growing market that is underserved by traditional finance companies and banks V Dynamic marketing strategy generates strong customer growth and optimizes customer acquisition costs VI Proprietary, bespoke IT platform underpins underwriting and is supported by a robust compliance culture VII Significant growth opportunities with sustainable competitive advantages 3

5 I Leading large scale lender to underbanked consumers with track record of profitability across credit cycles (1) Focused branch development in U.S Channel, product and geographic diversification 2014 Present Broad product diversification and brand development Company founded with first location in Riverside, California Began offering installment loans Installment loan product expansion Launched analytical brand marketing Launched online lending platforms Mobile optimized sites and apps Selectively expanded into additional states International expansion to Canada and the U.K. Refined best-in-class omnichannel platform Bespoke IT platform development Raised over $1.1 billion of debt financing since 2008 $13.9 billion of total credit extended since 2010 Gross revenues ($ in millions) $916 Adjusted EBITDA ($ in millions) Adjusted earnings ($ in millions) $204 $49 $212 $22 $ Q LTM Single-pay Installment and other 2010 Q LTM 2010 Q LTM (1) Leading large-scale lender in terms of revenue. 4

6 II Omni-channel platform supports Call, Click or Come-in We source customers from a broad base with high retention rates Storefront Digital / Mobile Category-killer stores promote brand awareness Synergistic lead funnel for storefront channel Distinctive and recognizable branding Enhances customer experience Convenient locations typically open 7 days per week Over 80% of web visitors are on mobile (1) Higher approval rates with better credit performance Site to store: over 14,000 customers per month (2) ($ in millions) $555.2 ($ in millions) $181.7 $273.4 $ Store revenue (3) Online revenue % of total % of total revenue 89% 67% revenue 11% 33% (1) Based on Q (2) Includes new and reactivated customers. (3) Calculated as total revenue less online revenues. 5

7 III Comprehensive product offering and diversified revenue Unsecured installment Secured installment Open-end Single-pay Channel Approximate average loan size (2) Online and in-store: 15 U.S. states, Canada and the United Kingdom (1) $ 636 $ 1,299 $ 463 ` Online and in-store: 7 U.S. states Duration Up to 48 months Up to 42 months Pricing 13.2% Average monthly Average monthly interest rate (3) interest rate (3) 10.6% Online: KS, TN, ID, UT, VA, DE and RI In-store: KS and TN ` Revolving / Open-ended Daily interest rates ranging from 0.74% to 0.99% Online and in-store: 12 U.S. states, Canada and the United Kingdom (1) $ 335 Up to 62 days Fees ranging from $13 to $25 per $100 borrowed Segment revenue by product Increasing installment & open-end focus LTM September 30, 2017 consolidated revenue Online revenue: 37% (4) (% of revenue) 68% Installment 58% Ancillary 4% Open-end 8% Non-U.S. Single-pay 18% $916 million U.S. Single-pay 12% Q U.S. Single-pay: 10.9% 19% 2010 Q (1) Online only in the U.K. (2) Includes CSO loans. (3) Weighted average of the contractual interest rates for the portfolio as of September 30, Excludes CSO. (4) As of Q YTD. 6

8 III Broad geographic footprint United States Canada United Kingdom 2 Store 3 Online Both ($ in millions) Brands Stores / states 215 / / 7 NA Online presence 26 states 5 provinces U.K. LTM revenue ($ / %) $696 / 76% $183 / 20% $37 / 4% 2016 channel mix Store 61% Online 39% Online 3% Store 97% Online 100% (1) (1) Reflects current channel mix since the remaining 13 stores in the U.K. were closed in Q

9 III Diversified and growing revenue stream ($ in millions) Revenue by product Non-U.S. single-pay 18% Open-end 8% Ancillary 4% Line of credit accounts 31% Installment loans and RPAs 45% Line of credit 27% Larger and more diversified revenue base Revenue by geography U.S. single-pay 12% Non-U.S. 24% Installment 58% U.S. 76% Short-term loans 24% Non-U.S. 15% U.S. 85% Non-U.S. 16% Installment 73% U.S. 84% Total revenue $916 $802 $649 Net revenue margin 66% 54% 46% Strong growth Revenue growth (1) 20% 11% 12% Source: Public SEC filings. Note: Financial data for the LTM period ended 9/30/2017, unless otherwise noted. (1) Q3 YoY growth rate. 8

10 III with attractive profitability and strong credit profile ($ in millions) Adj. EBITDA $212 $155 $83 Superior profitability Adj. EBITDA margin 23% 19% 13% Adj. net income $70 $47 $1 (1) Adj. net income margin 8% 6% 0% Robust credit performance Net charge-offs (% of gross revenue) Provisions (% of gross revenue) (2) 29% 44% 53% (2) 34% 46% 54% Provisions (% of net charge-offs) (2) 114% 103% 102% Lower customer acquisition cost and effective marketing New customer counts Q ,493 NA 91,000 Cost per funded loan $74 $400 $222 Advertising spend growth (QoQ) (3) (4) 38% 1% (12%) Source: Public SEC filings. Note: Financial data for the LTM period ended 9/30/2017, unless otherwise noted. (1) Net income. Elevate does not report adjusted net income. (2) Includes provisions and net charge-offs for allowance for loan losses and CSO guarantee. (3) Cost per funded loan in U.S. (4) Customer acquisition cost of Enova s NetCredit product. Company does not report cost per funded loan on an aggregate basis. 9

11 IV Large and growing addressable market Broad product offering expands addressable market by increasing appeal to larger proportion of consumers Large total addressable market Favorable consumer trends Combined estimated 140 million potential underbanked borrowers (1) 63% of respondents in a recent study do the majority of banking online and 43% conduct transactions using a mobile banking app 44% of American adults could not cover an emergency expense of $400 Growing preference towards installment loan products (1) In the U.S., Canada and the U.K. 10

12 IV Market is underserved by traditional finance companies $142 billion reduction in the availability of non-prime consumer credit from the credit crisis to 2015 Providers of credit to U.S. population by FICO band (1) 20.7% 19.0% 17.1% 13.2% 10.0% 8.5% 6.8% 4.7% > < 500 Banks Specialized consumer lenders Credit unions Marketplace lenders Specialized consumer lenders Non-prime Credit cards Marketplace lenders Credit cards Broker dealers Over 40% of U.S. consumers are underserved by traditional finance companies (1) April 2017; FICO. 11

13 V Multi-faceted marketing strategy and deep data analysis Technology and analytics drive risk-adjusted revenue growth and reduce CPF Radio Outdoor advertising SEO Direct mail Print advertising Integrated Global Marketing, Risk and Credit Analytics team consisting of 72 professionals Real time optimization of marketing spend using credit data Display advertising PPC Hot transfers Site-tostore Prescreen letters Affiliate TV Native advertising 2017 Q3 CPF $74 (1) (1) For U.S. loans. 12

14 V Opportunistic marketing spend drives strong customer growth while maintaining low customer acquisition cost ($ in millions) 217, million new customers added since January 1, 2015 $100 $90 190,633 $ , , , ,493 $80 127,635 $ ,707 $ ,817 $14.2 $70 $60 $ ,017 $ ,307 $50 $8.9 $9.2 $40 $7.6 $5.8 $30 $4.7 $20 $10 Q Q Q Q Q Q Q Q Q Q Q $- Q Q Q Q Q Q Q Q Q Q Q Direct advertising spend New customers acquired CPF - U.S. CPF - Canada Note: Data for North America only. 13

15 VI Centralized analytics and IT platform Continuous model updates Optimize loss rates and minimize effective customer acquisition costs 15+ years of customer data Over 71 million applications Structured, proprietary model development and deployment process 183 IT professionals and 72 Marketing, Risk and Analytics professionals Third-party reporting Monitor operational changes to address short-term changes to risk environment +11,000 potential risk analytic variables $13.9 billion total credit extended since 2010 Advanced data relevancy techniques 36.5 million total loans since 2010 Installment and open-end products require more stringent credit criteria supported by more sophisticated analytics Note: Data as of 9/30/

16 VI Improving credit trends while adding new customers Since 2015, we have decreased first-pay defaults periodically while adding 1.9 million new customers First-pay defaults (1) 21% 19% 17% 15% 13% 11% 9% 7% Q Q Q Q Q Q Q Q Q Q Q U.S. Online U.S. Store Canada Online Canada Store First-pay defaults and cost per funded loan are analyzed for optimal vintage performance (1) Data for North America only. 15

17 VI Robust compliance protocols Quarterly Board Meetings Quarterly Board Compliance Committee Meetings Strong Commitment to Compliance AML & Compliance Monitoring Software Proprietary Automated Internal Monitoring System Dedicated Compliance Monitoring Team Vendor Risk Management Software Ongoing Vendor Monitoring and Due Diligence Strong Contract Management Enterprise-wide Customer Feedback Software Ongoing Trend Analysis Quarterly Compliance Committee Annual Independent Compliance Audit Annual Independent AML Audit Annual Independent Third Party Collector Audit Computer Based Training Solution Dedicated Training Team Proactive, Tailored and easily accessible Easily Adapts to Product & Regulatory Change Automated Disclosures, Notices & Scripts CURO believes compliance capabilities are a competitive advantage in a highly regulated market Over 400 regulatory exams over the past year Track record of adapting to regulatory changes across geographies Flexible product platform % Introducing lower cost products across markets Operating scale across 3 countries Strong profitability 16

18 VII Multiple opportunities for continued growth CURO has developed a growth-oriented financial technology platform positioned to capitalize on numerous growth opportunities Capital structure optimization Ongoing alignment of financing mix to support future growth Operational enhancement Further reduce customer acquisition cost Continued improvement in credit performance Further expand installment loan offerings in U.S. and Canada Geographic expansion Expansion of LendDirect in Canada; pilot stores open Q Continue to explore opportunities in new high-growth markets New product offerings New online installment loan brand, Avio Credit New online guarantor loan product in the U.K. under new Juo loans brand Bank partner line of credit offerings in U.S. Efficient customer acquisition Continue to drive more customer growth in existing products / geographies Data driven, cost-efficient acquisition strategy Increase prescreen direct-mail program and add to affiliate network 17

19 Financial summary

20 Continued growth and profitability Q marked another successful chapter in CURO s growth story with LTM adjusted EBITDA at an all-time high of $212.4 million Q performance commentary Average earning assets: Grew $54.7 million (+15.2%) sequentially vs. Q Up $83 million (+29%) vs. Q Quarter ended LTM period ended September 30, September 30, ($ in millions) Growth % Growth % Revenue $212.9 $ % $826.5 $ % Revenue: Led by Unsecured and Secured Installment revenue growth vs. Q of 50.8% and 32.6%, respectively Single-Pay revenue was down $11.1 million (13.6%) vs. Q on Canada rate changes and product changes in Alberta, Ohio and the U.K. Gross margin $67.0 $ % $289.5 $ % Adjusted EBITDA $40.7 $ % $179.4 $ % Gross margin: Advertising spend up 37.5% vs. Q in part because of an opportunistic initiative to gain market share Gross margin improvement on operating leverage non-advertising cost of providing services grew just 4% vs. Q Adjusted earnings (1) $13.1 $ % $66.8 $ % Note: Subtotals may not sum due to rounding. (1) Adjusted earnings defined as net income plus or minus gain (loss) on certain non-cash or other adjusting items. 19

21 Historical financial summary Summary income statement metrics Total revenue ($ in millions) $813 $829 $55 $34 $185 $188 $916 $37 $183 $574 $607 $ LTM Q3'17 Provision for losses (as a % of gross revenue) U.S. Canada U.K. Adjusted EBITDA and adjusted earnings ($ in millions) ($ in millions) $281 $258 $307 $189 $212 $131 35% 31% 34% $25 16% 23% 23% $66 $ LTM Q3' LTM Q3'17 Adjusted earnings Adjusted EBITDA Adjusted EBITDA margin (1) (2) (3) Note: Subtotals may not sum due to rounding. LTM data calculated as 2016 plus nine months ended 9/30/17 minus nine months ended 9/30/16. (1) Adjusted earnings defined as net income plus or minus gain (loss) on certain non-cash or other adjusting items. (2) Adjusted EBITDA defined as earnings before interest, income taxes, depreciation and amortization, plus or minus certain non-cash or other adjusting items. (3) Calculated as a percentage of gross revenue. 20

22 Historical financial summary (cont d) Summary balance sheet metrics Total combined gross loans receivable ($ in millions) Excess provisions (1) $5 $6 ($1) $31 Loan loss allowance / gross receivables (%) (2) 16% 16% 16% 19% $464 (4) $412 (3) $71 $354 $312 $68 $60 $13 $23 $15 $2 $44 $44 $26 $31 $45 $41 $119 $134 $303 $59 $13 $2 $50 $28 $39 $113 $62 $18 $43 $48 $27 $37 $177 $18 $49 $50 $32 $39 $ Q3'16 Q2'17 Q3'17 U.S. Installment U.S. Single-pay U.S. Open-End Canada Single-pay Canada Installment U.K. CSO loans (5) Note: Subtotals may not sum due to rounding. (1) Calculated as provisions less NCOs. YTD metrics shown for Q and Q (2) Total allowance for loan losses and CSO guarantee liability divided by total combined gross loans receivable. (3) Past-due balances for unsecured installment and secured installment total receivables were $41.7 million and $12.6 million, respectively. (4) Past-due balances for unsecured installment and secured installment total receivables were $51.8 million and $15.3 million, respectively. (5) CSO loans are not included in gross loans receivable reflected on the balance sheet. 21

23 Historical financial summary (cont d) Consolidated summary balance sheet December 31, September 30, (1) November 2017 adjustments Pro-forma ($ in millions) HY issuance IPO Sept. 30, 2017 Cash $100.6 $193.5 $175.4 $95.5 ($5.0) $90.5 Restricted cash $11.8 $7.8 $5.2 $11.5 $11.5 Gross loans receivable Less: allowance for loan losses (32.9) (39.2) (33.3) (71.3) (71.3) Loans receivable, net PP&E net Goodwill and intangibles Other assets Total assets $666.0 $780.8 $721.1 $762.1 $757.1 Senior notes $135.0 (2) ($79.0) U.S. SPV and ABL facilities Other liabilities Total liabilities $685.4 $739.9 $682.7 $696.2 $135.0 ($79.0) $752.2 Total stockholders' equity / (deficit) ($19.4) $40.9 $38.4 $65.9 ($140.0) (3) $79.0 $4.9 Memo items: LTM adjusted ROAA 3.7% 9.2% 9.7% 9.5% 9.5% (4) Debt / LTM adjusted EBITDA 4.3x 3.3x 3.0x 2.6x 2.9x Note: Debt balances are reflected net of deferred interest costs. Subtotals may not sum due to rounding. (1) Does not reflect transaction fees and expenses. (2) Reflects principal amount of debt redeemed after accounting for IPO fees and expenses and 12% clawback penalty on debt repayment. (3) Does not reflect exercise of overallotment option. (4) Debt includes senior notes, SPV and ABL facilities. 22

24 Key investment highlights I Leading large scale lender to underbanked consumers with track record of profitability across credit cycles II Omni-channel platform supports strategy, enhances customer experience and drives superior performance III Diversified revenue base derived from comprehensive product offerings and broad geographic footprint IV Large and growing market that is underserved by traditional finance companies and banks V Dynamic marketing strategy generates strong customer growth and optimizes customer acquisition costs VI Proprietary, bespoke IT platform underpins underwriting and is supported by a robust compliance culture VII Significant growth opportunities with sustainable competitive advantages 23

25 Appendix

26 Historical consolidated adjusted EBITDA reconciliation Year ended December 31, Quarter ended September 30, ($ in millions) Net income $19.9 $17.8 $65.4 $15.8 $9.8 Provision for income taxes Interest expense Depreciation and amortization EBITDA $45.2 $120.0 $191.3 $45.8 $43.3 Gain on extinguishment of debt (7.0) (7.0) Restructuring and other costs Goodwill and intangible asset impairment 2.9 (4) Other adjustments (0.2) Share based compensation (6) Transaction-related costs (7) (5) (2) (1) (3) Legal settlement accrual 0.4 Adjusted EBITDA $48.6 $130.9 $189.4 $40.7 $51.4 Adjusted EBITDA margin 23.9% 16.1% 22.9% 19.1% 20.2% Note: Subtotals may not sum due to rounding. (1) For the year ended December 31, 2016, the $7.0 million gain on extinguishment of debt resulted from the Company s purchase of CURO Intermediate s 10.75% Senior Secured Notes in September (2) Restructuring costs of $4.3 million for the year ended December 31, 2015 represented the expected costs to be incurred related to the closure of ten underperforming stores in the U.K. Restructuring costs of $3.6 million for the year ended December 31, 2016 represented the elimination of certain corporate positions in our Canadian headquarters and the costs incurred related to the closure of seven underperforming stores in Texas. Restructuring costs of $1.5 million for the three months ended September 30, 2016 primarily represented costs incurred related to the elimination of certain corporate positions in our Canadian headquarters. Restructuring costs of $7.4 million for the three months ended September 30, 2017 were due to the closure of our remaining 13 U.K. stores. (3) Goodwill and intangible asset impairment charges in 2015 include a non-cash goodwill impairment charge of $0.9 million, and non-cash impairment charges related to the Wage Day trade name intangible asset and customer relationship intangible asset of $1.8 million and $0.2 million, respectively. (4) Other adjustments include deferred rent and the intercompany foreign exchange impact. Deferred rent represents the non-cash component of rent expense. Rent expense is recognized ratably on a straight-line basis over the lease term. (5) The Company approved the adoption of a share-based compensation plan during 2010 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. (6) Transaction-related costs include professional fees paid in connection with potential transactions. (7) The legal settlement accrual for the three months ended September 30, 2017 relates to the resolution of a 2010 lawsuit in Nevada. 25

27 Historical consolidated adjusted earnings reconciliation Year ended December 31, Quarter ended September 30, ($ in millions) Net income $19.9 $17.8 $65.4 $15.8 $9.8 Gain on extinguishment of debt (7.0) (7.0) (2) Transaction-related costs Goodwill and intangible asset impairment charge 2.9 (4) Restructuring costs Share-based cash and non-cash compensation Intangible asset amortization (6) (1) (5) (3) Legal settlement accrual 0.4 Cumulative tax effect of adjustments (1.4) (7.0) (0.6) 1.8 (4.5) Net addbacks (after tax) $2.5 $6.9 $1.0 ($2.8) $4.4 Adjusted earnings $22.4 $24.7 $66.4 $13.0 $14.2 Note: Subtotals may not sum due to rounding. (1) For the year ended December 31, 2016, the $7.0 million gain on extinguishment of debt resulted from the Company s purchase of CURO Intermediate s 10.75% Senior Secured Notes in September (2) Transaction-related costs include professional fees paid in connection with potential transactions. (3) Goodwill and intangible asset impairment charges in 2015 include a non-cash goodwill impairment charge of $0.9 million, and non-cash impairment charges related to the Wage Day trade name intangible asset and customer relationship intangible asset of $1.8 million and $0.2 million, respectively. (4) Restructuring costs of $4.3 million for the year ended December 31, 2015 represented the expected costs to be incurred related to the closure of ten underperforming stores in the U.K. Restructuring costs of $3.6 million for the year ended December 31, 2016 represented the elimination of certain corporate positions in our Canadian headquarters and the costs incurred related to the closure of seven underperforming stores in Texas. Restructuring costs of $1.5 million for the three months ended September 30, 2016 primarily represented costs incurred related to the elimination of certain corporate positions in our Canadian headquarters. Restructuring costs of $7.4 million for the three months ended September 30, 2017 were due to the closure of our remaining 13 U.K. stores. (5) The Company approved the adoption of a share-based compensation plan during 2010 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. (6) The legal settlement accrual for the three months ended September 30, 2017 relates to the resolution of a 2010 lawsuit in Nevada. 26