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Item 1. Financial Statements

2023-05-03 compared with 2023-02-01 · 183 added, 99 removed, 540 unchanged (34% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

September 30,

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issued and outstanding:

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

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

52,561,071 as of March 31, 2023;

53,685,333 as of March 31, 2022;

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

10 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per share amount) 2023 2022 2023 2022

11 unchanged sentences

Depreciation and amortization 7,963 7,450 15,951 15,024

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

Loss (gain) on sale or disposal of assets 73 ( 697 ) 57 ( 692 )

Other ( 2,465 ) — ( 2,465 ) —

Total operating expenses 122,449 104,723 246,700 214,618

2 unchanged sentences

Interest income ( 1,898 ) ( 255 ) ( 2,562 ) ( 559 )

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

Equity in net loss of unconsolidated affiliates 32,501 1,439 30,917 301

Other expense (income) 80 371 ( 154 ) 251

(Loss) income before income taxes ( 7,340 ) 20,123 17,198 41,470

Income (benefit) tax expense ( 550 ) 5,236 7,210 10,862

Net (loss) income $ ( 6,790 ) $ 14,887 $ 9,988 $ 30,608

Basic earnings per share $ ( 0.12 ) $ 0.26 $ 0.18 $ 0.54

5 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands) 2023 2022 2023 2022

Net income $ 16,778 $ 15,721

Net (loss) income $ ( 6,790 ) $ 14,887 $ 9,988 $ 30,608

Other comprehensive income:

10 unchanged sentences

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

Transfer of consideration for acquisition 10 — 99 — — 99

Transfer of equity consideration for acquisition 10 — 99 — — 99

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

4 unchanged sentences

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

Stock compensation — — 1,855 — — 1,855

Release of restricted stock, net of shares withheld for taxes 132 2 — — — 2

Taxes paid related to net share settlement of equity awards ( 1 ) — ( 11 ) — — ( 11 )

Foreign currency translation gain — — — — 16,148 16,148

Purchase and retirement of treasury stock ( 448 ) ( 5 ) ( 1,768 ) ( 2,178 ) — ( 3,951 )

Net loss — — — ( 6,790 ) — ( 6,790 )

Balances as of March 31, 2023 55,531 $ 556 $ 343,088 $ 405,961 $ ( 37,017 ) $ 712,588

Common Stock Additional

11 unchanged sentences

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

Stock compensation — — 460 — — 460

Transfer of consideration for other investment 213 2 1,498 — — 1,500

Release of restricted stock, net of shares withheld for taxes 129 2 — — — 2

Foreign currency translation gain — — — — 3,666 3,666

Net income — — — 14,887 — 14,887

Balances as of March 31, 2022 56,656 $ 567 $ 341,913 $ 384,246 $ ( 51,710 ) $ 675,016

See accompanying notes to unaudited interim condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands) 2023 2022

9 unchanged sentences

Stock compensation expense 3,741 2,158

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

Loss on extinguishment of debt 3,545 —

Changes in operating assets and liabilities:

Equity in net loss of unconsolidated affiliates 30,917 301

Net loss on extinguishment of debt 3,545 —

Changes in operating assets and liabilities, net of acquisitions:

Service charges and fees receivable 1,357 687

25 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents and restricted cash 1,056 2,157

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

Net increase in cash, cash equivalents and restricted cash 37,210 53

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

15 unchanged sentences

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.

Financial results for the three and six-month period ended March 31, 2023, 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 .

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

Three Months Ended December 31, 2022

Six Months Ended March 31, 2023

(in thousands) U.S.

4 unchanged sentences

Effect of foreign currency translation changes — 3,782 3,782

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

Three Months Ended December 31, 2021

Balances as of March 31, 2023 $ 254,971 $ 45,107 $ 300,078

Six Months Ended March 31, 2022

(in thousands) U.S.

4 unchanged sentences

Effect of foreign currency translation changes — 1,134 1,134

Balances as of December 31, 2021

Balances as of March 31, 2022

$ 244,471 $ 41,743 $ 286,214

2 unchanged sentences

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

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:

(LOSS) EARNINGS PER SHARE

The following table reconciles the number of common shares used to compute basic and diluted (loss) earnings per share attributable to EZCORP Inc., shareholders:

Three Months Ended

Six Months Ended

(in thousands, except per share amounts) 2023 2022 2023 2022

Basic earnings per common share:

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

Basic (loss) earnings per common share:

Net (loss) income - basic $ ( 6,790 ) $ 14,887 $ 9,988 $ 30,608

Weighted shares outstanding - basic 55,648 56,561 55,981 56,370

Basic earnings per common share $ 0.30 $ 0.28

Diluted earnings per common share:

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

Basic (loss) earnings per common share $ ( 0.12 ) $ 0.26 $ 0.18 $ 0.54

Diluted (loss) earnings per common share:

Net (loss) income - basic $ ( 6,790 ) $ 14,887 $ 9,988 $ 30,608

Convertible Notes interest expense, net of tax* — 1,846 ( 2,733 ) 3,730

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

Net (loss) income - diluted $ ( 6,790 ) $ 16,733 $ 7,255 $ 34,338

Weighted shares outstanding - basic 55,648 56,561 55,981 56,370

Effect of dilution from equity-based compensation awards** 1,118 541

Effect of dilution from if-converted Convertible Notes*** 26,353 25,224

Equity-based compensation awards - effect of dilution** — 622 1,067 676

Convertible Notes - effect of dilution — 25,224 8,221 25,224

Weighted shares outstanding - diluted 55,648 82,407 65,269 82,270

Diluted earnings per common share $ 0.25 $ 0.21

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

Diluted (loss) earnings per common share $ ( 0.12 ) $ 0.20 $ 0.11 $ 0.42

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

Equity-based compensation awards** 1,014 — — —

Convertible Notes*** 30,417 — 20,141 —

Restricted stock**** 1,504 1,756 1,528 1,847

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

Total 32,935 1,756 21,669 1,847

* The six months ended March 31, 2023 includes $ 5.4 million gain on the partial extinguishment of debt, associated with the 2025 Convertible Notes, which was recorded to "Interest expense" in the Company's condensed consolidated statement of operations.

Debt for additional information.

** 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.

Debt for 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.

2 unchanged sentences

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,

(in thousands) Balance Sheet Location March 31, 2023 March 31, 2022 September 30, 2022

Lease assets:

Operating lease right-of-use assets Right-of-use assets, net $ 234,287 $ 204,343 $ 221,405

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

Financing lease assets Other assets 1,289 — 181

Total lease assets $ 235,576 $ 204,343 $ 221,586

9 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands) 2023 2022 2023 2022

8 unchanged sentences

Total lease cost $ 22,130 $ 20,623 $ 43,507 $ 40,527

* 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.

* Includes a reduction for sublease rental income of $ 1.1 million and $ 0.8 million for the three months ended March 31, 2023 and 2022, respectively and $ 1.8 million and $ 1.7 million for the six months ended March 31, 2023 and 2022, 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.

Cash paid for operating leases was $ 18.9 million and $ 18.0 million for the three months ended March 31, 2023 and 2022, respectively and $ 37.4 million and $ 35.6 million for the six months ended March 31, 2023 and 2022, respectively.

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

Three Months Ended

Six Months Ended

Weighted-average remaining lease term (years):

4 unchanged sentences

Financing leases 11.14 % N/A

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

As of March 31, 2023, maturities of lease liabilities under ASC 842 by fiscal year were as follows:

(in thousands) Operating Leases Financing Leases

6 unchanged sentences

Total long term net lease liabilities $ 191,874 $ 1,024

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.

We recorded $ 34.5 million and $ 28.1 million in non-cash additions to our right-of-use assets and lease liabilities for the six months ended March 31, 2023 and March 31, 2022, respectively.

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.

The following table presents the Company's ownership in Cash Converters International Limited ("Cash Converters") for the periods presented:

Date of purchase Purchase amount

(in thousands)

Shares purchased Shares owned Ownership percentage

October 1, 2021 $ 2,500 13,000,000 236,702,991 37.7 %

March 10, 2022 $ 1,000 5,500,000 242,239,157 38.6 %

April 5, 2022 $ 2,500 13,000,000 255,239,157 40.7 %

September 15, 2022 $ 900 5,700,000 260,939,157 41.6 %

November 2, 2022 $ 2,100 13,000,000 273,939,157 43.7 %

On October 2021, April 2022 and November 2022, we received cash dividends of $ 1.7 million, $ 1.7 million and $ 1.8 million, respectively, from Cash Converters.

The following tables present summary financial information for Cash Converters most recently reported results at December 31, 2022 after translation to U.S.

(in thousands) 2022 2021

Current assets $ 189,179 $ 162,558

5 unchanged sentences

Total liabilities and shareholders’ equity $ 287,480 $ 348,338

Full-Year Ended June 30,

Half-Year Ended December 31,

(in thousands) 2022 2021

2 unchanged sentences

Net profit ( 73,197 ) 1

During the quarter ended March 31, 2023, we recorded a $ 32.5 million loss on our share of losses from Cash Converters, which included $ 32.4 million as our share of their non-cash goodwill impairment charge, that was recorded to "Equity in net loss of unconsolidated affiliates" in the condensed consolidated statements of operations.

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

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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 $ 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.

13 unchanged sentences

Carrying Value Estimated Fair Value

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

March 31, 2023 March 31, 2023 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

11 unchanged sentences

Carrying Value Estimated Fair Value

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

March 31, 2022 March 31, 2022 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

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

Significant increases or decreases in the underlying assumptions used to value pawn loans, pawn service charges receivable, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates.

The Company remeasures its acquisition-related contingent obligation associated with the acquisition in June 2021 of PLO del Bajio S.

de C.V., which owned stores operating under the name "Cash Apoyo Efectivo," at the end of each reporting period.

This remeasurement resulted in a $ 2.5 million reduction of the obligation with an offset recorded to "Other" as an operating item in our condensed consolidated statement of operations during the second quarter of fiscal 2023.

The remaining obligation of $ 2.5 million is included in "Accounts payable, accrued expenses and other current liabilities" in our Consolidated Balance Sheet as of March 31, 2023.

The key assumptions used to determine the fair value of acquisition-related contingent consideration are estimated by management, not observable in the market and, therefore, considered Level 3 inputs within the fair value hierarchy.

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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.

The fair value of the note approximated its carrying value as of March 31, 2023.

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.

The fair value of the note approximated its carrying value as of March 31, 2023.

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

2 unchanged sentences

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") .

The $ 39.2 million in "Other investments" as of March 31, 2023, includes $ 30.0 million related to our 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 $ 18.0 million "Other investments" as of March 31, 2022, includes $ 15.0 million related to our investment in Founders.

We determined 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.

1 unchanged sentence

The following table presents the Company's debt instruments outstanding:

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

March 31, 2023 March 31, 2022 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

3 unchanged sentences

Total long-term debt $ 367,762 $ ( 8,475 ) $ 359,287 $ 316,250 $ ( 4,082 ) $ 312,168 $ 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:

The following table presents the Company's contractual maturities related to the debt instruments as of March 31, 2023:

Schedule of Contractual Maturities

5 unchanged sentences

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:

The following table presents the Company's interest expense related to the Convertible Notes for the three and six months ended March 31, 2023 and 2022:

Three Months Ended

Six Months Ended

(in thousands) 2023 2022 2023 2022

6 unchanged sentences

Amortization of deferred financing costs 120 182 308 389

Gain on extinguishment — — ( 5,389 ) —

Total interest expense $ 734 $ 1,206 $ ( 3,525 ) $ 2,437

2 unchanged sentences

Amortization of deferred financing costs 41 142 179 309

Loss on extinguishment — — 8,935 —

Total interest expense $ 288 $ 1,175 $ 10,237 $ 2,375

3 unchanged sentences

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,

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 effective interest rate for the three and six months ended March 31, 2023 was approximately 4.28 %.

As of March 31, 2023, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2029 Maturity Date assuming no early conversion.

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

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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.

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.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2023.

As of March 31, 2023, the if-converted value of the 2029 Convertible Notes did not exceed the principal amount.

Note Repurchases

1 unchanged sentence

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.

2 unchanged sentences

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 effective interest rate for the three and six months ended March 31, 2023 was approximately 2.88 % for the 2025 Convertible Notes.

As of March 31, 2023, 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).

11 unchanged sentences

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.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2023.

As of March 31, 2023, 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.

3 unchanged sentences

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 effective interest rate for the three and six months ended March 31, 2023 was approximately 3.35 %.

As of March 31, 2023, 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).

10 unchanged sentences

The redemption price will be equal to 100 % of the principal amount of the 2024 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

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

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

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2023.

As of March 31, 2023, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount.

COMMON STOCK AND STOCK COMPENSATION

4 unchanged sentences

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.

As of March 31, 2023, the Company has repurchased and retired 929,336 shares of our Class A Common Stock for $ 8.0 million under the Common Stock Repurchase Program, of which $ 3.9 million was repurchased during the quarter ended March 31, 2023.

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

15 unchanged sentences

Cancelled ( 54,497 ) 6.55

Outstanding as of December 31, 2022

Outstanding as of March 31, 2023

2,586,768 $ 6.81

13 unchanged sentences

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;

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, which 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.

The Company recorded a $ 2.0 million charge during the quarter ended June 30, 2022, which amount has since been paid to the third party claims administrator in final satisfaction of claims and related costs.

The claims administrator is in the process of disbursing settlement funds.

SEGMENT INFORMATION

7 unchanged sentences

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

Three Months Ended March 31, 2023

(in thousands) U.S.

12 unchanged sentences

Depreciation and amortization 2,560 2,332 — 4,892 3,071 7,963

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

Loss (gain) loss on sale or disposal of assets 81 ( 8 ) — 73 — 73

Other — ( 2,465 ) — ( 2,465 ) — ( 2,465 )

Interest expense — — — — 3,390 3,390

Interest income ( 1 ) ( 298 ) — ( 299 ) ( 1,599 ) ( 1,898 )

Equity in net loss of unconsolidated affiliates — — 32,501 32,501 — 32,501

Other (income) expense — ( 46 ) 6 ( 40 ) 120 80

Segment contribution (loss) $ 37,752 $ 7,996 $ ( 32,497 ) $ 13,251

Income (loss) before income taxes $ 13,251 $ ( 20,591 ) $ ( 7,340 )

Three Months Ended March 31, 2022

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 100,064 $ 33,492 $ — $ 133,556 $ — $ 133,556

Jewelry scrapping sales 3,480 2,210 — 5,690 — 5,690

Pawn service charges 58,772 17,911 — 76,683 — 76,683

Other revenues 24 — 29 53 — 53

Total revenues 162,340 53,613 29 215,982 — 215,982

Merchandise cost of goods sold 58,613 23,633 — 82,246 — 82,246

Jewelry scrapping cost of goods sold 2,798 2,010 — 4,808 — 4,808

Gross profit 100,929 27,970 29 128,928 — 128,928

Segment and corporate expenses (income):

Store expenses 64,492 21,251 — 85,743 — 85,743

General and administrative — — — — 12,227 12,227

Depreciation and amortization 2,625 1,891 — 4,516 2,934 7,450

Loss on sale or disposal of assets and other — ( 9 ) — ( 9 ) ( 688 ) ( 697 )

Interest expense — — — — 2,527 2,527

Interest income — ( 255 ) — ( 255 ) — ( 255 )

Equity in net income of unconsolidated affiliates — — 1,439 1,439 — 1,439

2 unchanged sentences

Income (loss) before income taxes $ 37,152 $ ( 17,029 ) $ 20,123

Three Months Ended December 31, 2021

Six Months Ended March 31, 2023

(in thousands) U.S.

12 unchanged sentences

Depreciation and amortization 5,315 4,547 — 9,862 6,089 15,951

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

Loss (gain) on sale or disposal of assets 84 ( 27 ) — 57 — 57

Other — ( 2,465 ) — ( 2,465 ) — ( 2,465 )

Interest expense — — — — 9,580 9,580

Interest income ( 1 ) ( 467 ) — ( 468 ) ( 2,094 ) ( 2,562 )

Equity in net loss of unconsolidated affiliates — — 30,917 30,917 — 30,917

Other expense (income) — 24 10 34 ( 188 ) ( 154 )

Segment contribution (loss) $ 77,043 $ 15,525 $ ( 30,895 ) $ 61,673

Income (loss) before income taxes $ 61,673 $ ( 44,475 ) $ 17,198

Six Months Ended March 31, 2022

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 202,142 $ 69,134 $ — $ 271,276 $ — $ 271,276

Jewelry scrapping sales 8,460 4,174 — 12,634 — 12,634

Pawn service charges 115,329 37,379 — 152,708 — 152,708

Other revenues 46 240 72 358 — 358

Total revenues 325,977 110,927 72 436,976 — 436,976

Merchandise cost of goods sold 116,445 48,912 — 165,357 — 165,357

Jewelry scrapping cost of goods sold 6,773 3,807 — 10,580 — 10,580

Gross profit 202,759 58,208 72 261,039 — 261,039

Segment and corporate expenses (income):

Store expenses 129,181 43,333 — 172,514 — 172,514

General and administrative — — — — 27,772 27,772

Depreciation and amortization 5,295 3,871 — 9,166 5,858 15,024

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

Interest expense — — — — 4,958 4,958

Interest income — ( 437 ) — ( 437 ) ( 122 ) ( 559 )

Equity in net income of unconsolidated affiliates — — 301 301 — 301

2 unchanged sentences

Income (loss) before income taxes $ 79,303 $ ( 37,833 ) $ 41,470

The following table presents separately identified net earning assets by segment:

(in thousands) U.S.

Pawn Latin America Pawn Other

Investments Corporate Items Total

As of March 31, 2023

Pawn loans $ 157,043 $ 49,053 $ — $ — $ 206,096

Inventory, net 112,147 38,150 — — 150,297

As of March 31, 2022

Pawn loans $ 133,515 $ 40,103 $ — $ — $ 173,618

Inventory, net 93,320 26,570 — — 119,890

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,

(in thousands) March 31, 2023 March 31, 2022 September 30, 2022

Gross pawn service charges receivable $ 42,335 $ 35,886 $ 44,192

20 unchanged sentences

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

Three Months Ended

Six Months Ended

(in thousands) 2023 2022

5 unchanged sentences

Pawn loans forfeited and transferred to inventory $ 159,398 $ 134,562

Transfer of consideration for acquisition 99 —

Transfer of consideration for other investment — 1,500

Transfer of equity consideration for acquisition 99 —

Acquisition earn-out contingency 2,000 —

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements