What changed in this filing

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Item 1. Financial Statements

2023-02-01 compared with 2022-08-03 · 218 added, 318 removed, 421 unchanged (56% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts) June 30,

(in thousands, except share and per share amounts) December 31,

September 30,

17 unchanged sentences

Total assets $ 1,402,315 $ 1,280,321 $ 1,347,878

Liabilities and stockholders' equity:

Liabilities and equity:

Current liabilities:

1 unchanged sentence

Customer layaway deposits 16,276 13,142 16,023

Lease liability 53,358 47,241 52,263

Operating lease liabilities, current 52,799 51,843 52,334

Total current liabilities 139,005 140,516 152,866

1 unchanged sentence

Deferred tax liability, net — 221 373

Lease liability 175,489 149,342 161,330

Operating lease liabilities 188,730 161,841 180,756

Other long-term liabilities 10,261 11,398 8,749

5 unchanged sentences

issued and outstanding:

53,685,333 as of June 30, 2022;

53,086,438 as of June 30, 2021;

52,877,930 as of December 31, 2022;

53,344,218 as of December 31, 2021;

and 53,454,885 as of September 30, 2022

5 unchanged sentences

Accumulated other comprehensive loss ( 53,165 ) ( 55,376 ) ( 55,669 )

Total stockholders' equity 685,754 673,218 672,238

Total liabilities and stockholders' equity $ 1,330,827 $ 1,238,650 $ 1,266,911

Total equity 705,335 654,501 692,231

Total liabilities and equity $ 1,402,315 $ 1,280,321 $ 1,347,878

See accompanying notes to unaudited interim condensed consolidated financial statements

1 unchanged sentence

Three Months Ended

Nine Months Ended

(in thousands, except per share amount) 2022 2021

12 unchanged sentences

(Gain) loss on sale or disposal of assets and other ( 16 ) 5

Other charges — 497 — 497

Total operating expenses 124,251 109,895

3 unchanged sentences

Equity in net income of unconsolidated affiliates ( 1,584 ) ( 1,138 )

Other expense (income) ( 210 ) 65 41 ( 389 )

Income (loss) before income taxes 13,082 ( 766 ) 54,552 11,535

Other income ( 234 ) ( 120 )

Income before income taxes 24,538 21,347

Income tax expense 7,760 5,626

Net income (loss) $ 12,215 $ ( 2,570 ) $ 42,823 $ 7,059

Basic earnings (loss) per share $ 0.22 $ ( 0.05 ) $ 0.76 $ 0.13

Diluted earnings (loss) per share $ 0.17 $ ( 0.05 ) $ 0.59 $ 0.13

Net income $ 16,778 $ 15,721

Basic earnings per share $ 0.30 $ 0.28

Diluted earnings per share $ 0.25 $ 0.21

Weighted-average basic shares outstanding 56,308 56,183

3 unchanged sentences

Three Months Ended

Nine Months Ended

(in thousands) 2022 2021

Net income (loss) $ 12,215 $ ( 2,570 ) $ 42,823 $ 7,059

Net income $ 16,778 $ 15,721

Other comprehensive income:

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited except for balances as of September 30, 2021 and September 30, 2020)

Common Stock Additional

5 unchanged sentences

Stock compensation — — 1,886 — — 1,886

Release of restricted stock 257 3 — — — 3

Transfer of consideration for acquisition 10 — 99 — — 99

Release of restricted stock, net of shares withheld for taxes 235 2 — — — 2

Taxes paid related to net share settlement of equity awards — — ( 1,138 ) — — ( 1,138 )

Cumulative effect of adoption of ASU 2020-06 (Note 1) — — ( 64,263 ) 26,857 — ( 37,406 )

Foreign currency translation gain — — — — 2,504 2,504

Purchase and retirement of treasury stock ( 822 ) ( 7 ) ( 3,165 ) ( 3,855 ) — ( 7,027 )

Net income — — — 16,778 — 16,778

Balances as of December 31, 2022 55,848 $ 559 $ 343,012 $ 414,929 $ ( 53,165 ) $ 705,335

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

Stock compensation — — 1,850 — — 1,850

Foreign currency translation loss — — — — ( 3,327 ) ( 3,327 )

Net income — — — 12,215 — 12,215

Balances as of June 30, 2022 56,656 $ 567 $ 343,763 $ 396,461 $ ( 55,037 ) $ 685,754

Common Stock Additional

5 unchanged sentences

Stock compensation — — 1,698 — — 1,698

Release of restricted stock 296 5 — — — 5

Release of restricted stock, net of shares withheld for taxes 257 3 — — — 3

Taxes paid related to net share settlement of equity awards — — ( 792 ) — — ( 792 )

Cumulative effect of adoption of ASU 2020-06 — — ( 64,263 ) 26,857 — ( 37,406 )

Foreign currency translation gain — — — — 3,039 3,039

1 unchanged sentence

Balances as of December 31, 2021 56,314 $ 563 $ 339,955 $ 369,359 $ ( 55,376 ) $ 654,501

Stock compensation — — 1,094 — — 1,094

Transfer of consideration for 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

Stock compensation — — 1,538 — — 1,538

Transfer of consideration for acquisition 213 2 1,545 — — 1,547

Foreign currency translation gain — — — — 3,459 3,459

Net loss — — — ( 2,570 ) — ( 2,570 )

Balances as of June 30, 2021 56,057 $ 560 $ 402,522 $ 325,228 $ ( 55,092 ) $ 673,218

See accompanying notes to unaudited interim condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Three Months Ended

(in thousands) 2022 2021

4 unchanged sentences

Amortization of debt discount and deferred financing costs 378 374

Amortization of lease right-of-use asset 39,061 35,885

Non-cash lease expense 13,596 12,694

Deferred income taxes 656 587

3 unchanged sentences

Equity in net income of unconsolidated affiliates ( 1,584 ) ( 1,138 )

Loss on extinguishment of debt 3,545 —

Changes in operating assets and liabilities:

13 unchanged sentences

Acquisitions, net of cash acquired ( 12,884 ) —

Issuance of note receivable ( 1,000 ) —

Issuance of notes receivable ( 15,500 ) ( 1,000 )

Investment in unconsolidated affiliates ( 2,133 ) ( 2,477 )

3 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 1,138 ) ( 792 )

Payments on assumed debt and other borrowings — ( 15,363 )

Net cash used in financing activities ( 792 ) ( 16,202 )

Proceeds from issuance of debt 230,000 —

Debt issuance cost ( 7,403 ) —

Cash paid on extinguishment of debt ( 1,951 ) —

Payments on debt ( 178,488 ) —

Repurchase of common stock ( 7,027 ) —

Net cash provided by (used in) financing activities 33,993 ( 792 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash 605 719

Net decrease in cash, cash equivalents and restricted cash ( 32,668 ) ( 15,090 )

Net increase (decrease) in cash, cash equivalents and restricted cash 1,648 ( 21,658 )

Cash, cash equivalents and restricted cash at beginning of period 214,369 263,624

Cash, cash equivalents and restricted cash at end of period $ 216,017 $ 241,966

Supplemental disclosure of cash flow information

Cash and cash equivalents $ 222,342 $ 283,668

Restricted cash 8,614 13,795

Total cash and cash equivalents and restricted cash $ 230,956 $ 297,463

Non-cash investing and financing activities:

Pawn loans forfeited and transferred to inventory $ 204,662 $ 145,839

Transfer of consideration for other investment 1,500 —

Transfer of consideration for acquisition — 1,547

Acquisition earn-out contingency — 4,608

Accrued acquisition consideration held as restricted cash — 5,824

See accompanying notes to unaudited interim condensed consolidated financial statements

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Description of Business

(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.

(collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) is a provider of pawn loans in the United States ("U.S.") and Latin America.

Pawn loans are non-recourse loans collateralized by tangible property.

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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 nine-month periods ended June 30, 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 nine months ended June 30, 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 2021 Annual Report except for as disclosed below related to the adoption of Accounting Standards Update ("ASU") 2020-06.

Financial results for the three-month period ended December 31, 2022, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2023 or any other period due, in part, to seasonal variations.

There have been no changes that have had a material impact in significant accounting policies as described in our 2022 Annual Report .

Principles of Consolidation

4 unchanged sentences

All inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S.

1 unchanged sentence

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 adversely affected our gross profit and earnings during the latter half of fiscal 2020 and into fiscal 2021.

During the latter part of fiscal 2021, we saw pawn transaction activity start to rebuild.

That has continued to date, and our pawn loans outstanding ("PLO") balances now exceed 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.

Despite the recovery in pawn transaction activity, the continuing pandemic, driven by the proliferation of various COVID-19 variants, continues to affect portions of our business, such as managing appropriate staffing at the store level.

Our estimates, judgments and assumptions related to COVID-19 could vary over time, and there can be no assurance that the continuing pandemic will not have an adverse effect on our results of operations, financial position and cash flows in future periods.

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.

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 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 nine months ended June 30, 2022 was primarily to decrease interest expense by $ 3.5 million and $ 10.3 million, respectively.

This had the effect of increasing our basic earnings per share for the three and nine months ended June 30, 2022 by $ 0.05 and $ 0.14 , respectively, and decreasing our diluted earnings per common share for the nine months ended June 30, 2022 by $ 0.02 .

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.

We base our estimates on historical experience, observable trends and various other assumptions we believe are reasonable.

Actual results may differ materially from these estimates under different assumptions or conditions.

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.

On June 8, 2021, we completed the acquisition of 100 % of the common shares of PLO del Bajio S.

(“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 two years , contingent on the growth of the loan portfolios of the acquired stores.

Up to 50 % of any 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 fiscal 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 as of June 30, 2022, $ 0.3 million was paid during July 2022, and the remaining $ 0.4 million is expected to be paid on or around the fifth anniversary of the date of acquisition.

During the second quarter of fiscal 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.

The results of Bajio have been included in our condensed consolidated financial statements from June 9, 2021 through June 30, 2021, and are reported in our Latin America Pawn segment.

The acquired business contributed revenues of $ 1.7 million and net income of $ 0.1 million to us for the period from June 9, 2021 to June 30, 2021.

The following unaudited pro forma summary presents consolidated information for us as if the business combination had occurred on October 1, 2019.

The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results.

The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, nor does it reflect additional revenue opportunities following the acquisition.

The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed.

Three Months Ended

Nine Months Ended

(in thousands, except per share amounts) 2021 2021

Revenue $ 180,854 $ 558,426

Net (loss) income ( 2,475 ) 6,775

Basic (loss) earnings per common share ( 0.04 ) 0.12

Diluted (loss) earnings per common share ( 0.04 ) 0.12

We did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma net revenue and net income.

These pro forma amounts have been calculated after applying the Company's accounting policies and adjusting the results to reflect the additional amortization that would have been incurred assuming the amortization of the trade name had been applied from October 1, 2019.

During the three and nine months ended June 30, 2021, we incurred total acquisition costs of $ 0.2 million and $ 0.4 million, respectively.

The acquisition costs were primarily related to legal, accounting and consulting services, were expensed as incurred through June 30, 2021 and are included in general and administrative expenses in the consolidated statements of operations.

The following table summarizes the changes in the carrying amount of goodwill by segment and in total:

Nine Months Ended June 30, 2022

Three Months Ended December 31, 2022

(in thousands) U.S.

3 unchanged sentences

Acquisitions 9,413 — 9,413

Measurement period adjustments — ( 678 ) ( 678 )

Effect of foreign currency translation changes — 1,120 1,120

Balances as of June 30, 2022 $ 245,503 $ 41,295 $ 286,798

Nine Months Ended June 30, 2021

Balances as of December 31, 2022 $ 254,916 $ 42,445 $ 297,361

Three Months Ended December 31, 2021

(in thousands) U.S.

2 unchanged sentences

$ 244,471 $ 41,287 $ 285,758

Acquisitions 2,394 22,957 25,351

Measurement period adjustments — ( 1,322 ) $ ( 1,322 )

Effect of foreign currency translation changes — 183 183

Balances as of June 30, 2021

Balances as of December 31, 2021

$ 244,471 $ 40,148 $ 284,619

During the first quarter of fiscal 2023, we acquired nine pawn stores located in Houston, Texas and one luxury pawn store in Las Vegas, Nevada for total cash consideration of $ 12.9 million, inclusive of all ancillary arrangements, of which $ 9.4 million was recorded as goodwill.

These acquisitions expand our position in these strategic markets and expands our offerings by providing a dedicated and targeted focus on higher-end products.

These acquisitions were immaterial, individually and in the aggregate, and we have therefore omitted or aggregated certain disclosures.

EARNINGS PER SHARE

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Three Months Ended

Nine Months Ended

(in thousands, except per share amounts) 2022 2021

Basic earnings per common share:

Net income (loss) - basic $ 12,215 $ ( 2,570 ) $ 42,823 $ 7,059

Net income - basic $ 16,778 $ 15,721

Weighted shares outstanding - basic 56,308 56,183

Basic earnings (loss) per common share $ 0.22 $ ( 0.05 ) $ 0.76 $ 0.13

Basic earnings per common share $ 0.30 $ 0.28

Diluted earnings per common share:

Net income (loss) - basic $ 12,215 $ ( 2,570 ) $ 42,823 $ 7,059

Net income - basic $ 16,778 $ 15,721

Convertible Notes interest expense, net of tax* 4,540 1,884

Net income (loss) - diluted $ 14,083 $ ( 2,570 ) $ 48,421 $ 7,059

Net income - diluted $ 21,318 $ 17,605

Weighted shares outstanding - basic 56,308 56,183

2 unchanged sentences

Weighted shares outstanding - diluted 83,779 81,948

Diluted earnings (loss) per common share $ 0.17 $ ( 0.05 ) $ 0.59 $ 0.13

Diluted earnings per common share $ 0.25 $ 0.21

Potential common shares excluded from the calculation of diluted earnings per share above:

Restricted stock**** 1,552 1,936

* Includes $ 3.5 million loss on extinguishment of debt recorded to "Interest expense" in the Company's condensed consolidated statement of operations.

** 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 7:

Debt for conversion price and initial conversion rate of the 2024 Convertible Notes and 2025 Convertible Notes.

Debt for conversion price and initial conversion rate of the 2024 Convertible Notes, 2025 Convertible Notes and 2029 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 and nine months ended June 30, 2022, we increased net income by $ 1.9 million and $ 5.6 million, respectively, t o 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 .

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.

Leases in our 2021 Annual Report for additional information about our leasing activities.

The table below presents balances of our operating leases:

(in thousands) June 30, 2022 June 30, 2021 September 30,

Right-of-use asset $ 217,506 $ 185,467 $ 200,990

Lease liability, current $ 53,358 $ 47,241 $ 52,263

Lease liability, non-current 175,489 149,342 161,330

Total lease liability $ 228,847 $ 196,583 $ 213,593

The table below provides the composition of our lease costs:

The table below presents balances of our lease assets and liabilities and their balance sheet locations for both operating and financing leases:

(in thousands) Balance Sheet Location December 31, 2022 December 31, 2021 September 30,

Lease assets:

Operating lease right-of-use assets Right-of-use assets, net $ 229,991 $ 201,527 $ 221,405

Financing lease assets Right-of-use assets, net 563 — 181

Total lease assets $ 230,554 $ 201,527 $ 221,586

Lease liabilities:

Operating lease liabilities Operating lease liabilities, current $ 52,799 $ 51,843 $ 52,334

Financing lease liabilities Accounts payable, accrued expenses and other current liabilities 121 — 37

Total current lease liabilities $ 52,920 $ 51,843 $ 52,371

Operating lease liabilities Operating lease liabilities $ 188,730 $ 161,841 $ 180,756

Financing lease liabilities Other long-term liabilities 447 — 148

Total non-current lease liabilities $ 189,177 $ 161,841 $ 180,904

Total lease liabilities $ 242,097 $ 213,684 $ 233,275

The table below provides major components of our lease costs:

Three Months Ended

Nine Months Ended

(in thousands) 2022 2021

Operating lease expense* $ 17,264 $ 14,854 $ 50,415 $ 44,667

Variable lease expense 3,824 3,601 11,200 9,768

Total lease expense $ 21,088 $ 18,455 $ 61,615 $ 54,435

* Includes a reduction for sublease rental income.

Operating lease cost:

Operating lease cost * $ 17,495 $ 16,362

Variable lease cost 3,852 3,542

Total operating lease cost $ 21,347 $ 19,904

Financing lease cost:

Amortization of financing lease assets $ 19 $ —

Interest on financing lease liabilities 11 —

Total financing lease cost $ 30 $ —

Total lease cost $ 21,377 $ 19,904

* Includes a reduction for sublease rental income of $ 0.8 million and $ 0.8 million for the quarters ended December 31, 2022 and 2021, respectively.

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:

Nine Months Ended

Weighted-average remaining contractual lease term (years)

Weighted-average incremental borrowing rate 8.20 % 7.86 %

Maturities of lease liabilities as of June 30, 2022 were as follows (in thousands):

Cash paid for operating leases are $ 21.4 million and $ 19.9 million for the quarters ended December 31, 2022 and 2021, respectively.

The weighted-average term and discount rates for leases are as follows:

Three Months Ended

Weighted-average remaining lease term (years):

Operating leases 5.21 5.05

Financing leases 4.03 N/A

Weighted-average discount rate:

Operating leases 8.36 % 8.10 %

Financing leases 11.14 % N/A

As of December 31, 2022, maturities of lease liabilities under ASC 842 by fiscal year were as follows:

(in thousands) Operating Leases Financing Leases

Remaining 2023 $ 53,547 $ 176

Thereafter 50,420 —

Total lease payments $ 280,352

Portion representing interest 51,505

Present value of operating lease liabilities $ 228,847

Total lease liabilities $ 298,094 $ 708

portion representing imputed interest 56,565 140

Total net lease liabilities $ 241,529 $ 568

current portion 52,799 121

Non-current portion $ 175,489

We recorded $ 55.3 million and $ 33.5 million in non-cash additions to our right of use assets and lease liabilities for the nine months ended June 30, 2022 and June 30, 2021, respectively.

Total long term net lease liabilities $ 188,730 $ 447

We recorded $ 20.5 million and $ 14.3 million in non-cash additions to our right-of-use assets and lease liabilities for the three months ended December 31, 2022 and December 31, 2021, respectively.

STRATEGIC INVESTMENTS

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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 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.

1 unchanged sentence

On April 5, 2022, 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 $ 1.7 million from Cash Converters.

The following tables present summary financial information for Cash Converters most recently reported results at December 31, 2021 after translation to U.S.

On April 14, 2022, we received a cash dividend of $ 1.7 million from Cash Converters.

On September 15, 2022, we acquired an additional 5.7 million shares for $ 0.9 million, bringing our total ownership to 260,939,157 shares, representing an ownership interest of 41.6 %.

On November 2, 2022, we purchased an additional 13 million shares of Cash Converters for $ 2.1 million.

This purchase increased our total ownership in Cash Converters to 273,939,157 shares, representing a 43.7 % ownership interest.

During November 2022, we received a cash dividend of $ 1.8 million from Cash Converters.

The following tables present summary financial information for Cash Converters most recently reported results at June 30, 2022 after translation to U.S.

(in thousands) 2022 2021

6 unchanged sentences

Total liabilities and shareholders’ equity $ 329,785 $ 359,341

Half-Year Ended December 31,

Full-Year Ended June 30,

(in thousands) 2022 2021

4 unchanged sentences

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.

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 then 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 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.

On December 2, 2022, we contributed an additional $ 15.0 million to Founders associated with our preferred interest, which proceeds were used by Founders to acquire additional common stock in SMG.

In addition, we loaned $ 15.0 million to Founders in exchange for a Demand Promissory Note secured by the common interest in Founders held by the other member.

We have an interest in Founders, a variable interest entity, but because the Company is not the primary beneficiary, we do not consolidate Founders.

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 Accounting Standards Codification ("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.

Fair Value Measurements for the fair value and carrying value of our investment in Founders.

Consequently, our equity investment in Founders is accounted for utilizing the measurement alternative within Accounting Standards Codification ("ASC") 321, Investments — Equity Securities.

Our $ 30.0 million carrying value of the investment and $ 15.0 million Demand Promissory Note are included in “Other investments” and "Prepaid expenses and other current assets" in our consolidated balance sheets, respectively.

Our maximum exposure for losses related to our investment in Founders is our $ 30.0 million equity investment and $ 15.0 million Demand Promissory Note plus accrued and unpaid interest.

Fair Value Measurements for the fair values and carrying values of our investment in and loan to Founders, respectively.

FAIR VALUE MEASUREMENTS

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Carrying Value Estimated Fair Value

June 30, 2022 June 30, 2022 Fair Value Measurement Using

December 31, 2022 December 31, 2022 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

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$ 1,224 $ 1,224 $ — $ — $ 1,224

12.00 % promissory note receivable from Founders

15,100 15,100 — — 15,100

Investments in unconsolidated affiliates 37,789 43,497 43,497 — —

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2025 Convertible Notes 102,192 89,883 — 89,883 —

2029 Convertible Notes 222,649 225,975 — 225,975 —

Carrying Value Estimated Fair Value

June 30, 2021 June 30, 2021 Fair Value Measurement Using

December 31, 2021 December 31, 2021 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

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Investments in unconsolidated affiliates 42,513 52,671 45,650 — 7,021

Other investments 16,500 16,500 — — 16,500

Financial liabilities:

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Investments in unconsolidated affiliates 37,733 40,279 40,279 — —

Other investments 24,220 24,220 — — 24,220

Financial liabilities:

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2025 Convertible Notes 170,328 147,488 — 147,488 —

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.

Due to the short-term nature of cash and cash equivalents, pawn loans and pawn service charges receivable, 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 June 30, 2022 is $ 4.6 million which represents the fair value of acquisition-related contingent consideration as discussed in Note 2:

Acquisitions.

Included in "Accounts payable, accrued expenses and other current liabilities" in our Consolidated Balance Sheet as of December 31, 2022 is $ 4.6 million, representing the fair value of acquisition-related contingent consideration associated with the acquisition in June 2021 of PLO del Bajio S.

de C.V., which owned stores operating under the name "Cash Apoyo Efectivo" and located principally in the Mexico City metropolitan area.

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.

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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 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 June 30, 2022.

The fair value of the note approximated its carrying value as of December 31, 2022.

In December 2022, we loaned $ 15.0 million to Founders in exchange for a Demand Promissory Note secured by the common interest in Founders held by the other member.

The note bears interest at the rate of 12.00 % per annum, and all principal and accrued interest is due on demand.

The fair value of the note approximated its carrying value as of December 31, 2022.

We use the equity method of accounting to account for our ownership interest in Cash Converters.

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We included no control premium for owning a large percentage of outstanding shares.

We use the equity method of accounting to account for our 14.57 % 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.

Of the $ 39.2 million of "Other investments" included in the table above, $ 30.0 million is related the investment in Founders and $ 6.2 million related to our investment in Rich Data Corporation ("RDC") .

We believe the investment's fair value approximated its carrying value although such fair value is highly variable and includes significant unobservable inputs.

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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 June 30, 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.

The Company adopted ASU 2020-06 on October 1, 2021.

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:

June 30, 2022 June 30, 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

December 31, 2022 December 31, 2021 September 30, 2022

(in thousands) Gross Amount Debt Issuance Costs Carrying Amount Gross Amount Debt Issuance Costs Carrying Amount Gross Amount Debt Issuance Costs Carrying Amount

2029 Convertible Notes $ 230,000 $ ( 7,351 ) $ 222,649 $ — $ — $ — $ — $ — $ —

2025 Convertible Notes 103,373 ( 1,181 ) 102,192 172,500 ( 2,762 ) 169,738 172,500 ( 2,172 ) 170,328

2024 Convertible Notes 34,389 ( 246 ) 34,143 143,750 ( 1,644 ) 142,106 143,750 ( 1,175 ) 142,575

Total long-term debt $ 367,762 $ ( 8,778 ) $ 358,984 $ 316,250 $ ( 4,406 ) $ 311,844 $ 316,250 $ ( 3,347 ) $ 312,903

The following table presents the Company's contractual maturities related to the debt instruments as of June 30, 2022:

The following table presents the Company's contractual maturities related to the debt instruments as of December 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 — —

(in thousands) 2029 Convertible Notes 2025 Convertible Notes 2024 Convertible Notes Total

Remaining 2023 $ — $ — $ — $ —

— — 34,389 34,389

The following table presents the Company's interest expense related to the Convertible Notes for the three and nine months ended June 30, 2022 and 2021:

— 103,373 — 103,373

Thereafter 230,000 — — 230,000

Total long-term debt $ 230,000 $ 103,373 $ 34,389 $ 367,762

The following table presents the Company's interest expense related to the Convertible Notes for the three months ended December 31, 2022 and 2021:

Three Months Ended

Nine Months Ended

(in thousands) 2022 2021

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Amortization of deferred financing costs 52 —

Amortization of debt discount — 1,490 — 4,381

Total interest expense $ 483 $ —

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Amortization of deferred financing costs 188 207

Amortization of debt discount — 1,747 — 5,138

Total interest expense $ 1,130 $ 1,231

2024 Convertible Notes:

Contractual interest expense $ 876 $ 1,033

Amortization of deferred financing costs 138 167

Total interest expense $ 1,014 $ 1,200

3.750 % Convertible Senior Notes Due 2029

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.

In December 2022, we issued $ 230.0 million aggregate principal amount of 3.750 % Convertible Senior Notes Due 2029 (the “2029 Convertible Notes”).

The 2029 Convertible Notes were issued pursuant to an indenture dated December 12, 2022 (the "2022 Indenture") by and between the Company and Truist Bank, as trustee.

The 2029 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.

The 2029 Convertible Notes pay interest semi-annually in arrears at a rate of 3.750 % per annum on June 15 and December 15 of each year, commencing June 15, 2023, and mature on December 15, 2029 (the "2029 Maturity Date"), unless converted,

redeemed or repurchased in accordance with the terms prior to such date.

At maturity, the holders of the 2029 Convertible Notes will be entitled to receive cash equal to the principal of the 2029 Convertible Notes plus accrued interest.

The effective interest rate for the three and nine months ended June 30, 2022 was approximately 3.35 %.

As of June 30, 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 effective interest rate for the three months ended December 31, 2022 was approximately 4.28 %.

As of December 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2029 Maturity Date assuming no early conversion.

The 2029 Convertible Notes are convertible based on an initial conversion rate of 89.0313 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $ 11.23 per share).

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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;

Prior to June 15, 2029, the 2029 Convertible Notes will be convertible only under the following circumstances:

(1) during any fiscal quarter commencing after the fiscal quarter ending on March 31, 2023 (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 2022 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;

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or (4) upon the occurrence of specified corporate events, as defined in the 2022 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.

On or after June 15, 2029 until the close of business on the business day immediately preceding the 2029 Maturity Date, holders of 2029 Convertible Notes may, at their option, convert their 2029 Convertible Notes at any time, regardless of the foregoing circumstances.

We may not redeem the Notes prior to December 21, 2026.

At our option, we may redeem for cash all or any portion of the 2029 Convertible Notes on or after December 21, 2026, 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 2029 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 June 30, 2022.

As of June 30, 2022, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2022.

As of December 31, 2022, the if-converted value of the 2029 Convertible Notes did not exceed the principal amount.

Note Repurchases

In December 2022, the Company repurchased approximately $ 109.4 million aggregate principal amount of 2.875 % Convertible Senior Notes Due 2024 for approximately $ 117.5 million plus accrued interest and approximately $ 69.1 million aggregate principal amount of 2.375 % Convertible Senior Notes Due 2025 for approximately $ 62.9 million plus accrued interest and recognized a $ 3.5 million loss on extinguishment of debt recorded to "Interest expense" in the Company's condensed consolidated statement of operations.

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”).

In May 2018, we issued $ 172.5 million aggregate principal amount of 2.375 % Convertible Senior Notes Due 2025 (the “2025 Convertible Notes”), for which $ 103.4 million remains outstanding as of December 31, 2022.

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.

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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 nine months ended June 30, 2022 was approximately 2.88 % for the 2025 Convertible Notes.

As of June 30, 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 effective interest rate for the three months ended December 31, 2022 was approximately 2.88 % for the 2025 Convertible Notes.

As of December 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).

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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 June 30, 2022.

As of June 30, 2022, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2022.

As of December 31, 2022, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

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”), for which $ 34.4 million remains outstanding as of December 31, 2022.

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.

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 months ended December 31, 2022 was approximately 3.35 %.

As of December 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:

(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.

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 December 31, 2022.

As of December 31, 2022, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount.

COMMON STOCK AND STOCK COMPENSATION

Share Repurchase Program

On May 3, 2022, the Company's Board of Directors (the "Board") authorized the repurchase of up to $ 50 million of our Class A Common Stock over three years .

Common Stock Repurchase Program

On May 3, 2022, the Company's Board of Directors (the "Board") authorized the repurchase of up to $ 50 million of our Class A Common Stock over three years (the "Common Stock Repurchase Program").

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.

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The Board of Directors has reserved the right to modify, suspend or terminate the program at any time.

To date, the Company has not repurchased any Class A Common Stock under the May 3, 2022 authorized share repurchase program.

As of December 31, 2022, the Company has repurchased and retired 481,005 shares of our Class A Common Stock for $ 4.1 million under the Common Stock Repurchase Program.

The repurchase amount is allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets.

Other Common Stock Repurchases

During December 2022, the Company used approximately $ 5.0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase for cash 578,703 shares of its Class A common stock from purchasers of the notes in privately negotiated transactions.

Such transactions were authorized separately from, and not considered a part of, the publicly announced share repurchase program discussed above.

The repurchase amount is allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets.

Stock Compensation

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Outstanding as of September 30, 2022 2,113,323 $ 5.88

2,218,777 $ 4.86

Granted 917,990 7.72

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Cancelled ( 54,497 ) 6.55

Outstanding as of June 30, 2022

Outstanding as of December 31, 2022

2,629,028 $ 6.66

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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.

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.

d/b/a Value Pawn & Jewelry (Case No.

CACE-21-018864).

d/b/a Value Pawn & Jewelry .

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).

In May 2022, the federal court action was dismissed and the case was refiled in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida (Case No.

2022-008506-CA-01).

d/b/a Value Pawn & Jewelry .

In May 2022, the federal court action was dismissed and the case was refiled in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida.

The complaint was 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.

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The agreed settlement requires the Company to make available up to $ 5 million to be used to pay verified claims (not to exceed $ 70 per verified claimant), as well as attorneys’ fees and costs.

The agreed settlement, which was preliminarily approved by the court on July 22, 2022, remains subject to the court's final approval.

The Company recorded a charge during the quarter ended June 30, 2022 representing the estimated liability for the settlement of this matter.

The agreed settlement was approved by the court on October 24, 2022;

the period for submitting claims expired on November 8, 2022;

and the third-party claims administrator has verified the submitted claims and is set to undertake final resolution.

The Company recorded a charge during the quarter ended June 30, 2022, representing the estimated liability for the settlement of this matter and believes the accrual remains sufficient to cover the Company’s liability in this matter.

SEGMENT INFORMATION

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• Latin America Pawn — all pawn activities in Mexico and other parts of Latin America;

• 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.

• Other Investments — primarily our equity interest in the net income of Cash Converters along with our investment in Founders and RDC.

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.

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 June 30, 2022

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 94,005 $ 34,329 $ — $ 128,334 $ — $ 128,334

Jewelry scrapping sales 5,404 1,764 — 7,168 — 7,168

Pawn service charges 59,322 20,969 — 80,291 — 80,291

Other revenues 21 7 21 49 — 49

Total revenues 158,752 57,069 21 215,842 — 215,842

Merchandise cost of goods sold 55,885 24,282 — 80,167 — 80,167

Jewelry scrapping cost of goods sold 4,506 1,661 — 6,167 — 6,167

Gross profit 98,361 31,126 21 129,508 — 129,508

Segment and corporate expenses (income):

Store expenses 66,036 23,394 — 89,430 — 89,430

General and administrative — — — — 18,715 18,715

Depreciation and amortization 2,572 1,987 — 4,559 3,187 7,746

Interest expense — — — — 2,693 2,693

Interest income ( 1 ) ( 189 ) — ( 190 ) — ( 190 )

Equity in net income of unconsolidated affiliates — — ( 1,758 ) ( 1,758 ) — ( 1,758 )

Other (income) expense — ( 163 ) 19 ( 144 ) ( 66 ) ( 210 )

Segment contribution $ 29,754 $ 6,097 $ 1,760 $ 37,611

Income (loss) before income taxes $ 37,611 $ ( 24,529 ) $ 13,082

Three Months Ended June 30, 2021

Three Months Ended December 31, 2022

(in thousands) U.S.

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Depreciation and amortization 2,755 2,215 — 4,970 3,018 7,988

Other Charges — 497 — 497 — 497

(Gain) loss on sale or disposal of assets and other 3 ( 19 ) — ( 16 ) — ( 16 )

Interest expense — — — — 6,190 6,190

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Income (loss) before income taxes $ 48,422 $ ( 23,884 ) $ 24,538

Nine Months Ended June 30, 2022

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 296,147 $ 103,463 $ — $ 399,610 $ — $ 399,610

Jewelry scrapping sales 13,864 5,938 — 19,802 — 19,802

Pawn service charges 174,651 58,348 — 232,999 — 232,999

Other revenues 67 247 93 407 — 407

Total revenues 484,729 167,996 93 652,818 — 652,818

Merchandise cost of goods sold 172,330 73,194 — 245,524 — 245,524

Jewelry scrapping cost of goods sold 11,279 5,468 — 16,747 — 16,747

Gross profit 301,120 89,334 93 390,547 — 390,547

Segment and corporate expenses (income):

Store expenses 195,217 66,727 — 261,944 — 261,944

General and administrative — — — — 46,487 46,487

Depreciation and amortization 7,867 5,858 — 13,725 9,045 22,770

Gain on sale or disposal of assets and other — ( 4 ) — ( 4 ) ( 688 ) ( 692 )

Interest expense — — — — 7,651 7,651

Interest income ( 1 ) ( 626 ) — ( 627 ) ( 122 ) ( 749 )

Equity in net income of unconsolidated affiliates — — ( 1,457 ) ( 1,457 ) — ( 1,457 )

Other expense (income) — 37 15 52 ( 11 ) 41

Segment contribution $ 98,037 $ 17,342 $ 1,535 $ 116,914

Income (loss) before income taxes $ 116,914 $ ( 62,362 ) $ 54,552

Nine Months Ended June 30, 2021

Three Months Ended December 31, 2021

(in thousands) U.S.

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Loss on sale or disposal of assets and other — 5 — 5 — 5

Other Charges — 497 — 497 — 497

Interest expense — — — — 2,431 2,431

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Income (loss) before income taxes $ 42,151 $ ( 20,804 ) $ 21,347

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 June 30, 2022

Pawn loans $ 159,680 $ 44,475 $ — $ — $ 204,155

Inventory, net 101,831 30,882 — — 132,713

As of June 30, 2021

Pawn loans $ 117,186 $ 39,969 $ — $ — $ 157,155

Inventory, net 69,136 23,106 — — 92,242

SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

The following table provides supplemental information on net amounts included in our condensed consolidated balance sheets:

(in thousands) June 30, 2022 June 30, 2021 September 30,

(in thousands) December 31, 2022 December 31, 2021 September 30,

Gross pawn service charges receivable $ 44,397 $ 38,040 $ 44,192

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Prepaid expenses and other $ 11,581 $ 10,614 $ 8,336

Accounts receivable and other 7,465 7,111 9,322

Income taxes receivable 7,697 13,954 16,302

Accounts receivable, notes receivable and other 22,730 6,258 8,435

Income taxes prepaid and receivable 11,248 14,337 17,923

Prepaid expenses and other current assets $ 45,559 $ 31,209 $ 34,694

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Accounts payable, accrued expenses and other current liabilities $ 69,930 $ 75,531 $ 84,509

The following table provides supplemental disclosure of Consolidated Statements of Cash Flows information:

Three Months Ended

(in thousands) 2022 2021

Supplemental disclosure of cash flow information

Cash and cash equivalents $ 207,658 $ 233,274

Restricted cash 8,359 8,692

Total cash and cash equivalents and restricted cash $ 216,017 $ 241,966

Non-cash investing and financing activities:

Pawn loans forfeited and transferred to inventory $ 84,851 $ 70,966

Transfer of consideration for acquisition 99 —

Acquisition earn-out contingency 2,000 —

Accrued acquisition consideration 1,250 —

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-Q

Item 1. Financial Statements