What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-01-31 compared with 2023-08-02 · 64 added, 193 removed, 213 unchanged (55% of the section changed)

31 unchanged sentences

In the United States, PSC is historically highest in our fourth fiscal quarter (July through September) due to a higher average loan balance during the summer lending season.

PSC is historically lowest in our third fiscal quarter (April through June) following the tax refund season and merchandise sales are highest in our first and second fiscal quarters (October through March) due to the holiday season, jewelry sales

surrounding Valentine’s Day and the availability of tax refunds.

In Latin America, most of our customers receive additional compensation from their employers in December, and many receive additional compensation in June or July, applying downward pressure on loan balances and fueling some merchandise sales in those periods.

In Mexico, we saw similar downward pressure in loan balances during the quarter due to a recent change in law related to company profit sharing payments to employees.

In Mexico, we saw similar downward pressure in loan balances during the third quarter of prior year due to a recent change in law related to company profit sharing payments to employees.

We believe this change will impact pawn loan balances in May and June going forward.

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

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

Financial Highlights

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

The following chart presents sources of gross profit, including PSC, merchandise sales gross profit (“Merchandise sales GP”) and jewelry scrapping gross profit (“Jewelry Scrapping GP”) for the three and nine months ended June 30, 2023 and 2022:

The following chart presents sources of gross profit by geographic disbursement for the three and nine months ended June 30, 2023 and 2022:

The following chart presents sources of gross profit by geographic disbursement for the three months ended December 31, 2023 and 2022:

Business Developments

During October 2023, we contributed an additional $15.0 million to Founders One, LLC (“Founders”) associated with our preferred interest, bringing our total equity investment in Founders to $45.0 million.

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

Results of Operations

15 unchanged sentences

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

dollars as of and for the three and nine months ended June 30, 2023 and June 30, 2022 were as follows:

dollars as of and for the three months ended December 31, 2023 and 2022 were as follows:

Three Months Ended

Nine Months Ended

2023 2022 2023 2022

7 unchanged sentences

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

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

• Other Investments — Represents our equity interest in the net income of Cash Converters along with our investment in Rich Data Corporation (“RDC”) and our investment in and notes receivable from Founders.

Store Count by Segment

Three Months Ended June 30, 2023

Pawn Latin America Pawn Consolidated

As of March 31, 2023

527 672 1,199

New locations opened 1 12 13

As of June 30, 2023

528 684 1,212

Three Months Ended June 30, 2022

Three Months Ended December 31, 2023

Pawn Latin America Pawn Consolidated

As of March 31, 2022

As of September 30, 2023

529 702 1,231

1 unchanged sentence

Locations acquired 1 — 1

As of June 30, 2022

As of December 31, 2023

530 707 1,237

Nine Months Ended June 30, 2023

Three Months Ended December 31, 2022

Pawn Latin America Pawn Consolidated

As of September 30, 2022

New locations opened 3 25 28

Locations acquired 10 — 10

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

As of June 30, 2023

515 660 1,175

Nine Months Ended June 30, 2022

Pawn Latin America Pawn Consolidated

As of September 30, 2021 516 632 1,148

New locations opened — 2 2

Locations acquired 10 — 10

As of June 30, 2022

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

As of December 31, 2022

525 661 1,186

Three Months Ended June 30, 2023 vs.

Three Months Ended June 30, 2022

Three Months Ended December 31, 2023 vs.

Three Months Ended December 31, 2022

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

1 unchanged sentence

Pawn segment:

Three Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2023 2022

12 unchanged sentences

Depreciation and amortization 2,624 2,755 (5)%

Segment operating contribution 32,298 29,753 9%

Other segment income (1) (1) —%

Loss on sale or disposal of assets and other 26 3 *

Segment contribution $ 47,540 $ 39,291 21%

3 unchanged sentences

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

General merchandise as a % of PLO 33 % 34 % (100)bps

Jewelry as a % of PLO 67 % 66 % 100bps

* Represents a percentage computation that is not mathematically meaningful.

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PSC increased 14% as a result of higher average PLO.

Merchandise sales increased 9% and gross margin decreased to 39% from 41%, within our target range.

Merchandise sales increased 6% and gross margin decreased to 37% from 38%.

Aged general merchandise was 1.1% of total general merchandise inventory.

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Inventory turnover increased to 2.7x from 2.6x.

Store expenses increased 14%, primarily due to increased labor in-line with store activity, higher store count and, to a lesser extent, expenses related to our loyalty program.

Store expenses increased 5%, primarily due to wage inflationary pressures, higher store count and, to a lesser extent, rent.

Segment contribution increased 21% to $47.5 million, due to the changes noted above.

Segment store count increased by one de novo store during this quarter.

Segment store count increased by 1 store during the quarter due to an acquisition.

Latin America Pawn

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

Three Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2023 (GAAP)

14 unchanged sentences

Depreciation and amortization 2,339 2,215 6% 2,128 (4)%

Other (2,632) — * (2,145) *

Gain on sale or disposal of assets and other (196) (19) * (188) *

Segment operating contribution 9,681 7,427 30% 9,047 22%

5 unchanged sentences

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

General merchandise as a % of PLO 65 % 70 % (500)bps 63 % (700)bps

Jewelry as a % of PLO 35 % 30 % 500bps 37 % 700bps

* Represents a percentage computation that is not mathematically meaningful.

7 unchanged sentences

PLO improved to $52.5 million, up 22% (11% on constant currency basis).

On a same store basis, PLO increased 11% (decreased 2% on a constant currency basis).

PLO balance was lower than expected with a greater pay down during the quarter driven by a change in Mexican law, which significantly increased profit share required to be paid by companies to employees by May 30.

Total revenue was up 26% (15% on constant currency basis), while gross profit increased 24% (14% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.

PSC increased 19% (10% on a constant currency basis) as a result of higher average PLO and yield.

On a same store basis, PLO increased 19% (8% on a constant currency basis).

Total revenue was up 19% (9% on constant currency basis) and gross profit increased 22% (11% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.

PSC increased 18% (8% on a constant currency basis) as a result of higher average PLO.

Merchandise sales gross margin increased from 30% to 32%.

Aged general merchandise increased to 2.4% from 1.3% of total merchandise inventory.

Net inventory increased 30% (13% on a constant currency basis), as expected with the growth in PLO.

Inventory turnover remained strong at 3.4x, down from 3.7x.

Store expenses increased 26% (14% on a constant currency basis), primarily due to rent linked to inflation, higher store count and, to a lesser extent, expenses related to our loyalty program.

Aged general merchandise was 1.6% of total merchandise inventory.

Net inventory remained flat (decreased 11% on a constant currency basis) due to PLO growth, offset by increased inventory turnover at 3.8x, up from 3.3x.

Store expenses increased 21% (10% on a constant currency basis), primarily due to increases in minimum wage and headcount, higher store count and, to a lesser extent, rent.

Same-store expenses increased 16% (6% on a constant currency basis).

Segment contribution increased 59% (48% on a constant currency basis) to $9.7 million, primarily due to the reversal of contingent consideration liability in connection with a previously completed acquisition, which was recorded to “Other,” and the changes in revenue and store expenses described above.

Segment store count increased by 12 de novo stores during the quarter.

Segment contribution increased 35% (27% on a constant currency basis) to $10.1 million, due to the changes noted above.

Segment store count increased by 5 de novo stores opened during the quarter.

Other Investments

1 unchanged sentence

dollars from its functional currency of primarily Australian dollars:

Three Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2023 2022

3 unchanged sentences

Segment operating expenses:

Interest income (573) — *

Equity in net income of unconsolidated affiliates (1,153) (1,584) (27)%

Segment operating contribution 1,730 1,606 8%

Other segment expense 10 19 (47)%

Other segment loss 1 4 (75)%

Segment contribution $ 1,729 $ 1,602 8%

Segment contribution was $1.5 million, a decrease of $0.2 million due to the decrease in our share of equity in income of Cash Converters.

* Represents a percentage computation that is not mathematically meaningful.

Segment contribution was $1.7 million, an increase of $0.1 million due to interest income on our notes receivable to Founders, partially offset by the decrease in our share of equity in income of Cash Converters.

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

Three Months Ended June 30,

Three Months Ended December 31,

Percentage Change

4 unchanged sentences

Depreciation and amortization 3,602 3,018 19%

Gain on sale or disposal of assets and other (2) — *

Interest expense 3,440 6,190 (44)%

Interest income (1,646) (495) *

Other expense (income) 50 (66) (176)%

Other income (224) (308) (27)%

Income before income taxes 37,705 24,538 54%

4 unchanged sentences

Pawn and Latin America Pawn segments above.

General and administrative expense decreased $0.8 million or 4%, primarily due to the litigation accrual charge of $2.0 million recorded in prior period, offset by an increase in costs primarily related to our Workday implementation.

Interest income increased $2.3 million, due primarily to our treasury management with increased market interest rates, and, to a lesser extent, loans to certain strategic investees.

General and administrative expense increased $1.1 million or 7%, primarily due to annual salary increases and an increase in costs related to the implementation of Workday.

Interest expense decreased $2.8 million, primarily due to the loss on extinguishment of debt in the prior year quarter.

In December 2022, the Company repurchased approximately $109.4 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 for approximately $62.9 million plus accrued interest and recorded a $3.5 million loss on extinguishment of debt.

Interest income increased $1.2 million, due primarily to our treasury management with increased market interest rates.

Income tax expense increased $1.5 million primarily due to an increase in income before income taxes of $13.2 million this quarter compared to the prior year quarter as a result of improved operating results within the U.S.

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

Nine Months Ended June 30, 2023 vs.

Nine Months Ended June 30, 2022

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

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

Pawn segment:

Nine Months Ended June 30,

(in thousands) 2023 2022

Gross profit:

Pawn service charges $ 208,045 $ 174,651 19%

Merchandise sales 329,231 296,147 11%

Merchandise sales gross profit 125,533 123,817 1%

Gross margin on merchandise sales 38 % 42 % (400)bps

Jewelry scrapping sales 30,088 13,864 117%

Jewelry scrapping sales gross profit 4,221 2,585 63%

Gross margin on jewelry scrapping sales 14 % 19 % (500)bps

Other revenues 84 67 25%

Gross profit 337,883 301,120 12%

Segment operating expenses:

Store expenses 220,639 195,217 13%

Depreciation and amortization 7,820 7,867 (1)%

Loss on sale or disposal of assets and other 84 — *

Segment operating contribution 109,340 98,036 12%

Other segment income (2) (1) 100%

Segment contribution $ 109,342 $ 98,037 12%

Average monthly ending pawn loan balance per store (a) $ 317 $ 290 9%

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

* Represents a percentage computation that is not mathematically meaningful.

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

Pawn service charges increased 19% as a result of higher average PLO for the year.

Merchandise sales increased 11% compared to the prior year.

Merchandise sales increase was driven primarily by our continued focus on customer engagement and pricing merchandise to maintain strong inventory turnover.

Offsetting the sales increase, merchandise sales gross margin decreased 400 bps, within our target range.

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

Segment contribution increased $11.3 million, primarily due to the changes described above.

Latin America Pawn

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

dollars from functional currencies.

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

Nine Months Ended June 30,

(in thousands) 2023 (GAAP)

Change (GAAP) 2023 (Constant Currency)

Change (Constant Currency)

Gross profit:

Pawn service charges $ 71,397 $ 58,348 22% $ 67,137 15%

Merchandise sales 135,043 103,463 31% 125,905 22%

Merchandise sales gross profit 41,456 30,269 37% 38,640 28%

Gross margin on merchandise sales 31 % 29 % 200bps 31 % 200bps

Jewelry scrapping sales 4,552 5,938 (23)% 4,296 (28)%

Jewelry scrapping sales gross profit (394) 470 (184)% (363) (177)%

Gross margin on jewelry scrapping sales (9) % 8 % (1,700)bps (8) % (1,600)bps

Other revenues, net 75 247 (70)% 71 (71)%

Gross profit 112,534 89,334 26% 105,485 18%

Segment operating expenses:

Store expenses 86,365 66,727 29% 80,593 21%

Depreciation and amortization 6,850 5,858 17% 6,369 9%

Other (5,097) — * (4,481) *

Segment operating contribution 24,416 16,749 46% 23,004 37%

Other segment income (a) (823) (593) 39% (1,099) 85%

Segment contribution $ 25,239 $ 17,342 46% $ 24,103 39%

Average monthly ending pawn loan balance per store (a) $ 72 $ 63 14% $ 67 6%

Monthly average yield on pawn loans outstanding 17 % 16 % 100bps 17 % 100bps

* Represents a percentage computation that is not mathematically meaningful.

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

(Constant Currency)

Same Store data:

Merchandise Sales 25% 17%

Merchandise Sales Gross Profit 52% 42%

Store Expenses 25% 16%

During the nine months ended June 30, 2023, our Latin America pawn segment opened twenty-five de novo stores.

PSC increased 22% to $71.4 million (15% to $67.1 million on a constant currency basis) as a result of higher average PLO for the year.

Merchandise sales increased 31% (22% on a constant currency basis) and 25% on a same store basis (17% on a constant currency basis).

Merchandise sales increase was driven primarily by our continued focus on customer engagement, pricing merchandise to maintain strong inventory turnover and increase in stores.

Merchandise sales gross margin increased 200 bps from 29% to 31% and on a constant currency basis, within our target range.

Store expenses increased by 29% (21% on a constant currency basis) primarily due to higher store count and increased labor in-line with store activity.

On a same-store basis, store expenses increased 25% (16% on a constant currency basis) due to rising labor costs resulting from growing transaction volume.

Segment contribution increased $7.9 million, or 46%, to $25.2 million.

This increase was primarily due to the reversal of contingent consideration liability in connection with a previously completed acquisition, which was recorded to “Other,” and the changes in revenue and store expenses described above.

Other Investments

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

dollars from its functional currency of primarily Australian dollars:

Nine Months Ended June 30,

(in thousands) 2023 2022

Gross profit:

Consumer loan fees, interest and other 47 93 (49)%

Gross profit 47 93 (49)%

Segment operating expenses:

Equity in net loss (income) of unconsolidated affiliates 29,394 (1,457) *

Segment operating (loss) contribution (29,347) 1,550 *

Other segment loss 20 15 33%

Segment (loss) contribution $ (29,367) $ 1,535 *

* Represents a percentage computation that is not mathematically meaningful.

Segment loss was $29.4 million, a decrease of $30.9 million from the prior-year nine months ended June 30, 2022, primarily due to the net loss on our share of Cash Converters related to their non-cash goodwill impairment charge.

Nine Months Ended June 30,

Percentage Change

(in thousands) 2023 2022

Segment contribution $ 105,214 $ 116,914 (10)%

Corporate expenses (income):

General and administrative 48,964 46,487 5%

Depreciation and amortization 9,307 9,045 3%

Gain on sale or disposal of assets — (688) (100)%

Interest expense 12,994 7,651 70%

Interest income (4,421) (122) *

Other income (138) (11) *

Income from continuing operations before income taxes 38,508 54,552 (29)%

Income tax expense 10,298 11,729 (12)%

Net income $ 28,210 $ 42,823 (34)%

* Represents a percentage computation that is not mathematically meaningful.

Segment contribution decreased $11.7 million or 10% over the prior year nine months ended June 30, 2022, primarily due to the net loss on our share of losses in Cash Converters’ net results related to their non-cash goodwill impairment charge, partially offset by the improved operating results of the segments above.

General and administrative expenses increased $2.5 million or 5%, primarily due to the impact related to the reversal of incentive compensation for the departed CEO in the prior period and to a lesser extent, an overall increase in incentive-based compensation and costs primarily related to our Workday implementation, partially offset by the litigation accrual charge of $2.0 million recorded in prior period.

Interest expense increased $5.3 million, primarily driven by the net loss recorded on the partial extinguishments of the 2024 convertible notes and 2025 convertible notes, and higher average total debt outstanding at overall higher average effective interest rates due to the issuance of the 2029 convertible notes during December 2022.

Debt to the consolidated financials for further discussion.

Income tax expense decreased $1.4 million, primarily due to a decrease in income before income taxes of $16.0 million for the nine months ended June 30, 2023 compared to the same prior year nine month period offset by an increase in tax expense for the non-deductible loss realized on the refinancing of the convertible notes in the current year.

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

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

See Annual Report on Form 10-K for the year ended September 30, 2022 Note 11:

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

Liquidity and Capital Resources

Cash and Cash Equivalents

Our cash and equivalents balance was $238.0 million at June 30, 2023 compared to $206.0 million at September 30, 2022.

At June 30, 2023, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

Our cash and equivalents balance was $218.5 million at December 31, 2023 compared to $220.6 million at September 30, 2023.

At December 31, 2023, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

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

Nine Months Ended

Three Months Ended

(in thousands) 2023 2022

1 unchanged sentence

Net cash used in investing activities (16,864) (44,618) (62)%

Net cash provided by (used in) financing activities 26,972 (792) *

Net cash (used in) provided by financing activities (6,392) 33,993 (119)%

Effect of exchange rate changes on cash, cash equivalents and restricted cash (207) 605 (134)%

Net increase (decrease) in cash, cash equivalents and restricted cash $ 32,154 $ (32,668) (198)%

* Represents a percentage computation that is not mathematically meaningful.

The increase in cash flows provided by operating activities year-over-year was primarily due to an increase in net income (when considering adjustments for non-cash items affecting net income) as well as changes in working capital primarily related to the timing of payments of accounts payable and prepaid expenses.

The $11.0 million decrease in cash flows used in investing activities year-over-year was primarily due to a $60.5 million increase in cash inflows from the sale of forfeited collateral, offset by $20.2 million increase in cash flows used to fund acquisitions and strategic investments and an increase of $19.7 million in net pawn lending outflows.

Of the $20.2 million increase year-over-year used in funding acquisitions and other investments, the largest amount is $15.0 million related to a note receivable from Founders, as discussed in Note 5:

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

The $27.8 million increase in cash flows provided by financing activities was primarily related to the December 2022 financing of the 2029 Convertible Notes, in which we issued $230.0 million (less issuance costs) principal amount of 3.750% Convertible Senior Notes Due 2029 offset by the extinguishment of approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest.

Net (decrease) increase in cash, cash equivalents and restricted cash $ (1,982) $ 1,648 *

The increase in cash flows provided by operating activities quarter-over-quarter was primarily due to an increase in net income as well as changes in working capital primarily related to the timing of payments of prepaid expenses and accounts payable.

The $27.8 million decrease in cash flows used in investing activities year-over-year was primarily due to a $29.8 million decrease in cash flows used to fund acquisitions and strategic investments, offset by a $10.2 million increase in cash inflows from the sale of forfeited collateral and an increase of $14.0 million in net pawn lending outflows.

The $40.4 million decrease in cash flows provided by financing activities was primarily related to the December 2022 financing of the 2029 Convertible Notes, in which we issued $230.0 million (less issuance costs) principal amount of 3.750% Convertible Senior Notes Due 2029 offset by the extinguishment of approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest.

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

Further, the Company repurchased and retired 1,037,703 shares of our Class A Common Stock for $9.0 million under the Common Stock Repurchase Program for the nine month period ended June 30, 2023.

The net effect of these changes was a $32.2 million increase in cash on hand during the current year to date period, resulting in a $246.5 million ending cash and restricted cash balance.

The net effect of these changes was a $2.0 million decrease in cash on hand during the current year to date period, resulting in a $227.0 million ending cash and restricted cash balance.

Sources and Uses of Cash

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See Note 7 of Notes to Interim Condensed Consolidated Financial Statements included in “Part I, Item 1 — Financial Statements.” The shares repurchased in conjunction with the transactions discussed above were authorized separately from, and not considered part of, the publicly announced share repurchase program referred to below.

See Note 7 of Notes to Condensed Consolidated Financial Statements included in “Part I, Item 1 — Financial Statements.” The shares repurchased in conjunction with the transactions discussed above were authorized separately from, and not considered part of, the publicly announced share repurchase program referred to below.

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

As of June 30, 2023, we have repurchased 1,275,646 shares of our Class A Common Stock under the program for $11.0 million.

As of December 31, 2023, we have repurchased 1,981,927 shares of our Class A Common Stock under the program for $17.0 million.

Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.

3 unchanged sentences

The Board of Directors has reserved the right to modify, suspend or terminate the program at any time.

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

We anticipate that cash flows from operations and cash on hand will be adequate to fund ongoing operations, debt service requirements, tax payments, any future stock repurchases, strategic investments, our contractual obligations, planned de novo store growth, capital expenditures and working capital requirements through the next twelve months.

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

We anticipate that cash flows from operations and cash on hand will be adequate to fund ongoing operations, current debt service requirements, tax payments, any future stock repurchases, strategic investments, our contractual obligations, planned de novo store growth, capital expenditures and working capital requirements through the next twelve months.

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

2 unchanged sentences

In “Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended September 30, 2023, we reported that we had $736.6 million in total contractual obligations as of September 30, 2023.

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

Debt and Note 4:

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

There have been no material changes to this total obligation since September 30, 2023.

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

1 unchanged sentence

Recently Adopted Accounting Policies and 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.

See Note 1 of the Notes to Condensed Consolidated Financial Statements included in “Part I, Item 1 — Financial Statements” of this Quarterly Report for recently issued accounting pronouncements including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

Cautionary Statement Regarding Risks and Uncertainties that May Affect Future Results

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis