EZCORP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) March 31, 2022 March 31, 2021 September 30, 2021 (Unaudited) Assets: Current assets: Cash and cash equivalents $ 254,964 $ 335,638 $ 253,667 Restricted cash 8,713 8,006 9,957 Pawn loans 173,618 125,268 175,901 Pawn service charges receivable, net 28,319 20,842 29,337 Inventory, net 119,890 86,214 110,989 Prepaid expenses and other current assets 27,267 30,676 31,010 Total current assets 612,771 606,644 610,861 Investments in unconsolidated affiliates 42,002 34,961 37,724 Other investments 18,000 — — Property and equipment, net 50,874 51,836 53,811 Right-of-use asset, net 204,343 170,479 200,990 Goodwill 286,214 258,199 285,758 Intangible assets, net 62,145 58,125 62,104 Notes receivable, net 1,198 1,164 1,181 Deferred tax asset, net 15,908 9,693 9,746 Other assets 6,541 5,152 4,736 Total assets $ 1,299,996 $ 1,196,253 $ 1,266,911 Liabilities and stockholders' equity: Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 69,695 $ 69,019 $ 90,268 Customer layaway deposits 15,046 11,401 12,557 Lease liability 52,446 41,060 52,263 Total current liabilities 137,187 121,480 155,088 Long-term debt, net 312,168 257,143 264,186 Deferred tax liability, net 179 167 3,684 Lease liability 163,506 138,622 161,330 Other long-term liabilities 11,940 9,597 10,385 Total liabilities 624,980 527,009 594,673 Commitments and Contingencies (Note 10) Stockholders’ equity: Class A Non-voting Common Stock, par value $ 0.01 per share; shares authorized: 100 million; issued and outstanding: 53,685,333 as of March 31, 2022; 52,873,568 as of March 31, 2021; and 53,086,438 as of September 30, 2021 537 528 530 Class B Voting Common Stock, convertible, par value $ 0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171 30 30 30 Additional paid-in capital 341,913 399,439 403,312 Retained earnings 384,246 327,798 326,781 Accumulated other comprehensive loss ( 51,710 ) ( 58,551 ) ( 58,415 ) Total stockholders' equity 675,016 669,244 672,238 Total liabilities and stockholders' equity $ 1,299,996 $ 1,196,253 $ 1,266,911 See accompanying notes to unaudited interim condensed consolidated financial statements 1 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, Six Months Ended March 31, (in thousands, except per share amount) 2022 2021 2022 2021 Revenues: Merchandise sales $ 133,556 $ 115,225 $ 271,276 $ 223,008 Jewelry scrapping sales 5,690 6,075 12,634 12,834 Pawn service charges 76,683 63,436 152,708 126,925 Other revenues, net 53 203 358 307 Total revenues 215,982 184,939 436,976 363,074 Merchandise cost of goods sold 82,246 65,790 165,357 130,333 Jewelry scrapping cost of goods sold 4,808 5,401 10,580 10,603 Net revenues 128,928 113,748 261,039 222,138 Operating expenses: Store expenses 85,743 81,149 172,514 160,458 General and administrative 12,227 13,771 27,772 26,281 Depreciation and amortization 7,450 8,089 15,024 15,661 (Gain) loss on sale or disposal of assets and other ( 697 ) 112 ( 692 ) 90 Total operating expenses 104,723 103,121 214,618 202,490 Operating income 24,205 10,627 46,421 19,648 Interest expense 2,527 5,518 4,958 10,973 Interest income ( 255 ) ( 585 ) ( 559 ) ( 1,406 ) Equity in net loss (income) of unconsolidated affiliates 1,439 ( 1,250 ) 301 ( 1,766 ) Other expense (income) 371 145 251 ( 454 ) Income before income taxes 20,123 6,799 41,470 12,301 Income tax expense 5,236 1,469 10,862 2,672 Net income $ 14,887 $ 5,330 $ 30,608 $ 9,629 Basic earnings per share $ 0.26 $ 0.10 $ 0.54 $ 0.17 Diluted earnings per share $ 0.20 $ 0.10 $ 0.42 $ 0.17 Weighted-average basic shares outstanding 56,561 55,661 56,370 55,509 Weighted-average diluted shares outstanding 82,407 55,665 82,270 55,511 See accompanying notes to unaudited interim condensed consolidated financial statements 2 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, Six Months Ended March 31, (in thousands) 2022 2021 2022 2021 Net income $ 14,887 $ 5,330 $ 30,608 $ 9,629 Other comprehensive income: Foreign currency translation adjustment, net of tax 3,666 ( 1,760 ) 6,705 9,517 Comprehensive income $ 18,553 $ 3,570 $ 37,313 $ 19,146 See accompanying notes to unaudited interim condensed consolidated financial statements 3 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited except for balances as of September 30, 2021 and September 30, 2020) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity (in thousands) Shares Par Value Balances as of September 30, 2021 56,057 $ 560 $ 403,312 $ 326,781 $ ( 58,415 ) $ 672,238 Stock compensation — — 1,698 — — 1,698 Release of restricted stock 257 3 — — — 3 Taxes paid related to net share settlement of equity awards — — ( 792 ) — — ( 792 ) Cumulative effect of adoption of ASU 2020-06 (Note 1) — — ( 64,263 ) 26,857 — ( 37,406 ) Foreign currency translation gain — — — — 3,039 3,039 Net income — — — 15,721 — 15,721 Balances as of December 31, 2021 56,314 $ 563 $ 339,955 $ 369,359 $ ( 55,376 ) $ 654,501 Stock compensation — — 460 — — 460 Transfer of consideration for other investment 213 2 1,498 — — 1,500 Release of restricted stock 129 2 — — — 2 Foreign currency translation gain — — — — 3,666 3,666 Net income — — — 14,887 — 14,887 Balances as of March 31, 2022 56,656 $ 567 $ 341,913 $ 384,246 $ ( 51,710 ) $ 675,016 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity (in thousands) Shares Par Value Balances as of September 30, 2020 55,303 $ 551 $ 398,475 $ 318,169 $ ( 68,068 ) $ 649,127 Stock compensation — — 524 — — 524 Release of restricted stock 296 5 — — — 5 Taxes paid related to net share settlement of equity awards — — ( 730 ) — — ( 730 ) Foreign currency translation gain — — — — 11,277 11,277 Net income — — — 4,299 — 4,299 Balances as of December 31, 2020 55,599 $ 556 $ 398,269 $ 322,468 $ ( 56,791 ) $ 664,502 Stock compensation — — 1,094 — — 1,094 Transfer of consideration for prior period acquisition 33 — 185 — — 185 Release of restricted stock 212 2 — — — 2 Taxes paid related to net share settlement of equity awards — — ( 109 ) — — ( 109 ) Foreign currency translation loss — — — — ( 1,760 ) ( 1,760 ) Net Income — — — 5,330 — 5,330 Balances as of March 31, 2021 55,844 $ 558 $ 399,439 $ 327,798 $ ( 58,551 ) $ 669,244 See accompanying notes to unaudited interim condensed consolidated financial statements 4 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended March 31, (in thousands) 2022 2021 Operating activities: Net income $ 30,608 $ 9,629 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 15,024 15,661 Amortization of debt discount and deferred financing costs 698 6,754 Amortization of lease right-of-use asset 25,746 23,835 Deferred income taxes 212 ( 1,119 ) Other adjustments ( 708 ) ( 250 ) Provision for inventory reserve ( 1,780 ) ( 5,265 ) Stock compensation expense 2,158 1,618 Equity in net loss (income) of unconsolidated affiliates 301 ( 1,766 ) Changes in operating assets and liabilities: Service charges and fees receivable 687 ( 106 ) Inventory ( 2,779 ) 6,481 Prepaid expenses, other current assets and other assets 88 3,874 Accounts payable, accrued expenses and other liabilities ( 50,258 ) ( 43,436 ) Customer layaway deposits 2,342 238 Income taxes 6,576 2,573 Dividends from unconsolidated affiliates 1,660 — Net cash provided by operating activities 30,575 18,721 Investing activities: Loans made ( 329,459 ) ( 269,468 ) Loans repaid 199,836 177,888 Recovery of pawn loan principal through sale of forfeited collateral 129,311 109,019 Capital expenditures, net ( 10,498 ) ( 8,359 ) Issuance of note receivable ( 1,000 ) — Investment in unconsolidated affiliates ( 3,577 ) — Investment in other investments ( 16,500 ) — Net cash (used in) provided by investing activities ( 31,887 ) 9,080 Financing activities: Taxes paid related to net share settlement of equity awards ( 792 ) ( 839 ) Payments on assumed debt and other borrowings — ( 871 ) Net cash used in financing activities ( 792 ) ( 1,710 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash 2,157 5,000 Net increase in cash, cash equivalents and restricted cash 53 31,091 Cash, cash equivalents and restricted cash at beginning of period 263,624 312,553 Cash, cash equivalents and restricted cash at end of period $ 263,677 $ 343,644 Supplemental disclosure of cash flow information Cash and cash equivalents $ 254,964 $ 335,638 Restricted cash 8,713 8,006 Total cash and cash equivalents and restricted cash $ 263,677 $ 343,644 Non-cash investing and financing activities: Pawn loans forfeited and transferred to inventory $ 134,562 $ 99,285 Transfer of consideration for other investment 1,500 — See accompanying notes to unaudited interim condensed consolidated financial statements 5 Table of Contents Notes to Interim Condensed Consolidated Financial Statements NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business EZCORP, Inc. (collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) is a leading provider of pawn loans in the United States ("U.S.") and Latin America. Pawn loans are non-recourse loans collateralized by tangible property. We also sell merchandise, primarily collateral forfeited from pawn lending operations and pre-owned merchandise purchased from customers. Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements (“Condensed Consolidated Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended September 30, 2021, filed with the Securities and Exchange Commission ("SEC") on November 17, 2021 (“2021 Annual Report”). In the opinion of management, the accompanying Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Financial results for the three and six-month period ended March 31, 2022, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2022. Our business is subject to seasonal variations, and operating results for the three and six months ended March 31, 2022 and 2021 (the "current quarter" and "prior-year quarter," respectively) are not necessarily indicative of the results of operations for the full fiscal year. There have been no changes that have had a material impact in significant accounting policies as described in our Annual Report on Form 10-K for the year ended September 30, 2021 except for as disclosed below related to the adoption of Accounting Standards Update ("ASU") 2020-06. Principles of Consolidation The accompanying Condensed Consolidated Financial Statements include the accounts of EZCORP, Inc. and its wholly-owned subsidiaries. We use the equity method of accounting for entities in which we have a 50% or less investment and exercise significant influence. We account for equity investments for which we do not have significant influence and without readily determinable fair values at cost with adjustments for observable changes in price in orderly transactions for identical or similar investments of the same issuer or impairments. All inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include the determination of inventory reserves, expected credit losses, useful lives of long-lived and intangible assets, valuation of share-based compensation, valuation of equity investments, valuation of deferred tax assets and liabilities, loss contingencies related to litigation and discount rates used for operating leases. Actual results may result in actual amounts differing from reported amounts. Impact of COVID-19 The COVID-19 pandemic continues to affect the U.S. and global economies, as disclosed in our 2021 Annual Report on Form 10-K. The full extent and duration of the COVID-19 impact on the global economy generally, and on our business specifically, is currently unknown. The impact of the pandemic, and the recovery therefrom, continued to adversely affect net revenues and earnings into fiscal 2021. During the latter part of fiscal 2021, we saw pawn transaction activity continue to rebuild, driving pawn loans outstanding ("PLO") balances closer to pre-pandemic levels, which will drive accelerating pawn service charges ("PSC") revenue in the coming quarters given the natural lag between pawn originations and related fees. We continue to assess what type of impact various COVID-19 variants may have to our business net revenues and operating expenses in fiscal year 2022. A prolonged pandemic and recovery may have an adverse effect on our results of operations, financial position and cash flows. Our estimates, judgments and assumptions related to COVID-19 could ultimately differ over time. 6 Table of Contents Recently Adopted Accounting Policies In August 2020, the Financial Accounting Standards Board ("FASB") issued its ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) , (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Additionally, ASU 2020-06 eliminates beneficial conversion feature and cash conversion models resulting in more convertible instruments being accounted for as a single unit. The ASU 2020-06 amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We early adopted this standard on October 1, 2021 under the modified retrospective basis. Impact of the Adoption of ASU 2020-06 On October 1, 2021, we early adopted ASU 2020-06 on a modified retrospective basis. Under ASU 2020-06, we no longer separate the convertible senior notes into liability and equity components. We recognized the cumulative effect of initially applying this new standard as of October 1, 2021. We recognized a cumulative effect of initially applying the ASU as an adjustment to the October 1, 2021 opening balance of retained earnings. The conversion option that was previously accounted for in equity under the cash conversion model was recombined into the convertible debt outstanding, and as a result, additional paid in capital and the related unamortized debt discount on the convertible senior notes were reduced. The removal of the remaining debt discounts recorded for this previous separation has the effect of increasing our net debt balance. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. (in thousands) As Reported September 30, 2021 Adjustments Under ASU 2020-06 October 1, 2021 Principal $ 316,250 $ — $ 316,250 Unamortized debt discount ( 48,785 ) 48,785 — Deferred financing costs, net ( 3,279 ) ( 1,500 ) ( 4,779 ) Net carrying amount 264,186 47,285 311,471 Deferred tax asset 9,746 5,839 15,585 Deferred tax liability 3,684 ( 4,040 ) ( 356 ) Additional paid-in capital 403,312 ( 64,263 ) 339,049 Retained earnings 326,781 26,857 353,638 The impact of adoption on our condensed consolidated statements of operations for the three and six months ended March 31, 2022 was primarily to decrease interest expense by $ 3.4 million and $ 6.8 million, respectively. This had the effect of increasing our basic earnings per share for the three and six months ended March 31, 2022 by $ 0.05 and $ 0.09 , and decreasing our diluted earnings per common share for the three and six months ended March 31, 2022 by $ 0.01 and $ 0.03 , respectively. Additionally, adoption of the standard requires interest charges on the convertible debt to be added to net income as well as the use of the “if-converted” method to calculate diluted earnings per common share. Refer to Note 4: Earnings Per Share for a discussion of the effect of the convertible notes on diluted earnings per common share. Recently Issued Accounting Pronouncements We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact on our Condensed Consolidated Financial Statements. NOTE 2: ACQUISITIONS On June 8, 2021, we completed the acquisition of 100 % of the common shares of PLO del Bajio S. de R.L. de C.V. (“Bajio”) and gained control of the entity, further expanding our geographic footprint within Mexico with the addition of 128 pawn stores. These stores operate under the name "Cash Apoyo Efectivo" and are located principally in the Mexico City metropolitan area. At the time of acquisition, the total consideration for Bajio was $ 23.6 million, consisting of $ 17.4 million of cash, and 212,870 shares of our Class A Non-Voting Common Stock valued at $ 1.6 million. In addition, the sellers are entitled to additional payments of up to $ 4.6 million to be paid in two payments over the next two years , contingent on the growth of the loan portfolios of the acquired stores. Up to 50 % of any 7 Table of Contents future contingent payments can be made in shares of our Class A Non-Voting Common Stock at our discretion. The value of the contingent consideration was included in the total consideration as the metrics were considered achievable on the date of acquisition. Cash paid at closing was $ 11.6 million and an additional $ 3.8 million was paid during the fourth quarter of 2021. During the first quarter of 2022, both parties completed the formal working capital reconciliation stipulated within the purchase agreement. As part of the working capital reconciliation, the Company and the seller agreed to reduce the purchase price, which was held in restricted cash as of September 30, 2021, by $ 1.3 million. As the working capital adjustment was recorded as of September 30, 2021, this reduction to the purchase price is a measurement period adjustment, and resulted in a $ 1.3 million reduction to goodwill during the period ended December 31, 2021. This reduced the total consideration for Bajio to $ 22.3 million. As the future payments decreased, we released $ 1.3 million of the previously held $ 2.0 million in restricted cash to our unrestricted cash. Of the remaining $ 0.7 million in restricted cash, $ 0.3 million is expected to be paid prior to June 30, 2022, and $ 0.4 million is expected to be paid on or around the fifth anniversary of the date of acquisition. During the second quarter of 2022, we obtained new information about the seller's calculation of pawn service charges receivable balance as of the date of acquisition, which resulted in a $ 0.6 million measurement period adjustment to reduce pawn service charges receivable and increase goodwill. The assets acquired and liabilities assumed are based upon the estimated fair values at the date of acquisition. The excess purchase price over the estimated fair market value of the new assets acquired has been recorded as goodwill. The purchase price allocation is as follows, in thousands: Cash and cash equivalents $ 308 Pawn loans 4,619 Pawn service charges receivable 691 Inventory 1,319 Property and equipment 2,025 Right-of-use assets 10,651 Goodwill 25,422 Intangible assets 3,965 Deferred tax asset, net 381 Other assets 746 Accounts payable, accrued expenses and other liabilities ( 2,290 ) Debt ( 14,931 ) Lease liabilities ( 10,651 ) Total consideration $ 22,255 Intangible assets acquired consist of indefinite-lived trade names. NOTE 3: GOODWILL The following table summarizes the changes in the carrying amount of goodwill by segment and in total: Six Months Ended March 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Consolidated Balances as of September 30, 2021 $ 244,471 $ 41,287 $ 285,758 Measurement period adjustments — ( 678 ) ( 678 ) Effect of foreign currency translation changes — 1,134 1,134 Balances as of March 31, 2022 $ 244,471 $ 41,743 $ 286,214 Six Months Ended March 31, 2021 (in thousands) U.S. Pawn Latin America Pawn Consolidated Balances as of September 30, 2020 $ 241,928 $ 15,654 $ 257,582 Effect of foreign currency translation changes — 617 617 Balances as of March 31, 2021 $ 241,928 $ 16,271 $ 258,199 8 Table of Contents NOTE 4: EARNINGS PER SHARE The following table reconciles the number of common shares used to compute basic and diluted earnings per share attributable to EZCORP Inc., shareholders: Three Months Ended March 31, Six Months Ended March 31, (in thousands, except per share amounts) 2022 2021 2022 2021 Basic earnings per common share: Net income - basic $ 14,887 $ 5,330 $ 30,608 $ 9,629 Weighted shares outstanding - basic 56,561 55,661 56,370 55,509 Basic earnings per common share $ 0.26 $ 0.10 $ 0.54 $ 0.17 Diluted earnings per common share: Net income - basic $ 14,887 $ 5,330 $ 30,608 $ 9,629 Add: Convertible Notes interest expense, net of tax 1,846 — 3,730 — Net income - diluted $ 16,733 $ 5,330 $ 34,338 $ 9,629 Weighted shares outstanding - basic 56,561 55,661 56,370 55,509 Effect of dilution from equity-based compensation awards* 622 4 676 2 Effect of dilution from if-converted Convertible Notes** 25,224 — 25,224 — Weighted shares outstanding - diluted 82,407 55,665 82,270 55,511 Diluted earnings per common share $ 0.20 $ 0.10 $ 0.42 $ 0.17 Potential common shares excluded from the calculation of diluted earnings per share above: Restricted stock*** 1,756 964 1,847 831 * Includes time-based share-based awards and performance based awards for which targets for fiscal year tranches have been achieved and vesting is subject only to achievement of service conditions. ** See Note 8: Debt for conversion price and initial conversion rate of the 2024 Convertible Notes and 2025 Convertible Notes. *** Includes antidilutive share-based awards as well as performance-based share-based awards that are contingently issuable, but for which the condition for issuance has not been met as of the end of the reporting period. As a result of our adoption of ASU 2020-06 on October 1, 2021, the dilutive impact of the Convertible Notes for our calculation of diluted net income per share is considered using the if-converted method. During the three months and six months ended March 31, 2022, we increased net income by $ 1.8 million and $ 3.7 million respectively to arrive at the numerator used to calculate diluted earnings per common share, which represents interest expense recognized on the convertible notes that were subject to this change in methodology. For periods prior to our October 1, 2021 adoption of ASU 2020-06, we applied the treasury stock method to account for the dilutive impact of the 2024 and 2025 Convertible Notes for diluted earnings per share purposes . NOTE 5: LEASES We determine if a contract contains a lease at inception. Our lease portfolio consists primarily of operating leases for pawn store locations and corporate offices with lease terms ranging from three to ten years . The information below provides a summary of our leasing activities. See Note 12: Leases in our 2021 Annual Report for additional information about our leasing activities. The table below presents balances of our operating leases: (in thousands) March 31, 2022 March 31, 2021 September 30, 2021 Right-of-use asset $ 204,343 $ 170,479 $ 200,990 Lease liability, current $ 52,446 $ 41,060 $ 52,263 Lease liability, non-current 163,506 138,622 161,330 Total lease liability $ 215,952 $ 179,682 $ 213,593 9 Table of Contents The table below provides the composition of our lease costs: Three Months Ended March 31, Six Months Ended March 31, (in thousands) 2022 2021 2022 2021 Operating lease expense* $ 16,789 $ 14,616 $ 33,151 $ 29,815 Variable lease expense 3,834 2,064 7,376 4,243 Total lease expense $ 20,623 $ 16,680 $ 40,527 $ 34,058 * Includes a reduction for sublease rental income. Lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense are included in "Store" and "General and Administrative" expense, based on the underlying lease use. Other supplemental information includes the following for our operating leases: Six Months Ended March 31, 2022 2021 Weighted-average remaining contractual lease term (years) 5.00 5.07 Weighted-average incremental borrowing rate 8.27 % 7.88 % Maturities of lease liabilities as of March 31, 2022 were as follows (in thousands): Remaining 2022 $ 34,749 Fiscal 2023 62,161 Fiscal 2024 49,882 Fiscal 2025 39,081 Fiscal 2026 29,380 Thereafter 47,828 Total lease payments $ 263,081 Less: Portion representing interest 47,129 Present value of operating lease liabilities $ 215,952 Less: Current portion 52,446 Non-current portion $ 163,506 We recorded $ 28.1 million and $ 6.6 million in non-cash additions to our right of use assets and lease liabilities for the six months ended March 31, 2022 and March 31, 2021, respectively. 10 Table of Contents NOTE 6: STRATEGIC INVESTMENTS Cash Converters International Limited On October 1, 2021, we purchased an additional 13 million shares of Cash Converters International Limited ("Cash Converters") for $ 2.5 million. This purchase increased our total ownership in Cash Converters to 236,702,991 shares, representing a 37.72 % ownership interest. Additionally, on October 14, 2021, we received a cash dividend of $ 1.7 million from Cash Converters. On March 10, 2022, we purchased an additional 5.5 million shares of Cash Converters for $ 1.0 million. This purchase increased our total ownership in Cash Converters to 242,239,157 shares, representing a 38.60 % ownership interest. On April 5, 2022 (subsequent to the end of the quarter), we acquired an additional 13 million shares for $ 2.5 million, bringing our total ownership to 255,239,157 shares, representing an ownership interest of 40.67 %. Additionally, on April 14, 2022, we received a cash dividend of $ 1.8 million from Cash Converters. See Note 13: Subsequent Events. The following tables present summary financial information for Cash Converters most recently reported results at December 31, 2021 after translation to U.S. dollars: December 31, (in thousands) 2021 2020 Current assets $ 162,558 $ 170,412 Non-current assets 185,780 189,810 Total assets $ 348,338 $ 360,222 Current liabilities $ 59,701 $ 59,962 Non-current liabilities 59,915 58,368 Shareholders’ equity 228,722 241,892 Total liabilities and shareholders’ equity $ 348,338 $ 360,222 Half-Year Ended December 31, (in thousands) 2021 2020 Gross revenues $ 84,185 $ 71,153 Gross profit 55,280 51,231 Net profit (loss) 1 5,561 See Note 7: Fair Value Measurements for the fair value and carrying value of our investment in Cash Converters. Founders One, LLC In October 2021, we invested $ 15.0 million in exchange for a non-redeemable voting participating preferred equity interest in Founders One, LLC (“Founders”), a newly-formed entity with one other member. Founders used that $ 15.0 million to acquire an equity interest in Simple Management Group, Inc. (“SMG”), which owns and operates more than 20 pawn stores principally in the Caribbean region, with plans to build and acquire more stores in that region. The investment in Founders is a variable interest entity, but because the Company is not the primary beneficiary, we do not consolidate it. Further, as we are not the appointed manager, we do not have the ability to direct the activities of the investment entity that most significantly impact its economic performance. Consequently, our investment in Founders is accounted for utilizing the measurement alternative within ASC 321, Investments — Equity Securities. Our $ 15.0 million carrying value of the investment is included in “Other Investments” in our consolidated balance sheets. Our maximum exposure for losses in this investment is its contributed investment of $ 15.0 million. See Note 7: Fair Value Measurements for the fair value and carrying value of our investment in Founders. NOTE 7: FAIR VALUE MEASUREMENTS The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: • Level 1 — Quoted market prices in active markets for identical assets or liabilities. 11 Table of Contents • Level 2 — Other observable market-based inputs or unobservable inputs that are corroborated by market data. • Level 3 — Unobservable inputs that are not corroborated by market data. We have elected not to measure at fair value any eligible items for which fair value measurement is optional. There were no transfers in or out of Level 1, Level 2 or Level 3 for financial assets or liabilities measured at fair value on a recurring basis during the periods presented. Financial Assets and Liabilities Not Measured at Fair Value The tables below present our estimates of fair value of financial assets and liabilities that were not measured at fair value: Carrying Value Estimated Fair Value March 31, 2022 March 31, 2022 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,198 $ 1,198 $ — $ — $ 1,198 Investments in unconsolidated affiliates 42,002 51,502 44,529 — 6,973 Other investments 18,000 18,000 — — 18,000 Financial liabilities: 2024 Convertible Notes $ 142,248 $ 141,594 $ — $ 141,594 $ — 2025 Convertible Notes 169,920 153,525 — 153,525 — Carrying Value Estimated Fair Value March 31, 2021 March 31, 2021 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,164 $ 1,164 $ — $ — $ 1,164 Investments in unconsolidated affiliates 34,961 45,581 37,984 — 7,597 Financial liabilities: 2024 Convertible Notes $ 120,307 $ 132,609 $ — $ 132,609 $ — 2025 Convertible Notes 136,836 143,175 — 143,175 — Carrying Value Estimated Fair Value September 30, 2021 September 30, 2021 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,181 $ 1,181 $ — $ — $ 1,181 Investments in unconsolidated affiliates 37,724 48,954 41,638 — 7,316 Financial liabilities: 2024 Convertible Notes $ 123,543 $ 153,281 $ — $ 153,281 $ — 2025 Convertible Notes 140,643 155,250 — 155,250 — Due to the short-term nature of cash and cash equivalents, pawn loans, pawn service charges receivable and other debt, we estimate that the carrying value approximates fair value. We consider our cash and cash equivalents to be measured using Level 1 inputs and our pawn loans, pawn service charges receivable and other debt to be measured using Level 3 inputs. Significant increases or decreases in the underlying assumptions used to value pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates. Included in “Accounts payable, accrued expenses and other current liabilities“ in our Consolidated Balance Sheets as of March 31, 2022 is $ 4.6 million which represents the fair value of acquisition-related contingent consideration as discussed in Note 2: Acquisitions. The key assumptions used to determine the fair value of acquisition-related contingent consideration are estimated by management, not observable in the market and, therefore considered Level 3 inputs within the fair value hierarchy. In March 2019, we received $ 1.1 million in previously escrowed seller funds as a result of settling certain indemnification claims with the seller of GPMX. In April 2019, we loaned the $ 1.1 million back to the seller of GPMX in exchange for a promissory note. The note bears interest at the rate of 2.89 % per annum and is secured by certain marketable securities owned by the seller and held in a U.S. brokerage 12 Table of Contents account. All principal and accrued interest is due and payable in April 2024. The fair value of the note approximated its carrying value as of March 31, 2022. We use the equity method of accounting to account for our ownership interest in Cash Converters. The inputs used to generate the fair value of the investment in Cash Converters were considered Level 1 inputs. These inputs consist of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period. We included no control premium for owning a large percentage of outstanding shares. We use the equity method of accounting to account for our 13.14 % ownership in Rich Data Corporation ("RDC"), a previously consolidated variable interest entity for which we no longer have the power to direct the activities that most significantly affect its economic performance. We believe its fair value approximated carrying value although such fair value is highly variable and includes significant unobservable inputs. Of the $ 18.0 million included in the table above, $ 15.0 million is related the investment in Founders. We believe the investment's fair value approximated it's carrying value although such fair value is highly variable and includes significant unobservable inputs . We measured the fair value of the 2024 and 2025 Convertible Notes using quoted price inputs. The notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease. In September 2020, we received the final payment from AlphaCredit on the notes receivable related to the sale of Grupo Finmart and recorded the amount under “Restricted cash” in our consolidated balance sheet as of March 31, 2022. In August 2019, AlphaCredit notified us of an indemnity claim for certain pre-closing taxes, but the nature, extent and validity of such claim has yet to be determined. NOTE 8: DEBT The Company adopted ASU 2020-06 on October 1, 2021. See Note 1: Organization And Summary Of Significant Accounting Policies for further discussion of this recently adopted accounting policy. The following table presents the Company's debt instruments outstanding: March 31, 2022 March 31, 2021 September 30, 2021 (in thousands) Gross Amount Debt Issuance Costs Carrying Amount Gross Amount Debt Discount and Issuance Costs Carrying Amount Gross Amount Debt Discount and Issuance Costs Carrying Amount 2024 Convertible Notes $ 143,750 $ ( 1,502 ) $ 142,248 $ 143,750 $ ( 23,443 ) $ 120,307 $ 143,750 $ ( 20,207 ) $ 123,543 2025 Convertible Notes 172,500 ( 2,580 ) 169,920 172,500 ( 35,664 ) 136,836 172,500 ( 31,857 ) 140,643 Total long-term debt $ 316,250 $ ( 4,082 ) $ 312,168 $ 316,250 $ ( 59,107 ) $ 257,143 $ 316,250 $ ( 52,064 ) $ 264,186 The following table presents the Company's contractual maturities related to the debt instruments as of March 31, 2022: Schedule of Contractual Maturities (in thousands) Total Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years 2024 Convertible Notes $ 143,750 $ — $ 143,750 $ — $ — 2025 Convertible Notes 172,500 — — 172,500 — $ 316,250 $ — $ 143,750 $ 172,500 $ — 13 Table of Contents The following table presents the Company's interest expense related to the Convertible Notes for the three and six months ended March 31, 2022 and 2021: Three Months Ended March 31, Six Months Ended March 31, (in thousands) 2022 2021 2022 2021 2024 Convertible Notes: Contractual interest expense $ 1,033 $ 1,033 $ 2,066 $ 2,066 Amortization of deferred financing costs 142 111 309 223 Amortization of debt discount — 1,461 — 2,891 Total interest expense $ 1,175 $ 2,605 $ 2,375 $ 5,180 2025 Convertible Notes: Contractual interest expense $ 1,024 $ 1,024 $ 2,048 $ 2,048 Amortization of deferred financing costs 182 141 389 281 Amortization of debt discount — 1,712 — 3,391 Total interest expense $ 1,206 $ 2,877 $ 2,437 $ 5,720 2.875 % Convertible Senior Notes Due 2024 In July 2017, we issued $ 143.75 million aggregate principal amount of 2.875 % Convertible Senior Notes Due 2024 (the “2024 Convertible Notes”). The 2024 Convertible Notes were issued pursuant to an indenture dated July 5, 2017 (the "2017 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2017 Indenture. The 2024 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2024 Convertible Notes pay interest semi-annually in arrears at a rate of 2.875 % per annum on January 1 and July 1 of each year, commencing January 1, 2018, and mature on July 1, 2024 (the "2024 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2024 Convertible Notes will be entitled to receive cash equal to the principal of the 2024 Convertible Notes plus accrued interest. The effective interest rate for the three and six months months ended March 31, 2022 was approximately 3.35 %. As of March 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2024 Maturity Date assuming no early conversion. The 2024 Convertible Notes are convertible based on an initial conversion rate of 100 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $ 10.00 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2024 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election. Prior to January 1, 2024, the 2024 Convertible Notes will be convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2017 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2017 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2024 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2017 Indenture. On or after January 1, 2024 until the close of business on the business day immediately preceding the 2024 Maturity Date, holders of 2024 Convertible Notes may, at their option, convert their 2024 Convertible Notes at any time, regardless of the foregoing circumstances. At our option, we may redeem for cash all or any portion of the 2024 Convertible Notes on or after July 6, 2021, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100 % of the principal amount of the 2024 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2022. As of March 31, 2022, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount. 14 Table of Contents 2.375 % 2025 Convertible Senior Notes Due 2025 In May 2018, we issued $ 172.5 million aggregate principal amount of 2.375 % Convertible Senior Notes Due 2025 (the “2025 Convertible Notes”). The 2025 Convertible Notes were issued pursuant to an indenture dated May 14, 2018 (the "2018 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2018 Indenture. The 2025 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375 % per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. The effective interest rate for the three and six months months ended March 31, 2022 was approximately 2.88 % for the 2025 Convertible Notes. As of March 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2025 Maturity Date assuming no early conversion. The 2025 Convertible Notes are convertible based on an initial conversion rate of 62.8931 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $ 15.90 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2025 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election. Prior to November 1, 2024, the 2025 Convertible Notes are convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2018 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2018 Indenture. On or after November 1, 2024 until the close of business on the business day immediately preceding the 2025 Maturity Date, holders of 2025 Convertible Notes may, at their option, convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances. We may not redeem the 2025 Convertible Notes prior to May 1, 2022. At our option, we may redeem for cash all or any portion of the 2025 Convertible Notes on or after May 1, 2022, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100 % of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2022. As of March 31, 2022, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount. NOTE 9: COMMON STOCK AND STOCK COMPENSATION Share Repurchase Program In December 2019, the Company's Board of Directors (the "Board") authorized the repurchase of up to $ 60.0 million of our Class A Common Stock over three years . During fiscal 2020, we repurchased and retired 943,149 shares of our Class A Common Stock for $ 5.2 million, which was allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets. Repurchases under the program were suspended in March 2020 in order to preserve liquidity as a result of uncertainties related to the COVID-19 pandemic and no further share repurchases have been made since March of 2020. On May 3, 2022, the Board approved a new share repurchase program, which will replace the previous program that was suspended in March 2020. Note 13: Subsequent Events. 15 Table of Contents Stock Compensation We maintain a Board-approved incentive plan to retain the services of our valued officers, directors and employees and to incentivize such persons to make contributions to our company and motivate excellent performance (the "Incentive Plan"). Under the Incentive Plan, we grant awards of restricted stock or restricted stock units to employees and non-employee directors. Awards granted to employees are typically subject to performance and service conditions. Awards granted to non-employee directors are time-based awards subject only to service conditions. Awards granted under the Incentive Plan are measured at the grant date fair value with compensation costs associated with the awards recognized over the requisite service period, usually the vesting period, on a straight-line basis. The following table presents a summary of stock compensation activity: Shares Weighted Average Grant Date Fair Value Outstanding as of September 30, 2021 2,218,777 $ 4.86 Granted 1,362,750 7.37 Released (a) ( 486,627 ) 4.77 Cancelled ( 711,844 ) 6.47 Outstanding as of March 31, 2022 2,383,056 $ 6.30 (a) 101,103 shares were withheld to satisfy related income tax withholding. NOTE 10: CONTINGENCIES Currently, and from time to time, we are involved in various claims, disputes, lawsuits, investigations, and legal and regulatory proceedings, including the matter described below. We accrue for contingencies if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because these matters are inherently unpredictable and unfavorable developments or resolutions can occur, assessing contingencies requires judgments and is highly subjective about future events, and the amount of resulting loss may differ from these estimates. Except as noted below, we do not believe the resolution of any particular matter will have a material adverse effect on our financial condition, results of operations or liquidity. On October 14, 2021, Andrew Kowlessar filed an action in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida styled Andrew Kowlessar, individually and on behalf of all others similarly situated vs. EZCORP, Inc. d/b/a Value Pawn & Jewelry (Case No. CACE-21-018864). The matter subsequently was amended and removed to the United States District Court of the Southern District of Florida as Andrew Kowlessar, individually and on behalf of all others similarly situated vs. EZPAWN Florida, Inc. d/b/a Value Pawn & Jewelry (Case No. 0:21-cv-62362-RKA). The amended complaint is brought under Section 501.059, Florida Statutes, the Florida Telephone Solicitation Act (“Act”), and alleges certain text messages were sent in violation of the Act. The matter currently involves claims by a single individual, but alleges a class of persons who may have similar claims of violations of the Act and seeks class certification. The parties are conducting discovery and are scheduled to conduct certain pre-trial mediation discussions. We intend to defend vigorously against all claims, whether asserted individually or as a representative of any class. We have not recorded a liability for this matter as of March 31, 2022. An unfavorable resolution could have a material adverse effect on our results of operations for the period in which such resolution is recorded. NOTE 11: SEGMENT INFORMATION Our operations are primarily managed on a geographical basis and are comprised of three reportable segments. The factors for determining our reportable segments include the manner in which our chief operating decision maker ("CODM") evaluates performance for purposes of allocating resources and assessing performance. We currently report our segments as follows: • U.S. Pawn — all pawn activities in the United States; • Latin America Pawn — all pawn activities in Mexico and other parts of Latin America; and • Other Investments — primarily our equity interest in the net results of Cash Converters and RDC along with our investment in Founders. There are no inter-segment revenues presented below, and the amounts below were determined in accordance with the same accounting principles used in our condensed consolidated financial statements. 16 Table of Contents The following tables present revenue for each reportable segment, disaggregated revenue within our three reportable segments and Corporate, segment profits and segment contribution. Three Months Ended March 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 100,064 $ 33,492 $ — $ 133,556 $ — $ 133,556 Jewelry scrapping sales 3,480 2,210 — 5,690 — 5,690 Pawn service charges 58,772 17,911 — 76,683 — 76,683 Other revenues 24 — 29 53 — 53 Total revenues 162,340 53,613 29 215,982 — 215,982 Merchandise cost of goods sold 58,613 23,633 — 82,246 — 82,246 Jewelry scrapping cost of goods sold 2,798 2,010 — 4,808 — 4,808 Net revenues 100,929 27,970 29 128,928 — 128,928 Segment and corporate expenses (income): Store expenses 64,492 21,251 — 85,743 — 85,743 General and administrative — — — — 12,227 12,227 Depreciation and amortization 2,625 1,891 — 4,516 2,934 7,450 Gain on sale or disposal of assets and other — ( 9 ) — ( 9 ) ( 688 ) ( 697 ) Interest expense — — — — 2,527 2,527 Interest income — ( 255 ) — ( 255 ) — ( 255 ) Equity in net loss of unconsolidated affiliates — — 1,439 1,439 — 1,439 Other expense — 334 8 342 29 371 Segment contribution (loss) $ 33,812 $ 4,758 $ ( 1,418 ) $ 37,152 Income (loss) before income taxes $ 37,152 $ ( 17,029 ) $ 20,123 Three Months Ended March 31, 2021 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 93,827 $ 21,398 $ — $ 115,225 $ — $ 115,225 Jewelry scrapping sales 3,581 2,494 — 6,075 — 6,075 Pawn service charges 49,577 13,859 — 63,436 — 63,436 Other revenues 29 — 174 203 — 203 Total revenues 147,014 37,751 174 184,939 — 184,939 Merchandise cost of goods sold 51,812 13,978 — 65,790 — 65,790 Jewelry scrapping cost of goods sold 3,149 2,252 — 5,401 — 5,401 Net revenues 92,053 21,521 174 113,748 — 113,748 Segment and corporate expenses (income): Store expenses 63,657 17,492 — 81,149 — 81,149 General and administrative — — — — 13,771 13,771 Depreciation and amortization 2,636 1,793 — 4,429 3,660 8,089 Loss on sale or disposal of assets and other — 101 — 101 11 112 Interest expense — — — — 5,518 5,518 Interest income — ( 571 ) — ( 571 ) ( 14 ) ( 585 ) Equity in net income of unconsolidated affiliates — — ( 1,250 ) ( 1,250 ) — ( 1,250 ) Other expense — 85 9 94 51 145 Segment contribution $ 25,760 $ 2,621 $ 1,415 $ 29,796 Income (loss) before income taxes $ 29,796 $ ( 22,997 ) $ 6,799 17 Table of Contents Six Months Ended March 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 202,142 $ 69,134 $ — $ 271,276 $ — $ 271,276 Jewelry scrapping sales 8,460 4,174 — 12,634 — 12,634 Pawn service charges 115,329 37,379 — 152,708 — 152,708 Other revenues 46 240 72 358 — 358 Total revenues 325,977 110,927 72 436,976 — 436,976 Merchandise cost of goods sold 116,445 48,912 — 165,357 — 165,357 Jewelry scrapping cost of goods sold 6,773 3,807 — 10,580 — 10,580 Net revenues 202,759 58,208 72 261,039 — 261,039 Segment and corporate expenses (income): Store expenses 129,181 43,333 — 172,514 — 172,514 General and administrative — — — — 27,772 27,772 Depreciation and amortization 5,295 3,871 — 9,166 5,858 15,024 Gain on sale or disposal of assets and other — ( 4 ) — ( 4 ) ( 688 ) ( 692 ) Interest expense — — — — 4,958 4,958 Interest income — ( 437 ) — ( 437 ) ( 122 ) ( 559 ) Equity in net loss of unconsolidated affiliates — — 301 301 — 301 Other expense (income) — 200 ( 4 ) 196 55 251 Segment contribution (loss) $ 68,283 $ 11,245 $ ( 225 ) $ 79,303 Income (loss) before income taxes $ 79,303 $ ( 37,833 ) $ 41,470 Six Months Ended March 31, 2021 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 176,080 $ 46,928 $ — $ 223,008 $ — $ 223,008 Jewelry scrapping sales 7,585 5,249 — 12,834 — 12,834 Pawn service charges 99,797 27,128 — 126,925 — 126,925 Other revenues 51 7 249 307 — 307 Total revenues 283,513 79,312 249 363,074 — 363,074 Merchandise cost of goods sold 99,871 30,462 — 130,333 — 130,333 Jewelry scrapping cost of goods sold 5,993 4,610 — 10,603 — 10,603 Other cost of revenues — — — — — Net revenues 177,649 44,240 249 222,138 — 222,138 Segment and corporate expenses (income): Store expenses 125,749 34,709 — 160,458 — 160,458 General and administrative — — — — 26,281 26,281 Depreciation and amortization 5,372 3,653 — 9,025 6,636 15,661 Loss on sale or disposal of assets and other 27 — — 27 63 90 Interest expense — — — — 10,973 10,973 Interest income — ( 1,335 ) — ( 1,335 ) ( 71 ) ( 1,406 ) Equity in net income of unconsolidated affiliates — — ( 1,766 ) ( 1,766 ) — ( 1,766 ) Other (income) expense — ( 370 ) ( 201 ) ( 571 ) 117 ( 454 ) Segment contribution $ 46,501 $ 7,583 $ 2,216 $ 56,300 Income (loss) before income taxes $ 56,300 $ ( 43,999 ) $ 12,301 18 Table of Contents The following table presents separately identified net earning assets by segment: (in thousands) U.S. Pawn Latin America Pawn Other Investments Corporate Items Total As of March 31, 2022 Pawn loans $ 133,515 $ 40,103 $ — $ — $ 173,618 Inventory, net 93,320 26,570 — — 119,890 As of March 31, 2021 Pawn loans $ 95,369 $ 29,899 $ — $ — 125,268 Inventory, net 69,782 16,432 — — 86,214 NOTE 12: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION The following table provides supplemental information on net amounts included in our condensed consolidated balance sheets: (in thousands) March 31, 2022 March 31, 2021 September 30, 2021 Gross pawn service charges receivable $ 35,886 $ 26,607 $ 37,360 Allowance for uncollectible pawn service charges receivable ( 7,567 ) ( 5,765 ) ( 8,023 ) Pawn service charges receivable, net $ 28,319 $ 20,842 $ 29,337 Gross inventory $ 123,944 $ 93,470 $ 115,300 Inventory reserves ( 4,054 ) ( 7,256 ) ( 4,311 ) Inventory, net $ 119,890 $ 86,214 $ 110,989 Prepaid expenses and other $ 10,245 $ 7,881 $ 5,386 Accounts receivable and other 8,255 8,442 9,322 Income taxes receivable 8,767 14,353 16,302 Prepaid expenses and other current assets $ 27,267 $ 30,676 $ 31,010 Property and equipment, gross $ 293,087 $ 273,513 $ 284,867 Accumulated depreciation ( 242,213 ) ( 221,677 ) ( 231,056 ) Property and equipment, net $ 50,874 $ 51,836 $ 53,811 Accounts payable $ 17,756 $ 17,957 $ 22,462 Accrued payroll 8,631 8,867 9,093 Incentive accrual 8,196 6,682 16,868 Other payroll related expenses 7,877 12,187 10,695 Accrued sales and VAT taxes 8,022 9,064 10,936 Accrued income taxes payable 4,346 2,271 3,826 Other current liabilities 14,867 11,991 16,388 Accounts payable, accrued expenses and other current liabilities $ 69,695 $ 69,019 $ 90,268 NOTE 13: SUBSEQUENT EVENTS Share Repurchase Program On May 3, 2022, the Board of Directors approved a new share repurchase program, which will replace the previous program that was suspended in March 2020 at the onset of the COVID-19 pandemic. See Note 9: Share-Based Compensation — Common Stock Repurchase Program. Under the new program, the Company is authorized to repurchase up to $ 50 million of our Class A Non-Voting common shares over the next three years . Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities. The amount and timing of purchases will be dependent on a variety of factors, including stock price, trading volume, general market conditions, legal and regulatory requirements, general business conditions, the level of cash flows, and corporate considerations determined 19 Table of Contents by management and the Board, such as liquidity and capital needs and the availability of attractive alternative investment opportunities. The Board of Directors has reserved the right to modify, suspend or terminate the program at any time. Purchase Additional Shares of Cash Converters On April 5, 2022, we purchased an additional 13 million shares of Cash Converters for $ 2.5 million. This purchase increased our total ownership in Cash Converters to 255,239,157 shares, representing an ownership interest of 40.67 %. Additionally, in April 2022, we received a cash dividend of $ 1.8 million from Cash Converters. 20 Table of Contents