EZCORP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share amounts) June 30, 2023 June 30, 2022 September 30, 2022 Assets: Current assets: Cash and cash equivalents $ 237,974 $ 222,342 $ 206,028 Restricted cash 8,549 8,614 8,341 Pawn loans 229,379 204,155 210,009 Pawn service charges receivable, net 34,959 32,000 33,476 Inventory, net 154,944 132,713 151,615 Prepaid expenses and other current assets 44,925 29,822 34,694 Total current assets 710,730 629,646 644,163 Investments in unconsolidated affiliates 10,247 43,384 37,733 Other investments 39,220 18,000 24,220 Property and equipment, net 61,849 51,505 56,725 Right-of-use asset, net 243,100 217,506 221,405 Goodwill 302,120 286,798 286,828 Intangible assets, net 60,009 61,017 56,819 Notes receivable, net — 1,207 1,215 Deferred tax asset, net 19,610 15,773 12,145 Other assets 10,793 5,991 6,625 Total assets $ 1,457,678 $ 1,330,827 $ 1,347,878 Liabilities and equity: Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 74,458 $ 76,566 $ 84,509 Customer layaway deposits 18,595 14,927 16,023 Operating lease liabilities, current 56,919 53,358 52,334 Total current liabilities 149,972 144,851 152,866 Long-term debt, net 359,686 312,521 312,903 Deferred tax liability, net 349 307 373 Operating lease liabilities 197,499 175,489 180,756 Other long-term liabilities 11,130 11,905 8,749 Total liabilities 718,636 645,073 655,647 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: 52,214,761 as of June 30, 2023; 53,685,333 as of June 30, 2022; and 53,454,885 as of September 30, 2022 522 537 534 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 344,857 343,763 345,330 Retained earnings 422,549 396,461 402,006 Accumulated other comprehensive loss ( 28,916 ) ( 55,037 ) ( 55,669 ) Total equity 739,042 685,754 692,231 Total liabilities and equity $ 1,457,678 $ 1,330,827 $ 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 June 30, Nine Months Ended June 30, (in thousands, except per share amount) 2023 2022 2023 2022 Revenues: Merchandise sales $ 147,980 $ 128,334 $ 464,274 $ 399,610 Jewelry scrapping sales 13,931 7,168 34,640 19,802 Pawn service charges 93,819 80,291 279,442 232,999 Other revenues, net 82 49 206 407 Total revenues 255,812 215,842 778,562 652,818 Merchandise cost of goods sold 95,069 80,167 297,285 245,524 Jewelry scrapping cost of goods sold 11,958 6,167 30,813 16,747 Gross profit 148,785 129,508 450,464 390,547 Operating expenses: Store expenses 104,932 89,430 307,004 261,944 General and administrative 17,876 18,715 48,961 46,487 Depreciation and amortization 8,026 7,746 23,977 22,770 (Gain) loss on sale or disposal of assets ( 29 ) — 28 ( 692 ) Other ( 2,632 ) — ( 5,097 ) — Total operating expenses 128,173 115,891 374,873 330,509 Operating income 20,612 13,617 75,591 60,038 Interest expense 3,414 2,693 12,994 7,651 Interest income ( 2,584 ) ( 190 ) ( 5,146 ) ( 749 ) Equity in net (income) loss of unconsolidated affiliates ( 1,523 ) ( 1,758 ) 29,394 ( 1,457 ) Other (income) expense ( 5 ) ( 210 ) ( 159 ) 41 Income before income taxes 21,310 13,082 38,508 54,552 Income tax expense 3,088 867 10,298 11,729 Net income $ 18,222 $ 12,215 $ 28,210 $ 42,823 Basic earnings per share $ 0.33 $ 0.22 $ 0.51 $ 0.76 Diluted earnings per share $ 0.24 $ 0.17 $ 0.38 $ 0.59 Weighted-average basic shares outstanding 55,367 56,656 55,776 56,465 Weighted-average diluted shares outstanding 86,825 82,504 79,559 82,349 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 June 30, Nine Months Ended June 30, (in thousands) 2023 2022 2023 2022 Net income $ 18,222 $ 12,215 $ 28,210 $ 42,823 Other comprehensive income: Foreign currency translation adjustment, net of tax 8,101 ( 3,327 ) 26,753 3,378 Comprehensive income $ 26,323 $ 8,888 $ 54,963 $ 46,201 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 Stock compensation — — 3,135 — — 3,135 Foreign currency translation gain — — — — 8,101 8,101 Purchase and retirement of treasury stock ( 346 ) ( 4 ) ( 1,366 ) ( 1,634 ) — ( 3,004 ) Net income — — — 18,222 — 18,222 Balances as of June 30, 2023 55,185 $ 552 $ 344,857 $ 422,549 $ ( 28,916 ) $ 739,042 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 Stock compensation — — 1,850 — — 1,850 Foreign currency translation loss — — — — ( 3,327 ) ( 3,327 ) Net income — — — 12,215 — 12,215 Balances as of June 30, 2022 56,656 $ 567 $ 343,763 $ 396,461 $ ( 55,037 ) $ 685,754 See accompanying notes to unaudited interim condensed consolidated financial statements 4 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended June 30, (in thousands) 2023 2022 Operating activities: Net income $ 28,210 $ 42,823 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 23,977 22,770 Amortization of debt discount and deferred financing costs 1,135 1,051 Non-cash lease expense 41,752 39,061 Deferred income taxes ( 7,489 ) 475 Other adjustments ( 4,894 ) ( 734 ) Provision for inventory reserve ( 160 ) ( 2,096 ) Stock compensation expense 6,876 4,008 Equity in net loss of unconsolidated affiliates 29,394 ( 1,457 ) Net loss on extinguishment of debt 3,545 — Changes in operating assets and liabilities, net of acquisitions: Service charges and fees receivable ( 316 ) ( 2,949 ) Inventory ( 5,501 ) ( 7,837 ) Prepaid expenses, other current assets and other assets ( 2,750 ) 2,025 Accounts payable, accrued expenses and other liabilities ( 53,018 ) ( 53,209 ) Customer layaway deposits 1,036 2,265 Income taxes 8,923 ( 1,068 ) Dividends from unconsolidated affiliates 3,589 3,366 Net cash provided by operating activities 74,309 48,494 Investing activities: Loans made ( 592,689 ) ( 524,965 ) Loans repaid 343,886 295,823 Recovery of pawn loan principal through sale of forfeited collateral 251,608 191,082 Capital expenditures, net ( 27,751 ) ( 18,100 ) Acquisitions, net of cash acquired ( 12,968 ) ( 1,850 ) Issuance of notes receivable ( 15,500 ) ( 1,000 ) Investment in unconsolidated affiliates ( 2,133 ) ( 6,079 ) Investment in other investments ( 15,000 ) ( 16,500 ) Net cash used in investing activities ( 70,547 ) ( 81,589 ) 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 ( 13,982 ) — Net cash provided by (used in) financing activities 26,972 ( 792 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash 1,420 1,219 Net increase (decrease) in cash, cash equivalents and restricted cash 32,154 ( 32,668 ) Cash, cash equivalents and restricted cash at beginning of period 214,369 263,624 Cash, cash equivalents and restricted cash at end of period $ 246,523 $ 230,956 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 nine-month periods ended June 30, 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: Nine Months Ended June 30, 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 — 5,824 5,824 Balances as of June 30, 2023 $ 254,971 $ 47,149 $ 302,120 Nine Months Ended June 30, 2022 (in thousands) U.S. Pawn Latin America Pawn Consolidated Balances as of September 30, 2021 $ 244,471 $ 41,287 $ 285,758 Acquisitions 1,032 — 1,032 Measurement period adjustments — ( 678 ) ( 678 ) Effect of foreign currency translation changes — 686 686 Balances as of June 30, 2022 $ 245,503 $ 41,295 $ 286,798 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 $ 9.5 million was recorded as goodwill. These acquisitions expand our position in these strategic markets, a nd the luxury pawn transaction 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: EARNINGS PER SHARE The following table reconciles the number of common shares used to compute basic and diluted earnings per share attributable to EZCORP Inc., shareholders: Three Months Ended June 30, Nine Months Ended June 30, (in thousands, except per share amounts) 2023 2022 2023 2022 Basic earnings per common share: Net income - basic $ 18,222 $ 12,215 $ 28,210 $ 42,823 Weighted shares outstanding - basic 55,367 56,656 55,776 56,465 Basic earnings per common share $ 0.33 $ 0.22 $ 0.51 $ 0.76 Diluted earnings per common share: Net income - basic $ 18,222 $ 12,215 $ 28,210 $ 42,823 Add: Convertible Notes interest expense, net of tax* 2,644 1,868 1,885 5,598 Net income - diluted $ 20,866 $ 14,083 $ 30,095 $ 48,421 Weighted shares outstanding - basic 55,367 56,656 55,776 56,465 Equity-based compensation awards - effect of dilution** 1,041 624 1,058 660 Convertible Notes - effect of dilution 30,417 25,224 22,725 25,224 Weighted shares outstanding - diluted 86,825 82,504 79,559 82,349 Diluted earnings per common share $ 0.24 $ 0.17 $ 0.38 $ 0.59 Potential common shares excluded from the calculation of diluted earnings per common share above: Convertible Notes*** — — 6,323 — Restricted stock**** 1,705 1,825 1,728 2,066 Total 1,705 1,825 8,051 2,066 * The nine months ended June 30, 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 and finance leases for vehicles with lease terms of five 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 June 30, 2023 June 30, 2022 September 30, 2022 Lease assets: Operating lease right-of-use assets Right-of-use assets, net $ 243,100 $ 217,506 $ 221,405 Financing lease assets Other assets 2,076 — 181 Total lease assets $ 245,176 $ 217,506 $ 221,586 Lease liabilities: Current: Operating lease liabilities Operating lease liabilities, current $ 56,919 $ 53,358 $ 52,334 Financing lease liabilities Accounts payable, accrued expenses and other current liabilities 472 — 37 Total current lease liabilities $ 57,391 $ 53,358 $ 52,371 Non-current: Operating lease liabilities Operating lease liabilities $ 197,499 $ 175,489 $ 180,756 Financing lease liabilities Other long-term liabilities 1,645 — 148 Total non-current lease liabilities $ 199,144 $ 175,489 $ 180,904 Total lease liabilities $ 256,535 $ 228,847 $ 233,275 The table below provides major components of our lease costs: Three Months Ended June 30, Nine Months Ended June 30, (in thousands) 2023 2022 2023 2022 Operating lease cost: Operating lease cost * $ 18,701 $ 17,264 $ 54,219 $ 50,415 Variable lease cost 4,188 3,824 12,068 11,200 Total operating lease cost $ 22,889 $ 21,088 $ 66,287 $ 61,615 Financing lease cost: Amortization of financing lease assets $ 106 $ — $ 180 $ — Interest on financing lease liabilities 47 — 82 — Total financing lease cost $ 153 $ — $ 262 $ — Total lease cost $ 23,042 $ 21,088 $ 66,549 $ 61,615 * Includes a reduction for sublease rental income of $ 1.0 million and $ 0.9 million for the three months ended June 30, 2023 and 2022, respectively, and $ 2.8 million and $ 2.6 million for the nine months ended June 30, 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 $ 19.5 million and $ 18.4 million for the three months ended June 30, 2023 and 2022, respectively, and $ 56.9 million and $ 54.0 million for the nine months ended June 30, 2023 and 2022, respectively. 9 Table of Contents The weighted-average term and discount rates for leases are as follows: Nine Months Ended June 30, 2023 2022 Weighted-average remaining lease term (years): Operating leases 5.11 5.14 Financing leases 3.88 N/A Weighted-average discount rate: Operating leases 8.52 % 8.20 % Financing leases 11.14 % N/A As of June 30, 2023, maturities of lease liabilities under ASC 842 by fiscal year were as follows: (in thousands) Operating Leases Financing Leases Remaining 2023 $ 19,064 $ 171 Fiscal 2024 74,063 685 Fiscal 2025 64,559 685 Fiscal 2026 53,543 685 Fiscal 2027 39,921 384 Thereafter 61,874 — Total lease liabilities $ 313,024 $ 2,610 Less: portion representing imputed interest 58,606 493 Total net lease liabilities $ 254,418 $ 2,117 Less: current portion 56,919 472 Total long term net lease liabilities $ 197,499 $ 1,645 We recorded $ 55.2 million and $ 55.3 million in non-cash additions to our operating right-of-use assets and lease liabilities for the nine months ended June 30, 2023 and June 30, 2022, respectively. We recorded $ 2.1 million in non-cash additions to our finance right-of-use assets and leases liabilities for the nine months ended June 30, 2023. 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 % In October 2021, April 2022, November 2022 and April 2023, we received cash dividends of $ 1.7 million, $ 1.7 million, $ 1.8 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 three and nine months ended June 30, 2023, we recorded our share of income of $ 1.5 million and a $ 29.4 million loss on our share of losses from Cash Converters, respectively, included in “Equity in net (income) loss of unconsolidated affiliates” in the condensed consolidated statements of operations. For the nine months ended June 30, 2023, the $ 29.4 million loss includes $ 32.4 million of our share of their non-cash goodwill impairment charge. 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. 11 Table of Contents We have an interest in Founders, a variable interest entity, but because the Company is not the primary beneficiary, we do not consolidate Founders. Further, as we are not the appointed manager, we do not have the ability to direct the activities of the investment entity that most significantly impact its economic performance. Consequently, our equity investment in Founders is accounted for utilizing the measurement alternative within Accounting Standards Codification (“ASC”) 321, Investments — Equity Securities. Our $ 30.0 million carrying value of the investment and $ 15.0 million Demand Promissory Note are included in “Other investments” and “Prepaid expenses and other current assets” in our consolidated balance sheets, respectively. Our maximum exposure for losses related to our investment in Founders is our $ 30.0 million equity investment and $ 15.0 million Demand Promissory Note plus accrued and unpaid interest. 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 June 30, 2023 June 30, 2023 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,242 $ 1,242 $ — $ — $ 1,242 12.00 % promissory note receivable from Founders 16,050 16,050 — — 16,050 Investments in unconsolidated affiliates 10,247 41,367 41,367 — — Other investments 39,220 39,220 — — 39,220 Financial liabilities: 2024 Convertible Notes $ 34,223 $ 36,126 $ — $ 36,126 $ — 2025 Convertible Notes 102,433 94,586 — 94,586 — 2029 Convertible Notes 223,030 228,294 — 228,294 — Carrying Value Estimated Fair Value June 30, 2022 June 30, 2022 Fair Value Measurement Using (in thousands) Level 1 Level 2 Level 3 Financial assets: 2.89 % promissory note receivable due April 2024 $ 1,207 $ 1,207 $ — $ — $ 1,207 Investments in unconsolidated affiliates 43,384 47,973 41,342 — 6,631 Other investments 18,000 18,000 — 18,000 Financial liabilities: 2024 Convertible Notes $ 142,404 $ 143,951 $ — $ 143,951 $ — 2025 Convertible Notes 170,117 144,555 — 144,555 — 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, including money market accounts, 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 $ 2.6 million and $ 5.1 million reduction of the obligation with an offset recorded to “Other” as an operating item in our condensed consolidated statements of operations during the three and nine months ended June 30, 2023, respectively. There is no remaining obligation in our Consolidated Balance Sheet as of June 30, 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 June 30, 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 June 30, 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 June 30, 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 June 30, 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: June 30, 2023 June 30, 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 $ ( 6,970 ) $ 223,030 $ — $ — $ — $ — $ — $ — 2025 Convertible Notes 103,373 ( 940 ) 102,433 172,500 ( 2,383 ) 170,117 172,500 ( 2,172 ) 170,328 2024 Convertible Notes 34,389 ( 166 ) 34,223 143,750 ( 1,346 ) 142,404 143,750 ( 1,175 ) 142,575 Total long-term debt $ 367,762 $ ( 8,076 ) $ 359,686 $ 316,250 $ ( 3,729 ) $ 312,521 $ 316,250 $ ( 3,347 ) $ 312,903 The following table presents the Company’s contractual maturities related to the debt instruments as of June 30, 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 nine months ended June 30, 2023 and 2022: Three Months Ended June 30, Nine Months Ended June 30, (in thousands) 2023 2022 2023 2022 2029 Convertible Notes: Contractual interest expense $ 2,157 $ — $ 4,744 $ — Amortization of deferred financing costs 239 — 488 — Total interest expense $ 2,396 $ — $ 5,232 $ — 2025 Convertible Notes: Contractual interest expense $ 614 $ 1,025 $ 2,170 $ 3,073 Amortization of deferred financing costs 121 197 429 586 Gain on extinguishment — — ( 5,389 ) — Total interest expense $ 735 $ 1,222 $ ( 2,790 ) $ 3,659 2024 Convertible Notes: Contractual interest expense $ 247 $ 1,033 $ 1,370 $ 3,099 Amortization of deferred financing costs 39 156 218 465 Loss on extinguishment — — 8,935 — Total interest expense $ 286 $ 1,189 $ 10,523 $ 3,564 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”), for which $ 230.0 million remains outstanding as of June 30, 2023. 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 nine months ended June 30, 2023 was approximately 4.28 %. As of June 30, 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. 15 Table of Contents We may not redeem the Notes prior to December 21, 2026. At our option, we may redeem for cash all or any portion of the 2029 Convertible Notes on or after December 21, 2026, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100 % of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of June 30, 2023. As of June 30, 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 June 30, 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 nine months ended June 30, 2023 was approximately 2.88 % for the 2025 Convertible Notes. As of June 30, 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 June 30, 2023. As of June 30, 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 June 30, 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 nine months ended June 30, 2023 was approximately 3.35 %. As of June 30, 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 June 30, 2023. As of June 30, 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 June 30, 2023, the Company has repurchased and retired 1,275,646 shares of our Class A Common Stock for $ 11.0 million under the Common Stock Repurchase Program, of which $ 3.0 million was repurchased during the quarter ended June 30, 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 ( 78,029 ) 6.70 Outstanding as of June 30, 2023 2,563,236 $ 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, brought under Section 501.059, Florida Statutes, the Florida Telephone Solicitation Act (“Act”), alleges certain text messages were sent in violation of the Act. On June 16, 2022, 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 Company recorded a $ 2.0 million charge during the quarter ended June 30, 2022, the final payment of which was made on April 21, 2023 to the third party claims administrator for disbursement in final satisfaction of claims and related costs. 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 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 (loss) of Cash Converters along with our investment in Founders and RDC. There are no inter-segment revenues presented below, and the amounts below were determined in accordance with the same accounting principles used in our condensed consolidated financial statements. The following tables present revenue for each reportable segment, disaggregated revenue within our three reportable segments and Corporate, segment profits and segment contribution. Three Months Ended June 30, 2023 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 102,177 $ 45,803 $ — $ 147,980 $ — $ 147,980 Jewelry scrapping sales 13,098 833 — 13,931 — 13,931 Pawn service charges 68,790 25,029 — 93,819 — 93,819 Other revenues 27 40 15 82 — 82 Total revenues 184,092 71,705 15 255,812 — 255,812 Merchandise cost of goods sold 62,799 32,270 — 95,069 — 95,069 Jewelry scrapping cost of goods sold 11,101 857 — 11,958 — 11,958 Gross profit 110,192 38,578 15 148,785 — 148,785 Segment and corporate expenses (income): Store expenses 75,389 29,543 — 104,932 — 104,932 General and administrative — — — — 17,876 17,876 Depreciation and amortization 2,505 2,303 — 4,808 3,218 8,026 Gain on sale or disposal of assets — ( 29 ) — ( 29 ) — ( 29 ) Other — ( 2,632 ) — ( 2,632 ) — ( 2,632 ) Interest expense — — — — 3,414 3,414 Interest income ( 1 ) ( 256 ) — ( 257 ) ( 2,327 ) ( 2,584 ) Equity in net income of unconsolidated affiliates — — ( 1,523 ) ( 1,523 ) — ( 1,523 ) Other (income) expense — ( 65 ) 10 ( 55 ) 50 ( 5 ) Segment contribution $ 32,299 $ 9,714 $ 1,528 $ 43,541 Income (loss) before income taxes $ 43,541 $ ( 22,231 ) $ 21,310 19 Table of Contents Three Months Ended June 30, 2022 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 94,005 $ 34,329 $ — $ 128,334 $ — $ 128,334 Jewelry scrapping sales 5,404 1,764 — 7,168 — 7,168 Pawn service charges 59,322 20,969 — 80,291 — 80,291 Other revenues 21 7 21 49 — 49 Total revenues 158,752 57,069 21 215,842 — 215,842 Merchandise cost of goods sold 55,885 24,282 — 80,167 — 80,167 Jewelry scrapping cost of goods sold 4,506 1,661 — 6,167 — 6,167 Gross profit 98,361 31,126 21 129,508 — 129,508 Segment and corporate expenses (income): Store expenses 66,036 23,394 — 89,430 — 89,430 General and administrative — — — — 18,715 18,715 Depreciation and amortization 2,572 1,987 — 4,559 3,187 7,746 Interest expense — — — — 2,693 2,693 Interest income ( 1 ) ( 189 ) — ( 190 ) — ( 190 ) Equity in net income of unconsolidated affiliates — — ( 1,758 ) ( 1,758 ) — ( 1,758 ) Other (income) expense — ( 163 ) 19 ( 144 ) ( 66 ) ( 210 ) Segment contribution $ 29,754 $ 6,097 $ 1,760 $ 37,611 Income (loss) before income taxes $ 37,611 $ ( 24,529 ) $ 13,082 Nine Months Ended June 30, 2023 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 329,231 $ 135,043 $ — $ 464,274 $ — $ 464,274 Jewelry scrapping sales 30,088 4,552 — 34,640 — 34,640 Pawn service charges 208,045 71,397 — 279,442 — 279,442 Other revenues 84 75 47 206 — 206 Total revenues 567,448 211,067 47 778,562 — 778,562 Merchandise cost of goods sold 203,698 93,587 — 297,285 — 297,285 Jewelry scrapping cost of goods sold 25,867 4,946 — 30,813 — 30,813 Gross profit 337,883 112,534 47 450,464 — 450,464 Segment and corporate expenses (income): Store expenses 220,639 86,365 — 307,004 — 307,004 General and administrative — ( 3 ) — ( 3 ) 48,964 48,961 Depreciation and amortization 7,820 6,850 — 14,670 9,307 23,977 Loss (gain) on sale or disposal of assets 84 ( 56 ) — 28 — 28 Other — ( 5,097 ) — ( 5,097 ) — ( 5,097 ) Interest expense — — — — 12,994 12,994 Interest income ( 2 ) ( 723 ) — ( 725 ) ( 4,421 ) ( 5,146 ) Equity in net loss of unconsolidated affiliates — — 29,394 29,394 — 29,394 Other (income) expense — ( 41 ) 20 ( 21 ) ( 138 ) ( 159 ) Segment contribution (loss) $ 109,342 $ 25,239 $ ( 29,367 ) $ 105,214 Income (loss) before income taxes $ 105,214 $ ( 66,706 ) $ 38,508 20 Table of Contents Nine Months Ended June 30, 2022 (in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated Revenues: Merchandise sales $ 296,147 $ 103,463 $ — $ 399,610 $ — $ 399,610 Jewelry scrapping sales 13,864 5,938 — 19,802 — 19,802 Pawn service charges 174,651 58,348 — 232,999 — 232,999 Other revenues 67 247 93 407 — 407 Total revenues 484,729 167,996 93 652,818 — 652,818 Merchandise cost of goods sold 172,330 73,194 — 245,524 — 245,524 Jewelry scrapping cost of goods sold 11,279 5,468 — 16,747 — 16,747 Gross profit 301,120 89,334 93 390,547 — 390,547 Segment and corporate expenses (income): Store expenses 195,217 66,727 — 261,944 — 261,944 General and administrative — — — — 46,487 46,487 Depreciation and amortization 7,867 5,858 — 13,725 9,045 22,770 Gain on sale or disposal of assets and other — ( 4 ) — ( 4 ) ( 688 ) ( 692 ) Interest expense — — — — 7,651 7,651 Interest income ( 1 ) ( 626 ) — ( 627 ) ( 122 ) ( 749 ) Equity in net income of unconsolidated affiliates — — ( 1,457 ) ( 1,457 ) — ( 1,457 ) Other expense (income) — 37 15 52 ( 11 ) 41 Segment contribution $ 98,037 $ 17,342 $ 1,535 $ 116,914 Income (loss) before income taxes $ 116,914 $ ( 62,362 ) $ 54,552 The following table presents separately identified net earning assets by segment: (in thousands) U.S. Pawn Latin America Pawn Other Investments Corporate Items Total As of June 30, 2023 Pawn loans $ 178,877 $ 50,502 $ — $ — $ 229,379 Inventory, net 114,910 40,034 — — 154,944 As of June 30, 2022 Pawn loans $ 159,680 $ 44,475 $ — $ — $ 204,155 Inventory, net 101,831 30,882 — — 132,713 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) June 30, 2023 June 30, 2022 September 30, 2022 Gross pawn service charges receivable $ 47,071 $ 42,277 $ 44,192 Allowance for uncollectible pawn service charges receivable ( 12,112 ) ( 10,277 ) ( 10,716 ) Pawn service charges receivable, net $ 34,959 $ 32,000 $ 33,476 Gross inventory $ 157,590 $ 136,475 $ 153,673 Inventory reserves ( 2,646 ) ( 3,762 ) ( 2,058 ) Inventory, net $ 154,944 $ 132,713 $ 151,615 Prepaid expenses and other $ 6,081 $ 14,660 $ 8,336 Accounts receivable, notes receivable and other 29,860 7,465 8,435 Income taxes prepaid and receivable 8,984 7,697 17,923 Prepaid expenses and other current assets $ 44,925 $ 29,822 $ 34,694 Property and equipment, gross $ 335,296 $ 298,502 $ 306,667 Accumulated depreciation ( 273,447 ) ( 246,997 ) ( 249,942 ) Property and equipment, net $ 61,849 $ 51,505 $ 56,725 Accounts payable $ 19,220 $ 19,480 $ 24,056 Accrued payroll 13,668 11,840 8,365 Incentive accrual 13,564 14,128 17,403 Other payroll related expenses 6,059 7,167 9,592 Accrued sales and VAT taxes 6,663 7,672 7,279 Accrued income taxes payable 2,646 1,116 2,663 Other current liabilities 12,638 15,163 15,151 Accounts payable, accrued expenses and other current liabilities $ 74,458 $ 76,566 $ 84,509 The following table provides supplemental disclosure of Consolidated Statements of Cash Flows information: Nine Months Ended June 30, (in thousands) 2023 2022 Supplemental disclosure of cash flow information Cash and cash equivalents $ 237,974 $ 222,342 Restricted cash 8,549 8,614 Total cash and cash equivalents and restricted cash $ 246,523 $ 230,956 Non-cash investing and financing activities: Pawn loans forfeited and transferred to inventory $ 238,899 $ 204,662 Transfer of consideration for other investment — 1,500 Transfer of equity consideration for acquisition 99 — Acquisition earn-out contingency 2,000 — Accrued acquisition consideration 1,220 — 22 Table of Contents