EZCORP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, 2022 December 31, 2021 September 30, 2022 (Unaudited) Assets: Current assets: Cash and cash equivalents $ 207,658 $ 233,274 $ 206,028 Restricted cash 8,359 8,692 8,341 Pawn loans 209,855 176,586 210,009 Pawn service charges receivable, net 34,921 29,765 33,476 Inventory, net 156,064 119,313 151,615 Prepaid expenses and other current assets 45,559 31,209 34,694 Total current assets 662,416 598,839 644,163 Investments in unconsolidated affiliates 37,789 42,513 37,733 Other investments 39,220 16,500 24,220 Property and equipment, net 55,612 52,201 56,725 Right-of-use asset, net 230,554 201,527 221,586 Goodwill 297,361 284,619 286,828 Intangible assets, net 58,029 61,458 56,819 Notes receivable, net 1,224 1,190 1,215 Deferred tax asset, net 12,428 15,623 12,145 Other assets 7,682 5,851 6,444 Total assets $ 1,402,315 $ 1,280,321 $ 1,347,878 Liabilities and equity: Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 69,930 $ 75,531 $ 84,509 Customer layaway deposits 16,276 13,142 16,023 Operating lease liabilities, current 52,799 51,843 52,334 Total current liabilities 139,005 140,516 152,866 Long-term debt, net 358,984 311,844 312,903 Deferred tax liability, net — 221 373 Operating lease liabilities 188,730 161,841 180,756 Other long-term liabilities 10,261 11,398 8,749 Total liabilities 696,980 625,820 655,647 Commitments and contingencies (Note 9) Stockholders’ equity: Class A Non-voting Common Stock, par value $ 0.01 per share; shares authorized: 100 million; issued and outstanding: 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 529 533 534 Class B Voting Common Stock, convertible, par value $ 0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171 30 30 30 Additional paid-in capital 343,012 339,955 345,330 Retained earnings 414,929 369,359 402,006 Accumulated other comprehensive loss ( 53,165 ) ( 55,376 ) ( 55,669 ) 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 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended December 31, (in thousands, except per share amount) 2022 2021 Revenues: Merchandise sales $ 163,787 $ 137,720 Jewelry scrapping sales 7,884 6,944 Pawn service charges 92,593 76,025 Other revenues, net 63 305 Total revenues 264,327 220,994 Merchandise cost of goods sold 104,877 83,111 Jewelry scrapping cost of goods sold 6,953 5,772 Gross profit 152,497 132,111 Operating expenses: Store expenses 100,803 86,771 General and administrative 15,476 15,545 Depreciation and amortization 7,988 7,574 (Gain) loss on sale or disposal of assets and other ( 16 ) 5 Total operating expenses 124,251 109,895 Operating income 28,246 22,216 Interest expense 6,190 2,431 Interest income ( 664 ) ( 304 ) Equity in net income of unconsolidated affiliates ( 1,584 ) ( 1,138 ) Other income ( 234 ) ( 120 ) Income before income taxes 24,538 21,347 Income tax expense 7,760 5,626 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 Weighted-average diluted shares outstanding 83,779 81,948 See accompanying notes to unaudited interim condensed consolidated financial statements 2 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended December 31, (in thousands) 2022 2021 Net income $ 16,778 $ 15,721 Other comprehensive income: Foreign currency translation adjustment, net of tax 2,504 3,039 Comprehensive income $ 19,282 $ 18,760 See accompanying notes to unaudited interim condensed consolidated financial statements 3 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity (in thousands) Shares Par Value Balances as of September 30, 2022 56,425 $ 564 $ 345,330 $ 402,006 $ ( 55,669 ) $ 692,231 Stock compensation — — 1,886 — — 1,886 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 ) 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 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity (in thousands) Shares Par Value Balances as of September 30, 2021 56,057 $ 560 $ 403,312 $ 326,781 $ ( 58,415 ) $ 672,238 Stock compensation — — 1,698 — — 1,698 Release of restricted stock, 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 Net income — — — 15,721 — 15,721 Balances as of December 31, 2021 56,314 $ 563 $ 339,955 $ 369,359 $ ( 55,376 ) $ 654,501 See accompanying notes to unaudited interim condensed consolidated financial statements 4 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended December 31, (in thousands) 2022 2021 Operating activities: Net income $ 16,778 $ 15,721 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 7,988 7,574 Amortization of debt discount and deferred financing costs 378 374 Non-cash lease expense 13,596 12,694 Deferred income taxes 656 587 Other adjustments ( 91 ) ( 30 ) Provision for inventory reserve 532 ( 820 ) Stock compensation expense 1,886 1,698 Equity in net income of unconsolidated affiliates ( 1,584 ) ( 1,138 ) Loss on extinguishment of debt 3,545 — Changes in operating assets and liabilities: Service charges and fees receivable ( 691 ) ( 419 ) Inventory ( 1,881 ) ( 2,314 ) Prepaid expenses, other current assets and other assets ( 2,280 ) ( 2,330 ) Accounts payable, accrued expenses and other liabilities ( 34,761 ) ( 29,531 ) Customer layaway deposits ( 752 ) 551 Income taxes 6,574 4,741 Dividends from unconsolidated affiliates 1,775 1,660 Net cash provided by operating activities 11,668 9,018 Investing activities: Loans made ( 189,074 ) ( 166,480 ) Loans repaid 109,125 95,542 Recovery of pawn loan principal through sale of forfeited collateral 88,030 65,297 Capital expenditures, net ( 7,182 ) ( 4,985 ) Acquisitions, net of cash acquired ( 12,884 ) — Issuance of notes receivable ( 15,500 ) ( 1,000 ) Investment in unconsolidated affiliates ( 2,133 ) ( 2,477 ) Investment in other investments ( 15,000 ) ( 16,500 ) Net cash used in investing activities ( 44,618 ) ( 30,603 ) Financing activities: Taxes paid related to net share settlement of equity awards ( 1,138 ) ( 792 ) 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 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 See accompanying notes to unaudited interim condensed consolidated financial statements 5 Table of Contents Notes to Interim Condensed Consolidated Financial Statements NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business EZCORP, Inc. (collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) is a provider of pawn loans in the United States ("U.S.") and Latin America. Pawn loans are non-recourse loans collateralized by tangible property. We also sell merchandise, primarily collateral forfeited from pawn lending operations and pre-owned merchandise purchased from customers. Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements (“Condensed Consolidated Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended September 30, 2022, filed with the Securities and Exchange Commission ("SEC") on November 16, 2022 (“2022 Annual Report”). In the opinion of management, the accompanying Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Financial results for the three-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 The accompanying Condensed Consolidated Financial Statements include the accounts of EZCORP, Inc. and its wholly-owned subsidiaries. We use the equity method of accounting for entities in which we have a 50% or less investment and exercise significant influence. We account for equity investments for which we do not have significant influence and without readily determinable fair values at cost with adjustments for observable changes in price in orderly transactions for identical or similar investments of the same issuer or impairments. All inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include the determination of inventory reserves, expected credit losses, useful lives of long-lived and intangible assets, valuation of share-based compensation, valuation of equity investments, valuation of deferred tax assets and liabilities, loss contingencies related to litigation and discount rates used for operating leases. 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. 6 Table of Contents NOTE 2: GOODWILL The following table summarizes the changes in the carrying amount of goodwill by segment and in total: Three Months Ended December 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Consolidated Balances as of September 30, 2022 $ 245,503 $ 41,325 $ 286,828 Acquisitions 9,413 — 9,413 Effect of foreign currency translation changes — 1,120 1,120 Balances as of December 31, 2022 $ 254,916 $ 42,445 $ 297,361 Three Months Ended December 31, 2021 (in thousands) U.S. Pawn Latin America Pawn Consolidated Balances as of September 30, 2021 $ 244,471 $ 41,287 $ 285,758 Measurement period adjustments — ( 1,322 ) $ ( 1,322 ) Effect of foreign currency translation changes — 183 183 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. NOTE 3: EARNINGS PER SHARE The following table reconciles the number of common shares used to compute basic and diluted earnings per share attributable to EZCORP Inc., shareholders: Three Months Ended December 31, (in thousands, except per share amounts) 2022 2021 Basic earnings per common share: Net income - basic $ 16,778 $ 15,721 Weighted shares outstanding - basic 56,308 56,183 Basic earnings per common share $ 0.30 $ 0.28 Diluted earnings per common share: Net income - basic $ 16,778 $ 15,721 Add: Convertible Notes interest expense, net of tax* 4,540 1,884 Net income - diluted $ 21,318 $ 17,605 Weighted shares outstanding - basic 56,308 56,183 Effect of dilution from equity-based compensation awards** 1,118 541 Effect of dilution from if-converted Convertible Notes*** 26,353 25,224 Weighted shares outstanding - diluted 83,779 81,948 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, 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. 7 Table of Contents NOTE 4: LEASES We determine if a contract contains a lease at inception. Our lease portfolio consists primarily of operating leases for pawn store locations and corporate offices with lease terms ranging from three to ten years . The 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, 2022 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: Current: 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 Non-current: 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 December 31, (in thousands) 2022 2021 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. Cash paid for operating leases are $ 21.4 million and $ 19.9 million for the quarters ended December 31, 2022 and 2021, respectively. 8 Table of Contents The weighted-average term and discount rates for leases are as follows: Three Months Ended December 31, 2022 2021 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 Fiscal 2024 64,242 177 Fiscal 2025 54,470 177 Fiscal 2026 44,077 166 Fiscal 2027 31,338 12 Thereafter 50,420 — Total lease liabilities $ 298,094 $ 708 Less: portion representing imputed interest 56,565 140 Total net lease liabilities $ 241,529 $ 568 Less: current portion 52,799 121 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. 9 Table of Contents NOTE 5: STRATEGIC INVESTMENTS Cash Converters International Limited On October 1, 2021, we purchased an additional 13 million shares of Cash Converters International Limited ("Cash Converters") for $ 2.5 million. This purchase increased our total ownership in Cash Converters to 236,702,991 shares, representing a 37.72 % ownership interest. On October 14, 2021, we received a cash dividend of $ 1.7 million from Cash Converters. On March 10, 2022, we purchased an additional 5.5 million shares of Cash Converters for $ 1.0 million. This purchase increased our total ownership in Cash Converters to 242,239,157 shares, representing a 38.60 % ownership interest. On April 5, 2022, 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 %. 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. dollars: June 30, (in thousands) 2022 2021 Current assets $ 158,987 $ 167,553 Non-current assets 170,798 191,788 Total assets $ 329,785 $ 359,341 Current liabilities $ 59,256 $ 61,395 Non-current liabilities 53,045 57,511 Shareholders’ equity 217,484 240,435 Total liabilities and shareholders’ equity $ 329,785 $ 359,341 Full-Year Ended June 30, (in thousands) 2022 2021 Gross revenues $ 178,215 $ 150,165 Gross profit 116,106 105,851 Net profit 8,099 12,081 See Note 6: Fair Value Measurements for the fair value and carrying value of our investment in Cash Converters. Founders One, LLC In October 2021, we invested $ 15.0 million in exchange for a non-redeemable voting participating preferred equity interest in Founders One, LLC (“Founders”), a 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”). 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 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. 10 Table of Contents See Note 6: Fair Value Measurements for the fair values and carrying values of our investment in and loan to Founders, respectively. NOTE 6: FAIR VALUE MEASUREMENTS The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: • Level 1 — Quoted market prices in active markets for identical assets or liabilities. • Level 2 — Other observable market-based inputs or unobservable inputs that are corroborated by market data. • Level 3 — Unobservable inputs that are not corroborated by market data. We have elected not to measure at fair value any eligible items for which fair value measurement is optional. There were no transfers in or out of Level 1, Level 2 or Level 3 for financial assets or liabilities measured at fair value on a recurring basis during the periods presented. Financial Assets and Liabilities Not Measured at Fair Value The tables below present our estimates of fair value of financial assets and liabilities that were not measured at fair value: Carrying Value Estimated Fair Value December 31, 2022 December 31, 2022 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,224 $ 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 — — Other investments 39,220 39,220 — — 39,220 Financial liabilities: 2024 Convertible Notes $ 34,143 $ 35,851 $ — $ 35,851 $ — 2025 Convertible Notes 102,192 89,883 — 89,883 — 2029 Convertible Notes 222,649 225,975 — 225,975 — Carrying Value Estimated Fair Value December 31, 2021 December 31, 2021 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,190 $ 1,190 $ — $ — $ 1,190 Investments in unconsolidated affiliates 42,513 52,671 45,650 — 7,021 Other investments 16,500 16,500 — — 16,500 Financial liabilities: 2024 Convertible Notes $ 142,106 $ 147,063 $ — $ 147,063 $ — 2025 Convertible Notes 169,738 155,060 — 155,060 — Carrying Value Estimated Fair Value September 30, 2022 September 30, 2022 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,215 $ 1,215 $ — $ — $ 1,215 Investments in unconsolidated affiliates 37,733 40,279 40,279 — — Other investments 24,220 24,220 — — 24,220 Financial liabilities: 2024 Convertible Notes $ 142,575 $ 157,727 $ — $ 157,727 $ — 2025 Convertible Notes 170,328 147,488 — 147,488 — 11 Table of Contents 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 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 R.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. In March 2019, we received $ 1.1 million in previously escrowed seller funds as a result of settling certain indemnification claims with the seller of GPMX. In April 2019, we loaned the $ 1.1 million back to the seller of GPMX in exchange for a promissory note. The note bears interest at the rate of 2.89 % per annum and is secured by certain marketable securities owned by the seller and held in a U.S. brokerage 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 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. The inputs used to generate the fair value of the investment in Cash Converters were considered Level 1 inputs. These inputs consist of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period. We included no control premium for owning a large percentage of outstanding shares. 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. We measured the fair value of the 2024, 2025 and 2029 Convertible Notes using quoted price inputs. The notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease. 12 Table of Contents NOTE 7: DEBT The following table presents the Company's debt instruments outstanding: 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 December 31, 2022: Schedule of Contractual Maturities (in thousands) 2029 Convertible Notes 2025 Convertible Notes 2024 Convertible Notes Total Remaining 2023 $ — $ — $ — $ — Fiscal 2024 — — 34,389 34,389 Fiscal 2025 — 103,373 — 103,373 Fiscal 2026 — — — — Fiscal 2027 — — — — 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 December 31, (in thousands) 2022 2021 2029 Convertible Notes: Contractual interest expense $ 431 $ — Amortization of deferred financing costs 52 — Total interest expense $ 483 $ — 2025 Convertible Notes: Contractual interest expense $ 942 $ 1,024 Amortization of deferred financing costs 188 207 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 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 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, 13 Table of Contents 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 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). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2029 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 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; (3) if we call any or all of the 2029 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 2022 Indenture. 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 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”), 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. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2018 Indenture. The 2025 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375 % per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. The effective interest rate for the three 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). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2025 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election. 14 Table of Contents Prior to November 1, 2024, the 2025 Convertible Notes are convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2018 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2018 Indenture. On or after November 1, 2024 until the close of business on the business day immediately preceding the 2025 Maturity Date, holders of 2025 Convertible Notes may, at their option, convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances. We may not redeem the 2025 Convertible Notes prior to May 1, 2022. At our option, we may redeem for cash all or any portion of the 2025 Convertible Notes on or after May 1, 2022, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100 % of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of 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. The 2024 Convertible Notes were issued pursuant to an indenture dated July 5, 2017 (the "2017 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2017 Indenture. The 2024 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2024 Convertible Notes pay interest semi-annually in arrears at a rate of 2.875 % per annum on January 1 and July 1 of each year, commencing January 1, 2018, and mature on July 1, 2024 (the "2024 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2024 Convertible Notes will be entitled to receive cash equal to the principal of the 2024 Convertible Notes plus accrued interest. The effective interest rate for the three 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: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2017 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2017 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2024 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2017 Indenture. On or after January 1, 2024 until the close of business on the business day immediately preceding the 2024 Maturity Date, holders of 2024 Convertible Notes may, at their option, convert their 2024 Convertible Notes at any time, regardless of the foregoing circumstances. At our option, we may redeem for cash all or any portion of the 2024 Convertible Notes on or after July 6, 2021, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100 % of the principal amount of the 2024 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. 15 Table of Contents 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. NOTE 8: COMMON STOCK AND STOCK COMPENSATION 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. The amount and timing of purchases will be dependent on a variety of factors, including stock price, trading volume, general market conditions, legal and regulatory requirements, general business conditions, the level of cash flows, and corporate considerations determined by management and the Board, such as liquidity and capital needs and the availability of attractive alternative investment opportunities. The Board of Directors has reserved the right to modify, suspend or terminate the program at any time. 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 We maintain a Board-approved incentive plan to retain the services of our valued officers, directors and employees and to incentivize such persons to make contributions to our company and motivate excellent performance (the "Incentive Plan"). Under the Incentive Plan, we grant awards of restricted stock or restricted stock units to employees and non-employee directors. Awards granted to employees are typically subject to performance and service conditions. Awards granted to non-employee directors are time-based awards subject only to service conditions. Awards granted under the Incentive Plan are measured at the grant date fair value with compensation costs associated with the awards recognized over the requisite service period, usually the vesting period, on a straight-line basis. The following table presents a summary of stock compensation activity: Shares Weighted Average Grant Date Fair Value Outstanding as of September 30, 2022 2,113,323 $ 5.88 Granted 917,990 7.72 Released (a) ( 347,788 ) 4.71 Cancelled ( 54,497 ) 6.55 Outstanding as of December 31, 2022 2,629,028 $ 6.66 (a) 113,333 shares were withheld to satisfy related income tax withholding. NOTE 9: CONTINGENCIES Currently, and from time to time, we are involved in various claims, disputes, lawsuits, investigations, and legal and regulatory proceedings, including the matter described below. We accrue for contingencies if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because these matters are inherently unpredictable and unfavorable developments or resolutions can occur, assessing contingencies requires judgments and is highly subjective about future events, and the amount of resulting loss may differ from these estimates. 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. 16 Table of Contents On October 14, 2021, Andrew Kowlessar filed an action in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida styled Andrew Kowlessar, individually and on behalf of all others similarly situated vs. EZCORP, Inc. d/b/a Value Pawn & Jewelry . 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 . 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. The matter involves claims by a single individual, but alleges a class of persons who may have similar claims of violations of the Act and seeks class certification. On June 16, 2022, following discovery and pre-trial mediation, the parties agreed to a settlement of all asserted claims and entered into a Settlement Agreement and Release. 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 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. NOTE 10: SEGMENT INFORMATION Our operations are primarily managed on a geographical basis and are comprised of three reportable segments. The factors for determining our reportable segments include the manner in which our chief operating decision maker ("CODM") evaluates performance for purposes of allocating resources and assessing performance. We currently report our segments as follows: • U.S. Pawn — all pawn activities in the United States; • Latin America Pawn — all pawn activities in Mexico and other parts of Latin America; and • Other Investments — primarily our equity interest in the net 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. 17 Table of Contents The following tables present revenue for each reportable segment, disaggregated revenue within our three reportable segments and Corporate, segment profits and segment contribution. Three Months Ended December 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 118,314 $ 45,473 $ — $ 163,787 $ — $ 163,787 Jewelry scrapping sales 7,176 708 — 7,884 — 7,884 Pawn service charges 69,310 23,283 — 92,593 — 92,593 Other revenues 25 16 22 63 — 63 Total revenues 194,825 69,480 22 264,327 — 264,327 Merchandise cost of goods sold 73,256 31,621 — 104,877 — 104,877 Jewelry scrapping cost of goods sold 6,216 737 — 6,953 — 6,953 Gross profit 115,353 37,122 22 152,497 — 152,497 Segment and corporate expenses (income): Store expenses 73,304 27,499 — 100,803 — 100,803 General and administrative — ( 3 ) — ( 3 ) 15,479 15,476 Depreciation and amortization 2,755 2,215 — 4,970 3,018 7,988 (Gain) loss on sale or disposal of assets and other 3 ( 19 ) — ( 16 ) — ( 16 ) Interest expense — — — — 6,190 6,190 Interest income — ( 169 ) — ( 169 ) ( 495 ) ( 664 ) Equity in net income of unconsolidated affiliates — — ( 1,584 ) ( 1,584 ) — ( 1,584 ) Other (income) expense — 70 4 74 ( 308 ) ( 234 ) Segment contribution $ 39,291 $ 7,529 $ 1,602 $ 48,422 Income (loss) before income taxes $ 48,422 $ ( 23,884 ) $ 24,538 Three Months Ended December 31, 2021 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 102,078 $ 35,642 $ — $ 137,720 $ — $ 137,720 Jewelry scrapping sales 4,980 1,964 — 6,944 — 6,944 Pawn service charges 56,557 19,468 — 76,025 — 76,025 Other revenues 22 240 43 305 — 305 Total revenues 163,637 57,314 43 220,994 — 220,994 Merchandise cost of goods sold 57,832 25,279 — 83,111 — 83,111 Jewelry scrapping cost of goods sold 3,975 1,797 — 5,772 — 5,772 Gross profit 101,830 30,238 43 132,111 — 132,111 Segment and corporate expenses (income): Store expenses 64,689 22,082 — 86,771 — 86,771 General and administrative — — — — 15,545 15,545 Depreciation and amortization 2,670 1,980 — 4,650 2,924 7,574 Loss on sale or disposal of assets and other — 5 — 5 — 5 Interest expense — — — — 2,431 2,431 Interest income — ( 182 ) — ( 182 ) ( 122 ) ( 304 ) Equity in net income of unconsolidated affiliates — — ( 1,138 ) ( 1,138 ) — ( 1,138 ) Other (income) expense — ( 134 ) ( 12 ) ( 146 ) 26 ( 120 ) Segment contribution $ 34,471 $ 6,487 $ 1,193 $ 42,151 Income (loss) before income taxes $ 42,151 $ ( 20,804 ) $ 21,347 18 Table of Contents NOTE 11: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION The following table provides supplemental information on net amounts included in our condensed consolidated balance sheets: (in thousands) December 31, 2022 December 31, 2021 September 30, 2022 Gross pawn service charges receivable $ 44,397 $ 38,040 $ 44,192 Allowance for uncollectible pawn service charges receivable ( 9,476 ) ( 8,275 ) ( 10,716 ) Pawn service charges receivable, net $ 34,921 $ 29,765 $ 33,476 Gross inventory $ 159,286 $ 124,286 $ 153,673 Inventory reserves ( 3,222 ) ( 4,973 ) ( 2,058 ) Inventory, net $ 156,064 $ 119,313 $ 151,615 Prepaid expenses and other $ 11,581 $ 10,614 $ 8,336 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 Property and equipment, gross $ 312,502 $ 288,285 $ 306,667 Accumulated depreciation ( 256,890 ) ( 236,084 ) ( 249,942 ) Property and equipment, net $ 55,612 $ 52,201 $ 56,725 Accounts payable $ 20,220 $ 18,925 $ 24,056 Accrued payroll 4,952 11,486 8,365 Incentive accrual 6,010 5,158 17,403 Other payroll related expenses 10,911 7,964 9,592 Accrued sales and VAT taxes 8,086 9,704 7,279 Accrued income taxes payable 2,562 6,024 2,663 Other current liabilities 17,189 16,270 15,151 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 December 31, (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 — 19 Table of Contents