What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-11-13 compared with 2023-11-15 · 45 added, 42 removed, 293 unchanged (23% of the section changed)

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and one of the largest in Latin America.

We also offer web-based applications named EZ+ that allow customers to manage their pawn transactions, layaways and loyalty rewards online.

We also offer web-based applications under the name EZ+ that allow customers to manage their pawn transactions, layaways and loyalty rewards online.

In addition to our core pawn business in the U.S.

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CCV) headquartered in Perth, Western Australia.

Cash Converters and its controlled companies comprise a diverse group generating revenues from franchising, store operations, personal finance (including pawn transactions) and vehicle finance in over 600 stores across 14 countries.

• We own a preferred interest in Founders One, LLC (“Founders”) that has majority ownership in Simple Management Group, Inc.

(“SMG”), which owns and operates 95 pawn stores in the U.S., Caribbean and Central America, with plans to build and acquire more stores in that region.

(“SMG”), which owns and operates 102 pawn stores in the U.S., Caribbean and Central America, with plans to build and acquire more stores in those regions.

We generate revenues primarily from pawn service charges (“PSC”) on pawn loans outstanding (“PLO”), merchandise sales and jewelry scrapping.

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Pawn, which includes our EZPAWN, Value Pawn & Jewelry and other branded pawn operations in the United States;

• Latin America Pawn, which includes our Empeño Fácil, Cash Apoyo Efectivo (“CAE”) and other branded pawn operations in Mexico, as well as our GuatePrenda and MaxiEfectivo pawn operations in Guatemala, El Salvador and Honduras (referred to as “GPMX”);

• Cash Converters, which includes our equity interest in the net loss (income) of Cash Converters;

• Other Investments, which includes our investments in Rich Data Corporation (“RDC”) and our investment in and notes receivable from Founders.

• Latin America Pawn, which includes our Empeño Fácil, Cash Apoyo Efectivo and other branded pawn operations in Mexico, as well as our GuatePrenda and MaxiEfectivo pawn operations in Guatemala, El Salvador and Honduras (referred to as “GPMX”);

• Other Investments, which primarily includes our equity interest in Cash Converters and our investment in and notes receivable from Founders.

The following table presents store data by segment:

Company-owned Stores

Pawn Latin America Pawn Other Investments Consolidated

Pawn Latin America Pawn Consolidated

As of September 30, 2021

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Locations acquired 3 — 3

Locations sold, combined or closed — (11) — (11)

Locations combined or closed (4) — (4)

As of September 30, 2022

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Locations acquired 12 — 12

Locations sold, combined or closed (4) — — (4)

Locations combined or closed (1) (2) (3)

As of September 30, 2023

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Locations acquired 13 — 13

Locations sold, combined or closed (1) (2) — (3)

Locations combined or closed (1) (5) (6)

As of September 30, 2024

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For additional information about our segments and geographic areas, see Note 12:

Segment Information of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data.”

Segment Information of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplementary Data.”

Pawn Activities

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and the majority of our Latin America stores may purchase a product protection plan that allows them to exchange certain general merchandise (non-jewelry) sold through our retail pawn operations within six months of purchase.

In the U.S., we also offer a jewelry VIP package, which guarantees customers a minimum future pawn advance amount on the item sold, allows them full credit if they trade in the item to purchase a more expensive piece of jewelry and provides m inor repair service on the item sold.

Customers may also purchase an item on layaway by paying a minimum layaway deposit of typically 10% of the item’s sale price, in addition to an upfront fee.

We hold items on layaway for a 90-to-180-day period, during which the customer is required to pay the balance of the sales price through a series of installment payments.

We typically hold items on layaway for a 90-180 day period, during which the customer is required to pay the balance of the sales price through a series of installment payments.

If a payment is missed, we hold the item for up to 30 days, after which it is returned to active inventory for sale.

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We performed a Global Employee Engagement Survey, administered by Glint, in April 2024, and had a 87% participation rate with an overall engagement score of 84.

Our engagement score is nine points higher than the global benchmark, which contains data from over 900 companies of varying size across a variety of industries (Finance, Healthcare, Manufacturing, Professional Services, Retail, Technology and Utilities) and includes results from over eight million respondents located in over 150 countries.

Our engagement score is ten points higher than the global benchmark, which contains data from over 1,100 companies of varying size across a variety of industries (Finance, Healthcare, Manufacturing, Professional Services, Retail, Technology and Utilities) and includes results from over eight million respondents located in over 150 countries.

Our top strengths were Career, Customer Focus and Continuous Improvement.

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Talent Management and Development

We employ more than 7,500 Team Members across all our geographies, including over 3,400 in United States, approximately 3,300 in Mexico and 800 in Central America.

We employ approximately 8,000 Team Members across all our geographies, including approximately 3,600 in United States, 3,500 in Mexico and 900 in Central America.

We seek to hire and promote Team Members to lead the way today and to step into greater roles in the future.

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• Over 85% of managerial positions were filled via internal promotion.

In our Corporate Support Center, we reinforced the utilization of our career and competency framework to build individual development plans to guide the career paths of corporate Team Members and to prepare them for future roles.

We reinforced the utilization of our career path (Operations) and career and competency framework (Corporate Support Center) to build individual development plans to guide the career paths of Team Members and to prepare them for future roles.

Culture and Ethics

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• Diverse Workforce — Recruit and promote from diverse, qualified candidate pools to increase diversity of perspectives and experiences.

Sponsor affinity groups to foster an inclusive and supportive environment, where Team Members with shared characteristics, experiences or interests can connect, collaborate and contribute effectively.

The Women’s Empowerment, Black Empowerment and Hispanic Organization for Leadership Advocacy (HOLA) affinity groups in the U.S.

We sponsor affinity groups to foster an inclusive and supportive environment, where Team Members with shared characteristics, experiences or interests can connect, collaborate and contribute effectively.

The Women’s Empowerment, Black Empowerment, Hispanic Organization for Leadership Advocacy (HOLA) and EZ Pride affinity groups in the U.S.

and the Women’s Empowerment and Working Parents affinity groups in Latin America all aim to enhance diversity, equity and inclusion efforts by providing a platform for open dialogue, resource-sharing, professional development and cultural enrichment.

• Sustainability — Identify and eliminate systemic barriers by embedding diversity and inclusion in all human capital life cycle policies and practices.

Fiscal 2024 U.S.

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Additionally, on an annual basis (U.S.) gender and racial/ethnic analysis is performed to ensure pay equity.

• We engage a nationally recognized outside compensation and benefits consulting firm to independently evaluate the effectiveness of our executive compensation and to provide benchmarking against our selected peer group, which includes direct competitors in the pawn industry and similarly-sized companies from relevant industries that serve similar customer bases, operate in the retail or consumer finance industries and typically have similar operating dynamics.

• We engage a nationally recognized outside compensation and benefits consulting firm to independently evaluate the effectiveness of our executive compensation and to provide benchmarking against our selected peer group, which includes similarly-sized companies from relevant industries that serve similar customer bases, operate in the retail or consumer finance industries and typically have similar operating dynamics.

• We align our executives’ long-term equity compensation with our shareholders’ interests by linking realizable pay with stock performance.

• All employees are eligible for paid time off, retirement savings plan and Company-paid life insurance.

• All employees are eligible for paid time off, Company-paid life insurance and participation in a tenure award program which recognizes their commitment and loyalty by awarding EZ+ Rewards points based on their years of service.

Health and Safety

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Our business promotes social responsibility in the following ways:

• Our business serves as an essential and responsible financial resource for many unbanked and or underserved consumers who have limited access to traditional forms of capital or credit and comprise a large majority of our customer base.

• Our business serves as an essential and responsible financial resource for unbanked and or underserved consumers who have limited access to traditional forms of capital or credit.

We improve the reach and access to financial services through neighborhood-based stores, supported by digital offerings.

We provide instant access to cash in transactions that generally average around $180 or less.

We provide instant access to cash in transactions that generally average $185 in the U.S.

Our pawn transactions are simple, transparent, regulated and safe, and funding approval is based on the valuation of the collateral item, not on the credit worthiness of the customer.

The customer is under no legal obligation to repay the amount advanced;

we do not engage in collection efforts or take other legal actions against our customers;

and we do not report transaction histories to external credit agencies.

Rather, the customer may choose to repay the amount advanced or forfeit the collateralized merchandise.

The customer is not required to repay the amount advanced;

rather, the customer may choose to repay the amount advanced and the PSC or forfeit the collateralized merchandise.

We do not engage in collection efforts or take other legal actions against our customers, and we do not report transaction histories to external credit agencies.

• Customer satisfaction measurement and feedback are key factors in improving our customer service and Team Member engagement.

To capture direct customer feedback, we have enabled Google Reviews across all stores and have received over 349,000 Google reviews with an average satisfaction rating of 4.8 out of 5 across U.S and Latin America.

• We offer customers multiple payment options, including cross-store, over-the-phone and web-based and mobile platforms, reducing their need to travel to the stores to make payments.

Online payments are accepted on layaway, pawn extension and bulk payments, with electronic payment receipts delivered on these transactions.

• We offer customers multiple payment options, including cross-store, over-the-phone and web-based and mobile platforms, reducing the need to travel to stores to make payments.

Online payments are accepted on layaways and pawn extensions, with electronic payment receipts delivered on these transactions.

• We have refreshed the mission of EZCORP Foundation, our philanthropic arm that is focused on making a difference in communities where we live and operate by supporting charitable organizations that align with our operating values of People, Pawn and Passion.

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Four of the seven members of our Board of Directors meet all of the “independence” requirements set forth in the Nasdaq Listing Rules, and none of the independent directors have any past or existing relationship with our controlling stockholder outside of their Board service.

• All of our standing Board committees (Audit Committee, People and Compensation Committee and Nominating Committee) are comprised of solely independent directors.

• All of our standing Board committees (Audit and Risk Committee, People and Compensation Committee and Nominating Committee) are comprised of solely independent directors.

• We satisfy Nasdaq’s board diversity rules, with two of our seven Board members being diverse directors, one of whom self-identifies as female and an underrepresented minority and one whom self-identifies as an underrepresented minority.

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Our ability to add new stores is dependent on several variables, such as projected achievement of internal investment hurdles, the availability of acceptable sites or acquisition candidates, the alignment of acquirer/seller price expectations, the regulatory environment, local zoning ordinances, access to capital and availability of qualified personnel.

During fiscal 2023, we continued our expansion in Latin America with the opening of 44 de novo stores (23 in Mexico, 19 in Guatemala and 2 in Honduras).

We now own a total of 702 stores in Latin America, representing 57% of our total pawn stores.

In fiscal 2023, these stores represented 25% of our consolidated gross profit as the average scale of Latin America pawn stores is smaller than in the U.S.

We see opportunity for further expansion in Latin America through both acquisitions and de novo openings.

For further information about our acquisitions, see Note 3:

Acquisitions of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data.”

During fiscal 2024, we continued our expansion in Latin America and the U.S.

with the opening of 41 de novo stores (20 in Mexico, 17 in Guatemala, 3 in Honduras and 1 in Nevada) and the acquisition of 13 stores in the U.S.

We also consolidated 6 stores, 5 in Latin America and 1 in the U.S.

We now own a total of 1,279 stores, 737 in Latin America (58%) and 542 in the U.S.

In fiscal 2024, the Latin America stores represented 27% of our consolidated gross profit as the average scale of Latin America pawn stores is smaller than in the U.S.

We see opportunity for further expansion in Latin America and the U.S.

through both acquisitions and de novo openings.

Seasonality and Quarterly Results

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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 PLO balances and fueling some merchandise sales in those periods.

In Mexico, we saw similar downward pressure in loan balances during the third quarter 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 profit before tax is generally highest in our first fiscal quarter (October through December) and lowest in our third fiscal quarter (April through June).

In Mexico, we saw similar downward pressure in loan balances during the third quarter of fiscal 2023 due to a change in law related to company profit sharing payments to employees.

We anticipated this change would impact pawn loan redemptions annually in May and June;

however, in fiscal 2024, the demand for pawn loans in Mexico exceeded any downward pressure related to profit sharing payments.

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).

We encounter significant competition in connection with all of our activities.

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Our competitors for merchandise sales include numerous retail and wholesale stores such as jewelry stores, discount retail stores, consumer electronics stores, other pawn stores, other resale stores, electronic commerce retailers and auction sites.

Competitive factors in our retail operations include the ability to provide customers with a variety of merchandise at an exceptional value coupled with exceptional customer service and convenient locations.

Competitive factors in our retail operations include the ability to provide customers with a variety of merchandise at considerable value coupled with exceptional customer service and convenient locations.

The pawn industry in the U.S.

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We launched our EZ+ Rewards loyalty program in the U.S.

and Mexico in 2021 and in GPMX in 2022, and now have 3.8 million members globally.

and Mexico in 2021 and in GPMX in 2022, and now hav e 5.4 million members globally.

This free program allows customers to earn points on most transactions that may be applied as a discount towards retail sales once a certain threshold is met.

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Other Regulations — Our pawn lending activities are subject to other state and federal statutes and regulations, including the following:

• We are subject to the Truth in Lending Act (“TILA”), and its underlying regulations, which requires lenders to disclose information about the terms and costs of credit in a standardized manner, including in the form of an annual percentage rate.

The TILA regulations also require us to provide certain disclosure in advertising our products and services.

• We are subject to the federal Gramm-Leach-Bliley Act and its underlying regulations, as well as various state laws and regulations relating to privacy and data security.

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These regulations also require us to ensure that our systems are designed to protect the confidentiality of customers’ nonpublic personal information, and many of these regulations dictate certain actions that we must take to notify customers if their personal information is disclosed in an unauthorized manner.

In some jurisdictions, we are subject to the laws restricting the scope of data we collect and granting rights to our customers to access, correct, and/or delete the information we obtain.

• We are subject to the Fair Credit Reporting Act, which was enacted, in part, to address privacy concerns associated with the sharing of consumers’ financial information and credit history contained in consumer credit reports and limits our ability to share certain consumer report information.

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The law also restricts the use of cash in certain transactions associated with high-value assets and limits and, to the extent possible, money laundering activities protected by the anonymity that such cash tra nsactions provide.

Relevant aspects of the law specifically affecting the pawn industry include monthly reporting on “vulnerable activities,” which include pawn transactions exceeding 166,502.70 Mexican pesos and retail transactions of precious metals exceeding 166,502.70 Mexican pesos.

Relevant aspects of the law specifically affecting the pawn industry include monthly reporting on “vulnerable activities,” which include pawn transactions exceedin g 174,254.85 Mexican pesos and retail transactions of precious metals exceeding 174.254.85 Mexican pesos.

Retail transactions of precious metals in cash exceeding 348,509.70 Mexican pesos are prohibited.

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Our filings with the SEC, including our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and Section 16 filings, are available free of charge through links maintained on our website under the heading “Investor Relations — SEC Filings.” Information contained on our website is not incorporated by reference into this report.

UNRESOLVED STAFF COMMENTS

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-K

Item 1. Business