What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-02-01 compared with 2022-08-03 · 81 added, 226 removed, 197 unchanged (61% of the section changed)

19 unchanged sentences

We earn pawn service charges (“PSC”) for those cash advances, and the PSC rate varies by state and transaction size.

At the time of the transaction, we take possession of the pawned collateral, which consists of tangible personal property, generally jewelry, consumer electronics, tools, sporting goods and musical instruments.

If the customer chooses to redeem their pawn, they will repay the amount advanced plus any accrued PSC.

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As a net effect of these and other factors and excluding discrete charges, our consolidated income/loss before tax is generally highest in our first fiscal quarter (October through December) and lowest in our third fiscal quarter (April through June).

These historical trends have been impacted by COVID-19, but we expect these historical trends to return in the future.

Financial Highlights

We remain focused on optimizing our balance of pawn loans outstanding (“PLO”) and the resulting higher PSC.

The following chart presents sources of gross profit*, including PSC, merchandise sales gross profit ("Merchandise sales GP") and jewelry scrapping gross profit ("Jewelry Scrapping GP") for the three and nine months ended June 30, 2022 and 2021:

The following chart presents sources of gross profit by geographic disbursement for the three and nine months ended June 30, 2022 and 2021:

* We have relabeled "net revenues" to "gross profit" throughout our filings, which we believe will improve comparability across industries and companies.

This change is effective for this and future filings.

The following chart presents sources of gross profit, including PSC, merchandise sales gross profit ("Merchandise sales GP") and jewelry scrapping gross profit ("Jewelry Scrapping GP") for the three months ended December 31, 2022 and 2021:

The following chart presents sources of gross profit by geographic disbursement for the three months ended December 31, 2022 and 2021:

Business Developments

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.

Share Repurchase Program

On May 3, 2022, the Company's Board of Directors approved a new share repurchase program, which will replace the previous program that was suspended in March 2020.

Under the new program, the Company is authorized to repurchase up to $50 million of its outstanding Class A Non-Voting common share over the next three years.

Refer to "Liquidity and Capital Resources — Sources and Uses of Cash" below.

Convertible Debt

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

In conjunction with the issuance of the 2029 Convertible Notes, we extinguished approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest.

In addition, we used approximately $5.0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase 578,703 shares of our Class A common stock from purchasers of the notes in privately negotiated transactions.

See Note 7 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

Investment in Cash Converters International

On March 10, 2022, we purchased an additional 5.5 million shares of Cash Converters for $1.0 million.

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.

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 $1.8 million from Cash Converters.

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

During December 2022, we made additional investments in Founders One, LLC ("Founders") in the form of a $15.0 million additional capital contribution and a $15.0 million loan.

The proceeds of these additional investments were passed on to Simple Management Group, Inc.

("SMG") and used by SMG to complete the acquisition of FFI Holdings, Inc.

SMG owns and operates 73 pawn stores in the Caribbean and Florida.

See Note 5 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

Results of Operations

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dollars using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations.

In addition, we have an equity method investment that is denominated in Australian dollars and is translated into U.S.

We used the end-of-period rate for balance sheet items and the average closing daily exchange rate on a monthly basis during the appropriate period for statement of operations items.

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The end-of-period and approximate average exchange rates for each applicable currency as compared to U.S.

dollars as of and for the three and nine months ended June 30, 2022 and June 30, 2021 were as follows:

dollars as of and for the three months ended December 31, 2022 and December 31, 2021 were as follows:

Three Months Ended

Nine Months Ended

2022 2021 2022 2021

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Honduran lempira 24.4 24.1 24.3 23.9

Peruvian sol 3.7 3.9 3.7 3.8 3.8 3.7

Australian dollar 1.5 1.4 1.5 1.4

Operating Results

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

• Other Investments — Represents our equity interest in the net income of Cash Converters International and Rich Data Corporation, along with our investment in Founders.

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

Store Count by Segment

Three Months Ended June 30, 2022

Pawn Latin America Pawn Consolidated

As of March 31, 2022

516 636 1,152

New locations opened — 8 8

Locations acquired 3 — 3

As of June 30, 2022

519 644 1,163

Three Months Ended June 30, 2021

Three Months Ended December 31, 2022

Pawn Latin America Pawn Consolidated

As of March 31, 2021

As of September 30, 2022

515 660 1,175

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Locations sold, combined or closed — (1) (1)

As of June 30, 2021

As of December 31, 2022

525 661 1,186

Nine Months Ended June 30, 2022

Three Months Ended December 31, 2021

Pawn Latin America Pawn Consolidated

As of September 30, 2021

New locations opened — 12 12

Locations acquired 3 — 3

As of June 30, 2022

516 632 1,148

Nine Months Ended June 30, 2021

Pawn Latin America Pawn Consolidated

As of September 30, 2020 505 500 1,005

New locations opened — 1 1

Locations acquired 11 128 139

Locations sold, combined or closed — (11) (11)

As of June 30, 2021

As of December 31, 2021

516 633 1,149

Three Months Ended June 30, 2022 vs.

Three Months Ended June 30, 2021

Three Months Ended December 31, 2022 vs.

Three Months Ended December 31, 2021

These tables, as well as the discussion that follows, should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes.

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Pawn segment:

Three Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2022 2021

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Depreciation and amortization 2,755 2,670 3%

Segment operating contribution 29,753 18,149 64%

Other segment income (1) — *

Loss on sale or disposal of assets and other 3 — *

Segment contribution $ 39,291 $ 34,471 14%

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Monthly average yield on pawn loans outstanding 14 % 13 % 100bps

Pawn loan redemption rate 85 % 88 % (300)bps

* Represents a percentage computation that is not mathematically meaningful.

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(b) Balance is calculated based upon the average of the monthly ending balances during the applicable period.

PLO increased 36% to $159.7 million (36% on a same store basis), our highest level to-date, due to increased loan demand reflecting a recovery above pre-COVID levels.

Total revenue was up 22%, and gross profit increased 18% driven by increased pawn service charges, which were up 35% as a result of higher average PLO for the quarter.

Merchandise sales increased 11% due to our improved retail strategy.

Offsetting the sales increase, merchandise sales gross margin decreased to 41% from 46% reflecting a return to more normalized margins.

Inventory turnover decreased to 2.5x from 2.8x due to increased inventory levels in the current quarter and stimulus impacts in the prior year.

Store expenses increased 6% primarily due to increased store count and labor increases in line with business activity.

Segment contribution increased $11.6 million or 64%, due to the changes described above.

Segment store count increased by three acquired stores during the quarter.

PLO ended the quarter at $166.9 million, up 18% (15% on a same store basis).

Total revenue was up 19%, and gross profit increased 13%, driven by increased pawn service charges, higher merchandise sales and improved merchandise sales gross profit.

PSC increased 23% as a result of higher average PLO.

Merchandise sales gross margin decreased to 38% from 43%, reflecting a more normalized operating environment.

Store expenses increased 13% primarily due to increased labor in-line with store activity and, to a lesser extent, expenses related to our loyalty program and rent associated with lease renewals.

Segment contribution increased 14% to $39.3 million, due to the changes noted above.

Segment store count increased by 10 stores during this quarter due to two acquisitions.

Latin America Pawn

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dollars from its functional currencies noted above under “Results of Operations — Non-GAAP Constant Currency and Same Store Financial Information."

Three Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2022 (GAAP)

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Jewelry scrapping sales gross profit (29) 167 (117)% (29) (117)%

Gross margin on jewelry scrapping sales 6 % 5 % 100bps 6 % 100bps

Gross margin on jewelry scrapping sales (4) % 9 % * (4) % *

Other revenues, net 16 240 * 15 *

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Monthly average yield on pawn loans outstanding 17 % 17 % —bps 17 % —bps

Pawn loan redemption rate (c) 79 % 79 % —bps 79 % —bps

* Represents a percentage computation that is not mathematically meaningful.

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(b) Balance is calculated based upon the average of the monthly ending balances during the applicable period.

(Constant Currency)

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Store Expenses 22% 18%

In the current quarter, we opened eight de novo stores, bringing total segment store-count to 644.

PLO increased 11% to $44.5 million (13% on constant currency basis).

On a same store basis, PLO increased 9% (10% on a constant currency basis), also the highest level to-date, due to increased loan demand reflecting a recovery above pre-COVID levels.

Total revenue was up 31% (31% on a constant currency basis), while gross profit increased 26% (26% on a constant currency basis).

PSC increased 28% in the current quarter to $21.0 million (up 28% to $21.0 million on a constant currency basis) as a result of higher average PLO for the quarter.

Merchandise sales increased 47% (47% on a constant currency basis) and 29% on a same store basis (29% on a constant currency basis) reflecting a renewed focus on customer engagement.

Offsetting the sales increase, merchandise sales gross margin decreased from 35% to 29% reflecting a return to more normalized margins.

Net inventory increased 34% (35% on a constant currency basis).

Inventory turnover remains strong at 3.7x, down from 4.0x.

Store expenses increased $4.1 million or 21% (21% on a constant currency basis) primarily due to growth in labor and year-over-year store count in line with increased business activity.

On a same-store basis, store expenses increased by $0.2 million or 4% (6% on a constant currency basis).

Segment contribution increased $2.5 million, or 71%, to $6.1 million ($2.5 million or 71% on a constant currency basis).

PLO improved to $43.0 million, up 21% (17% on constant currency basis).

On a same store basis, PLO increased 19% (15% on a constant currency basis).

Total revenue was up 21% (16% on constant currency basis), while gross profit increased 23% (18% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.

PSC increased 20% (15% on a constant currency basis) as a result of higher average PLO.

Merchandise sales gross margin increased slightly from 29% to 30%.

Store expenses increased 25% (20% on a constant currency basis), primarily due to increased labor in-line with store activity and, to a lesser extent, expenses related to our loyalty program and rent associated with lease renewals.

Same-store expenses increased 22% (18% on a constant currency basis).

Segment contribution increased 16% (15% on a constant currency basis) to $7.5 million, due to the changes noted above.

Segment store count increased by one store due to the net impact of opening two de novo stores and the consolidation of one store during the quarter.

Other Investments

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dollars from its functional currency of primarily Australian dollars:

Three Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2022 2021

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Segment contribution $ 1,602 $ 1,193 34%

Segment contribution was $1.8 million, an increase of $1.0 million due to the increase in equity income for our unconsolidated affiliates.

The following table reconciles our consolidated segment contribution discussed above to net income attributable to EZCORP, Inc., including items that affect our consolidated financial results but are not allocated among segments:

Three Months Ended June 30,

Percentage Change

(in thousands) 2022 2021

Segment contribution $ 37,611 $ 22,429 68%

Corporate expenses (income):

General and administrative 18,715 14,589 28%

Depreciation and amortization 3,187 3,013 6%

Interest expense 2,693 5,569 (52)%

Interest income — (28) (100)%

Other (income) expense (66) 52 *

Income (loss) before income taxes 13,082 (766) 1,808%

Income tax expense 867 1,804 (52)%

Net income (loss) $ 12,215 $ (2,570) 575%

* Represents a percentage computation that is not mathematically meaningful.

Segment contribution increased $15.2 million or 68% over the prior year quarter primarily due to the improved operating results of the segments above.

General and administrative expenses increased $4.1 million or 28%, primarily due to a litigation accrual and increased performance-based incentive compensation.

Interest expense decreased $2.9 million primarily driven by the ASU 2020-06 accounting policy change which no longer requires debt discount be included on our balance sheet effective October 1, 2021.

The policy change eliminates the non-cash interest amortization of that debt discount.

Organization And Summary Of Significant Accounting Policies to the consolidated financials for further discussion of this recently adopted accounting policy.

Income tax expense decreased $0.9 million primarily due to the expiration of the statute of limitations on certain FIN 48 reserves this quarter, partially offset by an increase in income before income taxes of $13.8 million this quarter compared to the prior year quarter.

Income tax expense includes other items that do not necessarily correspond to pre-tax earnings and create volatility in our effective tax rate.

These items include the net effect of state taxes, non-deductible items and changes in valuation allowances for certain foreign operations.

See Annual Report on Form 10-K for the year ended September 30, 2021 Note 11:

Income Taxes of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for quantification of these items.

Nine Months Ended June 30, 2022 vs.

Nine Months Ended June 30, 2021

The tables below and discussion that follows should be read in conjunction with the accompanying condensed consolidated financial statements and related notes.

The following table presents selected summary financial data for the U.S.

Pawn segment:

Nine Months Ended June 30,

(in thousands) 2022 2021

Gross profit:

Pawn service charges $ 174,651 $ 143,836 21%

Merchandise sales 296,147 260,545 14%

Merchandise sales gross profit 123,817 115,364 7%

Gross margin on merchandise sales 42 % 44 % (200)bps

Jewelry scrapping sales 13,864 9,493 46%

Jewelry scrapping sales gross profit 2,585 1,622 59%

Gross margin on jewelry scrapping sales 19 % 17 % 200bps

Other revenues 67 83 (19)%

Gross profit 301,120 260,905 15%

Segment operating expenses:

Store expenses 195,217 188,256 4%

Depreciation and amortization 7,867 7,972 (1)%

Segment operating contribution 98,036 64,677 52%

Other segment (income) expense (1) 27 *

Segment contribution $ 98,037 $ 64,650 52%

Average monthly ending pawn loan balance per store (a) $ 290 $ 218 33%

Monthly average yield on pawn loans outstanding 14 % 14 % —bps

Pawn loan redemption rate 84 % 87 % (300)bps

* Represents a percentage computation that is not mathematically meaningful.

(a) Balance is calculated based upon the average of the monthly ending balances during the applicable period.

Pawn service charges increased 21% as a result of higher average PLO for the year.

Merchandise sales increased 14% compared to the prior year.

Offsetting the sales increase, merchandise sales gross margin decreased 200 bps reflecting a return to more normalized margins.

Store expenses increased by 4% primarily due to increased store count and labor expenses associated with increased business activity.

Segment contribution increased $33.4 million primarily due to the changes described above.

Latin America Pawn

The following table presents selected summary financial data our Latin America Pawn segment, including constant currency results, after translation to U.S.

dollars from functional currencies.

See “Results of Operations — Non-GAAP Constant Currency and Same Store Financial Information” above.

Nine Months Ended June 30,

(in thousands) 2022 (GAAP)

Change (GAAP) 2022 (Constant Currency)

Change (Constant Currency)

Gross profit:

Pawn service charges $ 58,348 $ 43,520 34% $ 58,497 34%

Merchandise sales 103,463 70,271 47% 104,031 48%

Merchandise sales gross profit 30,269 24,580 23% 30,436 24%

Gross margin on merchandise sales 29 % 35 % (600)bps 29 % (600)bps

Jewelry scrapping sales 5,938 9,014 (34)% 5,948 (34)%

Jewelry scrapping sales gross profit 470 809 (42)% 472 (42)%

Gross margin on jewelry scrapping sales 8 % 9 % (100)bps 8 % (100)bps

Other revenues, net 247 7 * 248 *

Gross profit 89,334 68,916 30% 89,653 30%

Segment operating expenses:

Store expenses 66,727 54,005 24% 67,029 24%

Depreciation and amortization 5,858 5,459 7% 5,883 8%

Other Charges — 497 * — *

Segment operating contribution 16,749 8,955 87% 16,741 87%

Other segment income (a) (593) (2,194) (73)% (696) (68)%

Segment contribution $ 17,342 $ 11,149 56% $ 17,437 56%

Average monthly ending pawn loan balance per store (a) $ 63 $ 58 9% $ 63 9%

Monthly average yield on pawn loans outstanding 16 % 16 % —bps 16 % —bps

Pawn loan redemption rate (b) 80 % 81 % (100)bps 80 % (100)bps

* Represents a percentage computation that is not mathematically meaningful.

(a) Balance is calculated based upon the average of the monthly ending balances during the applicable period.

(b) Rate is solely inclusive of results from Mexico Pawn.

(Constant Currency)

Same Store data:

Merchandise Sales 24% 25%

Merchandise Sales Gross Profit 7% 8%

Store Expenses 4% 6%

During the nine months ended June 30, 2022, our Latin America pawn segment opened twelve de novo stores.

PSC increased 34% to $58.3 million (34% to $58.5 million on a constant currency basis) as a result of higher average PLO for the year.

Merchandise sales increased 47% (48% on a constant currency basis) and 21% on a same store basis (21% on a constant currency basis).

Offsetting the sales increase, merchandise sales gross margin decreased 600 bps from 35% to 29% (29% on a constant currency basis) reflecting a return to more normalized margins.

Store expenses increased by 24% (24% on a constant currency basis) primarily due to growth in store count.

On a same-store basis, store expenses increased by $0.9 million or 4% (6% on a constant currency basis) due to rising labor costs resulting from growing transaction volume.

Segment contribution increased $6.2 million, or 56%, to $17.3 million.

This increase was primarily due to the changes in revenue and store expenses described above.

Other Investments

The following table presents selected financial data for our Other Investments segment after translation to U.S.

dollars from its functional currency of primarily Australian dollars:

Nine Months Ended June 30,

(in thousands) 2022 2021

Gross profit:

Consumer loan fees, interest and other 93 338 (72)%

Gross profit 93 338 (72)%

Segment operating expenses:

Equity in net income of unconsolidated affiliates (1,457) (2,409) (40)%

Segment operating contribution 1,550 2,747 (44)%

Other segment loss (income) 15 (183) (108)%

Segment contribution $ 1,535 $ 2,930 (48)%

Segment income was $1.5 million, a decrease of $1.4 million from the prior-year nine months ended June 30, 2022, primarily due to the decrease in equity income for our unconsolidated affiliates.

The decrease in equity in net income in the current nine months ended June 30, 2022 was primarily due to our equity pickup of Cash Converters' net results which included an impairment, primarily of its ROU leased assets, that was attributed to COVID-19.

Segment contribution was $1.6 million, an increase of $0.4 million due to the increase in equity income for our unconsolidated affiliate Cash Converters.

A recent law change in Australia could adversely impact Cash Converters' operations and financial position.

See "Part II, Item 1A — Risk Factors" of this Report.

Nine Months Ended June 30,

Three Months Ended December 31,

Percentage Change

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Depreciation and amortization 3,018 2,924 3%

(Gain) loss on sale or disposal of assets (688) 63 *

Interest expense 6,190 2,431 155%

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Other (income) expense (308) 26 *

Income from continuing operations before income taxes 54,552 11,535 373%

Income before income taxes 24,538 21,347 15%

Income tax expense 7,760 5,626 38%

1 unchanged sentence

* Represents a percentage computation that is not mathematically meaningful.

Segment contribution increased $38.2 million or 49% over the prior year 9 months ended June 30, 2021, primarily due to the improved operating results of the segments above.

General and administrative expenses increased $5.6 million or 14%, primarily due to a litigation accrual and increased salaries, including performance-based incentive compensation.

Interest expense decreased $8.9 million primarily driven by the ASU 2020-06 accounting policy change which no longer requires debt discount be included on our balance sheet effective October 1, 2021.

The policy change eliminates the non-cash interest amortization of that debt discount.

Organization And Summary Of Significant Accounting Policies to the consolidated financials for further discussion of this recently adopted accounting policy.

Income tax expense increased $7.3 million primarily due to an increase in income before income taxes of $43.0 million for the nine months ended June 30, 2022 compared to the same prior year nine month period.

Segment contribution increased $6.3 million or 15% over the prior year quarter primarily due to the improved operating results of the segments above.

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 recorded a $3.5 million loss on extinguishment of debt.

Income tax expense increased $2.1 million primarily due to an increase in income before income taxes of $3.2 million this quarter compared to the prior year quarter as well as the non-deductible loss on the convertible debt refinancing.

Income tax expense includes other items that do not necessarily correspond to pre-tax earnings and create volatility in our effective tax rate.

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Cash and Cash Equivalents

Our cash and equivalents balance was $222.3 million at June 30, 2022 compare d to $253.7 million at September 30, 2021.

At June 30, 2022, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

Our cash and equivalents balance was $207.7 million at December 31, 2022 compared to $206.0 million at September 30, 2022.

At December 31, 2022, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

The table and discussion below presents a summary of the selected sources and uses of our cash:

Nine Months Ended

Three Months Ended

(in thousands) 2022 2021

Cash flows provided by operating activities $ 48,494 $ 33,122 46%

Cash flows used in investing activities (81,589) (37,086) 120%

Cash flows used in financing activities (792) (16,202) (95)%

Net cash provided by operating activities $ 11,668 $ 9,018 29%

Net cash used in investing activities (44,618) (30,603) 46%

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

Effect of exchange rate changes on cash, cash equivalents and restricted cash 605 719 (16)%

Net decrease in cash, cash equivalents and restricted cash $ (32,668) $ (15,090) 116%

The increase in cash flows provided by operating activities year-over-year was primarily due to a $35.8 million increase in net income, partially offset by cash outflows used to purchase inventory and other changes to working capital.

The $44.5 million increase in cash flows used in investing activities year-over-year was primarily due to $16.5 million in outgoing cash flows used to fund other investments and an increase of $66.2 million in net pawn lending, partially offset by an $35.5 million increase in the sale of forfeited collateral.

Of the $16.5 million used to fund other investments, $15.0 million was invested in Founders, as discussed in Note 6:

Net increase (decrease) in cash, cash equivalents and restricted cash $ 1,648 $ (21,658) (108)%

* Represents a percentage computation that is not mathematically meaningful.

The increase in cash flows provided by operating activities year-over-year was primarily due to favorable changes in working capital primarily related to the timing of payments of accounts payable, partially offset by a $1.1 million increase in net income and a higher change in the provision for inventory reserve.

The $14.0 million increase in cash flows used in investing activities year-over-year was primarily due to $26.5 million higher outgoing cash flows used to fund acquisitions and strategic investments, and an increase of $9.0 million in net pawn lending, partially offset by an $22.7 million increase in the sale of forfeited collateral.

Of the $26.5 million used to fund other investments, the largest amount is $15.0 million related to a note receivable from Founders, as discussed in Note 5:

Strategic Investments in Part I, Item 1 - Notes to Interim Condensed Consolidated Financial Statements.

The net effect of these changes was a $32.7 million decrease in cash on hand during the current year to date period, resulting in a $231.0 million ending cash and restricted cash balance.

The $34.8 million increase in cash flows provided by financing activities was primarily related to the December 2022 financing of the 2029 Convertible Notes, in which we issued $230.0 million (less issuance costs) principal amount of 3.750% Convertible Senior Notes Due 2029 offset by the extinguishment of approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest.

The net effect of these changes was a $1.6 million increase in cash on hand during the current year to date period, resulting in a $216.0 million ending cash and restricted cash balance.

Sources and Uses of Cash

On May 3, 2022, our Board of Directors approved a new share repurchase program, which replaced the previous program that was suspended in March 2020.

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.

In December 2022, we issued $230.0 million aggregate principal amount of 2029 Convertible Notes.

See Note 7 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

On May 3, 2022, our Board authorized the repurchase of up to $50 million of our Class A Common Stock over three years.

As of December 31, 2022, we have repurchased 481,005 shares of our Class A Common Stock under the program for $4.1 million.

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, there were no stock repurchases under the new program.

We anticipate that cash flows from operations and cash on hand will be adequate to fund any future stock repurchases, our contractual obligations, planned de novo store growth, capital expenditures and working capital requirements through fiscal 2022.

See Note 8 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

We anticipate that cash flows from operations and cash on hand will be adequate to fund any future stock repurchases, strategic investments, our contractual obligations, planned de novo store growth, capital expenditures and working capital requirements through fiscal 2023.

We continue to explore acquisition opportunities, both large and small, and may choose to pursue additional debt, equity or equity-linked financings in the future should the need arise.

Given the current uncertainty related to the COVID-19 pandemic, we may adjust our capital or other expenditures.

Depending on the level of acquisition activity and other factors, our ability to repay our longer-term debt obligations, including the convertible debt maturing in 2024, 2025 and 2029, may require us to refinance these obligations through the issuance of new debt securities, equity securities, convertible securities or through new credit facilities.

1 unchanged sentence

In "Part II, Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended September 30, 2022, we reported that we had $608.0 million in total contractual obligations as of September 30, 2022.

There have been no material changes to this total obligation since September 30, 2021, other than changes as the result of adoption of accounting standards as further discussed in Note 1:

Organization And Summary Of Significant Accounting Policies of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

There have been no material changes to this total obligation since September 30, 2022, other than the convertible debt refinancing and lease liabilities changes as further discussed in Note 7:

Debt and Note 4:

Leases, respectively, of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

We are responsible for the maintenance, property taxes and insurance at most of our locations.

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Recently Adopted Accounting Policies and Recently Issued Accounting Pronouncements

In August 2020, the FASB issued its Accounting Standards Update (“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.

We early adopted this standard on October 1, 2021 under the modified retrospective basis.

The effect of eliminating our debt discount on the 2024 and 2025 Convertible Notes will decrease non-cash interest expense amortization on our Condensed Consolidated Statement of Operations, and the reduction of interest expense will affect our basic earnings per common share.

When calculating net income per share of common stock attributable to common shareholders, the Company uses the if-converted method as required under ASU 2020-06 to determine the dilutive effect of the Convertible Notes.

The Company did not incur any impact to liquidity or cash flows with recently adopted accounting policy.

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.

Cautionary Statement Regarding Risks and Uncertainties that May Affect Future Results

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis