EZCORP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share amounts) March 31, 2023 March 31, 2022 September 30, 2022 Assets: Current assets: Cash and cash equivalents $ 243,128 $ 254,964 $ 206,028 Restricted cash 8,451 8,713 8,341 Pawn loans 206,096 173,618 210,009 Pawn service charges receivable, net 33,116 28,319 33,476 Inventory, net 150,297 119,890 151,615 Prepaid expenses and other current assets 45,564 27,267 34,694 Total current assets 686,652 612,771 644,163 Investments in unconsolidated affiliates 10,681 42,002 37,733 Other investments 39,220 18,000 24,220 Property and equipment, net 59,775 50,874 56,725 Right-of-use asset, net 234,287 204,343 221,405 Goodwill 300,078 286,214 286,828 Intangible assets, net 59,620 62,145 56,819 Notes receivable, net 1,233 1,198 1,215 Deferred tax asset, net 19,127 15,908 12,145 Other assets 9,859 6,541 6,625 Total assets $ 1,420,532 $ 1,299,996 $ 1,347,878 Liabilities and equity: Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 72,695 $ 69,695 $ 84,509 Customer layaway deposits 18,761 15,046 16,023 Operating lease liabilities, current 53,921 52,446 52,334 Total current liabilities 145,377 137,187 152,866 Long-term debt, net 359,287 312,168 312,903 Deferred tax liability, net 368 179 373 Operating lease liabilities 191,874 163,506 180,756 Other long-term liabilities 11,038 11,940 8,749 Total liabilities 707,944 624,980 655,647 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: 52,561,071 as of March 31, 2023; 53,685,333 as of March 31, 2022; and 53,454,885 as of September 30, 2022 526 537 534 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 343,088 341,913 345,330 Retained earnings 405,961 384,246 402,006 Accumulated other comprehensive loss ( 37,017 ) ( 51,710 ) ( 55,669 ) Total equity 712,588 675,016 692,231 Total liabilities and equity $ 1,420,532 $ 1,299,996 $ 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 March 31, Six Months Ended March 31, (in thousands, except per share amount) 2023 2022 2023 2022 Revenues: Merchandise sales $ 152,507 $ 133,556 $ 316,294 $ 271,276 Jewelry scrapping sales 12,825 5,690 20,709 12,634 Pawn service charges 93,030 76,683 185,623 152,708 Other revenues, net 61 53 124 358 Total revenues 258,423 215,982 522,750 436,976 Merchandise cost of goods sold 97,339 82,246 202,216 165,357 Jewelry scrapping cost of goods sold 11,902 4,808 18,855 10,580 Gross profit 149,182 128,928 301,679 261,039 Operating expenses: Store expenses 101,269 85,743 202,072 172,514 General and administrative 15,609 12,227 31,085 27,772 Depreciation and amortization 7,963 7,450 15,951 15,024 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 Operating income 26,733 24,205 54,979 46,421 Interest expense 3,390 2,527 9,580 4,958 Interest income ( 1,898 ) ( 255 ) ( 2,562 ) ( 559 ) 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 Diluted earnings per share $ ( 0.12 ) $ 0.20 $ 0.11 $ 0.42 Weighted-average basic shares outstanding 55,648 56,561 55,981 56,370 Weighted-average diluted shares outstanding 55,648 82,407 65,269 82,270 See accompanying notes to unaudited interim condensed consolidated financial statements 2 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, Six Months Ended March 31, (in thousands) 2023 2022 2023 2022 Net (loss) income $ ( 6,790 ) $ 14,887 $ 9,988 $ 30,608 Other comprehensive income: Foreign currency translation adjustment, net of tax 16,148 3,666 18,652 6,705 Comprehensive income $ 9,358 $ 18,553 $ 28,640 $ 37,313 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 equity 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 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 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 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 4 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended March 31, (in thousands) 2023 2022 Operating activities: Net income $ 9,988 $ 30,608 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 15,951 15,024 Amortization of debt discount and deferred financing costs 736 698 Non-cash lease expense 27,546 25,746 Deferred income taxes ( 6,987 ) 212 Other adjustments ( 2,386 ) ( 708 ) Provision for inventory reserve 280 ( 1,780 ) Stock compensation expense 3,741 2,158 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 Inventory ( 2,306 ) ( 2,779 ) Prepaid expenses, other current assets and other assets ( 3,639 ) 88 Accounts payable, accrued expenses and other liabilities ( 43,969 ) ( 50,258 ) Customer layaway deposits 1,426 2,342 Income taxes 8,852 6,576 Dividends from unconsolidated affiliates 1,775 1,660 Net cash provided by operating activities 46,827 30,575 Investing activities: Loans made ( 378,717 ) ( 329,459 ) Loans repaid 230,604 199,836 Recovery of pawn loan principal through sale of forfeited collateral 171,504 129,311 Capital expenditures, net ( 18,439 ) ( 10,498 ) Acquisitions, net of cash acquired ( 12,968 ) — Issuance of notes receivable ( 15,500 ) ( 1,000 ) Investment in unconsolidated affiliates ( 2,133 ) ( 3,577 ) Investment in other investments ( 15,000 ) ( 16,500 ) Net cash used in investing activities ( 40,649 ) ( 31,887 ) Financing activities: Taxes paid related to net share settlement of equity awards ( 1,149 ) ( 792 ) Proceeds from issuance of debt 230,000 — Debt issuance cost ( 7,458 ) — Cash paid on extinguishment of debt ( 1,951 ) — Payments on debt ( 178,488 ) — Repurchase of common stock ( 10,978 ) — Net cash provided by (used in) financing activities 29,976 ( 792 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash 1,056 2,157 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 Cash, cash equivalents and restricted cash at end of period $ 251,579 $ 263,677 See accompanying notes to unaudited interim condensed consolidated financial statements 5 Table of Contents Notes to Interim Condensed Consolidated Financial Statements (Unaudited) 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 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 . 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: Six Months Ended March 31, 2023 (in thousands) U.S. Pawn Latin America Pawn Consolidated Balances as of September 30, 2022 $ 245,503 $ 41,325 $ 286,828 Acquisitions 9,468 — 9,468 Effect of foreign currency translation changes — 3,782 3,782 Balances as of March 31, 2023 $ 254,971 $ 45,107 $ 300,078 Six Months Ended March 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Consolidated Balances as of September 30, 2021 $ 244,471 $ 41,287 $ 285,758 Measurement period adjustments — ( 678 ) $ ( 678 ) Effect of foreign currency translation changes — 1,134 1,134 Balances as of March 31, 2022 $ 244,471 $ 41,743 $ 286,214 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 $ 13.0 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. 7 Table of Contents NOTE 3: (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 March 31, Six Months Ended March 31, (in thousands, except per share amounts) 2023 2022 2023 2022 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 (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 Add: Convertible Notes interest expense, net of tax* — 1,846 ( 2,733 ) 3,730 Net (loss) income - diluted $ ( 6,790 ) $ 16,733 $ 7,255 $ 34,338 Weighted shares outstanding - basic 55,648 56,561 55,981 56,370 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 (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 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. See Note 7: 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 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. 8 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 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 Other assets 1,289 — 181 Total lease assets $ 235,576 $ 204,343 $ 221,586 Lease liabilities: Current: Operating lease liabilities Operating lease liabilities, current $ 53,921 $ 52,446 $ 52,334 Financing lease liabilities Accounts payable, accrued expenses and other current liabilities 282 — 37 Total current lease liabilities $ 54,203 $ 52,446 $ 52,371 Non-current: Operating lease liabilities Operating lease liabilities $ 191,874 $ 163,506 $ 180,756 Financing lease liabilities Other long-term liabilities 1,024 — 148 Total non-current lease liabilities $ 192,898 $ 163,506 $ 180,904 Total lease liabilities $ 247,101 $ 215,952 $ 233,275 The table below provides major components of our lease costs: Three Months Ended March 31, Six Months Ended March 31, (in thousands) 2023 2022 2023 2022 Operating lease cost: Operating lease cost * $ 18,023 $ 16,789 $ 35,518 $ 33,151 Variable lease cost 4,028 3,834 7,880 7,376 Total operating lease cost $ 22,051 $ 20,623 $ 43,398 $ 40,527 Financing lease cost: Amortization of financing lease assets $ 55 $ — $ 74 $ — Interest on financing lease liabilities 24 — 35 — Total financing lease cost $ 79 $ — $ 109 $ — Total lease cost $ 22,130 $ 20,623 $ 43,507 $ 40,527 * 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 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. 9 Table of Contents The weighted-average term and discount rates for leases are as follows: Six Months Ended March 31, 2023 2022 Weighted-average remaining lease term (years): Operating leases 5.16 5.00 Financing leases 3.97 N/A Weighted-average discount rate: Operating leases 8.42 % 8.27 % Financing leases 11.14 % N/A As of March 31, 2023, maturities of lease liabilities under ASC 842 by fiscal year were as follows: (in thousands) Operating Leases Financing Leases Remaining 2023 $ 36,727 $ 310 Fiscal 2024 68,717 413 Fiscal 2025 58,855 413 Fiscal 2026 48,125 401 Fiscal 2027 34,973 81 Thereafter 55,547 — Total lease liabilities $ 302,944 $ 1,618 Less: portion representing imputed interest 57,149 312 Total net lease liabilities $ 245,795 $ 1,306 Less: current portion 53,921 282 Total long term net lease liabilities $ 191,874 $ 1,024 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. 10 Table of Contents NOTE 5: STRATEGIC INVESTMENTS Cash Converters International Limited 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. dollars: December 31, (in thousands) 2022 2021 Current assets $ 189,179 $ 162,558 Non-current assets 98,301 185,780 Total assets $ 287,480 $ 348,338 Current liabilities $ 91,601 $ 59,701 Non-current liabilities 56,792 59,915 Shareholders’ equity 139,087 228,722 Total liabilities and shareholders’ equity $ 287,480 $ 348,338 Half-Year Ended December 31, (in thousands) 2022 2021 Gross revenues $ 98,768 $ 84,185 Gross profit 63,800 55,280 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. 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" 11 Table of Contents 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. 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. 12 Table of Contents Financial Assets and Liabilities Not Measured at Fair Value The tables below present our estimates of fair value of financial assets and liabilities that were not measured at fair value: Carrying Value Estimated Fair Value March 31, 2023 March 31, 2023 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,233 $ 1,233 $ — $ — $ 1,233 12.00 % promissory note receivable from Founders 15,600 15,600 — — 15,600 Investments in unconsolidated affiliates 10,681 42,917 42,917 — — Other investments 39,220 39,220 — — 39,220 Financial liabilities: 2024 Convertible Notes $ 34,184 $ 34,389 $ — $ 34,389 $ — 2025 Convertible Notes 102,312 94,690 — 94,690 — 2029 Convertible Notes 222,791 221,529 — 221,529 — Carrying Value Estimated Fair Value March 31, 2022 March 31, 2022 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,198 $ 1,198 $ — $ — $ 1,198 Investments in unconsolidated affiliates 42,002 51,502 44,529 — 6,973 Other investments 18,000 18,000 — — 18,000 Financial liabilities: 2024 Convertible Notes $ 142,248 $ 141,594 $ — $ 141,594 $ — 2025 Convertible Notes 169,920 153,525 — 153,525 — Carrying Value Estimated Fair Value 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 — 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, 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 R.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. 13 Table of Contents 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 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 March 31, 2023. 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. 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. 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. As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease. NOTE 7: DEBT The following table presents the Company's debt instruments outstanding: 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 2029 Convertible Notes $ 230,000 $ ( 7,209 ) $ 222,791 $ — $ — $ — $ — $ — $ — 2025 Convertible Notes 103,373 ( 1,061 ) 102,312 172,500 ( 2,580 ) 169,920 172,500 ( 2,172 ) 170,328 2024 Convertible Notes 34,389 ( 205 ) 34,184 143,750 ( 1,502 ) 142,248 143,750 ( 1,175 ) 142,575 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 March 31, 2023: 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 14 Table of Contents The following table presents the Company's interest expense related to the Convertible Notes for the three and six months ended March 31, 2023 and 2022: Three Months Ended March 31, Six Months Ended March 31, (in thousands) 2023 2022 2023 2022 2029 Convertible Notes: Contractual interest expense $ 2,156 $ — $ 2,587 $ — Amortization of deferred financing costs 197 — 249 — Total interest expense $ 2,353 $ — $ 2,836 $ — 2025 Convertible Notes: Contractual interest expense $ 614 $ 1,024 $ 1,556 $ 2,048 Amortization of deferred financing costs 120 182 308 389 Gain on extinguishment — — ( 5,389 ) — Total interest expense $ 734 $ 1,206 $ ( 3,525 ) $ 2,437 2024 Convertible Notes: Contractual interest expense $ 247 $ 1,033 $ 1,123 $ 2,066 Amortization of deferred financing costs 41 142 179 309 Loss on extinguishment — — 8,935 — Total interest expense $ 288 $ 1,175 $ 10,237 $ 2,375 3.750 % 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, redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2029 Convertible Notes will be entitled to receive cash equal to the principal of the 2029 Convertible Notes plus accrued interest. The effective interest rate for the three and 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). 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 15 Table of Contents 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 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 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 March 31, 2023. The 2025 Convertible Notes were issued pursuant to an indenture dated May 14, 2018 (the "2018 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2018 Indenture. The 2025 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375 % per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. The effective interest rate for the three and six months 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). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2025 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election. Prior to November 1, 2024, the 2025 Convertible Notes are convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2018 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2018 Indenture. On or after November 1, 2024 until the close of business on the business day immediately preceding the 2025 Maturity Date, holders of 2025 Convertible Notes may, at their option, convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances. We may not redeem the 2025 Convertible Notes prior to May 1, 2022. At our option, we may redeem for cash all or any portion of the 2025 Convertible Notes on or after May 1, 2022, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100 % of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2023. As of March 31, 2023, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount. 16 Table of Contents 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 March 31, 2023. The 2024 Convertible Notes were issued pursuant to an indenture dated July 5, 2017 (the "2017 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2017 Indenture. The 2024 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2024 Convertible Notes pay interest semi-annually in arrears at a rate of 2.875 % per annum on January 1 and July 1 of each year, commencing January 1, 2018, and mature on July 1, 2024 (the "2024 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2024 Convertible Notes will be entitled to receive cash equal to the principal of the 2024 Convertible Notes plus accrued interest. The effective interest rate for the three and six months 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). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2024 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election. Prior to January 1, 2024, the 2024 Convertible Notes will be convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2017 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2017 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2024 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2017 Indenture. On or after January 1, 2024 until the close of business on the business day immediately preceding the 2024 Maturity Date, holders of 2024 Convertible Notes may, at their option, convert their 2024 Convertible Notes at any time, regardless of the foregoing circumstances. At our option, we may redeem for cash all or any portion of the 2024 Convertible Notes on or after July 6, 2021, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100 % of the principal amount of the 2024 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2023. As of March 31, 2023, 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 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. 17 Table of Contents 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 1,008,180 7.82 Released (a) ( 480,238 ) 4.86 Cancelled ( 54,497 ) 6.55 Outstanding as of March 31, 2023 2,586,768 $ 6.81 (a) 114,311 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. 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, which was approved by the court on October 24, 2022. The period for submitting claims expired on November 8, 2022. 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. 18 Table of Contents 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. The following tables present revenue for each reportable segment, disaggregated revenue within our three reportable segments and Corporate, segment profits and segment contribution. Three Months Ended March 31, 2023 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 108,740 $ 43,767 $ — $ 152,507 $ — $ 152,507 Jewelry scrapping sales 9,814 3,011 — 12,825 — 12,825 Pawn service charges 69,945 23,085 — 93,030 — 93,030 Other revenues 32 19 10 61 — 61 Total revenues 188,531 69,882 10 258,423 — 258,423 Merchandise cost of goods sold 67,643 29,696 — 97,339 — 97,339 Jewelry scrapping cost of goods sold 8,550 3,352 — 11,902 — 11,902 Gross profit 112,338 36,834 10 149,182 — 149,182 Segment and corporate expenses (income): Store expenses 71,946 29,323 — 101,269 — 101,269 General and administrative — — — — 15,609 15,609 Depreciation and amortization 2,560 2,332 — 4,892 3,071 7,963 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 ) 19 Table of Contents Three Months Ended March 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 100,064 $ 33,492 $ — $ 133,556 $ — $ 133,556 Jewelry scrapping sales 3,480 2,210 — 5,690 — 5,690 Pawn service charges 58,772 17,911 — 76,683 — 76,683 Other revenues 24 — 29 53 — 53 Total revenues 162,340 53,613 29 215,982 — 215,982 Merchandise cost of goods sold 58,613 23,633 — 82,246 — 82,246 Jewelry scrapping cost of goods sold 2,798 2,010 — 4,808 — 4,808 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 Other (income) expense — 334 8 342 29 371 Segment contribution $ 33,812 $ 4,758 $ ( 1,418 ) $ 37,152 Income (loss) before income taxes $ 37,152 $ ( 17,029 ) $ 20,123 Six Months Ended March 31, 2023 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 227,054 $ 89,240 $ — $ 316,294 $ — $ 316,294 Jewelry scrapping sales 16,990 3,719 — 20,709 — 20,709 Pawn service charges 139,255 46,368 — 185,623 — 185,623 Other revenues 57 35 32 124 — 124 Total revenues 383,356 139,362 32 522,750 — 522,750 Merchandise cost of goods sold 140,899 61,317 — 202,216 — 202,216 Jewelry scrapping cost of goods sold 14,766 4,089 — 18,855 — 18,855 Gross profit 227,691 73,956 32 301,679 — 301,679 Segment and corporate expenses (income): Store expenses 145,250 56,822 — 202,072 — 202,072 General and administrative — ( 3 ) — ( 3 ) 31,088 31,085 Depreciation and amortization 5,315 4,547 — 9,862 6,089 15,951 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 20 Table of Contents Six Months Ended March 31, 2022 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 202,142 $ 69,134 $ — $ 271,276 $ — $ 271,276 Jewelry scrapping sales 8,460 4,174 — 12,634 — 12,634 Pawn service charges 115,329 37,379 — 152,708 — 152,708 Other revenues 46 240 72 358 — 358 Total revenues 325,977 110,927 72 436,976 — 436,976 Merchandise cost of goods sold 116,445 48,912 — 165,357 — 165,357 Jewelry scrapping cost of goods sold 6,773 3,807 — 10,580 — 10,580 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 Other (income) expense — 200 ( 4 ) 196 55 251 Segment contribution $ 68,283 $ 11,245 $ ( 225 ) $ 79,303 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 21 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) March 31, 2023 March 31, 2022 September 30, 2022 Gross pawn service charges receivable $ 42,335 $ 35,886 $ 44,192 Allowance for uncollectible pawn service charges receivable ( 9,219 ) ( 7,567 ) ( 10,716 ) Pawn service charges receivable, net $ 33,116 $ 28,319 $ 33,476 Gross inventory $ 153,348 $ 123,944 $ 153,673 Inventory reserves ( 3,051 ) ( 4,054 ) ( 2,058 ) Inventory, net $ 150,297 $ 119,890 $ 151,615 Prepaid expenses and other $ 7,677 $ 10,245 $ 8,336 Accounts receivable, notes receivable and other 27,817 8,255 8,435 Income taxes prepaid and receivable 10,070 8,767 17,923 Prepaid expenses and other current assets $ 45,564 $ 27,267 $ 34,694 Property and equipment, gross $ 325,458 $ 293,087 $ 306,667 Accumulated depreciation ( 265,683 ) ( 242,213 ) ( 249,942 ) Property and equipment, net $ 59,775 $ 50,874 $ 56,725 Accounts payable $ 18,443 $ 17,756 $ 24,056 Accrued payroll 8,842 8,631 8,365 Incentive accrual 8,997 8,196 17,403 Other payroll related expenses 8,351 7,877 9,592 Accrued sales and VAT taxes 6,949 8,022 7,279 Accrued income taxes payable 3,662 4,346 2,663 Other current liabilities 17,451 14,867 15,151 Accounts payable, accrued expenses and other current liabilities $ 72,695 $ 69,695 $ 84,509 The following table provides supplemental disclosure of Consolidated Statements of Cash Flows information: Six Months Ended March 31, (in thousands) 2023 2022 Supplemental disclosure of cash flow information Cash and cash equivalents $ 243,128 $ 254,964 Restricted cash 8,451 8,713 Total cash and cash equivalents and restricted cash $ 251,579 $ 263,677 Non-cash investing and financing activities: Pawn loans forfeited and transferred to inventory $ 159,398 $ 134,562 Transfer of consideration for other investment — 1,500 Transfer of equity consideration for acquisition 99 — Acquisition earn-out contingency 2,000 — Accrued acquisition consideration 1,145 — 22 Table of Contents