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Item 1. Financial Statements

2024-05-01 compared with 2024-01-31 · 188 added, 111 removed, 564 unchanged (35% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

September 30,

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issued and outstanding:

52,272,594 as of December 31, 2023;

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

52,057,309 as of March 31, 2024;

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

and 51,869,569 as of September 30, 2023

10 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per share amount) 2024 2023 2024 2023

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Depreciation and amortization 8,219 7,963 16,784 15,951

Gain on sale or disposal of assets and other ( 172 ) ( 16 )

Loss (gain) on sale or disposal of assets and other 3 73 ( 169 ) 57

Other income ( 765 ) ( 2,465 ) ( 765 ) ( 2,465 )

Total operating expenses 140,305 122,449 275,796 246,700

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Interest income ( 2,882 ) ( 1,898 ) ( 5,521 ) ( 2,562 )

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

Other income ( 271 ) ( 234 )

Income before income taxes 37,705 24,538

Income tax expense 9,235 7,760

Net income $ 28,470 $ 16,778

Basic earnings per share $ 0.52 $ 0.30

Diluted earnings per share $ 0.36 $ 0.25

Equity in net (income) loss of unconsolidated affiliates ( 1,719 ) 32,501 ( 2,872 ) 30,917

Other (income) expense ( 165 ) 80 ( 436 ) ( 154 )

Income (loss) before income taxes 28,651 ( 7,340 ) 66,356 17,198

Income tax expense (benefit) 7,172 ( 550 ) 16,407 7,210

Net income (loss) $ 21,479 $ ( 6,790 ) $ 49,949 $ 9,988

Basic earnings (loss) per share $ 0.39 $ ( 0.12 ) $ 0.91 $ 0.18

Diluted earnings (loss) per share $ 0.29 $ ( 0.12 ) $ 0.65 $ 0.11

Weighted-average basic shares outstanding 55,093 55,648 55,084 55,981

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Three Months Ended

Six Months Ended

(in thousands) 2024 2023 2024 2023

Net income $ 28,470 $ 16,778

Net income (loss) $ 21,479 $ ( 6,790 ) $ 49,949 $ 9,988

Other comprehensive income:

Foreign currency translation adjustment, net of income tax benefit for our investment in unconsolidated affiliate of $ 57 and $ 396 for the three months ended December 31, 2023, and 2022, respectively

Foreign currency translation adjustment, net of income tax expense for our investment in unconsolidated affiliate of $ 98 and $ 1,133 for the three months ended March 31, 2024, and 2023, respectively and $ 41 and $ 737 for the six months ended March 31, 2024, and 2023, respectively

4,457 16,148 9,090 18,652

Comprehensive income $ 25,936 $ 9,358 $ 59,039 $ 28,640

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Balances as of December 31, 2023 55,243 $ 553 $ 343,870 $ 457,929 $ ( 27,469 ) $ 774,883

Stock compensation — — 2,580 — — 2,580

Release of restricted stock, net of shares withheld for taxes 89 1 ( 1 ) — — —

Foreign currency translation gain — — — — 4,457 4,457

Purchase and retirement of treasury stock ( 305 ) ( 3 ) ( 1,275 ) ( 1,725 ) — ( 3,003 )

Net income — — — 21,479 — 21,479

Balances as of March 31, 2024 55,027 $ 551 $ 345,174 $ 477,683 $ ( 23,012 ) $ 800,396

Common Stock Additional

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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

See accompanying notes to unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

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Stock compensation expense 4,844 3,741

Equity in net income from investment in unconsolidated affiliates ( 1,153 ) ( 1,584 )

Equity in net (income) loss from investment in unconsolidated affiliates ( 2,872 ) 30,917

Net loss on extinguishment of debt — 3,545

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Effect of exchange rate changes on cash and cash equivalents and restricted cash ( 43 ) 1,056

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

Net increase in cash, cash equivalents and restricted cash 8,724 37,210

Cash and cash equivalents and restricted cash at beginning of period 228,968 214,369

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In the opinion of management, the accompanying Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation.

Financial results for the three-month period ended December 31, 2023, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2024 or any other period due, in part, to seasonal variations.

Financial results for the three and six month periods ended March 31, 2024, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2024 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 2023 Annual Report .

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Customer layaway deposits are generally refundable upon cancellation.

Our customer layaway deposits balance as of December 31, 2023, 2022 and September 30, 2023 was $ 18.3 million, $ 16.3 million and $ 18.9 million, respectively, and are generally recognized as revenue within a one-year period.

Our customer layaway deposits balance as of March 31, 2024, 2023 and September 30, 2023 was $ 20.4 million, $ 18.8 million and $ 18.9 million, respectively, and are generally recognized as revenue within a one-year period.

We account for our investment in Rich Data Corporation (“RDC”) in accordance with Accounting Standards Codification (“ASC”) 321, Investments — Equity Securities, and we have elected to use the measurement alternative to measure this investment at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any.

As of December 31, 2023 and September 30, 2023, the carrying value of our investment in RDC was $ 6.2 million.

As of March 31, 2024, 2023 and September 30, 2023, the carrying value of our investment in RDC was $ 6.2 million.

Refer to Note 5:

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We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements (“ASU 2024-02”).

ASU 2024-02 contains amendments to the Codification that remove references to various FASB Concepts Statements.

The requirements of this ASU 2024-02 are effective for the Company for fiscal years beginning after December 15, 2024 and can be applied on a prospective or retrospective basis.

This standard is not expected to have a significant impact on our consolidated financial statements and related disclosures.

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

Three Months Ended December 31, 2023

Six Months Ended March 31, 2024

(in thousands) U.S.

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Acquisitions (a)

6,330 — 6,330

Effect of foreign currency translation changes — 1,956 1,956

Balances as of December 31, 2023 $ 256,358 $ 47,441 $ 303,799

(a) Amount represents goodwill recognized in connection with an immaterial acquisition within the U.S.

Pawn segment and we have therefore omitted certain disclosures.

Three Months Ended December 31, 2022

Balances as of March 31, 2024 $ 262,272 $ 48,386 $ 310,658

Six Months Ended March 31, 2023

(in thousands) U.S.

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$ 245,503 $ 41,325 $ 286,828

Acquisitions (b)

Acquisitions (a)

9,468 — 9,468

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

Balances as of December 31, 2022

Balances as of March 31, 2023

$ 254,971 $ 45,107 $ 300,078

(b) Amount represents goodwill recognized in connection with acquisitions within the U.S.

(a) Amount represents goodwill recognized in connection with acquisitions within the U.S.

Pawn segment that were immaterial, individually and in the aggregate, and we have therefore omitted certain disclosures.

EARNINGS PER SHARE

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

EARNINGS (LOSS) PER SHARE

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

Three Months Ended

Six Months Ended

(in thousands, except per share amounts) 2024 2023 2024 2023

Basic earnings per common share:

Net income - basic $ 28,470 $ 16,778

Basic earnings (loss) per common share:

Net income (loss) - basic $ 21,479 $ ( 6,790 ) $ 49,949 $ 9,988

Weighted shares outstanding - basic 55,093 55,648 55,084 55,981

Basic earnings per common share $ 0.52 $ 0.30

Diluted earnings per common share:

Net income - basic $ 28,470 $ 16,778

Convertible Notes interest expense, net of tax* 2,659 4,540

Net income - diluted $ 31,129 $ 21,318

Basic earnings (loss) per common share $ 0.39 $ ( 0.12 ) $ 0.91 $ 0.18

Diluted earnings (loss) per common share:

Net income (loss) - basic $ 21,479 $ ( 6,790 ) $ 49,949 $ 9,988

Convertible Notes interest expense (income), net of tax* 2,415 — 5,074 ( 2,733 )

Net income (loss) - diluted $ 23,894 $ ( 6,790 ) $ 55,023 $ 7,255

Weighted shares outstanding - basic 55,093 55,648 55,084 55,981

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Weighted shares outstanding - diluted 83,045 55,648 84,948 65,269

Diluted earnings per common share $ 0.36 $ 0.25

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

Diluted earnings (loss) per common share $ 0.29 $ ( 0.12 ) $ 0.65 $ 0.11

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

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

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

Restricted stock**** 1,676 1,504 1,673 1,528

* The three months ended December 31,2022 includes $ 3.5 million loss on extinguishment of debt recorded to “Interest expense” in the Company’s condensed consolidated statement of operations.

Total 1,676 32,935 1,673 21,669

* Effective January 1, 2024, we are required to combination settle the 2024 Convertible Notes.

As such, no interest expense is included for the three months ended March 31, 2024 and only the first quarter of 2024 interest expense is included for the six months ended March 31, 2024.

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

Debt for additional information.

** Includes time-based share-based awards and performance based awards for which targets for fiscal year tranches have been achieved and vesting is subject only to achievement of service conditions.

*** See Note 7:

Debt for conversion price and initial conversion rate of the 2024 Convertible Notes, 2025 Convertible Notes, and 2029 Convertible Notes.

*** As we are required to combination settle the 2024 Convertible Notes effective January 1, 2024, the 3.4 million principal shares are not included for the three months ended March 31, 2024 and only the weighted average shares of 1.7 million are included for the six months ended March 31, 2024.

Additionally, no potential common shares related to the accreted value of the 2024 Convertible Notes are included for the three or six months ended March 31, 2024 as the average market rate was not above the initial conversion price of $ 10.00 per share for the noted reporting periods.

Debt for conversion price, initial conversion rate and additional information on 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.

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The table below presents balances of our lease assets and liabilities and their balance sheet locations for both operating and financing leases:

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

(in thousands) Balance Sheet Location March 31, 2024 March 31, 2023 September 30, 2023

Lease assets:

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Three Months Ended

Six Months Ended

(in thousands) 2024 2023 2024 2023

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Total lease cost $ 24,710 $ 22,130 $ 48,207 $ 43,507

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

* Includes a reduction for sublease rental income of $ 0.6 million and $ 1.1 million for the three months ended March 31, 2024 and 2023, respectively, and $ 1.7 million and $ 1.8 million for the six months ended March 31, 2024 and 2023, 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 $ 20.3 million and $ 21.4 million for the three months ended December 31, 2023 and 2022, respectively.

Cash paid for principal and interest on finance leases was $ 0.1 million and $ 0.1 million, respectively, for the three months ended December 31, 2023 .

There was no cash paid for principal and interest on finance leases during the three months ended December 31, 2022.

The components of lease expense are included in “Store expenses” and “General and administrative” under operating expenses, based on the underlying lease use.

Cash paid for operating leases was $ 24.3 million and $ 18.9 million for the three months ended March 31, 2024 and 2023, respectively, and $ 44.6 million and $ 37.4 million for the six months ended March 31, 2024 and 2023, respectively.

Cash paid for principal and interest on finance leases was $ 0.1 million and $ 0.1 million, respectively, for the three months ended March 31, 2024 and $ 0.3 million and $ 0.1 million for the six months ended March 31, 2024 respectively .

There was no cash paid for principal or interest on finance leases during the three and six months ended March 31, 2023.

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

Three Months Ended

Six Months Ended

Weighted-average remaining lease term (years):

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Financing leases 11.14 % 11.14 %

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

As of March 31, 2024, maturities of lease liabilities under ASC 842 by fiscal year were as follows:

(in thousands) Operating Leases Financing Leases

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Total long term net lease liabilities $ 197,285 $ 1,626

We recorded $ 9.3 million and $ 20.5 million in non-cash additions to our operating right-of-use assets and lease liabilities for the three months ended December 31, 2023 and 2022, respectively.

We recorded $ 0.1 million and $ 0.4 million in non-cash finance lease additions for the three months ended December 31, 2023 and 2022, respectively.

We recorded $ 35.0 million and $ 34.5 million in non-cash additions to our operating right-of-use assets and lease liabilities for the six months ended March 31, 2024 and 2023, respectively.

We recorded $ 0.2 million and $ 1.2 million in non-cash finance lease additions for the six months ended March 31, 2024 and 2023, respectively.

STRATEGIC INVESTMENTS

Cash Converters International Limited

As of December 31, 2023, we owned 273,939,157 shares, or approximately 43.7 %, of Cash Converters.

As of March 31, 2024, we owned 273,939,157 shares, or approximately 43.7 %, of Cash Converters.

We acquired our original investment (representing approximately 30 % of the outstanding shares) in November 2009 and have increased our ownership through the acquisition of additional shares periodically since that time.

We received cash dividends from Cash Converters of $ 1.7 million and $ 1.8 million, during the three months ended December 31, 2023 and 2022, respectively.

The following tables present summary financial information for Cash Converters most recently reported results at June 30, 2023 after translation to U.S.

We received cash dividends from Cash Converters of $ 1.7 million and $ 1.8 million during the six months ended March 31, 2024 and 2023, respectively.

The following tables present summary financial information for Cash Converters’ most recently reported results at December 31, 2023 after translation to U.S.

(in thousands) 2023 2022

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Total liabilities and shareholders’ equity $ 323,843 $ 287,480

Full-Year Ended June 30,

Half-Year Ended December 31,

(in thousands) 2023 2022

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Gross profit $ 73,675 $ 63,800

Net (loss) profit $ ( 65,351 ) $ 8,099

During the three months ended December 31, 2023 and 2022, we recorded our share of income of $ 1.2 million and $ 1.6 million, respectively, from Cash Converters, included in “Equity in net income of unconsolidated affiliates” in the condensed consolidated statements of operations.

Net profit (loss) $ 6,499 $ ( 73,197 )

During the three and six m onths ended March 31, 2024, we recorded our share of income of $ 1.7 million and $ 2.9 million, respectively, from Cash Converters.

During the three and six months ended March 31, 2023 we recorded a loss of $ 32.5 million and $ 30.9 million, respectively, from Cash Converters, which included $ 32.4 million as our share of their non-cash goodwill impairment charge during the quarter ended March 31, 2023 that was recorded to “Equity in net (income) loss of unconsolidated affiliates” in the condensed consolidated statements of operations.

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

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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.

In October 2023, we contributed an additional $ 15.0 million to Founders associated with our preferred interest, bringing our total equity investment in Founders to $ 45.0 million.

In October 2023, we contributed an additional $ 15.0 million to Founders associated with our preferred interest, bringing our total preferred equity investment in Founders to $ 45.0 million.

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 ASC 321, Investments — Equity Securities.

As of December 31, 2023, our $ 45.0 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 condensed consolidated balance sheets, respectively.

As of December 31, 2023, our maximum exposure for losses related to our investment in Founders was our $ 45.0 million equity investment and $ 15.0 million Demand Promissory Note plus accrued and unpaid interest.

Consequently, our preferred equity investment in Founders is accounted for utilizing the measurement alternative within ASC 321, Investments — Equity Securities.

As of March 31, 2024, our $ 45.0 million carrying value of the preferred equity investment and $ 15.0 million Demand Promissory Note are included in “Other investments” and “Prepaid expenses and other current assets” in our condensed consolidated balance sheets, respectively.

As of March 31, 2024, our maximum exposure for losses related to our investment in Founders was our $ 45.0 million preferred equity investment and $ 15.0 million Demand Promissory Note plus accrued and unpaid interest.

Fair Value Measurements for the fair value and carrying value of our loan to Founders .

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Carrying Value Estimated Fair Value

December 31, 2023 December 31, 2023 Fair Value Measurement Using

March 31, 2024 March 31, 2024 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

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Carrying Value Estimated Fair Value

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

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

(in thousands) Level 1 Level 2 Level 3

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

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

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

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

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

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.

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brokerage account.

All principal and accrued interest is due and payable in April 2024.

Based primarily on the short-term nature of the note, we estimate that its carrying value approximates fair value as of December 31, 2023.

As of December 31, 2023, our $ 1.3 million carrying value of the promissory note is recorded within “Prepaid expenses and other current assets” in our condensed consolidated balance sheets.

Based primarily on the short-term nature of the note, we estimate that its carrying value approximates fair value as of March 31, 2024.

As of March 31, 2024, our $ 1.3 million carrying value of the promissory note is recorded within “Prepaid expenses and other current assets” in our condensed consolidated balance sheets.

All principal and accrued interest was received in April 2024.

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.

As of December 31, 2023, the interest rate on the note was 15.00 % per annum, and all principal and accrued interest is due on demand.

Based primarily on the short-term nature of the note, we estimate that its carrying value approximates fair value as of December 31, 2023.

As of March 31, 2024, the interest rate on the note was 15.00 % per annum, and all principal and accrued interest is due on demand.

Based primarily on the short-term nature of the note, we estimate that its carrying value approximates fair value as of March 31, 2024.

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

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

December 31, 2023 December 31, 2022 September 30, 2023

March 31, 2024 March 31, 2023 September 30, 2023

(in thousands) Gross Amount Debt Issuance Costs Carrying Amount Gross Amount Debt Issuance Costs Carrying Amount Gross Amount Debt Issuance Costs Carrying Amount

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Total long-term debt $ 333,373 $ ( 6,800 ) $ 326,573 $ 367,762 $ ( 8,475 ) $ 359,287 $ 333,373 $ ( 7,526 ) $ 325,847

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

The following table presents the Company’s contractual maturities related to the debt instruments as of March 31, 2024:

Schedule of Contractual Maturities

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Total long-term debt $ 230,000 $ 103,373 $ 34,389 $ 367,762

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

The following table presents the Company’s interest expense related to the Convertible Notes for the three and six months ended March 31, 2024 and 2023:

Three Months Ended

Six Months Ended

(in thousands) 2024 2023 2024 2023

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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 December 31, 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.

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At maturity, the holders of the 2029 Convertible Notes will be entitled to receive cash equal to the principal of the 2029 Convertible Notes plus accrued interest.

The effective interest rate for the three months ended December 31, 2023 was approximately 4.28 %.

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

The effective interest rate for the three and six months ended March 31, 2024 was approximately 4.28 %.

As of March 31, 2024, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2029 Maturity Date assuming no early conversion.

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

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On or after June 15, 2029 until the close of business on the business day immediately preceding the 2029 Maturity Date, holders of 2029 Convertible Notes may, at their option, convert their 2029 Convertible Notes at any time, regardless of the foregoing circumstances.

We may not redeem the Notes prior to December 21, 2026.

We may not redeem the 2029 Convertible Notes prior to December 21, 2026.

At our option, we may redeem for cash all or any portion of the 2029 Convertible Notes on or after December 21, 2026, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

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

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

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2024.

As of March 31, 2024, the if-converted value of the 2029 Convertible Notes did not exceed the principal amount.

Note Repurchases

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2.375 % 2025 Convertible Senior Notes Due 2025

In May 2018, we issued $ 172.5 million aggregate principal amount of 2.375 % Convertible Senior Notes Due 2025 (the “2025 Convertible Notes”), for which $ 103.4 million remains outstanding as of December 31, 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.

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The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375 % per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the “2025 Maturity Date”), unless converted, redeemed or repurchased in accordance with the terms prior to such date.

The effective interest rate for the three months ended December 31, 2023 was approximately 2.88 % for the 2025 Convertible Notes.

As of December 31, 2023, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2025 Maturity Date assuming no early conversion.

The effective interest rate for the three and six months ended March 31, 2024 was approximately 2.88 % for the 2025 Convertible Notes.

As of March 31, 2024, 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).

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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.

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.

At our option, we may redeem for cash all or any portion of the 2025 Convertible Notes if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

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

As of December 31, 2023, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2024.

As of March 31, 2024, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

2.875 % Convertible Senior Notes Due 2024

In July 2017, we issued $ 143.75 million aggregate principal amount of 2.875 % Convertible Senior Notes Due 2024 (the “2024 Convertible Notes”), for which $ 34.4 million remains outstanding as of December 31, 2023.

In July 2017, we issued $ 143.75 million aggregate principal amount of 2.875 % Convertible Senior Notes Due 2024 (the “2024 Convertible Notes”), of which $ 34.4 million remains outstanding as of March 31, 2024.

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.

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At maturity, the holders of the 2024 Convertible Notes will be entitled to receive cash equal to the principal of the 2024 Convertible Notes plus accrued interest.

The effective interest rate for the three months ended December 31, 2023 was approximately 3.35 %.

As of December 31, 2023, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2024 Maturity Date assuming no early conversion.

The effective interest rate for the three and six months ended March 31, 2024 was approximately 3.35 %.

As of March 31, 2024, 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).

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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 would have been 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 was 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 had called 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.

From 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 December 31, 2023.

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

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.

Because we did not elect an alternative settlement method prior to January 1, 2024, conversions will be settled by combination settlement, which is $1,000 cash (per the $1,000 principal value) plus stock equal to the accreted value as defined in the 2017 Indenture.

As of March 31, 2024, based on the terms of the 2017 Indenture, the if-converted value of the 2024 Convertible Notes exceeded the principal amount by $ 2.2 million, or approximately 205,000 Class A common shares.

As of March 31, 2024, no holders of the 2024 Convertible Notes have delivered a conversion notice.

COMMON STOCK AND STOCK COMPENSATION

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

As of December 31, 2023, we had repurchased and retired 1,981,927 shares of our Class A Common Stock for $ 17.0 million under the Common Stock Repurchase Program, of which 354,882 shares were repurchased and retired for $ 3.0 million during the quarter ended December 31, 2023.

During the quarter ended December 31, 2022, 243,062 shares were repurchased and retired for $ 2.0 million under the Common Stock Repurchase Program.

As of March 31, 2024, we had repurchased and retired 2,287,402 shares of our Class A Common Stock for $ 20.0 million under the Common Stock Repurchase Program, of which 305,475 and 660,357 shares were repurchased and retired for $ 3.0 million and $ 6.0 million during the three and six months ended March 31, 2024, respectively.

During the three and six months ended March 31, 2023, 448,331 and 691,393 shares were repurchased and retired for $ 3.9 million and $ 6.0 million, respectively, under the Common Stock Repurchase Program.

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

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The following table presents a summary of stock compensation activity:

Shares Weighted

Shares Weighted Average

Grant Date Fair Value

Outstanding as of September 30, 2023

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Cancelled ( 32,566 ) 6.96

Outstanding as of December 31, 2023

Outstanding as of March 31, 2024

2,729,002 $ 7.89

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The following income (loss) before income taxes tables present revenue for each reportable segment, disaggregated revenue within our reportable segments and Corporate, segment profits and segment contribution.

Three Months Ended December 31, 2023

Three Months Ended March 31, 2024

(in thousands) U.S.

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Depreciation and amortization 2,516 2,392 — 4,908 3,311 8,219

Loss (gain) on sale or disposal of assets and other 26 ( 196 ) — ( 170 ) ( 2 ) ( 172 )

(Gain) loss on sale or disposal of assets and other ( 30 ) ( 66 ) — ( 96 ) 99 3

Other income — — — — ( 765 ) ( 765 )

Interest expense — — — — 3,402 3,402

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Equity in net income of unconsolidated affiliates — — ( 1,719 ) ( 1,719 ) — ( 1,719 )

Other expense (income) — 1 14 15 ( 180 ) ( 165 )

Segment contribution $ 40,656 $ 8,118 $ 2,369 $ 51,143

Income (loss) before income taxes $ 51,143 $ ( 22,492 ) $ 28,651

Three Months Ended March 31, 2023

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 108,740 $ 43,767 $ — $ 152,507 $ — $ 152,507

Jewelry scrapping sales 9,814 3,011 — 12,825 — 12,825

Pawn service charges 69,945 23,085 — 93,030 — 93,030

Other revenues 32 19 10 61 — 61

Total revenues 188,531 69,882 10 258,423 — 258,423

Merchandise cost of goods sold 67,643 29,696 — 97,339 — 97,339

Jewelry scrapping cost of goods sold 8,550 3,352 — 11,902 — 11,902

Gross profit 112,338 36,834 10 149,182 — 149,182

Segment and corporate expenses (income):

Store expenses 71,946 29,323 — 101,269 — 101,269

General and administrative — — — — 15,609 15,609

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

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

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

Interest expense — — — — 3,390 3,390

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

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

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

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

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

Six Months Ended March 31, 2024

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 240,362 $ 103,728 $ — $ 344,090 $ — $ 344,090

Jewelry scrapping sales 25,501 2,295 — 27,796 — 27,796

Pawn service charges 159,083 54,529 — 213,612 — 213,612

Other revenues 66 31 35 132 — 132

Total revenues 425,012 160,583 35 585,630 — 585,630

Merchandise cost of goods sold 151,507 69,962 — 221,469 — 221,469

Jewelry scrapping cost of goods sold 22,078 1,918 — 23,996 — 23,996

Gross profit 251,427 88,703 35 340,165 — 340,165

Segment and corporate expenses (income):

Store expenses 158,095 67,042 — 225,137 — 225,137

General and administrative — — — — 34,809 34,809

Depreciation and amortization 5,140 4,731 — 9,871 6,913 16,784

(Gain) loss on sale or disposal of assets and other ( 4 ) ( 262 ) — ( 266 ) 97 ( 169 )

Other income — — — — ( 765 ) ( 765 )

Interest expense — — — — 6,842 6,842

Interest income — ( 1,028 ) ( 1,206 ) ( 2,234 ) ( 3,287 ) ( 5,521 )

Equity in net loss of unconsolidated affiliates — — ( 2,872 ) ( 2,872 ) — ( 2,872 )

Other (income) expense — ( 47 ) 15 ( 32 ) ( 404 ) ( 436 )

Segment contribution $ 88,196 $ 18,267 $ 4,098 $ 110,561

Income (loss) before income taxes $ 110,561 $ ( 44,205 ) $ 66,356

Three Months Ended December 31, 2022

Six Months Ended March 31, 2023

(in thousands) U.S.

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

Loss (gain) on sale or disposal of assets and other 3 ( 19 ) — ( 16 ) — ( 16 )

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

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

Interest expense — — — — 9,580 9,580

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

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

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

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

Segment contribution $ 39,291 $ 7,529 $ 1,602 $ 48,422

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

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

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Corporate Items Total

As of December 31, 2023

As of March 31, 2024

Pawn loans $ 173,744 $ 62,029 $ — $ — $ 235,773

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Total assets 1,003,447 330,256 81,238 93,201 1,508,142

As of December 31, 2022

As of March 31, 2023

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

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The following table provides supplemental information on net amounts included in our condensed consolidated balance sheets:

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

(in thousands) March 31, 2024 March 31, 2023 September 30, 2023

Gross pawn service charges receivable $ 48,812 $ 42,335 $ 50,881

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The following table provides supplemental disclosure of condensed consolidated statements of cash flows information:

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

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

What changed 10-Q

Item 1. Financial Statements