Delaware

~~75-2237318~~

87-3920732

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~1600 West 7th Street, Fort Worth, Texas~~

~~76102~~

~~(Address of principal executive offices)~~

~~(Zip Code)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x☒Yes o☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x☒Yes o☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



x ~~Large accelerated filer~~	o ~~Accelerated filer~~
o ~~Non-accelerated filer (Do not check if a smaller reporting company)~~	o ~~Smaller reporting company~~
	o ~~Emerging growth company~~



~~Table of Contents~~ ☒	Large accelerated filer	☐	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes x☒ No

As of October ~~25, 2017,~~26, 2022, there were ~~47,186,687~~46,318,065 shares of common stock outstanding.

~~FORM 10-Q FOR THE QUARTER ENDED~~ ~~SEPTEMBER 30, 2017~~

CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information

This quarterly report contains forward-looking statements about the business, financial condition and prospects of FirstCash Holdings, Inc. and its wholly owned subsidiaries (together, the “Company”). Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans. Forward-looking statements can also be identified by the fact these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

~~These forward-looking statements are made to provide the public with management’s current assessment of the Company’s business. Although~~While the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this quarterly report. Such factors may include, without limitation, risks related to the American First Finance (“AFF”) transaction, including the failure of the transaction to deliver the estimated value and benefits expected by the Company, the incurrence of unexpected future costs, liabilities or obligations as a result of the transaction, the effect of the transaction on the ability of the Company to retain and hire personnel and maintain relationships with retail partners, consumers and others with whom the Company and AFF do business; the ability of the Company to successfully integrate AFF’s operations; the ability of the Company to successfully implement its plans, forecasts and other expectations with respect to AFF’s business; risks ~~uncertainties~~associated with the legal and regulatory ~~developments~~proceedings that the Company is a party to, or may become a party to in the future, including the Consumer Financial Protection Bureau (the “CFPB”) lawsuit filed against the Company, the putative shareholder securities class action lawsuit filed against the Company, and the California private lawsuits filed against the Company; risks related to the regulatory environment in which the Company operates; general economic risks, including the contributory effects of the COVID-19 pandemic; potential changes in consumer behavior and shopping patterns which could impact demand for the Company’s pawn loan, retail, lease-to-own and retail finance products; labor shortages and increased labor costs; inflation; rising interest rates; a deterioration in the economic conditions in the United States and Latin America which potentially could have an impact on discretionary consumer spending; currency fluctuations, primarily involving the Mexican peso; and other risks discussed and described in ~~(i)~~ the Company’s ~~2016 annual report~~most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) ~~on March 1, 2017,~~, including the risks described in Part 1, Item 1A, “Risk Factors” thereof, ~~(ii) in this quarterly report,~~ and ~~(iii) the~~ other reports filed with the SEC. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this quarterly report speak only as of the date of this quarterly report, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.



Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


FIRSTCASH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	September 30,				December 31,
	2022		2021		2021
ASSETS
Cash and cash equivalents	$	100,620	$	49,907	$	120,046
Accounts receivable, net	58,435		43,492		55,356
Pawn loans	404,227		348,993		347,973
Finance receivables, net	111,945		—		181,021
Inventories	295,428		254,260		263,311
Leased merchandise, net	132,097		—		143,944
Prepaid expenses and other current assets	38,322		14,793		17,707
Total current assets	1,141,074		711,445		1,129,358

Property and equipment, net	535,584		411,042		462,526
Operating lease right of use asset	299,052		300,040		306,061
Goodwill	1,523,699		1,014,052		1,536,178
Intangible assets, net	345,512		83,019		388,184
Other assets	9,133		8,413		8,531
Deferred tax assets, net	6,906		5,472		5,614
Total assets	$	3,860,960	$	2,533,483	$	3,836,452

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable and accrued liabilities	$	175,964	$	88,151	$	244,327
Customer deposits and prepayments	63,066		46,702		57,310
Lease liability, current	91,115		89,502		90,570
Total current liabilities	330,145		224,355		392,207

Revolving unsecured credit facilities	338,000		246,000		259,000

Senior unsecured notes	1,035,226		493,499		1,033,904
Deferred tax liabilities, net	155,263		78,191		126,098
Lease liability, non-current	197,171		197,618		203,166
Other liabilities	—		—		13,950
Total liabilities	2,055,805		1,239,663		2,028,325

Stockholders’ equity:

Common stock	573		493		573
Additional paid-in capital	1,732,500		1,222,432		1,724,956
Retained earnings	995,669		849,438		866,679
Accumulated other comprehensive loss	(127,366)		(125,761)		(131,299)
Common stock held in treasury, at cost	(796,221)		(652,782)		(652,782)
Total stockholders’ equity	1,805,155		1,293,820		1,808,127
Total liabilities and stockholders’ equity	$	3,860,960	$	2,533,483	$	3,836,452

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

September 30, December 31,
2017 2016 2016
ASSETS
Cash and cash equivalents $ 93,411
$ 83,356
$ 89,955
Fees and service charges receivable 45,134
45,708
41,013
Pawn loans 371,367
373,169
350,506
Consumer loans, net 24,515
27,792
29,204
Inventories 308,683
332,862
330,683
Income taxes receivable 27,867
36,449
25,510
Prepaid expenses and other current assets 23,818
31,935
25,264
Investment in common stock of Enova —
54,786
—
Total current assets 894,795
986,057
892,135

Property and equipment, net 234,309
240,749
236,057
Goodwill 834,883
865,350
831,151
Intangible assets, net 95,991
106,502
104,474
Other assets 59,054
69,125
71,679
Deferred tax assets 12,694
9,912
9,707
Total assets $ 2,131,726
$ 2,277,695
$ 2,145,203

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities $ 94,769
$ 129,997
$ 109,354
Customer deposits 37,626
37,591
33,536
Income taxes payable 3,763
910
738
Total current liabilities 136,158
168,498
143,628

Revolving unsecured credit facilities 140,000
360,000
260,000
Senior unsecured notes 294,961
196,373
196,545
Deferred tax liabilities 73,203
42,125
61,275
Other liabilities 19,725
77,645
33,769
Total liabilities 664,047
844,641
695,217

Stockholders’ equity:
Preferred stock —
—
—
Common stock 493
493
493
Additional paid-in capital 1,219,589
1,217,820
1,217,969
Retained earnings 436,159
359,926
387,401
Accumulated other comprehensive loss (88,445 ) (109,114 ) (119,806 )
Common stock held in treasury, at cost (100,117 ) (36,071 ) (36,071 )
Total stockholders’ equity 1,467,679
1,433,054
1,449,986
Total liabilities and stockholders’ equity $ 2,131,726
$ 2,277,695
$ 2,145,203

The accompanying notes are an integral part
of these condensed consolidated financial statements.



Table of Contents


FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue:
Retail merchandise sales	$	300,899	$	268,726	$	901,975	$	806,335
Pawn loan fees	145,727		121,365		411,613		346,796
Leased merchandise income	158,089		—		455,736		—
Interest and fees on finance receivables	48,846		—		135,039		—
Wholesale scrap jewelry sales	18,582		9,583		75,235		44,060
Total revenue	672,143		399,674		1,979,598		1,197,191

Cost of revenue:
Cost of retail merchandise sold	182,199		158,057		543,722		468,634
Depreciation of leased merchandise	86,519		—		262,830		—
Provision for lease losses	31,916		—		109,771		—
Provision for loan losses	31,956		—		83,453		—
Cost of wholesale scrap jewelry sold	16,261		8,528		64,371		37,657
Total cost of revenue	348,851		166,585		1,064,147		506,291

Net revenue	323,292		233,089		915,451		690,900

Expenses and other income:
Operating expenses	185,547		138,619		539,398		415,071
Administrative expenses	36,951		30,208		110,882		88,605
Depreciation and amortization	25,971		11,217		77,495		32,731
Interest expense	18,282		7,961		50,749		22,389
Interest income	(206)		(143)		(1,104)		(420)
Loss (gain) on foreign exchange	255		558		(198)		248
Merger and acquisition expenses	733		12		1,712		1,264
Gain on revaluation of contingent acquisition consideration	(19,800)		—		(82,789)		—
Other expenses (income), net	164		361		(2,721)		1,640


Total expenses and other income	247,897		188,793		693,424		561,528

Income before income taxes	75,395		44,296		222,027		129,372

Provision for income taxes	16,079		10,900		48,598		33,834

Net income	$	59,316	$	33,396	$	173,429	$	95,538

Earnings per share:
Basic	$	1.26	$	0.83	$	3.65	$	2.34
Diluted	$	1.26	$	0.82	$	3.64	$	2.34

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(unaudited, in thousands, except per share amounts)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenue:
Retail merchandise sales $ 246,334
$ 152,215
$ 750,150
$ 386,534
Pawn loan fees 132,545
79,505
383,428
182,816
Wholesale scrap jewelry sales 37,528
18,956
107,285
35,906
Consumer loan and credit services fees 19,005
10,477
58,754
21,079
Total revenue 435,412
261,153
1,299,617
626,335

Cost of revenue:
Cost of retail merchandise sold 161,350
93,399
483,458
239,166
Cost of wholesale scrap jewelry sold 36,831
16,977
102,370
30,701
Consumer loan and credit services loss provision 6,185
3,413
15,419
5,780
Total cost of revenue 204,366
113,789
601,247
275,647

Net revenue 231,046
147,364
698,370
350,688

Expenses and other income:
Store operating expenses 138,966
80,574
412,780
190,563
Administrative expenses 29,999
24,500
93,542
58,277
Depreciation and amortization 13,872
7,281
42,804
17,165
Interest expense 6,129
5,073
17,827
13,859
Interest income (418 ) (138 ) (1,138 ) (636 )
Merger and other acquisition expenses 911
29,398
3,164
33,877
Loss on extinguishment of debt 20
—
14,114
—
Net loss on sale of common stock of Enova —
253
—
253
Total expenses and other income 189,479
146,941
583,093
313,358

Income before income taxes 41,567
423
115,277
37,330

Provision for income taxes 13,293
1,835
39,119
13,895

Net income (loss) $ 28,274
$ (1,412 ) $ 76,158
$ 23,435

Net income (loss) per share:
Basic $ 0.59
$ (0.04 ) $ 1.58
$ 0.77
Diluted $ 0.59
$ (0.04 ) $ 1.58
$ 0.77

Dividends declared per common share $ 0.190
$ 0.125
$ 0.570
$ 0.375

The accompanying notes are an integral part
of these condensed consolidated financial statements.



Table of Contents


FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income	$	59,316	$	33,396	$	173,429	$	95,538
Other comprehensive income:
Currency translation adjustment	(7,372)		(9,971)		3,933		(7,329)
Comprehensive income	$	51,944	$	23,425	$	177,362	$	88,209

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income (loss) $ 28,274
$ (1,412 ) $ 76,158
$ 23,435
Other comprehensive income (loss):
Currency translation adjustment (4,981 ) (12,248 ) 31,361
(28,951 )
Change in fair value of investment in common stock of Enova ⁽¹⁾
—
(1,753 ) —
(1,753 )
Comprehensive income (loss) $ 23,293
$ (15,413 ) $ 107,519
$ (7,269 )

(1) Net of tax benefit of $1,031 for the three and nine months ended September 30, 2016.

The accompanying notes are an integral part
of these condensed consolidated financial statements.

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands)

Preferred
Stock

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accum-
ulated
Other
Compre-
hensive
Loss

Common Stock
Held in Treasury

Total
Stock-
holders’
Equity
Shares Amount Shares Amount Shares Amount
Balance at 12/31/2016 —
$ —
49,276
$ 493
$ 1,217,969
$ 387,401
$ (119,806 ) 769
$ (36,071 ) $ 1,449,986
Shares issued under share-based com-pensation plan —
—
—
—
(440 ) —
—
(10 ) 440
—
Exercise of stock options —
—
—
—
(242 ) —
—
(13 ) 549
307
Share-based compensa-tion expense —
—
—
—
2,302
—
—
—
—
2,302
Net income —
—
—
—
—
76,158
—
—
—
76,158
Dividends paid —
—
—
—
—
(27,400 ) —
—
—
(27,400 )
Currency translation adjustment —
—
—
—
—
—
31,361
—
—
31,361
Repurchases of treasury stock —
—
—
—
—
—
—
1,182
(65,035 ) (65,035 )
Balance at 9/30/2017 —
$ —
49,276
$ 493
$ 1,219,589
$ 436,159
$ (88,445 ) 1,928
$ (100,117 ) $ 1,467,679

The accompanying notes are an integral part
of these condensed consolidated financial statements.



Table of Contents


FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except per share amounts)

Nine Months Ended September 30, 2022
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock- holders’ Equity
		Shares	Amount								Shares	Amount
As of 12/31/2021		57,322	$	573	$	1,724,956	$	866,679	$	(131,299)	8,843	$	(652,782)	$	1,808,127
Shares issued under share-based compensation plan		—	—		(1,281)		—		—		(17)	1,281		—


Share-based compensation expense		—	—		3,075		—		—		—	—		3,075
Net income		—	—		—		28,005		—		—	—		28,005
Cash dividends ($0.30 per share)		—	—		—		(14,546)		—		—	—		(14,546)
Currency translation adjustment		—	—		—		—		11,789		—	—		11,789
Purchases of treasury stock		—	—		—		—		—		1,048	(72,217)		(72,217)

As of 3/31/2022		57,322	$	573	$	1,726,750	$	880,138	$	(119,510)	9,874	$	(723,718)	$	1,764,233




Share-based compensation expense		—	—		2,875		—		—		—	—		2,875
Net income		—	—		—		86,108		—		—	—		86,108
Cash dividends ($0.30 per share)		—	—		—		(14,235)		—		—	—		(14,235)
Currency translation adjustment		—	—		—		—		(484)		—	—		(484)
Purchases of treasury stock		—	—		—		—		—		301	(20,499)		(20,499)

As of 6/30/2022		57,322	$	573	$	1,729,625	$	952,011	$	(119,994)	10,175	$	(744,217)	$	1,817,998










Share-based compensation expense		—	—		2,875		—		—		—	—		2,875
Net income		—	—		—		59,316		—		—	—		59,316
Cash dividends ($0.33 per share)		—	—		—		(15,658)		—		—	—		(15,658)
Currency translation adjustment		—	—		—		—		(7,372)		—	—		(7,372)
Purchases of treasury stock		—	—		—		—		—		686	(52,004)		(52,004)

As of 9/30/2022		57,322	$	573	$	1,732,500	$	995,669	$	(127,366)	10,861	$	(796,221)	$	1,805,155

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(unaudited, in thousands)

Preferred
Stock

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accum-
ulated
Other
Compre-
hensive
Loss

Common Stock
Held in Treasury

Total
Stock-
holders’
Equity
Shares Amount Shares Amount Shares Amount
Balance at 12/31/2015 —
$ —
40,288
$ 403
$ 202,393
$ 643,604
$ (78,410 ) 12,052
$ (336,608 ) $ 431,382
Shares issued under share-based com-pensation plan —
—
7
—
(3,903 ) —
—
(83 ) 3,903
—
Shares issued upon merger with Cash America —
—
20,181
202
1,015,305
—
—
—
—
1,015,507
Share-based compensa-tion expense —
—
—
—
4,025
—
—
—
—
4,025
Net income —
—
—
—
—
23,435
—
—
—
23,435
Dividends paid —
—
—
—
—
(10,591 ) —
—
—
(10,591 )
Change in fair value of investment in common stock of Enova, net of tax —
—
—
—
—
—
(1,753 ) —
—
(1,753 )
Currency translation adjustment —
—
—
—
—
—
(28,951 ) —
—
(28,951 )
Retirement of treasury stock —
—
(11,200 ) (112 ) —
(296,522 ) —
(11,200 ) 296,634
—
Balance at 9/30/2016 —
$ —
49,276
$ 493
$ 1,217,820
$ 359,926
$ (109,114 ) 769
$ (36,071 ) $ 1,433,054

The accompanying notes are an integral part
of these condensed consolidated financial statements.



Table of Contents


FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(unaudited, in thousands, except per share amounts)

Nine Months Ended September 30, 2021
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock- holders’ Equity
		Shares	Amount								Shares	Amount
As of 12/31/2020		49,276	$	493	$	1,221,788	$	789,303	$	(118,432)	8,238	$	(609,337)	$	1,283,815
Shares issued under share-based compensation plan, net of 28 shares net-settled		—	—		(7,090)		—		—		(73)	5,427		(1,663)


Share-based compensation expense		—	—		3,625		—		—		—	—		3,625
Net income		—	—		—		33,715		—		—	—		33,715
Cash dividends ($0.27 per share)		—	—		—		(11,097)		—		—	—		(11,097)
Currency translation adjustment		—	—		—		—		(12,335)		—	—		(12,335)
Purchases of treasury stock		—	—		—		—		—		84	(4,967)		(4,967)

As of 3/31/2021		49,276	$	493	$	1,218,323	$	811,921	$	(130,767)	8,249	$	(608,877)	$	1,291,093



Share-based compensation expense		—	—		1,625		—		—		—	—		1,625
Net income		—	—		—		28,427		—		—	—		28,427
Cash dividends ($0.30 per share)		—	—		—		(12,308)		—		—	—		(12,308)
Currency translation adjustment		—	—		—		—		14,977		—	—		14,977
Purchases of treasury stock		—	—		—		—		—		452	(32,998)		(32,998)

As of 6/30/2021		49,276	$	493	$	1,219,948	$	828,040	$	(115,790)	8,701	$	(641,875)	$	1,290,816














Exercise of stock options		—	—		(358)		—		—		(10)	738		380

Share-based compensation expense		—	—		2,842		—		—		—	—		2,842
Net income		—	—		—		33,396		—		—	—		33,396
Cash dividends ($0.30 per share)		—	—		—		(11,998)		—		—	—		(11,998)
Currency translation adjustment		—	—		—		—		(9,971)		—	—		(9,971)
Purchases of treasury stock		—	—		—		—		—		152	(11,645)		(11,645)

As of 9/30/2021		49,276	$	493	$	1,222,432	$	849,438	$	(125,761)	8,843	$	(652,782)	$	1,293,820

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended
September 30,
2017 2016
Cash flow from operating activities:
Net income $ 76,158
$ 23,435
Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of credit loss provision 10,012
2,368
Share-based compensation expense 2,302
4,025
Net loss on sale of common stock of Enova —
253
Depreciation and amortization expense 42,804
17,165
Amortization of debt issuance costs 1,322
1,083
Amortization of favorable/(unfavorable) lease intangibles, net (744 ) (58 )
Loss on extinguishment of debt 14,114
—
Deferred income taxes, net 11,137
8,665
Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable (3,017 ) (2,630 )
Inventories 5,206
(4,924 )
Prepaid expenses and other assets 7,819
1,774
Accounts payable, accrued liabilities and other liabilities (21,036 ) 2,990
Income taxes 2,769
(13,672 )
Net cash flow provided by operating activities 148,846
40,474
Cash flow from investing activities:
Loan receivables, net of cash repayments 5,261
(31,486 )
Purchases of property and equipment (26,595 ) (23,426 )
Portion of aggregate merger consideration paid in cash, net of cash acquired —
(8,251 )
Acquisitions of pawn stores, net of cash acquired (1,141 ) (28,756 )
Proceeds from sale of common stock of Enova —
2,962
Net cash flow used in investing activities (22,475 ) (88,957 )
Cash flow from financing activities:
Borrowings from revolving credit facilities 181,000
396,000
Repayments of revolving credit facilities (301,000 ) (94,000 )
Repayments of debt assumed from acquisitions —
(238,532 )
Issuance of senior unsecured notes 300,000
—
Repurchase/redemption of senior unsecured notes (200,000 ) —
Repurchase/redemption premiums paid on senior unsecured notes (10,895 ) —
Debt issuance costs paid (5,342 ) (2,340 )
Purchases of treasury stock (65,035 ) —
Proceeds from exercise of share-based compensation awards 307
—
Dividends paid (27,400 ) (10,591 )
Net cash flow provided by (used in) financing activities (128,365 ) 50,537
Effect of exchange rates on cash 5,450
(5,652 )
Change in cash and cash equivalents 3,456
(3,598 )
Cash and cash equivalents at beginning of the period 89,955
86,954
Cash and cash equivalents at end of the period $ 93,411
$ 83,356

The accompanying notes are an integral part
of these condensed consolidated financial statements.



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FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Nine Months Ended
	September 30,
	2022		2021
Cash flow from operating activities:
Net income	$	173,429	$	95,538
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation of leased merchandise	262,830		—
Provision for lease losses	109,771		—
Provision for loan losses	83,453		—
Share-based compensation expense	8,825		8,092
Depreciation and amortization expense	77,495		32,731
Amortization of debt issuance costs	2,208		1,223
Net amortization of premiums, discounts and unearned origination fees on finance receivables	35,257		—
Gain on revaluation of contingent acquisition consideration	(82,789)		—
Impairments and dispositions of certain other assets	482		1,640

Deferred income taxes, net	46,142		5,622
Changes in operating assets and liabilities, net of business combinations:
Accounts receivable, net	(2,953)		(2,302)
Inventories purchased directly from customers, wholesalers or manufacturers	(11,017)		(25,592)
Leased merchandise, net	(360,755)		—
Prepaid expenses and other assets	(2,144)		229
Accounts payable, accrued liabilities and other liabilities	7,256		16,538
Income taxes	(21,692)		4,131
Net cash flow provided by operating activities	325,798		137,850
Cash flow from investing activities:
Pawn loans, net (1)	(74,707)		(70,637)
Finance receivables, net	(49,634)		—
Purchases of furniture, fixtures, equipment and improvements	(29,630)		(31,608)
Purchases of store real property	(77,689)		(38,256)

Acquisitions of pawn stores, net of cash acquired	(7,072)		(49,434)

Net cash flow used in investing activities	(238,732)		(189,935)
Cash flow from financing activities:
Borrowings from unsecured credit facilities	196,000		338,000
Repayments of unsecured credit facilities	(117,000)		(215,000)





Debt issuance costs paid	(1,745)		—
Purchases of treasury stock	(140,391)		(49,610)
Proceeds from exercise of stock options	—		380

Payment of withholding taxes on net share settlements of restricted stock unit awards and stock options exercised	—		(1,663)
Dividends paid	(44,439)		(35,403)
Net cash flow (used in) provided by financing activities	(107,575)		36,704


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FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONTINUED
(unaudited, in thousands)
	Nine Months Ended
	September 30,
	2022		2021
Effect of exchange rates on cash	1,083		(562)
Change in cash and cash equivalents	(19,426)		(15,943)
Cash and cash equivalents at beginning of the period	120,046		65,850
Cash and cash equivalents at end of the period	$	100,620	$	49,907

(1)Includes the funding of new pawn loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH HOLDINGS, INC.

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

~~(In thousands except per share amounts, unless otherwise indicated)~~

Note 1 - General

~~Note~~ 1 ~~- Significant Accounting Policies~~

Basis of Presentation

The accompanying ~~condensed~~ consolidated balance sheet at as of December 31, ~~2016~~,2021, which is derived from audited consolidated financial statements, and the unaudited ~~condensed~~ consolidated financial statements, including the notes thereto, include the accounts of FirstCash Holdings, Inc. and its wholly-owned subsidiaries (together, the “Company”). The Company regularly makes acquisitions, and the results of operations for the acquired stores have been consolidated since the acquisition dates. All significant intercompany accounts and transactions have been eliminated.

These unaudited consolidated financial statements ~~are condensed and do not include all disclosures and footnotes required by~~have been prepared in accordance with U.S. generally accepted accounting principles in(“GAAP”) for interim financial information and with the ~~United States of America~~rules and regulations for ~~complete~~reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. These interim period financial statements should be read in conjunction with the Company’s audited consolidated financial statements, which are included in the Company’s ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2021, filed with the ~~Securities and Exchange Commission (the “SEC”)~~SEC on ~~March 1, 2017.~~February 28, 2022. The ~~condensed~~ consolidated financial statements as of September 30, ~~2017~~2022 and ~~2016,~~2021, and for the three month and nine month periods ended September 30, ~~2017~~2022 and ~~2016,~~2021, are unaudited, but in management’s opinion include all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flow for such interim periods. Operating results for the periods ended September 30, ~~2017~~2022 are not necessarily indicative of the results that may be expected for the full ~~fiscal~~ year.

On ~~September 1, 2016,~~December 17, 2021, the Company completed ~~its merger with Cash America International, Inc. (“Cash America”~~the acquisition of AFF (the “AFF Acquisition”), ~~whereby Cash America merged with and into~~which is a ~~wholly owned subsidiary of the Company (the “Merger”~~leading technology-driven retail point-of-sale (“POS”). The accompanying unaudited condensed consolidated results of operations for the three month and nine month periods ended September 30, 2017 include the results of operations for Cash America, while the comparable prior-year periods include the results of operations for Cash America for the period September 2, 2016 to September 30, 2016, affecting comparability of 2017 and 2016 amounts. The Company has performed a valuation analysis of identifiable assets acquired and liabilities assumed and allocated the aggregate Merger consideration based payment solutions platform primarily focused on ~~the fair values of those identifiable assets and liabilities.~~providing lease-to-own (“LTO”) products.

The Company has ~~significant~~ operations in Latin America, where in Mexico, Guatemala and ~~Guatemala~~Colombia, the functional currency is the Mexican peso, ~~and~~ Guatemalan quetzal ~~respectively.~~and Colombian peso. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the ~~three month and nine month periods ended September 30, 2017 and 2016.~~respective period. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar.

Use of Estimates

The preparation of interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and related revenue and expenses, and the disclosure of gain and loss contingencies at the date of the financial statements. Such estimates and assumptions are subject to a number of risks and uncertainties, which may cause actual results to differ materially from the Company’s estimates.

Reclassification

Certain amounts in the consolidated balance sheets as of September 30, 2021 and December 31, 2021 have been reclassified in order to conform to the 2022 presentation.

Recent Accounting Pronouncements

In ~~May 2014,~~March 2020, the Financial Accounting Standards Board issued ASU ~~No. 2014-09, “Revenue from Contracts with Customers~~No 2020-04, “Reference Rate Reform (Topic ~~606)”~~848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU ~~2014-09”~~2020-04”). ASU ~~2014-09 is a comprehensive revenue recognition model that requires a company~~2020-04 provides temporary optional expedients and exceptions to ~~recognize revenue~~the GAAP guidance on contract modifications and hedge accounting to ~~depict~~ease the ~~transfer of goods or services~~financial reporting burdens related to ~~a customer at an amount that reflects~~ the ~~consideration it expects~~expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank-offered rates to ~~receive in exchange for those goods or services.~~alternative reference rates. ASU ~~2014-09 also requires additional disclosure about~~2020-04 was effective beginning on March 12, 2020, and the ~~nature, amount, timing and uncertainty of revenue and cash flows arising from customer~~Company may elect to apply the amendments prospectively through December 31, 2022. As the Company no longer has any LIBOR based contracts including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the Financial Accounting Standards Board issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606),” which delayed the effective date of ASU 2014-09 by one year. In addition, between March 2016 and December 2016, the Financial Accounting Standards Board issued ASU No. 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting revenue gross versus net)” (“ASU 2016-08”)(see Note 8), ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”), ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), and ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”). ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 clarify certain aspects of ASU 2014-09 and provide additional implementation guidance. ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 (collectively, “ASC 606”) become effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017 for public companies. Early adoption is permitted but2020-04 will not ~~before annual reporting periods beginning after December 15, 2016. Entities are permitted to adopt ASC 606 using one of two methods: (a) full retrospective~~



~~Table of Contents~~

adoption, meaning the standard is applied to all periods presented, or (b) modified retrospective adoption, meaning the cumulative effect of applying the new standard is recognized as an adjustment to the opening retained earnings balance.

The Company plans to adopt ASC 606 using the modified retrospective method. The Company does not believe the adoption of ASC 606 will impact the Company’s revenue recognition for pawn loan fees or consumer loan fees, as it believes neither is within the scope of ASC 606. Further, the Company has not identified any impacts to its consolidated financial statements that it believes will be material as a result of the adoption of ASC 606 for other revenue streams (retail merchandise sales, credit services fees and wholesale scrap jewelry sales), although it continues to evaluate the impact of adoption.

In July 2015, the Financial Accounting Standards Board issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires inventory be measured at the lower of cost or net realizable value. ASU 2015-11 defines net realizable value as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory measured using last-in, first-out (“LIFO”) or the retail inventory method are excluded from the scope of this update. ASU 2015-11 requires prospective application and is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2015-11 as of January 1, 2017, and the guidance was applied prospectively. There were no changes to the Company’s financial position, results of operations, financial statement disclosures or valuation of inventory.

In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires a lessee to recognize, in the statement of financial position, a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. Lessor accounting remains largely unchanged. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently assessing the potential impact of ASU 2016-02 on its consolidated financial statements.

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact of ASU 2016-13 on its consolidated financial statements.

In August 2016, the Financial Accounting Standards Board issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-15 is effective for public entities for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect ASU 2016-15 to have a material effect on the Company’s consolidated financial statements or current financial statement disclosures.

In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-01, “Business Combinations (Topic 805) - Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 provides amendments to clarify the definition of a business and affects all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and should be applied prospectively as of the beginning of the period of adoption. Early adoption is permitted under certain circumstances. The Company does not expect ASU 2017-01 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.


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In ~~January 2017,~~March 2022, the Financial Accounting Standards Board issued ASU ~~No. 2017-04, “Intangibles - Goodwill~~No 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and ~~Other (Topic 350) - Simplifying~~Vintage Disclosures” (“ASU 2022-02”). ASU 2022-02 eliminates the ~~Test~~accounting guidance for ~~Goodwill Impairment” (“ASU 2017-04”). These amendments eliminate step 2 from the goodwill impairment test. The amendments also eliminate the~~troubled debt restructurings by creditors while enhancing disclosure requirements for ~~any reporting unit with a zero or negative carrying amount~~certain loan refinancing and restructurings by creditors made to ~~perform a qualitative assessment~~borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs for financing receivables and ~~if it fails that qualitative test, to perform step 2~~net investment in leases by year of origination in the ~~goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance~~vintage disclosures. ASU 2022-02 is effective for ~~annual or any interim goodwill impairment tests in~~ fiscal years beginning after December 15, ~~2019.~~2022, including interim periods within those fiscal years for entities. Early adoption is permitted if an entity has adopted the CECL accounting standard. Except for ~~interim or annual goodwill impairment tests performed on testing dates after January 1,~~



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~~2017 and should be adopted on a prospective basis. The~~expanded disclosures to its vintage disclosures, the Company does not expect ASU ~~2017-04~~2022-02 to have a material effect on the Company’s current financial position, results of operations or financial ~~statement disclosures.~~statements.

Note 2 - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per ~~share:~~share (in thousands, except per share amounts):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Numerator:
Net income	$	59,316	$	33,396	$	173,429	$	95,538



Denominator:
Weighted-average common shares for calculating basic earnings per share	46,902		40,453		47,518		40,745
Effect of dilutive securities:
Stock options and restricted stock unit awards	120		63		84		44
Weighted-average common shares for calculating diluted earnings per share	47,022		40,516		47,602		40,789

Earnings per share:
Basic	$	1.26	$	0.83	$	3.65	$	2.34
Diluted	$	1.26	$	0.82	$	3.64	$	2.34

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Numerator:
Net income (loss) $ 28,274
$ (1,412 ) $ 76,158
$ 23,435

Denominator (in thousands):
Weighted-average common shares for calculating basic earnings per share 47,628
34,631
48,090
30,372
Effect of dilutive securities:
Stock options and nonvested stock awards 40
—
27
—
Weighted-average common shares for calculating diluted earnings per share 47,668
34,631
48,117
30,372

Net income (loss) per share:
Basic $ 0.59
$ (0.04 ) $ 1.58
$ 0.77
Diluted $ 0.59
$ (0.04 ) $ 1.58
$ 0.77


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Note 3 - Acquisitions

~~Note~~ 3 ~~- Long-Term Debt~~American First Finance Acquisition

On December 17, 2021, the Company completed the AFF Acquisition. Subsequent to December 31, 2021, the Company made certain measurement period adjustments to the preliminary purchase price allocation, which resulted in a decrease in goodwill of $16.9 million. The adjusted purchase price allocation is reflected in the accompanying consolidated balance sheet as of September 30, 2022.

The following table details the ~~Company’s long-term debt at the respective principal amounts, net~~preliminary purchase price allocation as of ~~unamortized debt issuance costs:~~

September 30, December 31,
2017 2016 2016
Senior unsecured notes:
5.375% senior notes due 2024 ⁽¹⁾
$ 294,961
$ —
$ —
6.75% senior notes due 2021 ⁽²⁾
—
196,373
196,545
$ 294,961
$ 196,373
$ 196,545

Revolving unsecured credit facility, maturing 2022 $ 140,000
$ 360,000
$ 260,000


⁽¹⁾	As of September 30, 2017, deferred debt issuance costs of $5,039 are included as a direct deduction from the carrying amount of the senior unsecured notes due 2024 in the accompanying condensed consolidated balance sheets.


⁽²⁾	~~As of September 30, 2016 and~~ December 31, ~~2016, deferred debt issuance costs of $3,627 and $3,455, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due~~ 2021, ~~in the accompanying condensed consolidated balance sheets.~~



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~~Senior Unsecured Notes~~

On May 30, 2017, the Company completed an offering of $300,000 of 5.375% senior notes due on June 1, 2024 (the “Notes”). Interest on the Notes will be payable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2017. The Notes were sold to the placement agents as initial purchasers for resale only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States in accordance with Regulation S under the Securities Act. The Company used the proceeds from the offering to repurchase, or otherwise redeem, its outstanding $200,000, 6.75% senior notes due 2021 (the “2021 Notes”), to repay borrowings under the Company’s credit facility and to pay related fees and expenses associated with the Notes offering and the repurchase and redemption of the 2021 Notes. The Company capitalized approximately $5,200 in issuance costs, which consisted primarily of placement agent fees and legal and other professional expenses. The issuance costs are being amortized over the life of the Notes as a component of interest expense and are carried as a direct deduction from the carrying amount of the Notes in the accompanying condensed consolidated balance sheets.

The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its primary revolving bank credit facility. The Notes will permit the Company to make share repurchases of up to $100,000 with the net proceeds of the Notes and other available funds and to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio (“Net Debt Ratio”) is less than 2.25 to 1.00. The Net Debt Ratio is defined generally in the indenture governing the Notes (the “Indenture”) as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement ~~period.~~

The Company may redeem the Notes at any time on or after June 1, 2020, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any. In addition, prior to June 1, 2020, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus a “make-whole” premium set forth in the Indenture. The Company may redeem up to 35% of the Notes prior to June 1, 2020, with the proceeds of certain equity offerings at a redemption price of 105.375% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any. In addition, upon a change of control, noteholders have the right to require the Company to purchase the Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any.

~~For~~period adjustments made during the nine months ended September 30, 2017, the Company recognized a $14,114 loss on extinguishment of debt related to the repurchase or redemption of the 2021 Notes which includes the tender or redemption premiums paid over the outstanding $200,000 principal amount of the 2021 Notes and other reacquisition costs of $10,8952022 and the ~~write off of unamortized debt issuance costs of $3,219.~~

~~Revolving Credit Facilities~~

At September 30, 2017, the Company maintained a line of credit with a group of U.S. based commercial lenders (the “2016 Credit Facility”) in the amount of $400,000. In May 2017, the term of the 2016 Credit Facility was extended through September 2, 2022. The calculation of the fixed charge coverage ratio was also amended to remove share repurchases from the calculation to provide greater flexibility for making future share repurchases and paying cash dividends.

At September 30, 2017, the Company had $140,000 in outstanding borrowings and a $4,456 outstanding letter of credit under the 2016 Credit Facility, leaving $255,544 available for future borrowings. The 2016 Credit Facility bears interest, at the Company’s option, at either (i) the prevailing London Interbank Offered Rate (“LIBOR”) (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (ii) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of 0.50% on the average daily unused portion of the 2016 Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the 2016 Credit Facility at September 30, 2017 was 3.75% based on 1 week LIBOR. Under the terms of the 2016 Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The 2016 Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the requirements and covenants of the 2016 Credit Facilitypreliminary purchase price allocation as of September 30, ~~2017.~~2022, subject to future measurement period adjustments (in thousands):


	December 31,		2022		September 30,
	2021		Adjustments		2022





Accounts receivable	$	11,660	$	—	$	11,660
Finance receivables	225,261		—		225,261

Leased merchandise	139,649		—		139,649
Prepaid expenses and other current assets	4,474		(211)		4,263
Property and equipment	11,670		—		11,670
Operating lease right of use asset	491		—		491
Goodwill	503,106		(16,920)		486,186
Intangible assets	305,100		—		305,100
Accounts payable and accrued liabilities	(28,357)		(1,083)		(29,440)
Customer deposits and prepayments	(11,014)		—		(11,014)
Lease liability, current	(10)		—		(10)
Deferred tax liabilities (1)	(42,608)		18,214		(24,394)
Lease liability, non-current	(481)		—		(481)
Purchase price	$	1,118,941	$	—	$	1,118,941

(1)Measurement period adjustment is primarily a result of the seller finalizing the ending tax basis in the assets and liabilities acquired, which carried over to the Company.

Note 4 - Operating Leases

Lessor

For information about the Company’s revenue-generating activities as a lessor, refer to Note 2 to the consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K. All of the Company’s lease agreements are considered operating leases.

Lessee

The Company leases the majority of its pawnshop locations and certain administrative offices under operating leases and determines if an arrangement is or contains a lease at inception. Many leases include both lease and non-lease components for which the Company accounts separately. Lease components include rent, taxes and insurance costs while non-lease components include common area or other maintenance costs. Operating leases are included in operating lease right of use assets, lease liability, current and lease liability, non-current in the consolidated balance sheets. The Company does not have any finance leases.


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Leased facilities are generally leased for a term of three to five years with one or more options to renew for an additional three to five years, typically at the Company’s sole discretion. In addition, the majority of these leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability. The Company regularly evaluates renewal and termination options to determine if the Company is reasonably certain to exercise the option, and excludes these options from the lease term included in the recognition of the operating lease right of use asset and lease liability until such certainty exists. The weighted-average remaining lease term for operating leases was 4.1 years for both September 30, 2022 and 2021.

The operating lease right of use asset and lease liability is recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company’s leases do not provide an implicit rate and therefore, it uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company utilizes a portfolio approach for determining the incremental borrowing rate to apply to groups of leases with similar characteristics. The weighted-average discount rate used to measure the lease liability as of September 30, 2022 and 2021 was 6.3% and 6.4%, respectively.

The Company has certain operating leases in Mexico which are denominated in U.S. dollars. The liability related to these leases is considered a monetary liability and requires remeasurement each reporting period into the functional currency (Mexican pesos) using reporting date exchange rates. The remeasurement results in the recognition of foreign currency exchange gains or losses each reporting period, which can produce a certain level of earnings volatility. The Company recognized a foreign currency loss of $0.4 million and $0.5 million during the three months ended September 30, 2022 and 2021, respectively, related to the remeasurement of these U.S. dollar denominated operating leases, which is included in loss (gain) on foreign exchange in the accompanying consolidated statements of income. During the nine months ended September 30, ~~2017,~~2022 and 2021, the Company ~~made net~~recognized a foreign currency gain of $0.4 million and a loss of $0.4 million, respectively, related to these U.S. dollar denominated leases.

Lease expense is recognized on a straight-line basis over the lease term, with variable lease expense recognized in the period such payments are incurred. The following table details the components of ~~$120,000 pursuant to~~lease expense included in operating expenses in the ~~2016 Credit Facility.~~consolidated statements of income during the three and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Operating lease expense	$	31,988	$	31,595	$	95,590	$	94,034
Variable lease expense (1)	4,216		4,120		12,619		11,893
Total operating lease expense	$	36,204	$	35,715	$	108,209	$	105,927

(1)Variable lease costs consist primarily of taxes, insurance and common area or other maintenance costs paid based on actual costs incurred by the lessor and can therefore vary over the lease term.

The following table details the maturity of lease liabilities for all operating leases as of September 30, 2022 (in thousands):


Three months ending December 31, 2022	$	28,211
2023	101,538
2024	79,146
2025	52,542
2026	32,895
Thereafter	32,452
Total	$	326,784
Less amount of lease payments representing interest	(38,498)
Total present value of lease payments	$	288,286



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AtThe following table details supplemental cash flow information related to operating leases for the nine months ended September 30, 2017, the Company maintained a U.S. dollar denominated line of credit with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $10,000. The Mexico Credit Facility bears interest at 30-day LIBOR plus a fixed spread of 2.0%2022 and matures in December 2017. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the requirements and covenants of the Mexico Credit Facility as of September 30, 2017. The Company is required to pay a one-time commitment fee of $25 due when the first amount is drawn/borrowed. At September 30, 2017, the Company had no amount outstanding under the Mexico Credit Facility and $10,000 was available for borrowings.2021 (in thousands):


	Nine Months Ended
	September 30,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	87,040	$	85,565
Leased assets obtained in exchange for new operating lease liabilities	$	66,442	$	78,280

Note 45 - Fair Value of Financial Instruments

The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements

AsThe Company’s financial assets and liabilities as of September 30, ~~2017, the Company did not have any financial assets or liabilities~~2022 and December 31, 2021 that are measured at fair value on a recurring ~~basis.~~ basis are as follows (in thousands):


	Estimated Fair Value
	September 30,		Fair Value Measurements Using
	2022		Level 1		Level 2		Level 3
Financial liabilities:
Contingent AFF acquisition consideration (1)	$	26,760	$	—	$	—	$	26,760

(1)The ~~Company’s~~contingent consideration related to the AFF Acquisition is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.


	Estimated Fair Value
	December 31,		Fair Value Measurements Using
	2021		Level 1		Level 2		Level 3
Financial liabilities:
Contingent AFF acquisition consideration (1)	$	109,549	$	—	$	—	$	109,549

(1)The current portion of $95.6 million is included in accounts payable and accrued liabilities and the non-current portion of $14.0 million is included in other liabilities in the accompanying consolidated balance sheets.

The Company revalues the contingent consideration related to the AFF Acquisition to fair value at the end of each reporting period. The estimate of the fair value of contingent consideration related to the AFF Acquisition is determined by applying a Monte Carlo simulation, which includes inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of AFF over the earn-out period, and therefore represents a Level 3 measurement. Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the contingent consideration related to the AFF Acquisition.


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The changes in financial assets and liabilities that are measured and recorded at fair value on a recurring basis using Level 3 fair value measurements for the three and nine months ended September 30, 2022 are as follows (in thousands):


	Three Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2022
Contingent AFF acquisition consideration at beginning of the period	$	46,560	$	109,549
Change in fair value (1)	(19,800)		(82,789)
Contingent AFF acquisition consideration at end of the period	$	26,760	$	26,760

(1)The Company recognized a gain of $19.8 million and $82.8 million during the three and nine months ended September 30, 2022, respectively, as a result of the change in fair value of the contingent consideration related to the AFF Acquisition, which is included in gain on revaluation of contingent acquisition consideration in the accompanying consolidated statements of income.

There were no transfers in or out of Level 1, 2 or 3 during the three and nine months ended September 30, 2022, and the Company did not have any financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, ~~2016 and December 31, 2016 were as follows:~~2021.

September 30, Fair Value Measurements Using
Financial assets: 2016 Level 1 Level 2 Level 3
Cash America nonqualified savings plan-related assets $ 12,229
$ 12,229
$ —
$ —
Investment in common stock of Enova 54,786
54,786
—
—
$ 67,015
$ 67,015
$ —
$ —

December 31, Fair Value Measurements Using
2016 Level 1 Level 2 Level 3
Financial assets:
Cash America nonqualified savings plan-related assets $ 12,663
$ 12,663
$ —
$ —
$ 12,663
$ 12,663
$ —
$ —

Prior to the Merger, Cash America had a nonqualified savings plan that was available to certain members of its management. Upon completion of the Merger, the nonqualified savings plan was terminated and during the three months ended March 31, 2017, the Company dissolved the plan and distributed the remaining assets to the participants. As of September 30, 2016 and December 31, 2016, the assets of the nonqualified savings plan included marketable equity securities, which were classified as Level 1 and the fair values were based on quoted market prices. The nonqualified savings plan assets were included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet with an offsetting liability of equal amount, which is included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheet.

The Company’s investment in common stock of Enova represented the Company’s available-for-sale shares of Enova International, Inc. (“Enova”) common stock. As of September 30, 2016, the equity securities representing Enova common stock were classified as Level 1 and based on the market determined stock price of Enova. During 2016, the Company sold all of the Enova shares in open market transactions.



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Fair Value Measurements on a ~~Nonrecurring~~Non-Recurring Basis

The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a ~~nonrecurring~~non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired.

Financial Assets and Liabilities Not Measured at Fair Value, But for Which Fair Value is Disclosed

The Company’s financial assets and liabilities as of September 30, ~~2017, 2016~~2022, September 30, 2021 and December 31, ~~2016~~2021 that are not measured at fair value in the ~~condensed~~ consolidated balance sheets are as ~~follows:~~follows (in thousands):


	Carrying Value		Estimated Fair Value
	September 30,		September 30,		Fair Value Measurements Using
	2022		2022		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	100,620	$	100,620	$	100,620	$	—	$	—
Accounts receivable, net	58,435		58,435		—		—		58,435
Pawn loans	404,227		404,227		—		—		404,227
Finance receivables, net (1)	111,945		193,750		—		—		193,750
	$	675,227	$	757,032	$	100,620	$	—	$	656,412

Financial liabilities:
Revolving unsecured credit facilities	$	338,000	$	338,000	$	—	$	338,000	$	—
Senior unsecured notes (outstanding principal)	1,050,000		887,000		—		887,000		—
	$	1,388,000	$	1,225,000	$	—	$	1,225,000	$	—

Carrying Value Estimated Fair Value
September 30, September 30, Fair Value Measurements Using
2017 2017 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 93,411
$ 93,411
$ 93,411
$ —
$ —
Pawn loans 371,367
371,367
—
—
371,367
Consumer loans, net 24,515
24,515
—
—
24,515
Fees and service charges receivable 45,134
45,134
—
—
45,134
$ 534,427
$ 534,427
$ 93,411
$ —
$ 441,016

Financial liabilities:
Revolving unsecured credit facilities $ 140,000
$ 140,000
$ —
$ 140,000
$ —
Senior unsecured notes, outstanding principal 300,000
314,000
—
314,000
—
$ 440,000
$ 454,000
$ —
$ 454,000
$ —

Carrying Value Estimated Fair Value
September 30, September 30, Fair Value Measurements Using
2016 2016 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 83,356
$ 83,356
$ 83,356
$ —
$ —
Pawn loans 373,169
373,169
—
—
373,169
Consumer loans, net 27,792
27,792
—
—
27,792
Fees and service charges receivable 45,708
45,708
—
—
45,708
$ 530,025
$ 530,025
$ 83,356
$ —
$ 446,669

Financial liabilities:
Revolving unsecured credit facilities $ 360,000
$ 360,000
$ —
$ 360,000
$ —
Senior unsecured notes, outstanding principal 200,000
210,000
—
210,000
—
$ 560,000
$ 570,000
$ —
$ 570,000
$ —

(1)Finance receivables, gross as of September 30, 2022 was $188.9 million. See Note 6.



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	Carrying Value		Estimated Fair Value
	September 30,		September 30,		Fair Value Measurements Using
	2021		2021		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	49,907	$	49,907	$	49,907	$	—	$	—
Accounts receivable, net	43,492		43,492		—		—		43,492
Pawn loans	348,993		348,993		—		—		348,993

	$	442,392	$	442,392	$	49,907	$	—	$	392,485

Financial liabilities:
Revolving unsecured credit facilities	$	246,000	$	246,000	$	—	$	246,000	$	—
Senior unsecured notes (outstanding principal)	500,000		516,000		—		516,000		—
	$	746,000	$	762,000	$	—	$	762,000	$	—


	Carrying Value		Estimated Fair Value									Carrying Value		Estimated Fair Value
	December 31,		December 31,		Fair Value Measurements Using							December 31,		December 31,		Fair Value Measurements Using
	2016		2016		Level 1		Level 2		Level 3			2021		2021		Level 1		Level 2		Level 3
Financial assets:											Financial assets:
Cash and cash equivalents	$	89,955	$	89,955	$	89,955	$	—	$	—	Cash and cash equivalents	$	120,046	$	120,046	$	120,046	$	—	$	—
Accounts receivable, net											Accounts receivable, net	55,356		55,356		—		—		55,356
Pawn loans	350,506		350,506		—		—		350,506		Pawn loans	347,973		347,973		—		—		347,973
Consumer loans, net	29,204		29,204		—		—		29,204
Fees and service charges receivable	41,013		41,013		—		—		41,013
Finance receivables, net (1)											Finance receivables, net (1)	181,021		233,000		—		—		233,000
	$	510,678	$	510,678	$	89,955	$	—	$	420,723		$	704,396	$	756,375	$	120,046	$	—	$	636,329

Financial liabilities:											Financial liabilities:
Revolving unsecured credit facilities	$	260,000	$	260,000	$	—	$	260,000	$	—	Revolving unsecured credit facilities	$	259,000	$	259,000	$	—	$	259,000	$	—
Senior unsecured notes, outstanding principal	200,000		208,000		—		208,000		—
Senior unsecured notes (outstanding principal)											Senior unsecured notes (outstanding principal)	1,050,000		1,058,000		—		1,058,000		—
	$	460,000	$	468,000	$	—	$	468,000	$	—		$	1,309,000	$	1,317,000	$	—	$	1,317,000	$	—

(1)Finance receivables, gross as of December 31, 2021 were $220.3 million. See Note 6.

As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value. Due to their short-term maturities, the carrying value of pawn loans and ~~fees and service charges~~accounts receivable, net approximate fair value. ~~Short-term loans and installment loans, collectively, represent consumer loans,~~

Finance receivables are measured at amortized cost, net of an allowance for loan losses on the ~~accompanying condensed~~ consolidated balance ~~sheets~~sheets. In estimating fair value for finance receivables, the Company utilized a discounted cash flow methodology. The Company used various unobservable inputs reflecting its own assumptions, such as contractual future principal and interest cash flows, future charge-off rates and discount rates (which consider current interest rates and are ~~carried net of the allowance~~adjusted for estimated loan losses, which is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance. The unobservable inputs used to calculate the fair value of these loans include historical loss rates, recent default trends and estimated remaining loan terms; therefore, the carrying value approximates the fair value.credit risk, among other factors).

The carrying value of the ~~Company’s prior~~unsecured credit facilities approximates fair value as of September 30, ~~2016.~~2022, September 30, 2021 and December 31, 2021. The ~~carrying~~fair value of the ~~Company’s current~~unsecured credit facilities ~~(the 2016 Credit Facility~~is estimated based on market values for debt issuances with similar characteristics or rates currently available for debt with similar terms. In addition, the unsecured credit facilities have a variable interest rate based on a fixed spread over the prevailing secured overnight financing rate (“SOFR”) or the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) and ~~the Mexico Credit Facility) approximates fair value as of September 30, 2017 and December 31, 2016.~~reprice with any changes in SOFR or TIIE. The fair value of the senior unsecured notes ~~have been~~is estimated based on ~~a discounted cash flow analysis using a discount rate representing the Company’s estimate of the rate~~quoted prices in markets that ~~would be used by market participants. Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.~~are not active.



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Note 6 - Finance Receivables, Net

Finance receivables, net consist of the following (in thousands):


	As of September 30,				As of December 31,
	2022		2021		2021
Finance receivables, gross	$	188,897	$	—	$	220,329
Fair value premium on non-PCD finance receivables (1)	6,839		—		40,251
Non-credit discount on PCD finance receivables (2)	—		—		(3,521)
Merchant partner discounts and premiums, net	(2,044)		—		(104)
Unearned origination fees	(3,334)		—		(360)
Finance receivables, amortized cost	190,358		—		256,595
Less allowance for loan losses	(78,413)		—		(75,574)
Finance receivables, net	$	111,945	$	—	$	181,021

(1)Represents the difference between the initial fair value and the unpaid principal balance as of the date of the AFF Acquisition, which is recognized through interest income on an effective yield basis over the lives of the related non-purchased credit deteriorated (“PCD”) finance receivables.

(2)Represents the difference between the unpaid principal balance and the amortized cost basis as of the date of the AFF Acquisition, which is recognized through interest income on an effective yield basis over the lives of the related PCD finance receivables.

Changes in the allowance for loan losses were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Balance at beginning of period	$	73,936	$	—	$	75,574	$	—
Provision for loan losses	31,956		—		83,453		—

Charge-offs	(28,642)		—		(84,629)		—
Recoveries	1,163		—		4,015		—
Balance at end of period	$	78,413	$	—	$	78,413	$	—

The following is an assessment of the credit quality indicators of the amortized cost of finance receivables as of September 30, 2022, by origination year (in thousands):


	2022		2021		2020		Total
FICO score category (1):
No FICO score identified or obtained	$	39,639	$	13,067	$	113	$	52,819
599 or less	44,966		16,299		539		61,804
Between 600 and 699	45,125		15,755		567		61,447
700 or greater	5,531		1,841		77		7,449
Finance receivables before fair value adjustments	$	135,261	$	46,962	$	1,296	183,519
Fair value premium on non-PCD finance receivables							6,839
Finance receivables, amortized cost							$	190,358

(1)FICO score as determined at the time of origination.


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The following is an aging of the amortized cost of finance receivables as of September 30, 2022, by origination year (in thousands):


	2022		2021		2020		Total
Delinquency:
1 to 30 days past due	$	11,149	$	4,468	$	150	$	15,767
31 to 60 days past due	7,118		3,233		100		10,451
61 to 90 days past due (1)	5,971		3,292		120		9,383
Total past due finance receivables before fair value adjustments	24,238		10,993		370		35,601
Current finance receivables before fair value adjustments	111,023		35,969		926		147,918
Finance receivables before fair value adjustments	$	135,261	$	46,962	$	1,296	183,519
Fair value premium on non-PCD finance receivables							6,839
Finance receivables, amortized cost							$	190,358

(1)The Company charges off finance receivables when a receivable is 90 days or more contractually past due.

Note 7 - Leased Merchandise, Net

Leased merchandise, net consists of the following (in thousands):


	As of September 30,				As of December 31,
	2022		2021		2021
Leased merchandise (1)	$	292,374	$	—	$	156,280
Processing fees	(3,449)		—		(440)
Merchant partner discounts and premiums, net	2,114		—		310
Accumulated depreciation	(81,343)		—		(6,764)
Leased merchandise, before allowance for lease losses	209,696		—		149,386
Allowance for lease losses	(77,599)		—		(5,442)
Leased merchandise, net	$	132,097	$	—	$	143,944

(1)Acquired leased merchandise in the AFF Acquisition was recorded at fair value.

Changes in the allowance for lease losses were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Balance at beginning of period	$	69,101	$	—	$	5,442	$	—
Provision for lease losses	31,916		—		109,771		—
Charge-offs	(24,538)		—		(40,859)		—
Recoveries	1,120		—		3,245		—
Balance at end of period	$	77,599	$	—	$	77,599	$	—


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Note 8 - Long-Term Debt

The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs on the senior unsecured notes (in thousands):


	As of September 30,				As of December 31,
	2022		2021		2021

Revolving unsecured credit facility, maturing 2027 (1)	$	338,000	$	246,000	$	259,000

Senior unsecured notes:
4.625% senior unsecured notes due 2028 (2)	493,226		493,499		492,499
5.625% senior unsecured notes due 2030 (3)	542,000		—		541,405
Total senior unsecured notes	1,035,226		493,499		1,033,904

Total long-term debt	$	1,373,226	$	739,499	$	1,292,904

(1)Debt issuance costs related to the Company’s revolving unsecured credit facilities are included in other assets in the accompanying consolidated balance sheets.

(2)As of September 30, 2022, September 30, 2021 and December 31, 2021, deferred debt issuance costs of $6.8 million, $6.5 million and $7.5 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2028 in the accompanying consolidated balance sheets.

(3)As of September 30, 2022 and December 31, 2021, deferred debt issuance costs of $8.0 million and $8.6 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2030 in the accompanying consolidated balance sheets.

Revolving Unsecured Credit Facility

During the period from January 1, 2022 through August 30, 2022, the Company maintained an unsecured line of credit with a group of U.S.-based commercial lenders (the “Credit Facility”) in the amount of $500.0 million, which was scheduled to mature on December 19, 2024. The Credit Facility charged interest, at the Company’s option, of either (1) the prevailing LIBOR (with interest periods of 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (2) the prevailing prime or base rate plus a fixed spread of 1.5%.

On August 30, 2022, the Credit Facility was amended (the “2022 Amendment”) in order to increase the total lender commitment, extend the term of the Credit Facility, amend certain financial covenants and modify the benchmark interest rate to SOFR. Under the 2022 Amendment, the total lender commitment was increased from $500.0 million to $590.0 million and the term of the Credit Facility was extended to August 30, 2027. In addition, certain financial covenants were amended, as described below.

The financial covenant limiting the domestic leverage ratio was eliminated. The permitted consolidated leverage ratio (defined as consolidated EBITDA, adjusted for certain customary items as more fully set forth in the Credit Facility (“Adjusted EBITDA”), divided by outstanding consolidated debt), which was previously scheduled to decrease to 3.0 times effective December 31, 2022, will remain at the current level of 3.5 times Adjusted EBITDA through December 31, 2023 when it decreases to 3.25 times Adjusted EBITDA through December 31, 2024. The consolidated leverage ratio will revert to the previously scheduled ratio of 3.0 times Adjusted EBITDA effective January 1, 2025. The 2022 Amendment also includes additional limits to certain restricted payments when the consolidated leverage ratio is equal to or greater than 3.0 times Adjusted EBITDA, which are more fully described in the 2022 Amendment.

The Credit Facility now bears interest at the Borrower’s option of either (i) the prevailing SOFR (with interest periods of 1, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% and a fixed SOFR adjustment of 0.1% or (ii) the prevailing prime or base rate plus a fixed spread of 1.5%.


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As of September 30, 2022, the Company had $338.0 million in outstanding borrowings and $3.2 million in outstanding letters of credit under the Credit Facility, leaving $248.8 million available for future borrowings, subject to certain financial covenants. The agreement has an interest rate floor of 0%. Additionally, the Company is required to pay an annual commitment fee of 0.325% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at September 30, 2022 was 5.39% based on 1-month SOFR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of September 30, 2022. During the nine months ended September 30, 2022, the Company received net proceeds of $79.0 million from borrowings pursuant to the Credit Facility.

Revolving Unsecured Uncommitted Credit Facility

As of September 30, 2022, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., maintained an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc. with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $600.0 million Mexican pesos. The Mexico Credit Facility bears interest at TIIE plus a fixed spread of 2.5% and matures on March 9, 2023. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the covenants of the Mexico Credit Facility as of September 30, 2022. At September 30, 2022, the Company had no amount outstanding under the Mexico Credit Facility and $600.0 million Mexican pesos available for borrowings.

Senior Unsecured Notes Due 2028

On August 26, 2020, the Company issued $500.0 million of 4.625% senior unsecured notes due on September 1, 2028 (the “2028 Notes”), all of which are currently outstanding. Interest on the 2028 Notes is payable semi-annually in arrears on March 1 and September 1. The 2028 Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility. The 2028 Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio is less than 2.75 to 1. The consolidated total debt ratio is defined generally in the indenture governing the 2028 Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period. As of September 30, 2022, the Company’s consolidated total debt ratio was 2.8 to 1. While the 2028 Notes generally limit the Company’s ability to make restricted payments if the consolidated total debt ratio is greater than 2.75 to 1, restricted payments are allowable within certain permitted baskets, which currently provide the Company with continued flexibility to make restricted payments when the Company’s consolidated total debt ratio is greater than 2.75 to 1.

Senior Unsecured Notes Due 2030

On December 13, 2021, the Company issued $550.0 million of 5.625% senior unsecured notes due on January 1, 2030 (the “2030 Notes”), all of which are currently outstanding. Interest on the 2030 Notes is payable semi-annually in arrears on January 1 and July 1. The 2030 Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility. The 2030 Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio is less than 3.0 to 1. The consolidated total debt ratio is defined generally in the indenture governing the 2030 Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period. As of September 30, 2022, the Company’s consolidated total debt ratio was 2.8 to 1. While the 2030 Notes generally limit the Company’s ability to make restricted payments if the consolidated total debt ratio is greater than 3.0 to 1, restricted payments are allowable within certain permitted baskets, which currently provides the Company with continued flexibility to make restricted payments when the Company’s consolidated total debt ratio is greater than 3.0 to 1.

The Company utilized the net proceeds from the offering of the 2030 Notes to finance the cash consideration and transaction expenses for the AFF Acquisition, including the repayment, in full, of the outstanding debt under AFF’s credit facility at the closing of the AFF Acquisition, payment of fees and expenses related to the note offering and reduction of the outstanding balance on the Credit Facility.


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Note 9 - Commitments and Contingencies

Litigation

The Company, in the ordinary course of business, is a party to various legal and regulatory proceedings and other general claims. Although no assurances can be given, in management’s opinion, such outstanding proceedings are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

The Company believes it has meritorious defenses to all of the claims described below, and intends to vigorously defend against such claims. However, legal and regulatory proceedings involve an inherent level of uncertainty and no assurances can be given regarding the ultimate outcome of any such matters or whether an adverse outcome would not have a material adverse impact on the Company’s financial position, results of operations, or cash flows. At this stage, the Company is unable to determine whether a future loss will be incurred for any of its outstanding legal and regulatory proceedings or estimate a range of loss with respect to such proceeding, if any, and accordingly, no amounts have been accrued in the Company’s financial statements for legal and regulatory proceedings.

On January 14, 2022, plaintiff Genesee County Employees’ Retirement System filed a putative shareholder securities class action lawsuit (the “Litigation”) in the United States District Court for the Northern District of Texas against the Company and certain of its current officers styled Genesee County Employees’ Retirement System v. FirstCash Holdings, Inc., et al., Civil Action No. 4:22-CV-00033-P (N.D. Tex.). The complaint alleges that the defendants made materially false and/or misleading statements that caused losses to investors, including that the Company failed to disclose in public statements that the Company engaged in widespread and systemic violations of the Military Lending Act (the “MLA”). The Litigation does not quantify any alleged damages, but, in addition to attorneys’ fees and costs, it seeks to recover damages on behalf of the plaintiff and other persons who purchased or otherwise acquired Company stock during the putative class period from February 1, 2018 through November 12, 2021 at allegedly inflated prices and purportedly suffered financial harm as a result. On June 8, 2022, the Company and named defendants filed a motion to dismiss, which remains pending.

The Company was named as a nominal defendant and certain of the Company’s current and former directors and officers were named as defendants in a shareholder derivative lawsuit filed on July 19, 2022 in the United States District Court for the Northern District of Texas and styled Treppel Family Trust U/A 08/18/18 Lawrence A. Treppel and Geri D. Treppel for the Benefit of Geri D. Treppel and Larry A. Treppel, Derivatively on Behalf of FirstCash Holdings, Inc., v. Rick L. Wessel, et. al, Case 4:22-cv-00623-P (N.D. Tex). The complaint makes similar allegations as the Litigation and alleges a single count for breach of fiduciary duty against the named derivative defendants. The action does not quantify any alleged damages, but, in addition to attorneys’ fees and costs and certain equitable relief, the derivative plaintiff seeks to recover damages on behalf of the Company for purported financial harm and to have the court order changes in the Company’s corporate governance.

On November 12, 2021, the CFPB initiated a civil action in the United States District Court for the Northern District of Texas against FirstCash, Inc. and Cash America West, Inc., two of the Company’s subsidiaries, alleging violations of the MLA in connection with pawn transactions. The CFPB also alleges that these same alleged violations of the MLA constitute breaches of a 2013 CFPB consent order entered into by its predecessor company that, among other things, allegedly required the company and its successors to cease and desist from further MLA violations. The CFPB is seeking an injunction, redress for affected borrowers and a civil monetary penalty. On March 28, 2022, the CFPB filed a motion to strike certain affirmative defenses of the Company, which motion remains pending. On April 27, 2022, the Company filed a motion for partial summary judgment, which remains pending. On October 24, 2022, the Company filed a motion to dismiss the lawsuit due to the funding structure of the CFPB, which the motion alleges is unconstitutional. This motion to dismiss follows the recent decision by the Fifth Circuit Court of Appeals, where the U.S. District Court for the Northern District of Texas sits, finding that the CFPB is unconstitutionally structured. The motion to dismiss remains pending.

On November 7, 2018, plaintiffs Maria Andrade and Shaun Caulkins filed a complaint in the United States District Court for the Northern District of California against AFF alleging that AFF is an unlicensed lender that made usurious loans through certain California merchants in violation of California law. Caulkins was dismissed on October 14, 2020, and the Court denied class certification in September 2022. The case is scheduled to proceed to trial on an individual basis on February 21, 2023. In addition to money damages, including disgorgement of all amounts paid to AFF, actual and statutory damages, and attorneys’ fees, Andrade seeks to enjoin AFF from servicing California customers under its current practices.


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On October 20, 2021, plaintiff Larry Facio filed a complaint in the United States District Court for the Northern District of California against AFF alleging that AFF partnered with California merchants to deceive California customers into taking out usurious loans made from AFF, an unlicensed lender. Plaintiff seeks, among other things, class certification, a declaration that AFF’s security agreements are subject to the California Finance Lenders Law and that no person has a right to collect or receive principal or payments, restitution for all amounts collected from class members, actual damages, statutory damages and attorneys’ fees. On May 5, 2022, the court granted AFF’s motion to compel arbitration, and the case is currently stayed, pending arbitration. At this time, Mr. Facio has not yet elected to pursue his claims through arbitration.

Note 510 - Segment Information

The Company organizes its operations into ~~two~~three reportable segments as follows:

•U.S. ~~operations - Includes all~~ pawn

•Latin America pawn

•Retail POS payment solutions (AFF)

Corporate expenses and ~~consumer loan operations in~~income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, loss (gain) on foreign exchange, merger and acquisition expenses, gain on revaluation of contingent acquisition consideration, and other expenses (income), net, are presented on a consolidated basis and are not allocated between the U.S.

pawn segment, Latin America ~~operations - Includes all~~ pawn segment or retail POS payment solutions segment. Intersegment transactions relate to U.S. pawn stores offering AFF’s LTO payment solution as a payment option in its stores and ~~consumer loan operations in Latin America, which currently includes operations in Mexico, Guatemala and El Salvador~~are eliminated to arrive at consolidated totals.


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The following tables present reportable segment information for the three and nine month periods ended September 30, ~~2017~~2022 and ~~2016:~~2021 as well as segment earning assets (in thousands):


	Three Months Ended September 30, 2022
	U.S. Pawn		Latin America Pawn		Retail POS Payment Solutions		Corporate/ Eliminations			Consolidated
Revenue:
Retail merchandise sales	$	195,854	$	107,591	$	—	$	(2,546)	(1)	$	300,899
Pawn loan fees	96,222		49,505		—		—			145,727
Leased merchandise income	—		—		158,089		—			158,089
Interest and fees on finance receivables	—		—		48,846		—			48,846
Wholesale scrap jewelry sales	12,956		5,626		—		—			18,582
Total revenue	305,032		162,722		206,935		(2,546)			672,143

Cost of revenue:
Cost of retail merchandise sold	114,899		68,642		—		(1,342)		(1)	182,199
Depreciation of leased merchandise	—		—		86,703		(184)		(1)	86,519
Provision for lease losses	—		—		32,350		(434)		(1)	31,916
Provision for loan losses	—		—		31,956		—			31,956
Cost of wholesale scrap jewelry sold	11,338		4,923		—		—			16,261
Total cost of revenue	126,237		73,565		151,009		(1,960)			348,851

Net revenue	178,795		89,157		55,926		(586)		(1)	323,292

Expenses and other income:
Operating expenses	102,508		47,979		35,060		—			185,547
Administrative expenses	—		—		—		36,951			36,951
Depreciation and amortization	5,806		4,566		775		14,824			25,971
Interest expense	—		—		—		18,282			18,282
Interest income	—		—		—		(206)			(206)
Loss on foreign exchange	—		—		—		255			255
Merger and acquisition expenses	—		—		—		733			733
Gain on revaluation of contingent acquisition consideration	—		—		—		(19,800)			(19,800)
Other expenses (income), net	—		—		—		164			164

Total expenses and other income	108,314		52,545		35,835		51,203			247,897

Income (loss) before income taxes	$	70,481	$	36,612	$	20,091	$	(51,789)		$	75,395

Three Months Ended September 30, 2017

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 160,598
$ 85,736
$ —
$ 246,334
Pawn loan fees 95,266
37,279
—
132,545
Wholesale scrap jewelry sales 32,397
5,131
—
37,528
Consumer loan and credit services fees 18,525
480
—
19,005
Total revenue 306,786
128,626
—
435,412

Cost of revenue:
Cost of retail merchandise sold 107,561
53,789
—
161,350
Cost of wholesale scrap jewelry sold 31,518
5,313
—
36,831
Consumer loan and credit services loss provision 6,068
117
—
6,185
Total cost of revenue 145,147
59,219
—
204,366

Net revenue 161,639
69,407
—
231,046

Expenses and other income:
Store operating expenses 104,555
34,411
—
138,966
Administrative expenses —
—
29,999
29,999
Depreciation and amortization 5,919
2,704
5,249
13,872
Interest expense —
—
6,129
6,129
Interest income —
—
(418 ) (418 )
Merger and other acquisition expenses —
—
911
911
Loss on extinguishment of debt —
—
20
20
Total expenses and other income 110,474
37,115
41,890
189,479

Income (loss) before income taxes $ 51,165
$ 32,292
$ (41,890 ) $ 41,567

(1)Represents the elimination of intersegment transactions related to U.S. pawn stores offering AFF’s LTO payment solution as a payment option in its stores.



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	Nine Months Ended September 30, 2022
	U.S. Pawn		Latin America Pawn		Retail POS Payment Solutions		Corporate/ Eliminations			Consolidated
Revenue:
Retail merchandise sales	$	596,165	$	308,356	$	—	$	(2,546)	(1)	$	901,975
Pawn loan fees	274,304		137,309		—		—			411,613
Leased merchandise income	—		—		455,736		—			455,736
Interest and fees on finance receivables	—		—		135,039		—			135,039
Wholesale scrap jewelry sales	45,153		30,082		—		—			75,235
Total revenue	915,622		475,747		590,775		(2,546)			1,979,598

Cost of revenue:
Cost of retail merchandise sold	349,007		196,057		—		(1,342)		(1)	543,722
Depreciation of leased merchandise	—		—		263,014		(184)		(1)	262,830
Provision for lease losses	—		—		110,205		(434)		(1)	109,771
Provision for loan losses	—		—		83,453		—			83,453
Cost of wholesale scrap jewelry sold	39,150		25,221		—		—			64,371
Total cost of revenue	388,157		221,278		456,672		(1,960)			1,064,147

Net revenue	527,465		254,469		134,103		(586)		(1)	915,451

Expenses and other income:
Operating expenses	302,572		141,574		95,252		—			539,398
Administrative expenses	—		—		—		110,882			110,882
Depreciation and amortization	17,261		13,520		2,156		44,558			77,495
Interest expense	—		—		—		50,749			50,749
Interest income	—		—		—		(1,104)			(1,104)
Gain on foreign exchange	—		—		—		(198)			(198)
Merger and acquisition expenses	—		—		—		1,712			1,712
Gain on revaluation of contingent acquisition consideration	—		—		—		(82,789)			(82,789)
Other expenses (income), net	—		—		—		(2,721)			(2,721)

Total expenses and other income	319,833		155,094		97,408		121,089			693,424

Income (loss) before income taxes	$	207,632	$	99,375	$	36,695	$	(121,675)		$	222,027

Three Months Ended September 30, 2016

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 84,547
$ 67,668
$ —
$ 152,215
Pawn loan fees 48,840
30,665
—
79,505
Wholesale scrap jewelry sales 15,046
3,910
—
18,956
Consumer loan and credit services fees 9,991
486
—
10,477
Total revenue 158,424
102,729
—
261,153

Cost of revenue:
Cost of retail merchandise sold 51,922
41,477
—
93,399
Cost of wholesale scrap jewelry sold 13,955
3,022
—
16,977
Consumer loan and credit services loss provision 3,275
138
—
3,413
Total cost of revenue 69,152
44,637
—
113,789

Net revenue 89,272
58,092
—
147,364

Expenses and other income:
Store operating expenses 52,480
28,094
—
80,574
Administrative expenses —
—
24,500
24,500
Depreciation and amortization 2,906
2,602
1,773
7,281
Interest expense —
—
5,073
5,073
Interest income —
—
(138 ) (138 )
Merger and other acquisition expenses —
—
29,398
29,398
Net loss on sale of common stock of Enova —
—
253
253
Total expenses and other income 55,386
30,696
60,859
146,941

Income (loss) before income taxes $ 33,886
$ 27,396
$ (60,859 ) $ 423


	As of September 30, 2022
	U.S. Pawn		Latin America Pawn		Retail POS Payment Solutions		Corporate/ Eliminations			Consolidated
Earning assets:
Pawn loans	$	279,645	$	124,582	$	—	$	—		$	404,227
Finance receivables, net	—		—		111,945		—			111,945
Inventories	204,359		91,069		—		—			295,428
Leased merchandise, net	—		—		132,683		(586)		(1)	132,097

(1)Represents the elimination of intersegment transactions related to U.S. pawn stores offering AFF’s LTO payment solution as a payment option in its stores.



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	Three Months Ended September 30, 2021
	U.S. Pawn		Latin America Pawn		Corporate/ Eliminations		Consolidated
Revenue:
Retail merchandise sales	$	167,257	$	101,469	$	—	$	268,726
Pawn loan fees	76,674		44,691		—		121,365


Wholesale scrap jewelry sales	4,168		5,415		—		9,583
Total revenue	248,099		151,575		—		399,674

Cost of revenue:
Cost of retail merchandise sold	93,326		64,731		—		158,057



Cost of wholesale scrap jewelry sold	3,778		4,750		—		8,528
Total cost of revenue	97,104		69,481		—		166,585

Net revenue	150,995		82,094		—		233,089

Expenses and other income:
Operating expenses	93,247		45,372		—		138,619
Administrative expenses	—		—		30,208		30,208
Depreciation and amortization	5,662		4,591		964		11,217
Interest expense	—		—		7,961		7,961
Interest income	—		—		(143)		(143)
Loss on foreign exchange	—		—		558		558
Merger and acquisition expenses	—		—		12		12

Other expenses (income), net	—		—		361		361

Total expenses and other income	98,909		49,963		39,921		188,793

Income (loss) before income taxes	$	52,086	$	32,131	$	(39,921)	$	44,296

Nine Months Ended September 30, 2017

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 519,116
$ 231,034
$ —
$ 750,150
Pawn loan fees 287,338
96,090
—
383,428
Wholesale scrap jewelry sales 91,430
15,855
—
107,285
Consumer loan and credit services fees 57,425
1,329
—
58,754
Total revenue 955,309
344,308
—
1,299,617

Cost of revenue:
Cost of retail merchandise sold 337,789
145,669
—
483,458
Cost of wholesale scrap jewelry sold 87,600
14,770
—
102,370
Consumer loan and credit services loss provision 15,115
304
—
15,419
Total cost of revenue 440,504
160,743
—
601,247

Net revenue 514,805
183,565
—
698,370

Expenses and other income:
Store operating expenses 318,044
94,736
—
412,780
Administrative expenses —
—
93,542
93,542
Depreciation and amortization 18,759
7,723
16,322
42,804
Interest expense —
—
17,827
17,827
Interest income —
—
(1,138 ) (1,138 )
Merger and other acquisition expenses —
—
3,164
3,164
Loss on extinguishment of debt —
—
14,114
14,114
Total expenses and other income 336,803
102,459
143,831
583,093

Income (loss) before income taxes $ 178,002
$ 81,106
$ (143,831 ) $ 115,277



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	Nine Months Ended September 30, 2021
	U.S. Pawn		Latin America Pawn		Corporate/ Eliminations		Consolidated
Revenue:
Retail merchandise sales	$	530,468	$	275,867	$	—	$	806,335


Pawn loan fees	220,013		126,783		—		346,796
Wholesale scrap jewelry sales	20,217		23,843		—		44,060
Total revenue	770,698		426,493		—		1,197,191

Cost of revenue:
Cost of retail merchandise sold	295,455		173,179		—		468,634



Cost of wholesale scrap jewelry sold	16,678		20,979		—		37,657
Total cost of revenue	312,133		194,158		—		506,291

Net revenue	458,565		232,335		—		690,900

Expenses and other income:
Operating expenses	282,068		133,003		—		415,071
Administrative expenses	—		—		88,605		88,605
Depreciation and amortization	16,391		13,388		2,952		32,731
Interest expense	—		—		22,389		22,389
Interest income	—		—		(420)		(420)
Loss on foreign exchange	—		—		248		248
Merger and acquisition expenses	—		—		1,264		1,264

Other expenses (income), net	—		—		1,640		1,640

Total expenses and other income	298,459		146,391		116,678		561,528

Income (loss) before income taxes	$	160,106	$	85,944	$	(116,678)	$	129,372


	As of September 30, 2021
	U.S. Pawn		Latin America Pawn		Consolidated
Earning assets:
Pawn loans	$	242,825	$	106,168	$	348,993

Inventories	175,047		79,213		254,260

Nine Months Ended September 30, 2016

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 186,673
$ 199,861
$ —
$ 386,534
Pawn loan fees 94,929
87,887
—
182,816
Wholesale scrap jewelry sales 25,910
9,996
—
35,906
Consumer loan and credit services fees 19,619
1,460
—
21,079
Total revenue 327,131
299,204
—
626,335

Cost of revenue:
Cost of retail merchandise sold 114,632
124,534
—
239,166
Cost of wholesale scrap jewelry sold 22,914
7,787
—
30,701
Consumer loan and credit services loss provision 5,380
400
—
5,780
Total cost of revenue 142,926
132,721
—
275,647

Net revenue 184,205
166,483
—
350,688

Expenses and other income:
Store operating expenses 107,196
83,367
—
190,563
Administrative expenses —
—
58,277
58,277
Depreciation and amortization 5,827
7,919
3,419
17,165
Interest expense —
—
13,859
13,859
Interest income —
—
(636 ) (636 )
Merger and other acquisition expenses —
—
33,877
33,877
Net loss on sale of common stock of Enova —
—
253
253
Total expenses and other income 113,023
91,286
109,049
313,358

Income (loss) before income taxes $ 71,182
$ 75,197
$ (109,049 ) $ 37,330



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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition, results of operations, liquidity and capital resources of FirstCash Holdings, Inc. and its wholly-owned subsidiaries ~~(the~~(together, the “Company”) should be read in conjunction with the Company’s ~~condensed~~ consolidated financial statements and accompanying notes included under Part I, Item 1 of this quarterly report on Form 10-Q, as well as with the audited consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2016. References in this quarterly report~~2021.

GENERAL

The Company’s primary line of business is the operation of retail pawn stores, also known as “pawnshops,” which focus on ~~Form 10-Q to “year-to-date” refer to the nine-month period from January 1, 2017 to September 30, 2017.~~

~~On September 1, 2016, the Company completed its merger with Cash America International, Inc. (“Cash America”), whereby Cash America merged with~~serving cash and into a wholly owned subsidiary of the Company (the “Merger”). The accompanying unaudited condensed consolidated results of operations for the three month and nine month periods ended September 30, 2017 include the results of operations for Cash America, while the comparable prior-year periods include the results of operations for Cash America for the period September 2, 2016 to September 30, 2016, affecting comparability of 2017 and 2016 amounts. The Company has performed a valuation analysis of identifiable assets acquired and liabilities assumed and allocated the aggregate Merger consideration based on the fair values of those identifiable assets and liabilities.

~~In thousands except share and per share amounts, unless otherwise indicated.~~

~~GENERAL~~

credit-constrained consumers. The Company is athe leading operator of ~~retail-based~~ pawn stores ~~with over 2,100 store locations~~ in the U.S. and Latin America. ~~The Company’s~~Pawn stores help customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers. Personal property, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments, is pledged and held as collateral for the pawn loans over the typical 30-day term of the loan. Pawn stores also generate ~~significant~~ retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers.

With the AFF Acquisition, the Company is also a leading provider of technology-driven, retail POS payment solutions focused on serving credit-constrained consumers. The ~~stores also offer pawn loans to help customers meet small short-term cash needs. Personal property, such as~~Company’s retail POS payment solutions business line consists solely of the operations of AFF, which focuses on LTO products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners in all 50 states in the U.S., the District of Columbia and Puerto Rico. AFF’s retail partners provide consumer ~~electronics, jewelry, power tools, household appliances, sporting~~ goods and ~~musical instruments, is pledged as collateral for the pawn loans~~services to their customers and ~~held by the Company over the life~~use AFF’s LTO and retail finance solutions to facilitate payments on such transactions. As one of the ~~loan. In addition, some~~largest omni-channel providers of ~~the Company’s pawn stores offer consumer loans or~~“no credit ~~services products.~~ required” payment options, AFF’s technology set provides consumers with seamless leasing and financing experiences in-store, online, in-cart and on mobile devices.

The Company’s strategy is to focus on growing its retail-based pawn operations in the U.S. and Latin America through new store openings and strategic acquisition opportunities as they arise. Pawn operations accounted for 95% and 97% of the Company’s consolidated revenue during the nine month periods ended September 30, 2017 and 2016, respectively.

~~The Company organizes its operations~~two business lines are organized into ~~two~~three reportable segments. The U.S. ~~operations~~pawn segment consists of all pawn ~~and consumer loan~~ operations in the U.S. and the Latin America ~~operations~~pawn segment consists of all pawn ~~and consumer loan operations in Latin America, which currently includes~~ operations in Mexico, Guatemala, Colombia and El Salvador. The retail POS payment solutions segment consists of the operations of AFF in the U.S. and Puerto Rico.


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OPERATIONS AND LOCATIONS

As of September 30, 2022, the Company operated 2,839 pawn store locations comprised of 1,076 stores in 25 U.S. states and the District of Columbia, 1,674 stores in 32 states in Mexico, 60 stores in Guatemala, 15 stores in Colombia and 14 stores in El Salvador.

The ~~Company recognizes~~following tables detail pawn ~~loan fee revenue on a constant-yield basis~~store count activity:


	Three Months Ended September 30, 2022
	U.S.	Latin America	Total
Total locations, beginning of period	1,076	1,758	2,834
New locations opened	—	9	9
Locations acquired	2	—	2


Consolidation of existing pawn locations (1)	(2)	(4)	(6)

Total locations, end of period	1,076	1,763	2,839


	Nine Months Ended September 30, 2022
	U.S.	Latin America	Total
Total locations, beginning of period	1,081	1,744	2,825
New locations opened (2)	—	28	28
Locations acquired	3	—	3


Consolidation of existing pawn locations (1)	(8)	(9)	(17)

Total locations, end of period	1,076	1,763	2,839

(1)Store consolidations were primarily acquired locations over the ~~life of the pawn loan~~past six years which have been combined with overlapping stores and for ~~all pawn loans of~~ which the Company ~~deems collection~~expects to ~~be probable based on historical redemption statistics. If~~maintain a ~~pawn loan is not repaid prior to the expiration~~significant portion of the ~~loan term, including any extension or grace period, if applicable,~~acquired customer base in the ~~property is forfeited~~consolidated location.

(2)In addition to new store openings, the Company and transferred to inventory at a value equal to the principal amount of the loan, exclusive of accrued pawn fee revenue. The Company records merchandise sales revenue at the time of the sale and presents merchandise sales net of any sales or value-added taxes collected. The Company does not provide direct financing to customers for the purchase of its merchandise, but does permit its customers to purchase merchandise on an interest-free layaway plan. Should the customer fail to make a required payment pursuant to a layaway plan, the previous payments are typically forfeited to the Company. Interim payments from customers on layaway sales are recorded as deferred revenue and subsequently recorded as income during the period in which final payment is received or when previous payments are forfeited to the Company. Some jewelry is melted at a third-party facility and the precious metal and diamond content is sold at either prevailing market commodity prices or a previously agreed upon price with a commodity buyer. The Company records revenue from these wholesale scrap jewelry transactions when a price has been agreed upon and the Company ships the commodity to the buyer.

~~The Company operates a small number of stand-alone consumer finance~~strategically relocated two stores in the U.S. and Mexico. These stores provide consumer financial services products including credit services, consumer loans and check cashing. In addition, 366 of the Company’s pawn stores also offer credit services and/or consumer loans as an ancillary product. Consumer loan and credit services revenue accounted for 5% and 3% of consolidated revenueone store in Latin America during the nine month periods ended September 30, 2017 and 2016, respectively. The increase in consumer loan and credit services revenue as a percentage of consolidated revenue was solely the result of the Merger as the Company continues to de-emphasize its consumer lending operations in light of increasing regulatory constraints on these operations.



~~Table of Contents~~

The Company recognizes service fee income on consumer loan transactions on a constant-yield basis over the life of the loan and recognizes credit services fees ratably over the life of the extension of credit made by independent third-party lenders. Changes in the valuation reserve on consumer loans and credit services transactions are charged or credited to the consumer loan credit loss provision. The credit loss provision associated with the Company’s credit services organization program and consumer loans is based primarily upon historical credit loss experience, with consideration given to recent credit loss trends, delinquency rates, economic conditions and management’s expectations of future credit losses.

Stores included in the same-store calculations presented in this report are those stores that were opened or acquired prior to the beginning of the prior-year comparative period and remained open through the end of the reporting period. Also included are stores that were relocated during the applicable period within a specified distance serving the same market where there is not a significant change in store size and where there is not a significant overlap or gap in timing between the opening of the new store and the closing of the existing store. Unless otherwise noted, same-store calculations exclude the results of the merged Cash America stores. Legacy Cash America same-store calculations refer to Cash America stores that were opened prior to the beginning of the prior-year comparative period (although not then owned by the Company) and remained open through the end of the reporting period.

Operating expenses consist of all items directly related to the operation of the Company’s stores, including salaries and related payroll costs, rent, utilities, facilities maintenance, advertising, property taxes, licenses, supplies and security. Administrative expenses consist of items relating to the operation of the corporate offices, including the compensation and benefit costs of corporate management, area supervisors and other operations management personnel, collection operations and personnel, accounting and administrative costs, information technology costs, liability and casualty insurance, outside legal and accounting fees and stockholder-related expenses. Merger and other acquisition expenses primarily include incremental costs directly associated with the Merger and integration of Cash America, including professional fees, legal expenses, severance, retention and other employee-related costs, accelerated vesting of certain equity compensation awards, contract breakage costs and costs related to consolidation of technology systems and corporate facilities.

The Company’s business is subject to seasonal variations and operating results for the current quarter and year-to-date periods are not necessarily indicative of the results of operations for the full year. Typically, the Company experiences seasonal growth of service fees in the third and fourth quarter of each year due to loan balance growth. Service fees generally decline in the first and second quarter of each year after the heavy repayment period of pawn and consumer loans associated with statutory bonuses received by customers in the fourth quarter in Mexico and with tax refund proceeds received by customers in the first quarter in the U.S. Retail sales are seasonally higher in the fourth quarter associated with holiday shopping and, to a lesser extent, in the first quarter associated with tax refunds.



~~Table of Contents~~

~~OPERATIONS AND LOCATIONS~~

As of September 30, 2017, the Company had 2,106 store locations in 26 U.S. states, 32 states in Mexico, Guatemala and El Salvador, which represents a net store-count increase of 1% over the number of stores at September 30, 2016.

~~The following table details store count activity for the three months ended September 30, 2017:~~

Consumer
Pawn Loan Total

Locations ⁽¹⁾

Locations ⁽²⁾
Locations
U.S.:
Total locations, beginning of period 1,073
44
1,117
New locations opened 1
—
1
Locations closed or consolidated (1 ) —
(1 )
Total locations, end of period 1,073
44
1,117

Latin America:
Total locations, beginning of period 952
28
980
New locations opened 9
—
9
Total locations, end of period 961
28
989

Total:
Total locations, beginning of period 2,025
72
2,097
New locations opened 10
—
10
Locations closed or consolidated (1 ) —
(1 )
Total locations, end of period 2,034
72
2,106


⁽¹⁾	At ~~September 30, 2017~~, ~~317~~ ~~of the U.S. pawn stores, which are primarily located in Texas and Ohio, also offered consumer loans or credit services products, while 49 Mexico pawn stores offered consumer loan products.~~


⁽²⁾	The Company’s U.S. free-standing consumer loan locations offer consumer loans and/or a credit services product and are located in Ohio, Texas, California and limited markets in Mexico. The table does not include 63 check cashing locations operated by independent franchisees under franchising agreements with the Company.



~~Table of Contents~~

~~The following table details store count activity for~~ the nine months ended September 30, ~~2017:~~2022.

As of September 30, 2022, AFF provided LTO and retail POS solutions for consumer goods and services through a nationwide network of approximately 8,600 active retail merchant partner locations.

Consumer
Pawn Loan Total

Locations ⁽¹⁾

Locations ⁽²⁾
Locations
U.S.:
Total locations, beginning of period 1,085
45
1,130
New locations opened 2
—
2
Locations acquired 1
—
1
Locations closed or consolidated (15 ) (1 ) (16 )
Total locations, end of period 1,073
44
1,117

Latin America:
Total locations, beginning of period 927
28
955
New locations opened 32
—
32
Locations acquired 5
—
5
Locations closed or consolidated (3 ) —
(3 )
Total locations, end of period 961
28
989

Total:
Total locations, beginning of period 2,012
73
2,085
New locations opened 34
—
34
Locations acquired 6
—
6
Locations closed or consolidated (18 ) (1 ) (19 )
Total locations, end of period 2,034
72
2,106


⁽¹⁾	At September 30, 2017, 317 of the U.S. pawn stores, which are primarily located in Texas and Ohio, also offered consumer loans or credit services products, while 49 Mexico pawn stores offer consumer loan products.


⁽²⁾	The Company’s U.S. free-standing consumer loan locations offer consumer loans and/or a credit services product and are located in Ohio, Texas, California and limited markets in Mexico. The table does not include 63 check cashing locations operated by independent franchisees under franchising agreements with the Company.



~~Table of Contents~~

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

The ~~preparation of~~ financial statements have been prepared in ~~conformity~~accordance with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, related revenue and expenses, and disclosure of gain and loss contingencies at the date of the financial statements. Such estimates, assumptions and judgments are subject to a number of risks and uncertainties, which may cause actual results to differ materially from the Company’s estimates.GAAP. The significant accounting policies and estimates that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results have been reported in the Company’s ~~2016 annual report~~2021 Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies for the nine months ended September 30, ~~2017.~~2022.

~~Recent Accounting Pronouncements~~

See Note 1 - Significant Accounting Policies of the condensed consolidated financial statements contained in Part I, Item 1 of this report for a discussion of recent accounting pronouncements that the Company has adopted or will adopt in future periods.


Table of Contents

RESULTS OF ~~CONTINUING~~ OPERATIONS (unaudited)

Continuing Impact of COVID-19

The COVID-19 pandemic and its contributory impacts on the economy have impacted numerous aspects of the Company’s business. In particular, the COVID-19 pandemic and government responses thereto had an initial adverse impact on pawn loan demand, which impacted pawn receivables, inventories and revenues. This adverse impact in pawn loan demand was offset in large part by a positive impact in merchandise sales. Throughout 2021 and 2022, pawn loan demand has steadily recovered and pawn receivables, inventories and revenues are now ahead of pre-pandemic levels.

Constant Currency Results

The Company’s management reviews and analyzes ~~certain~~ operating results in Latin America on a constant currency basis because the Company believes this better represents the Company’s underlying business trends. Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating ~~current year~~current-year results at ~~prior year~~prior-year average exchange rates. The wholesale scrap jewelry ~~generated~~sales in Latin America ~~is sold~~are priced and settled in U.S. dollars and ~~is therefore~~are not affected by foreign currency ~~translation. A~~translation, as are a small percentage of the operating and administrative expenses in Latin America which are ~~also~~ billed and paid in U.S. ~~dollars which~~dollars. Amounts presented on a constant currency basis are ~~not affected by foreign~~denoted as such. See “Non-GAAP Financial Information” for additional discussion of constant currency ~~translation.~~operating results.

Business operations in Mexico, Guatemala and ~~Guatemala~~Colombia are transacted in Mexican pesos, ~~and~~ Guatemalan quetzales ~~respectively.~~and Colombian pesos. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar. The following table provides exchange rates for the Mexican peso, ~~and~~ Guatemalan quetzal and Colombian peso for the current and ~~prior year~~prior-year periods:


	September 30,		Favorable /				September 30,		Favorable /
	2017	2016	(Unfavorable)				2022	2021	(Unfavorable)
Mexican peso / U.S. dollar exchange rate:						Mexican peso / U.S. dollar exchange rate:
End-of-period	18.2	19.5		7	%	End-of-period	20.3	20.3		—	%
Three months ended	17.8	18.7		5	%	Three months ended	20.2	20.0		(1)	%
Nine months ended	18.9	18.3		(3	)%	Nine months ended	20.3	20.1		(1)	%

Guatemalan quetzal / U.S. dollar exchange rate:						Guatemalan quetzal / U.S. dollar exchange rate:
End-of-period	7.3	7.5		3	%	End-of-period	7.9	7.7		(3)	%
Three months ended	7.3	7.6		4	%	Three months ended	7.8	7.7		(1)	%
Nine months ended	7.4	7.6		3	%	Nine months ended	7.7	7.7		—	%

Colombian peso / U.S. dollar exchange rate:						Colombian peso / U.S. dollar exchange rate:
End-of-period						End-of-period	4,532	3,835		(18)	%
Three months ended						Three months ended	4,375	3,844		(14)	%
Nine months ended						Nine months ended	4,068	3,696		(10)	%

~~Amounts presented on a constant currency basis are denoted as such. See “—Non-GAAP Financial Information” for additional discussion of constant currency operating results.~~

Operating Results for the Three Months Ended September 30, ~~2017~~2022 Compared to the Three Months Ended September 30, ~~2016~~2021

U.S. ~~Operations~~Pawn Segment

The following table details earning assets, which consist of pawn loans ~~consumer loans, net~~ and inventories as well as other earning asset metrics of the U.S. ~~operations~~pawn segment, as of September 30, ~~2017 as~~2022 compared to September 30, ~~2016:~~2021 (dollars in thousands, except as otherwise noted):


	As of September 30,
	2022			2021			Increase
U.S. Pawn Segment
Earning assets:
Pawn loans	$	279,645		$	242,825			15	%
Inventories		204,359			175,047			17	%
	$	484,004		$	417,872			16	%

Average outstanding pawn loan amount (in ones)	$	232		$	208			12	%

Composition of pawn collateral:
General merchandise	32		%	36		%
Jewelry	68		%	64		%
	100		%	100		%

Composition of inventories:
General merchandise	43		%	48		%
Jewelry	57		%	52		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	1		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	2.7 times			2.9 times

Balance at September 30, Increase /
2017 2016 (Decrease)
U.S. Operations Segment
Earning assets:
Pawn loans $ 281,217
$ 300,646
(6 )%
Consumer loans, net ⁽¹⁾
24,108
27,381
(12 )%
Inventories 240,384
280,429
(14 )%
$ 545,709
$ 608,456
(10 )%

Average outstanding pawn loan amount (in ones) $ 152
$ 145
5 %

Composition of pawn collateral:
General merchandise 36 % 39 %
Jewelry 64 % 61 %
100 % 100 %

Composition of inventories:
General merchandise 43 % 48 %
Jewelry 57 % 52 %
100 % 100 %

Percentage of inventory aged greater than one year 9 % 6 %

The following table presents segment pre-tax operating income and other operating metrics of the U.S. ~~operations~~pawn segment for the three months ended September 30, ~~2017 as~~2022 compared to the three months ended September 30, ~~2016. Store operating~~2021 (dollars in thousands). Operating expenses include salary and benefit expense of ~~store-level~~pawn-store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores.


	Three Months Ended
	September 30,
	2022			2021			Increase
U.S. Pawn Segment
Revenue:
Retail merchandise sales	$	195,854		$	167,257			17	%
Pawn loan fees		96,222			76,674			25	%
Wholesale scrap jewelry sales		12,956			4,168			211	%
Total revenue		305,032			248,099			23	%

Cost of revenue:
Cost of retail merchandise sold		114,899			93,326			23	%
Cost of wholesale scrap jewelry sold		11,338			3,778			200	%
Total cost of revenue		126,237			97,104			30	%

Net revenue		178,795			150,995			18	%

Segment expenses:
Operating expenses		102,508			93,247			10	%
Depreciation and amortization		5,806			5,662			3	%
Total segment expenses		108,314			98,909			10	%

Segment pre-tax operating income	$	70,481		$	52,086			35	%

Operating metrics:
Retail merchandise sales margin	41		%	44		%

Net revenue margin	59		%	61		%
Segment pre-tax operating margin	23		%	21		%

Three Months Ended
September 30,
2017 2016 Increase
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 160,598
$ 84,547
90 %
Pawn loan fees 95,266
48,840
95 %
Wholesale scrap jewelry sales 32,397
15,046
115 %
Consumer loan and credit services fees 18,525
9,991
85 %
Total revenue 306,786
158,424
94 %

Cost of revenue:
Cost of retail merchandise sold 107,561
51,922
107 %
Cost of wholesale scrap jewelry sold 31,518
13,955
126 %
Consumer loan and credit services loss provision 6,068
3,275
85 %
Total cost of revenue 145,147
69,152
110 %

Net revenue 161,639
89,272
81 %

Segment expenses:
Store operating expenses 104,555
52,480
99 %
Depreciation and amortization 5,919
2,906
104 %
Total segment expenses 110,474
55,386
99 %

Segment pre-tax operating income $ 51,165
$ 33,886
51 %

Retail Merchandise Sales Operations

U.S. retail merchandise sales increased ~~90%~~17% to ~~$160,598~~$195.9 million during the third quarter of ~~2017~~2022 compared to ~~$84,547~~$167.3 million for the third quarter of 2016. The increase was primarily due to the third quarter of 2016 only including the results of operations for Cash America for the period September 2, 2016 to September 30, 2016 (“Cash America 2016 Partial Quarter”) as the Merger was completed on September 1, 2016.2021. Same-store retail sales ~~decreased 1% in both legacy First Cash and Cash America stores~~increased 16% in the third quarter of ~~2017~~2022 compared to the third quarter of ~~2016. During~~2021. The increase in total and same-store retail sales was primarily due to increased inventory levels during the third quarter of ~~2017,~~2022 compared to the third quarter of 2021 and greater demand for value-priced consumer goods. The gross profit margin on retail merchandise sales in the U.S. was ~~33% compared~~41% in the third quarter of 2022 and 44% in the third quarter of 2021. The decrease in the retail merchandise margins was primarily due to ~~a margin of 39%~~lower-than-normal inventory levels during the third quarter of ~~2016, reflecting~~2021, which limited the ~~impact of historically lower margins in the Cash America stores and a focus during the third quarter of 2017 on clearing aged inventory levels in the Cash America stores.~~need for normal discounting.

U.S. inventories ~~decreased 14%~~increased 17% from ~~$280,429~~$175.0 million at September 30, ~~2016~~2021 to ~~$240,384~~$204.4 million at September 30, ~~2017.~~2022. The ~~decrease~~increase was primarily due to ~~a 19% decline in legacy Cash America store inventories as~~lower-than-normal inventory balances at September 30, 2021 due to the ~~Company continues to optimize inventory levels and clear aged inventory in~~impacts of the ~~Cash America stores, partially offset by a 6% increase in legacy First Cash store inventories.~~COVID-19 pandemic. Inventories aged greater than one year ~~were 11% and 5%~~ in the ~~legacy Cash America stores~~U.S. were 1% at both September 30, 2022 and ~~legacy First Cash U.S. stores, respectively.~~2021.

Pawn Lending Operations

U.S. pawn loan receivables as of September 30, 2022 increased 15% in total and on a same-store basis compared to September 30, 2021. The increase in total and same-store pawn receivables was primarily due to the continued recovery in pawn loan demand to pre-pandemic levels combined with inflationary pressures driving additional demand for consumer credit.

U.S. pawn loan fees increased ~~95% totaling $95,266~~25% to $96.2 million during the third quarter of ~~2017~~2022 compared to ~~$48,840~~$76.7 million for the third quarter of ~~2016. The increase was primarily due to the Cash America 2016 Partial Quarter. Legacy First Cash same-store~~2021. Same-store pawn ~~loan~~ fees ~~increased 3%, while legacy Cash America same-store pawn loan fees decreased 11%~~ in the third quarter of ~~2017~~2022 also increased 25% compared to the third quarter of ~~2016. Pawn loan receivables~~2021. The increase in ~~the U.S. as of September 30, 2017 decreased 6% compared to September 30, 2016. Legacy First Cash~~total and same-store pawn receivables increased 5%, while legacy Cash America same-store pawn receivables decreased 13% as of September 30, 2017 compared to September 30, 2016. The decline in legacy Cash America same-store pawn receivables and pawn loan fees was primarily due to the ~~expected impact of reducing the holding period on delinquent~~continued recovery in pawn ~~loans, continued optimization of loan-to-value ratios and to a lesser extent, the impact of the hurricane on pawn~~loan receivables, ~~in coastal Texas markets.~~as described above.

~~Wholesale Scrap Jewelry Operations~~Segment Expenses

U.S. ~~wholesale scrap jewelry revenue, consisting primarily of gold sales,~~operating expenses increased ~~115%~~10% to ~~$32,397~~$102.5 million during the third quarter of ~~2017~~2022 compared to ~~$15,046~~$93.2 million during the third quarter of ~~2016.~~2021 while same-store operating expenses increased 9% compared with the prior-year period. The increase in ~~wholesale scrap jewelry revenue~~total and same-store operating expenses was primarily due to ~~the Cash America 2016 Partial Quarter. The scrap gross~~inflationary increases in wages and other certain operating costs and increased store-level incentive compensation driven by increased revenues and store operating profit margin in the U.S. was 3% compared to the prior-year margin of 7%, primarily as a result of the typically higher cost basis in scrap jewelry sold by the Cash America stores. Scrap jewelry profits accounted for less than 1% of U.S. net revenue (gross profit) for the third quarter of 2017 compared to 1% in the third quarter of 2016.

~~Consumer Lending Operations~~

~~Segment Expenses and~~ Segment Pre-Tax Operating Income

The U.S. segment pre-tax operating income for the third quarter of ~~2017~~2022 was ~~$51,165,~~$70.5 million, which generated a pre-tax segment operating margin of ~~17%~~23% compared to ~~$33,886~~$52.1 million and 21% in the prior year, respectively. The ~~decline~~increase in the segment pre-tax operating income and margin ~~was primarily due to historically lower operating margins~~reflected an 18% increase in net revenue further leveraged by the ~~Cash America stores and a focus during the third quarter of 2017 on clearing aged inventory levels~~10% increase in ~~Cash America stores, resulting in lower gross profit margins on retail merchandise sales.~~segment expenses.

Latin America Operations Segment

Latin American results of operations for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 were impacted by a 1% unfavorable change in the average value of the Mexican peso compared to the U.S. dollar. The translated value of Latin American earning assets as of September 30, 2022 compared to September 30, 2021 were not affected by the end-of-period Mexican peso compared to the U.S. dollar exchange rate as it was unchanged compared to the prior-year period.

The following table details earning assets, which consist of pawn loans ~~consumer loans, net~~ and inventories as well as other earning asset metrics of the Latin America ~~operations~~pawn segment, as of September 30, ~~2017 as~~2022 compared to September 30, ~~2016:~~2021 (dollars in thousands, except as otherwise noted):


										Constant Currency Basis
										As of
										September 30,
	As of September 30,									2022		Increase
	2022			2021			Increase			(Non-GAAP)		(Non-GAAP)
Latin America Pawn Segment
Earning assets:
Pawn loans	$	124,582		$	106,168			17	%	$	124,711		17	%
Inventories		91,069			79,213			15	%	91,167			15	%
	$	215,651		$	185,381			16	%	$	215,878		16	%

Average outstanding pawn loan amount (in ones)	$	79		$	76			4	%	$	79		4	%

Composition of pawn collateral:
General merchandise	69		%	68		%
Jewelry	31		%	32		%
	100		%	100		%

Composition of inventories:
General merchandise	71		%	67		%
Jewelry	29		%	33		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	1		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	4.0 times			4.2 times

Constant Currency Basis
Balance at
September 30, Increase /
Balance at September 30, Increase / 2017 (Decrease)
2017 2016 (Decrease) (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Earning assets:
Pawn loans $ 90,150
$ 72,523
24 % $ 84,378
16 %
Consumer loans, net 407
411
(1 )% 380
(8 )%
Inventories 68,299
52,433
30 % 63,855
22 %
$ 158,856
$ 125,367
27 % $ 148,613
19 %

Average outstanding pawn loan amount (in ones) $ 67
$ 59
14 % $ 63
7 %

Composition of pawn collateral:
General merchandise 82 % 82 %
Jewelry 18 % 18 %
100 % 100 %

Composition of inventories:
General merchandise 75 % 80 %
Jewelry 25 % 20 %
100 % 100 %

Percentage of inventory aged greater than one year 1 % 1 %

The following table presents segment pre-tax operating income and other operating metrics of the Latin America ~~operations~~pawn segment for the three months ended September 30, ~~2017 as~~2022 compared to the three months ended September 30, ~~2016. Store operating~~2021 (dollars in thousands). Operating expenses include salary and benefit expense of ~~store-level~~pawn-store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores.


													Constant Currency Basis
													Three Months
													Ended
		Three Months Ended											September 30,
		September 30,							Increase /				2022			Increase
		2022				2021			(Decrease)				(Non-GAAP)			(Non-GAAP)
Latin America Pawn Segment
Revenue:
Retail merchandise sales		$	107,591			$	101,469			6	%		$	108,808			7	%
Pawn loan fees		49,505				44,691				11	%		50,067				12	%
Wholesale scrap jewelry sales		5,626				5,415				4	%		5,626				4	%
Total revenue		162,722				151,575				7	%		164,501				9	%

Cost of revenue:
Cost of retail merchandise sold		68,642				64,731				6	%		69,415				7	%
Cost of wholesale scrap jewelry sold		4,923				4,750				4	%		4,977				5	%
Total cost of revenue		73,565				69,481				6	%		74,392				7	%

Net revenue		89,157				82,094				9	%		90,109				10	%

Segment expenses:
Operating expenses		47,979				45,372				6	%		48,527				7	%
Depreciation and amortization		4,566				4,591				(1)	%		4,630				1	%
Total segment expenses		52,545				49,963				5	%		53,157				6	%

Segment pre-tax operating income		$	36,612			$	32,131			14	%		$	36,952			15	%

Operating metrics:
Retail merchandise sales margin	36			%	36			%				36			%

Net revenue margin	55			%	54			%				55			%
Segment pre-tax operating margin	22			%	21			%				22			%

Constant Currency Basis
Three Months
Ended
Three Months Ended September 30, Increase /
September 30, Increase / 2017 (Decrease)
2017 2016 (Decrease) (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales $ 85,736
$ 67,668
27 % $ 81,686
21 %
Pawn loan fees 37,279
30,665
22 % 35,534
16 %
Wholesale scrap jewelry sales 5,131
3,910
31 % 5,131
31 %
Consumer loan and credit services fees 480
486
(1 )% 457
(6 )%
Total revenue 128,626
102,729
25 % 122,808
20 %

Cost of revenue:
Cost of retail merchandise sold 53,789
41,477
30 % 51,252
24 %
Cost of wholesale scrap jewelry sold 5,313
3,022
76 % 5,068
68 %
Consumer loan and credit services loss provision 117
138
(15 )% 111
(20 )%
Total cost of revenue 59,219
44,637
33 % 56,431
26 %

Net revenue 69,407
58,092
19 % 66,377
14 %

Segment expenses:
Store operating expenses 34,411
28,094
22 % 32,920
17 %
Depreciation and amortization 2,704
2,602
4 % 2,587
(1 )%
Total segment expenses 37,115
30,696
21 % 35,507
16 %

Segment pre-tax operating income $ 32,292
$ 27,396
18 % $ 30,870
13 %

Retail Merchandise Sales Operations

Latin America retail merchandise sales increased ~~27% (21%~~6% (7% on a constant currency basis) to ~~$85,736~~$107.6 million during the third quarter of ~~2017~~2022 compared to ~~$67,668~~$101.5 million for the third quarter of ~~2016. The increase was primarily due to a 24% increase (19%~~2021. Same-store retail sales increased 5% (7% on a constant currency basis) during the third quarter of 2022 compared to the third quarter of 2021. The increase in total and same-store retail sales which included a same-store retail sales increase of 59% (52% on a constant currency basis) in the Maxi Prenda stores acquired in the fourth quarter of 2015 and first quarter of 2016. Excluding the Maxi Prenda stores, same-store retail sales increased 19% (14% on a constant currency basis), which was primarily due to ~~strong retail~~increased inventory levels during the third quarter of 2022 compared to the third quarter of 2021 and greater demand ~~trends and the maturation of existing stores.~~for value-priced consumer goods. The gross profit margin on retail merchandise sales was ~~37%~~36% during both the third quarter of ~~2017 compared~~2022 and 2021.

Latin America inventories increased 15% from $79.2 million at September 30, 2021 to ~~39% during~~$91.1 million at September 30, 2022. The increase was primarily due to lower-than-normal inventory balances at September 30, 2021 due to the ~~third quarter~~impacts of ~~2016.~~

Pawn Lending Operations

~~Pawn loan fees in~~ Latin America increased 22% (16% on a constant currency basis) totaling $37,279 during the third quarter of 2017 compared to $30,665 for the third quarter of 2016, primarily as a result of the 24% (16% on a constant currency basis) increase in pawn loan receivables increased 17% as of September 30, ~~2017~~2022 compared to September 30, ~~2016.~~2021, and on a same-store basis pawn loan receivables also increased 17%. The increase in ~~pawn receivables reflects a same-store pawn receivable increase of 22% (14% on a constant currency basis)~~total and ~~new store additions. The increase in~~ same-store pawn receivables was primarily due to ~~strong~~the continued recovery in pawn loan demand ~~for pawn loans and the maturation of existing stores.~~

~~Wholesale Scrap Jewelry Operations~~

Latin America pawn loan fees increased 11% (12% on a constant currency basis), totaling $49.5 million during the third quarter of ~~2016.~~2022 compared to $44.7 million for the third quarter of 2021. Same-store pawn fees increased 10% (12% on a constant currency basis) in the third quarter of 2022 compared to the third quarter of 2021. The increase in ~~wholesale scrap jewelry revenue~~total and same-store constant currency pawn loan fees was primarily due to ~~reduced scrapping activities~~the continued recovery in ~~the Maxi Prenda stores~~pawn loan receivables, as described above.

Operating expenses increased 6% (7% on a constant currency basis) to $48.0 million during the third quarter of ~~2016 as those stores were being converted~~2022 compared to $45.4 million during the ~~Company’s proprietary point~~third quarter of ~~sale~~2021, reflecting continued store growth and ~~loan management system. The scrap gross profit margin~~modest inflationary pressure on labor and other operating expenses in ~~Latin America was a loss of 4% (1% profit~~the current quarter. Same-store operating expenses increased 5% (6% on a constant currency basis) compared to the prior-year ~~margin of 23%. Scrap jewelry profits or losses accounted for less than 1% of Latin America net revenue (gross profit) for the third quarter of 2017 compared to 2% in the third quarter of 2016.~~period.

~~Segment Expenses and~~ Segment Pre-Tax Operating Income

The segment pre-tax operating income for the third quarter of ~~2017~~2022 was ~~$32,292,~~$36.6 million, which generated a pre-tax segment operating margin of ~~25%~~22% compared to ~~$27,396~~$32.1 million and ~~27%~~21% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected a 9% increase in net revenue further leveraged by a 5% increase in segment expenses and a 1% unfavorable change in the average value of the Mexican peso.

Retail POS Payment Solutions Segment

The Company completed the AFF Acquisition on December 17, 2021, and the results of operations of AFF have been consolidated since the acquisition date. As a result of purchase accounting, AFF’s as reported earning assets, consisting of finance receivables and leased merchandise, contain significant fair value adjustments. The fair value adjustments will be amortized over the life of the finance receivables and lease contracts acquired at the time of acquisition.

The following table provides a detail of finance receivables as reported and as adjusted to exclude the impacts of purchase accounting as of September 30, 2022 (in thousands):


	As of September 30, 2022
	As Reported (GAAP)		Adjustments		Adjusted (Non-GAAP)
Finance receivables, before allowance for loan losses (1)	$	190,358	$	(7,858)	$	182,500
Less allowance for loan losses	(78,413)		—		(78,413)
Finance receivables, net	$	111,945	$	(7,858)	$	104,087

(1)As reported acquired finance receivables was recorded at fair value in conjunction with purchase accounting. Adjustment represents the difference between the original amortized cost basis and fair value of the remaining acquired finance receivables.

The following table provides a detail of leased merchandise as reported and as adjusted to exclude the impacts of purchase accounting as of September 30, 2022 (in thousands):


	As of September 30, 2022
	As Reported (GAAP)		Adjustments		Adjusted (Non-GAAP)
Leased merchandise, before allowance for lease losses (1)	$	210,703	$	6,709	$	217,412
Less allowance for lease losses	(78,020)		(7,610)		(85,630)
Leased merchandise, net (2)	$	132,683	$	(901)	$	131,782

(1)As reported acquired leased merchandise was recorded at fair value (which includes estimates for charge-offs) in conjunction with purchase accounting. Adjustment represents the difference between the original depreciated cost and fair value of the remaining acquired leased merchandise.

(2)Includes $0.6 million of intersegment transactions related to U.S. pawn stores offering AFF’s LTO payment solution as a payment option in its stores that are eliminated upon consolidation. For further detail, see earning assets detail in Note 10 of Notes to Consolidated Financial Statements.

AFF’s as reported results of operations contain significant purchase accounting impacts. The following table presents segment pre-tax operating income as reported and as adjusted to exclude the impacts of purchase accounting for the three months ended September 30, 2022 (in thousands). Operating expenses include salary and benefit expense of certain operations focused departments, merchant partner incentives, bank and other payment processing charges, credit reporting costs, information technology costs, advertising costs and other operational costs incurred by AFF.


	Three Months Ended September 30, 2022
	As Reported				Adjusted
	(GAAP)		Adjustments		(Non-GAAP)
Retail POS Payment Solutions Segment
Revenue:
Leased merchandise income	$	158,089	$	—	$	158,089
Interest and fees on finance receivables	48,846		7,111		55,957

Total revenue	206,935		7,111		214,046

Cost of revenue:
Depreciation of leased merchandise	86,703		(839)		85,864
Provision for lease losses	32,350		—		32,350
Provision for loan losses	31,956		—		31,956

Total cost of revenue	151,009		(839)		150,170

Net revenue	55,926		7,950		63,876

Segment expenses:
Operating expenses	35,060		—		35,060
Depreciation and amortization	775		—		775
Total segment expenses	35,835		—		35,835

Segment pre-tax operating income	$	20,091	$	7,950	$	28,041

Consolidated Results of Operations

The following table reconciles pre-tax operating income of the Company’s U.S. ~~operations~~pawn segment, Latin America pawn segment and ~~Latin America operations~~retail POS payment solutions segment discussed above to consolidated net income for the three months ended September 30, ~~2017 as~~2022 compared to the three months ended September 30, ~~2016:~~2021 (dollars in thousands):


	Three Months Ended
	September 30,				Increase /
	2022		2021		(Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. pawn	$	70,481	$	52,086		35	%
Latin America pawn	36,612		32,131			14	%
Retail POS payment solutions (1)	20,091		—			—	%
Intersegment elimination (2)	(586)		—			—	%
Consolidated segment pre-tax operating income	126,598		84,217			50	%

Corporate expenses and other income:
Administrative expenses	36,951		30,208			22	%
Depreciation and amortization	14,824		964			1,438	%
Interest expense	18,282		7,961			130	%
Interest income	(206)		(143)			44	%
Loss on foreign exchange	255		558			(54)	%
Merger and acquisition expenses	733		12			6,008	%
Gain on revaluation of contingent acquisition consideration	(19,800)		—			—	%
Other expenses (income), net	164		361			(55)	%

Total corporate expenses and other income	51,203		39,921			28	%

Income before income taxes	75,395		44,296			70	%

Provision for income taxes	16,079		10,900			48	%

Net income	$	59,316	$	33,396		78	%

Three Months Ended
September 30, Increase /
2017 2016 (Decrease)
Consolidated Results of Operations
U.S. operations segment pre-tax operating income $ 51,165
$ 33,886
51 %
Latin America operations segment pre-tax operating income 32,292
27,396
18 %
Consolidated segment pre-tax operating income 83,457
61,282
36 %

Corporate expenses and other income:
Administrative expenses 29,999
24,500
22 %
Depreciation and amortization 5,249
1,773
196 %
Interest expense 6,129
5,073
21 %
Interest income (418 ) (138 ) 203 %
Merger and other acquisition expenses 911
29,398
(97 )%
Loss on extinguishment of debt 20
—
— %
Net loss on sale of common stock of Enova —
253
(100 )%
Total corporate expenses and other income 41,890
60,859
(31 )%

Income before income taxes 41,567
423
9,727 %

Provision for income taxes 13,293
1,835
624 %

Net income (loss) $ 28,274
$ (1,412 ) 2,102 %

Comprehensive income (loss) $ 23,293
$ (15,413 ) 251 %

(1)The AFF segment results are significantly impacted by certain purchase accounting adjustments as noted in the retail POS payment solutions segment results of operations above. Adjusted retail POS payment solutions segment pre-tax operating income excluding such purchase accounting adjustments was $28.0 million for the three months ended September 30, 2022.



~~Table of Contents~~

(2)Represents the elimination of intersegment transactions related to U.S. pawn stores offering AFF’s LTO payment solution as a payment option in its stores. For further detail, see Note 10 of Notes to Consolidated Financial Statements.

Corporate Expenses and Taxes

Administrative expenses increased 22% to ~~$29,999~~$37.0 million during the third quarter of ~~2017~~2022 compared to ~~$24,500 during~~$30.2 million in the third quarter of ~~2016,~~2021, primarily ~~as a result of~~due to the Merger, a 37% increase in the weighted-average store count resulting in additional management and supervisory compensation and other support expenses required for such growth and by a 5% favorable change in the average value of the Mexican peso, which increased comparative administrative expenses in Mexico.AFF Acquisition. As a percentage of revenue, administrative expenses decreased from 9%8% during the third quarter of ~~2016~~2021 to 7%5% during the third quarter of ~~2017, primarily due to synergies realized from the Merger and the Maxi Prenda acquisition.~~2022.

~~Depreciation~~Corporate depreciation and amortization expense increased 1,438% to ~~$5,249~~$14.8 million during the third quarter of ~~2017~~2022 compared to ~~$1,773~~$1.0 million in the third quarter of 2021, primarily due to $14.2 million in amortization expense during the third quarter of ~~2016 primarily due to the assumption of substantial corporate property and equipment from the Merger and $2,313 in amortization expense~~2022 related to identified intangible assets ~~acquired as a result of~~in the ~~Merger.~~AFF Acquisition.

Interest expense increased 130% to ~~$6,129~~$18.3 million during the third quarter of 2022 compared to $8.0 million in the third quarter of ~~2017 compared~~2021, primarily due to ~~$5,073~~an increase in the Company’s outstanding senior unsecured notes and higher interest rates and higher average balances outstanding on the Company’s unsecured credit facilities. See Note 8 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”

The Company revalues the contingent consideration related to the AFF Acquisition to fair value at the end of each reporting period with changes in the fair value recognized in the consolidated statements of income. The Company recognized a gain of $19.8 million during the third quarter of 2022 as a result of a decrease in the liability for the estimated fair value of contingent consideration related to the AFF Acquisition. The contingent consideration is primarily based on AFF’s achievement of certain EBITDA targets by the end of 2022 and in the first half of 2023. Additionally, a portion of the contingent consideration consisted of a potential payment of up to $75.0 million to the seller parties in the event that the highest average stock price of the Company for any 10-day period from December 6, 2021 through February 28, 2023 was less than $86.25. As a result of an increase in the Company’s stock price subsequent to September 30, 2022, no such contingent payment to the seller parties is required. See Note 5 of Notes to Consolidated Financial Statements.

Consolidated effective income tax rates for the third quarter of ~~2016. See “—Liquidity~~2022 and ~~Capital Resources.”~~

~~Net Income, Adjusted Net Income, Net Income Per Share and Adjusted Net Income Per Share~~

Three Months Ended September 30,
2017 2016
As Reported Adjusted As Reported Adjusted
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
Revenue $ 435,412
$ 435,412
$ 261,153
$ 261,153
Net revenue $ 231,046
$ 231,046
$ 147,364
$ 147,364
Net income (loss) $ 28,274
$ 28,861
$ (1,412 ) $ 20,126
Diluted earnings (loss) per share $ 0.59
$ 0.61
$ (0.04 ) $ 0.58
Weighted avg diluted shares 47,668
47,668
34,631
34,631

~~GAAP and adjusted earnings per share for~~2021, related to an increased inflation index adjustment allowed in Mexico as a result of elevated inflation in Mexico, which started during the ~~three months ended September 30, 2017 compared~~latter half of 2021. In addition, the Company recognized a $1.0 million permanent domestic tax benefit in the third quarter of 2022 related to the ~~three months ended September 30, 2016 were positively impacted by $0.02 per share due~~$19.8 million gain on revaluation of certain contingent consideration related to the year-over-year 5% favorable change in the average value of the Mexican peso. Adjusted net income removes certain items from GAAP net income that the Company does not consider to be representative of its actual operating performance, suchAFF Acquisition as Merger and other acquisition expenses and loss on extinguishment of debt, but does not adjust for the effects of foreign currency rate fluctuations. See “—Non-GAAP Financial Information—Adjusted Net Income and Adjusted Net Income Per Share” below.described above.

U.S. ~~Operations~~Pawn Segment

The following table presents segment pre-tax operating income and other operating metrics of the U.S. ~~operations~~pawn segment for the nine months ended September 30, ~~2017 as~~2022 compared to the nine months ended September 30, ~~2016. Store operating~~2021 (dollars in thousands). Operating expenses include salary and benefit expense of ~~store-level~~pawn-store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores.


	Nine Months Ended
	September 30,
	2022			2021			Increase
U.S. Pawn Segment
Revenue:
Retail merchandise sales	$	596,165		$	530,468			12	%
Pawn loan fees		274,304			220,013			25	%
Wholesale scrap jewelry sales		45,153			20,217			123	%
Total revenue		915,622			770,698			19	%

Cost of revenue:
Cost of retail merchandise sold		349,007			295,455			18	%
Cost of wholesale scrap jewelry sold		39,150			16,678			135	%
Total cost of revenue		388,157			312,133			24	%

Net revenue		527,465			458,565			15	%

Segment expenses:
Operating expenses		302,572			282,068			7	%
Depreciation and amortization		17,261			16,391			5	%
Total segment expenses		319,833			298,459			7	%

Segment pre-tax operating income	$	207,632		$	160,106			30	%

Operating metrics:
Retail merchandise sales margin	41		%	44		%

Net revenue margin	58		%	59		%
Segment pre-tax operating margin	23		%	21		%

Nine Months Ended
September 30,
2017 2016 Increase
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 519,116
$ 186,673
178 %
Pawn loan fees 287,338
94,929
203 %
Wholesale scrap jewelry sales 91,430
25,910
253 %
Consumer loan and credit services fees 57,425
19,619
193 %
Total revenue 955,309
327,131
192 %

Cost of revenue:
Cost of retail merchandise sold 337,789
114,632
195 %
Cost of wholesale scrap jewelry sold 87,600
22,914
282 %
Consumer loan and credit services loss provision 15,115
5,380
181 %
Total cost of revenue 440,504
142,926
208 %

Net revenue 514,805
184,205
179 %

Segment expenses:
Store operating expenses 318,044
107,196
197 %
Depreciation and amortization 18,759
5,827
222 %
Total segment expenses 336,803
113,023
198 %

Segment pre-tax operating income $ 178,002
$ 71,182
150 %

Retail Merchandise Sales Operations

U.S. retail merchandise sales increased ~~178%~~12% to ~~$519,116~~$596.2 million during the nine months ended September 30, ~~2017~~2022 compared to ~~$186,673~~$530.5 million for the nine months ended September 30, 2016. The increase was primarily due to the nine months ended September 30, 2016 only including the results of operations for Cash America for the period September 2, 2016 to September 30, 2016 (“Cash America 2016 Partial Period”) as the Merger was completed on September 1, 2016.2021. Same-store retail sales ~~decreased 1% in legacy First Cash stores and decreased 4% in legacy Cash America stores~~increased 9% during the nine months ended September 30, ~~2017~~2022 compared to the nine months ended September 30, ~~2016. Gross~~2021. The increase in total and same-store retail sales was primarily due to increased inventory levels during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 and greater demand for value-priced consumer goods. During the nine months ended September 30, 2022, the gross profit margin on retail merchandise sales in the U.S. was ~~35%~~41% compared to a margin of 44% during the nine months ended September 30, ~~2017 compared~~2021. The decrease in the retail merchandise margins was primarily due to ~~a margin of 39%~~lower-than-normal inventory levels during the nine months ended September 30, ~~2016, reflecting~~2021, which limited the ~~impact of historically lower margins in the Cash America stores and a focus during 2017 on clearing aged inventory levels in the Cash America stores.~~need for normal discounting.

Pawn Lending Operations

U.S. pawn loan fees increased ~~203% totaling $287,338~~25% to $274.3 million during the nine months ended September 30, ~~2017~~2022 compared to ~~$94,929~~$220.0 million for the nine months ended September 30, ~~2016. The increase was primarily due to the Cash America 2016 Partial Period. Legacy First Cash same-store~~2021. Same-store pawn ~~loan~~ fees increased ~~4%, while legacy Cash America same-store pawn loan fees decreased 8%~~22% during the nine months ended September 30, ~~2017~~2022 compared to the nine months ended September 30, ~~2016. Pawn loan receivables~~2021. The increase in ~~the U.S. as of September 30, 2017 decreased 6% compared to September 30, 2016. Legacy First Cash~~total and same-store pawn receivables increased 5%, while legacy Cash America same-store pawn receivables decreased 13% as of September 30, 2017 compared to September 30, 2016. The decline in legacy Cash America same-store pawn receivables and pawn loan fees was primarily due to the ~~expected impact of reducing the holding period on delinquent~~continued recovery in pawn ~~loans, continued optimization of loan-to-value ratios and~~loan receivables to ~~a lesser extent, the impact of the hurricane on pawn receivables in coastal Texas markets.~~pre-pandemic levels, combined with inflationary pressures driving additional demand for consumer credit.

~~Wholesale Scrap Jewelry Operations~~Segment Expenses

U.S. ~~wholesale scrap jewelry revenue, consisting primarily of gold sales,~~store operating expenses increased ~~253%~~7% to ~~$91,430~~$302.6 million during the nine months ended September 30, ~~2017~~2022 compared to ~~$25,910~~$282.1 million during the nine months ended September 30, ~~2016.~~2021 and same-store operating expenses increased 5% compared with the prior-year period. The increase in ~~wholesale scrap jewelry revenue~~operating expenses was primarily due to ~~the Cash America 2016 Partial Period. The scrap gross~~inflationary increases in wages and other certain operating costs and increased store-level incentive compensation driven by increased revenues and segment profit margin in the U.S. was 4% compared to the prior-year margin of 12%, primarily as a result of the typically higher cost basis in scrap jewelry sold by the Cash America stores. Scrap jewelry profits accounted for 1% of U.S. net revenue (gross profit) for the nine months ended September 30, 2017 compared to 2% in the nine months ended September 30, 2016.

~~Consumer Lending Operations~~

~~Segment Expenses and~~ Segment Pre-Tax Operating Income

The U.S. segment pre-tax operating income for the nine months ended September 30, ~~2017~~2022 was ~~$178,002,~~$207.6 million, which generated a pre-tax segment operating margin of ~~19%~~23% compared to ~~$71,182~~$160.1 million and ~~22%~~21% in the prior year, respectively. The ~~decline~~increase in the segment pre-tax operating income and margin ~~was primarily due to historically lower operating margins~~reflected a 15% increase in ~~the Cash America stores and~~net revenue further leveraged by a ~~focus during 2017 on clearing aged inventory levels~~7% increase in ~~Cash America stores, resulting in lower gross profit margins on retail merchandise sales.~~segment expenses.

Latin America Operations Segment

Latin American results of operations for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 were impacted by a 1% unfavorable change in the average value of the Mexican peso compared to the U.S. dollar.

The following table presents segment pre-tax operating income and other operating metrics of the Latin America ~~operations~~pawn segment for the nine months ended September 30, ~~2017 as~~2022 compared to the nine months ended September 30, ~~2016. Store operating~~2021 (dollars in thousands). Operating expenses include salary and benefit expense of ~~store-level~~pawn-store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores.


													Constant Currency Basis
													Nine Months
													Ended
		Nine Months Ended											September 30,
		September 30,											2022			Increase
		2022				2021			Increase				(Non-GAAP)			(Non-GAAP)
Latin America Pawn Segment
Revenue:
Retail merchandise sales		$	308,356			$	275,867			12	%		$	310,446			13	%
Pawn loan fees		137,309				126,783				8	%		138,244				9	%
Wholesale scrap jewelry sales		30,082				23,843				26	%		30,082				26	%
Total revenue		475,747				426,493				12	%		478,772				12	%

Cost of revenue:
Cost of retail merchandise sold		196,057				173,179				13	%		197,379				14	%
Cost of wholesale scrap jewelry sold		25,221				20,979				20	%		25,394				21	%
Total cost of revenue		221,278				194,158				14	%		222,773				15	%

Net revenue		254,469				232,335				10	%		255,999				10	%

Segment expenses:
Operating expenses		141,574				133,003				6	%		142,553				7	%
Depreciation and amortization		13,520				13,388				1	%		13,642				2	%
Total segment expenses		155,094				146,391				6	%		156,195				7	%

Segment pre-tax operating income		$	99,375			$	85,944			16	%		$	99,804			16	%

Operating metrics:
Retail merchandise sales margin	36			%	37			%				36			%

Net revenue margin	53			%	54			%				53			%
Segment pre-tax operating margin	21			%	20			%				21			%

Constant Currency Basis
Nine Months
Ended
Nine Months Ended September 30, Increase /
September 30, Increase / 2017 (Decrease)
2017 2016 (Decrease) (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales $ 231,034
$ 199,861
16 % $ 238,833
19 %
Pawn loan fees 96,090
87,887
9 % 99,272
13 %
Wholesale scrap jewelry sales 15,855
9,996
59 % 15,855
59 %
Consumer loan and credit services fees 1,329
1,460
(9 )% 1,377
(6 )%
Total revenue 344,308
299,204
15 % 355,337
19 %

Cost of revenue:
Cost of retail merchandise sold 145,669
124,534
17 % 150,536
21 %
Cost of wholesale scrap jewelry sold 14,770
7,787
90 % 15,238
96 %
Consumer loan and credit services loss provision 304
400
(24 )% 315
(21 )%
Total cost of revenue 160,743
132,721
21 % 166,089
25 %

Net revenue 183,565
166,483
10 % 189,248
14 %

Segment expenses:
Store operating expenses 94,736
83,367
14 % 97,565
17 %
Depreciation and amortization 7,723
7,919
(2 )% 7,956
— %
Total segment expenses 102,459
91,286
12 % 105,521
16 %

Segment pre-tax operating income $ 81,106
$ 75,197
8 % $ 83,727
11 %

Retail Merchandise Sales Operations

Latin America retail merchandise sales increased ~~16% (19%~~12% (13% on a constant currency basis) to ~~$231,034~~$308.4 million during the nine months ended September 30, ~~2017~~2022 compared to ~~$199,861~~$275.9 million for the nine months ended September 30, ~~2016. The increase was primarily due to a 9% increase (13%~~2021. Same-store retail sales increased 11% (also 11% on a constant currency basis) in same-store retail sales, which included a same-store retail sales increase of 25% (20% on a constant currency basis) in the Maxi Prenda stores acquired in the fourth quarter of 2015 and first quarter of 2016. Excluding the Maxi Prenda stores, same-store retail sales increased 9% (13% on a constant currency basis), which was primarily due to strong retail demand trends and the maturation of existing stores. Duringduring the nine months ended September 30, ~~2017,~~2022 compared to the nine months ended September 30, 2021. The increase in total and same-store retail sales was primarily due to increased inventory levels during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 and greater demand for value-priced consumer goods. The gross profit margin on retail merchandise sales was ~~37% compared to 38%~~36% during the nine months ended September 30, ~~2016.~~

~~Pawn Lending Operations~~

Pawn Lending Operations

Latin America pawn loan fees increased 8% (9% on a constant currency basis) to $137.3 million during the nine months ended September 30, 2022 compared to ~~$87,887~~$126.8 million for the nine months ended September 30, ~~2016 as a result of the 24% (16%~~2021. Same-store pawn fees increased 7% (8% on a constant currency basis) increase in pawn loan receivables as of September 30, 2017 compared to September 30, 2016. The increase in pawn receivables reflects a same-store pawn receivable increase of 22% (14% on a constant currency basis) and new store additions. The increase in same-store pawn receivables was primarily due to strong demand for pawn loans and the maturation of existing stores.

~~Wholesale Scrap Jewelry Operations~~

Store operating expenses increased 6% (7% on a constant currency basis) to $141.6 million during the nine months ended September 30, ~~2016. The increase in wholesale scrap jewelry revenue was primarily due~~2022 compared to ~~reduced scrapping activities in the Maxi Prenda stores~~$133.0 million during the nine months ended September 30, ~~2016 as those stores were being converted to~~2021, reflecting continued store growth and inflationary pressure on labor and other operating expenses during the ~~Company’s proprietary point of sale and loan management system. The scrap gross profit margin in Latin America was 7% (4%~~current period. Same-store operating expenses increased 6% (also 6% on a constant currency basis) compared to the prior-year margin of 22%. Scrap jewelry profits accounted for 1% of Latin America net revenue (gross profit) for the nine months ended September 30, 2017, which equaled the nine months ended September 30, 2016.period.

~~Segment Expenses and~~ Segment Pre-Tax Operating Income

The segment pre-tax operating income for the nine months ended September 30, ~~2017~~2022 was ~~$81,106,~~$99.4 million, which generated a pre-tax segment operating margin of ~~24%~~21% compared to ~~$75,197~~$85.9 million and ~~25%~~20% in the prior year, respectively. The increase in the segment pre-tax operating income reflected a 10% increase in net revenue further leveraged by a 6% increase in segment expenses and a 1% unfavorable change in the average value of the Mexican peso.

Retail POS Payment Solutions Segment

The following table presents segment pre-tax operating income as reported and as adjusted to exclude the impacts of purchase accounting for the nine months ended September 30, 2022 (in thousands):


	Nine Months Ended September 30, 2022
	As Reported				Adjusted
	(GAAP)		Adjustments		(Non-GAAP)
Retail POS Payment Solutions Segment
Revenue:
Leased merchandise income	$	455,736	$	—	$	455,736
Interest and fees on finance receivables	135,039		34,798		169,837

Total revenue	590,775		34,798		625,573

Cost of revenue:
Depreciation of leased merchandise	263,014		(6,796)		256,218
Provision for lease losses	110,205		—		110,205
Provision for loan losses	83,453		—		83,453

Total cost of revenue	456,672		(6,796)		449,876

Net revenue	134,103		41,594		175,697

Segment expenses:
Operating expenses	95,252		—		95,252
Depreciation and amortization	2,156		—		2,156
Total segment expenses	97,408		—		97,408

Segment pre-tax operating income	$	36,695	$	41,594	$	78,289

Consolidated Results of Operations

The following table reconciles pre-tax operating income of the Company’s U.S. ~~operations~~pawn segment, Latin America pawn segment and ~~Latin America operations~~retail POS payment solutions segment discussed above to consolidated net income for the nine months ended September 30, ~~2017 as~~2022 compared to the nine months ended September 30, ~~2016:~~2021 (dollars in thousands):


	Nine Months Ended
	September 30,				Increase /
	2022		2021		(Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. operations	$	207,632	$	160,106		30	%
Latin America pawn	99,375		85,944			16	%
Retail POS payment solutions (1)	36,695		—			—	%
Intersegment eliminations (2)	(586)		—			—	%
Consolidated segment pre-tax operating income	343,116		246,050			39	%

Corporate expenses and other income:
Administrative expenses	110,882		88,605			25	%
Depreciation and amortization	44,558		2,952			1,409	%
Interest expense	50,749		22,389			127	%
Interest income	(1,104)		(420)			163	%
(Gain) loss on foreign exchange	(198)		248			(180)	%
Merger and acquisition expenses	1,712		1,264			35	%
Gain on revaluation of contingent acquisition consideration	(82,789)		—			—	%
Other expenses (income), net	(2,721)		1,640			(266)	%

Total corporate expenses and other income	121,089		116,678			4	%

Income before income taxes	222,027		129,372			72	%

Provision for income taxes	48,598		33,834			44	%

Net income	$	173,429	$	95,538		82	%

Nine Months Ended
September 30, Increase /
2017 2016 (Decrease)
Consolidated Results of Operations
U.S. operations segment pre-tax operating income $ 178,002
$ 71,182
150 %
Latin America operations segment pre-tax operating income 81,106
75,197
8 %
Consolidated segment pre-tax operating income 259,108
146,379
77 %

Corporate expenses and other income:
Administrative expenses 93,542
58,277
61 %
Depreciation and amortization 16,322
3,419
377 %
Interest expense 17,827
13,859
29 %
Interest income (1,138 ) (636 ) 79 %
Merger and other acquisition expenses 3,164
33,877
(91 )%
Loss on extinguishment of debt 14,114
—
— %
Net loss on sale of common stock of Enova —
253
(100 )%
Total corporate expenses and other income 143,831
109,049
32 %

Income before income taxes 115,277
37,330
209 %

Provision for income taxes 39,119
13,895
182 %

Net income $ 76,158
$ 23,435
225 %

Comprehensive income (loss) $ 107,519
$ (7,269 ) 1,579 %

(1)The AFF segment results are significantly impacted by certain purchase accounting adjustments as noted in the retail POS payment solutions segment results of operations above. Adjusted retail POS payment solutions segment pre-tax operating income excluding such purchase accounting adjustments was $78.3 million for the nine months ended September 30, 2022.

Corporate Expenses and Taxes

Administrative expenses increased ~~61%~~25% to ~~$93,542~~$110.9 million during the nine months ended September 30, ~~2017~~2022 compared to ~~$58,277~~$88.6 million during the nine months ended September 30, ~~2016,~~2021, primarily ~~as a result of~~due to the Merger and a 54% increase in the weighted-average store count resulting in additional management and supervisory compensation and other support expenses required for such growth, partially offset by a 3% unfavorable change in the average value of the Mexican peso, which reduced comparative administrative expenses in Mexico.AFF Acquisition. As a percentage of revenue, administrative expenses decreased from ~~9% during the nine months ended September 30, 2016 to~~ 7% during the nine months ended September 30, ~~2017, primarily due~~2021 to ~~synergies realized from the Merger and the Maxi Prenda acquisition.~~

Corporate depreciation and amortization expense increased 1,409% to ~~$3,419~~$44.6 million during the nine months ended September 30, ~~2016~~2022 compared to $3.0 million in the nine months ended September 30, 2021, primarily due to ~~the assumption of substantial corporate property and equipment from the Merger and $7,428~~$42.5 million in amortization expense ~~related to intangible assets acquired as a result of the Merger.~~

Interest expense increased 127% to $50.7 million during the nine months ended September 30, 2022 compared to ~~$13,859~~$22.4 million for the nine months ended September 30, ~~2016.~~2021, primarily due to an increase in the Company’s outstanding senior unsecured notes and higher interest rates and higher average balances outstanding on the Company’s unsecured credit facilities. See ~~“—Liquidity~~Note 8 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”

~~Merger and other acquisition expenses decreased~~The Company revalues the contingent consideration related to ~~$3,164~~the AFF Acquisition to fair value at the end of each reporting period with changes in the fair value recognized in the consolidated statements of income. The Company recognized a gain of $82.8 million during the nine months ended September 30, ~~2017 compared~~2022 as a result of a decrease in the liability for the estimated fair value of certain contingent consideration related to ~~$33,877~~the AFF Acquisition. Additionally, a portion of the contingent consideration consisted of a potential payment of up to $75.0 million to the seller parties in the event that the highest average stock price of the Company for any 10-day period from December 6, 2021 through February 28, 2023 was less than $86.25. As a result of an increase in the Company’s stock price subsequent to September 30, 2022, no such contingent payment to the seller parties is required. See Note 5 of Notes to Consolidated Financial Statements.

The Company recognized a gain of $3.2 million during the nine months ended September 30, 2022 as a result of a cash distribution received from a non-operating investment acquired in conjunction with the merger with Cash America International, Inc. (“Cash America Merger”), which was included in other expenses (income), net in the accompanying consolidated statements of income.

Consolidated effective income tax rates for the nine months ended September 30, ~~2016, reflecting timing in transaction~~2022 and ~~integration costs primarily related to the Merger. See “—Non-GAAP Financial Information” for additional details of Merger related expenses.~~

~~Net Income, Adjusted Net Income, Net Income Per Share and Adjusted Net Income Per Share~~

Nine Months Ended September 30,
2017 2016
As Reported Adjusted As Reported Adjusted
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
Revenue $ 1,299,617
$ 1,299,617
$ 626,335
$ 626,335
Net revenue $ 698,370
$ 698,370
$ 350,688
$ 350,688
Net income $ 76,158
$ 87,044
$ 23,435
$ 47,884
Diluted earnings per share $ 1.58
$ 1.81
$ 0.77
$ 1.58
Weighted avg diluted shares 48,117
48,117
30,372
30,372

~~GAAP and adjusted earnings per share for~~2021, related to an increased inflation index adjustment allowed in Mexico as a result of elevated inflation in Mexico, which started during the latter half of 2021. In addition, the Company recognized a $4.3 million permanent domestic tax benefit in the nine months ended September 30, ~~2017 compared~~2022 related to the ~~nine months ended September 30, 2016 were negatively impacted by $0.03 per share due~~$82.8 million gain on revaluation of certain contingent consideration related to the year-over-year 3% unfavorable change in the average value of the Mexican peso. Adjusted net income removes certain items from GAAP net income that the Company does not consider to be representative of its actual operating performance, suchAFF Acquisition as Merger and other acquisition expenses, but does not adjust for the effects of foreign currency rate fluctuations. See “—Non-GAAP Financial Information—Adjusted Net Income and Adjusted Net Income Per Share” below.described above.

LIQUIDITY AND CAPITAL RESOURCES

~~As of September 30, 2017, the~~Material Capital Requirements

The Company’s primary ~~sources~~capital requirements include:

•Expand pawn operations through growth of ~~liquidity were $93,411~~pawn receivables and inventories in existing stores, new store openings, strategic acquisition of pawn stores and purchases of real estate at existing locations;

•Expand retail POS payment solutions operations through growth of the business generated from new and existing merchant partners;

◦Expected to result in additional purchases of lease merchandise, funding of additional finance receivables and an increase in servicing and collection activities to support increased leases and finance receivables outstanding;

◦Expected to require operational support and development activities around AFF’s proprietary loan management and decisioning systems along with marketing and merchant and customer service functions; and

•Return capital to shareholders through dividends and stock repurchases.

Other material capital requirements include operating expenses (see Note 4 of Notes to Consolidated Financial Statements regarding operating lease commitments), general corporate operating activities, income tax payments and debt service, among others. The Company believes that net cash provided by operating activities and ~~cash equivalents, $265,544 of~~ available and unused funds under ~~the Company’s long-term lines of~~its revolving unsecured credit with its commercial lenders, $441,016 in customer loans and fees and service charges receivable and $308,683 in inventories. As of September 30, 2017, the amount of cash associated with indefinitely reinvested foreign earnings was $42,329, which is primarily held in Mexican pesos. The Company had working capital of $758,637 as of September 30, 2017 and total equity exceeded liabilities by a ratio of 2.2 to 1.

For the nine months ended September 30, 2017, the Company recognized a $14,114 loss on extinguishment of debt related to the repurchase or redemption of the 2021 Notes which includes the tender or redemption premiums paid over the outstanding $200,000 principal amount of the 2021 Notes and other reacquisition costs of $10,895 and the write off of unamortized debt issuance costs of $3,219.

Expand Pawn Operations

~~flow from its business, if necessary. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “—Regulatory Developments.”~~

Although viewed by management as a discretionary expenditure not required to operate its pawn stores, the Company may ~~seek additional financing,~~continue to purchase real estate from its landlords at existing stores or in conjunction with pawn store acquisitions as opportunities arise at reasonable valuations. The Company purchased the ~~terms~~real estate at 38 store locations, primarily from landlords at existing stores, for a cumulative purchase price of ~~which will be negotiated on a case-by-case basis.~~

Expand Retail POS Payment Solutions Operations

AFF expects to ~~have the required gold ounces~~expand its business primarily by promoting and expanding relationships with both new and existing customers and retail merchant partners. In addition, AFF has made, and intends to ~~meet the commitments as they come due.~~continue to make, investments in its customer and merchant support operations and facilities, its technology platforms and its proprietary decisioning platforms and processes.

Return of Capital to Shareholders

In ~~January 2015,~~October 2022, the Company’s Board of Directors ~~authorized~~declared a common stock repurchase program for up to 2,000,000 shares of the Company’s outstanding common stock. During the first quarter of 2017, the Company repurchased 228,000 shares of its common stock at an aggregate cost of $10,005 and an average cost per share of $43.94. In May 2017, the Company’s Board of Directors authorized a new common stock repurchase program for up to $100,000 of the Company’s outstanding common stock. The new share repurchase program replaced the Company’s prior share repurchase plan, which was terminated in May 2017. Under the May 2017 stock repurchase program, the Company has repurchased 954,000 shares of its common stock at an aggregate cost of $55,030 and an average cost per share of $57.65 and $44,970 remains available for repurchases as of September 30, 2017. The Company intends to continue repurchases under its repurchase program in 2017 through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act of 1934, as amended, subject to a variety of factors, including, but not limited to, the level of cash balances, credit availability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company’s stock, dividend policy and the availability of alternative investment opportunities.

During the nine months ended September 30, 2022, the Company repurchased a total of 2,035,000 shares of common stock at an aggregate cost of $144.7 million and an average cost per share of $71.12, and during the nine months ended September 30, 2021, the Company repurchased 688,000 shares of common stock at an aggregate cost of $49.6 million and an average cost per share of $72.10. The Company has approximately $27.5 million of remaining availability under its share repurchase program authorized in April 2022. In October 2022, the Board of Directors approved a new share repurchase authorization of up to $100 million of common shares, of which the entire $100 million is currently remaining. While the Company intends to continue repurchases under its active share repurchase program, future share repurchases are subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, dividend policy and the availability of alternative investment opportunities.

Sources of Liquidity

The Company regularly evaluates opportunities to optimize its capital structure, including through consideration of the issuance of debt or equity, to refinance existing debt and to enter into interest rate hedge transactions, such as interest rate swap agreements. As of September 30, 2022, the Company’s primary sources of liquidity were $100.6 million in cash and cash equivalents and $278.4 million of available and unused funds under the Company’s revolving unsecured credit facilities, subject to certain financial covenants (see Note 8 of Notes to Consolidated Financial Statements). The Company had working capital of $810.9 million as of September 30, 2022.

The Company’s cash and cash equivalents as of September 30, 2022 included $22.7 million held by its foreign subsidiaries. These cash balances, which are primarily held in Mexican pesos, are associated with foreign earnings the Company has asserted are indefinitely reinvested and which the Company primarily plans to use to support its continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, operating expenses or other similar cash needs of the Company’s foreign operations.

The Company’s liquidity is affected by a number of factors, including changes in general customer traffic and demand, pawn loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, LTO and finance receivable originations, collection of lease and finance receivable payments, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, earnout payments associated with the AFF Acquisition, litigation related expenses, tax rates, gold prices, foreign currency exchange rates and the pace of new pawn store expansion and acquisitions. Additionally, a prolonged reduction in earnings and EBITDA could limit the Company’s future ability to fully borrow on its credit facilities under current leverage covenants. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “Regulatory Developments.”

If needed, the Company could seek to raise additional funds from a variety of sources, including, but not limited to, repatriation of excess cash held in Latin America, the sale of assets, reductions in operating expenses, capital expenditures and dividends, the forbearance or deferral of operating expenses, the issuance of debt or equity securities, leveraging currently unencumbered real estate owned by the Company and/or changes to its management of current assets. The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory, which accounts for approximately 48% of total inventory, give the Company flexibility to quickly increase cash flow, if necessary.

Cash Flows and Liquidity Metrics

The following tables set forth certain historical information with respect to the Company’s sources and uses of cash and other key indicators of liquidity (dollars in thousands):


	Nine Months Ended September 30,
	2022		2021
Cash flow provided by operating activities	$	325,798	$	137,850
Cash flow used in investing activities	$	(238,732)	$	(189,935)
Cash flow (used in) provided by financing activities	$	(107,575)	$	36,704


		As of September 30,
		2022			2021
Working capital		$	810,929		$	487,090
Current ratio	3.5:1			3.2:1

Cash Flow Provided by Operating Activities

Net cash provided by operating activities increased $187.9 million, or 136%, from $137.9 million for the nine months ended September 30, 2021 to $325.8 million for the nine months ended September 30, 2022, due to net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows), and an increase in net income of $77.9 million.

Cash Flow Used in Investing Activities

Net cash used in investing activities increased $48.8 million, or 26%, from $189.9 million for the nine months ended September 30, 2021 to $238.7 million for the nine months ended September 30, 2022. Cash flows from investing activities are utilized primarily to fund acquisitions, purchases of furniture, fixtures, equipment and improvements, which includes capital expenditures for improvements to existing stores and for new pawn store openings and other corporate assets, and discretionary purchases of store real property. In addition, cash flows related to the funding of new pawn loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral and finance receivables are included in investing activities. The Company paid $29.6 million for furniture, fixtures, equipment and improvements and $77.7 million for discretionary pawn store real property purchases during the nine months ended September 30, 2022 compared to $31.6 million and $38.3 million in the prior-year period, respectively. The Company paid $7.1 million in cash related to pawn store acquisitions during the nine months ended September 30, 2022 compared to $49.4 million during the nine months ended September 30, 2021. The Company funded a net increase in pawn loans of $74.7 million during the nine months ended September 30, 2022 and $70.6 million during the nine months ended September 30, 2021, and the Company funded a net increase in finance receivables of $49.6 million during the nine months ended September 30, 2022.

Cash Flow Used in Financing Activities

Net cash used in financing activities increased $144.3 million, or 393%, from net cash provided by financing activities of $36.7 million for the nine months ended September 30, 2021 to net cash used in financing activities of $107.6 million for the nine months ended September 30, 2022. Net borrowings on the credit facilities were $79.0 million during the nine months ended September 30, 2022 compared to net borrowings of $123.0 million during the nine months ended September 30, 2021. The Company funded $140.4 million for share repurchases and paid dividends of $44.4 million during the nine months ended September 30, 2022, compared to funding $49.6 million of share repurchases and dividends paid of $35.4 million during the nine months ended September 30, 2021. The Company paid debt issuance costs of $1.7 million during the nine months ended September 30, 2022. In addition, the Company paid withholding taxes on net share settlements of restricted stock awards during the nine months ended September 30, 2021 of $1.7 million.

REGULATORY DEVELOPMENTS

The Company’s pawn, LTO and retail finance businesses are subject to significant regulation in all of the jurisdictions in which it operates. Existing regulations and regulatory developments are further and more completely described under “Governmental Regulation” in Part I, Item 1 of the Company’s 2021 Annual Report on Form 10-K filed with the SEC on February 28, 2022 and in subsequent filings on Form 10-Q.

There have been no other material changes in regulatory developments directly affecting the Company since December 31, 2021.

NON-GAAP FINANCIAL INFORMATION

The Company uses certain financial calculations such as adjusted net income, adjusted ~~net income~~diluted earnings per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow, adjusted retail POS payment solutions segment metrics and constant currency results ~~(as defined or explained below)~~ as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than ~~generally accepted accounting principles (“GAAP”),~~GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined ~~in Securities and Exchange Commission (“SEC”)~~under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and ~~because management believes they~~ provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating ~~adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and constant currency results~~these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP and are thus susceptible to varying calculations, ~~adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and constant currency results,~~the non-GAAP financial measures, as presented, may not be comparable to other ~~similarly titled~~similarly-titled measures of other companies.

~~The~~While acquisitions are an important part of the Company’s overall strategy, the Company ~~expects~~has adjusted the applicable financial calculations to ~~incur additional~~exclude merger and acquisition expenses, ~~in 2017 and 2018~~including the Company’s transaction expenses incurred in connection with its acquisition of AFF and the impacts of purchase accounting with respect to the AFF acquisition, in order to allow more accurate comparisons of the financial results to prior periods. In addition, the Company does not consider these merger and acquisition expenses to be related to the organic operations of the acquired businesses or its continuing operations, and such expenses are generally not relevant to assessing or estimating the long-term performance of the acquired businesses. Merger and ~~integration~~acquisition expenses include incremental costs directly associated with merger and acquisition activities, including professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to the consolidation of ~~Cash America.~~technology systems and corporate facilities, among others.

The Company has certain leases in Mexico which are denominated in U.S. dollars. The lease liability of these U.S. dollar denominated leases, which is considered a monetary liability, is remeasured into Mexican pesos using current period exchange rates, resulting in the recognition of foreign currency exchange gains or losses. The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses because they are non-cash, non-operating items ~~because it generally would not incur such costs~~that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured and ~~expenses as part~~to improve comparability of ~~its continuing operations. The Merger related expenses are predominantly incremental costs directly associated~~current periods presented with the Merger and integration of Cash America, including professional fees, legal expenses, severance and retention payments, accelerated vesting of certain equity compensation awards, contract breakage costs and costs related to consolidation of technology systems and corporate facilities.prior periods.

In conjunction with the Cash America Merger in 2016, the Company recorded certain lease intangibles related to above- or below-market lease liabilities of Cash America which are included in the operating lease right of use asset on the consolidated balance sheets. As the Company continues to opportunistically purchase real estate from landlords at certain Cash America stores, the associated lease intangible, if any, is written off and gain or loss is recognized. The Company has adjusted the applicable financial measures to exclude these gains or losses given the variability in size and timing of these transactions and because they are non-cash, non-operating gains or losses. The Company believes this improves comparability of operating results for current periods presented with prior periods.

Adjusted Net Income and Adjusted ~~Net Income~~Diluted Earnings Per Share

Management believes the presentation of adjusted net income and adjusted ~~net income~~diluted earnings per share ~~(“Adjusted Income Measures”)~~ provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and not representative of the Company’s core operating performance. In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with the prior periods presented.

The following table provides a reconciliation between ~~the~~ net income and diluted earnings per share calculated in accordance with GAAP to ~~the Adjusted Income Measures,~~adjusted net income and adjusted diluted earnings per share, which are shown net of ~~tax:~~tax (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
In Thousands Per Share In Thousands Per Share In Thousands Per Share In Thousands Per Share
Net income (loss), as reported $ 28,274
$ 0.59
$ (1,412 ) $ (0.04 ) $ 76,158
$ 1.58
$ 23,435
$ 0.77
Adjustments, net of tax:
Merger related expenses:
Transaction —
—
10,915
0.32
—
—
13,732
0.45
Severance and retention 56
—
8,737
0.25
857
0.02
8,737
0.29
Other 518
0.02
1,726
0.05
1,137
0.02
1,726
0.06
Total Merger related expenses 574
0.02
21,378
0.62
1,994
0.04
24,195
0.80
Other acquisition expenses —
—
—
—
—
—
94
—
Loss on extinguishment of debt 13
—
—
—
8,892
0.19
—
—
Net loss on sale of common stock of Enova —
—
160
—
—
—
160
0.01
Adjusted net income $ 28,861
$ 0.61
$ 20,126
$ 0.58
$ 87,044
$ 1.81
$ 47,884
$ 1.58


	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
	In Thousands		Per Share		In Thousands		Per Share		In Thousands		Per Share		In Thousands		Per Share
Net income and diluted earnings per share, as reported	$	59,316	$	1.26	$	33,396	$	0.82	$	173,429	$	3.64	$	95,538	$	2.34
Adjustments, net of tax:




Merger and acquisition expenses	564		0.01		8		—		1,317		0.03		950		0.02
Non-cash foreign currency loss (gain) related to lease liability	251		0.01		359		0.01		(245)		(0.01)		256		0.01
AFF purchase accounting adjustments (1)	17,036		0.36		—		—		64,772		1.36		—		—
Gain on revaluation of contingent acquisition consideration (2)	(16,229)		(0.34)		—		—		(68,083)		(1.43)		—		—
Other expenses (income), net (3)	126		—		278		0.01		(2,095)		(0.04)		1,263		0.03


Adjusted net income and diluted earnings per share	$	61,064	$	1.30	$	34,041	$	0.84	$	169,095	$	3.55	$	98,007	$	2.40

(1)See detail of the AFF purchase accounting adjustments in tables below.

(2)The seller of AFF has the right to receive up to $250.0 million and $50.0 million of earnout consideration if AFF achieves certain adjusted EBITDA targets through December 31, 2022 and June 30, 2023, respectively, and has the right to receive up to $75.0 million of additional consideration based on the performance of the Company’s stock through February 28, 2023. The Company estimated the fair value of this contingent consideration as of the acquisition date with subsequent changes in the fair value recognized in the consolidated statements of income. The gain is a result of a net decrease in the estimated fair value of the contingent consideration payable to the seller of AFF as of September 30, 2022. See Note 5 of Notes to Consolidated Financial Statements.

(3)For the nine months ended September 30, 2022, primarily includes a $2.5 million gain, net of tax, recognized as a result of a cash distribution received from a non-operating investment acquired in conjunction with the Cash America Merger. The Company has elected to exclude the gain from adjusted earnings given the non-operating nature of the income.

The following tables provide a reconciliation of the gross amounts, the impact of income taxes and the net amounts for ~~each of~~ the adjustments included in the table ~~above:~~above (in thousands):


	Three Months Ended September 30,
	2022						2021
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Merger and acquisition expenses	$	733	$	169	$	564	$	12	$	4	$	8
Non-cash foreign currency loss related to lease liability	359		108		251		513		154		359
AFF purchase accounting adjustments (1)	22,125		5,089		17,036		—		—		—
Gain on revaluation of contingent acquisition consideration	(19,800)		(3,571)		(16,229)		—		—		—
Other expenses (income), net	164		38		126		361		83		278


Total adjustments	$	3,581	$	1,833	$	1,748	$	886	$	241	$	645

Three Months Ended September 30,
2017 2016
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger related expenses ⁽¹⁾
$ 911
$ 337
$ 574
$ 29,398
$ 8,020
$ 21,378
Loss on extinguishment of debt 20
7
13
—
—
—
Net loss on sale of common stock of Enova —
—
—
253
93
160
Total adjustments $ 931
$ 344
$ 587
$ 29,651
$ 8,113
$ 21,538


	Nine Months Ended September 30,
	2022						2021
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Merger and acquisition expenses	$	1,712	$	395	$	1,317	$	1,264	$	314	$	950
Non-cash foreign currency (gain) loss related to lease liability	(350)		(105)		(245)		366		110		256
AFF purchase accounting adjustments (1)	84,120		19,348		64,772		—		—		—
Gain on revaluation of contingent acquisition consideration	(82,789)		(14,706)		(68,083)		—		—		—
Other expenses (income), net	(2,721)		(626)		(2,095)		1,640		377		1,263


Total adjustments	$	(28)	$	4,306	$	(4,334)	$	3,270	$	801	$	2,469

Nine Months Ended September 30,
2017 2016
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger related expenses ⁽¹⁾
$ 3,164
$ 1,170
$ 1,994
$ 33,727
$ 9,532
$ 24,195
Other acquisition expenses —
—
—
150
56
94
Loss on extinguishment of debt 14,114
5,222
8,892
—
—
—
Net loss on sale of common stock of Enova —
—
—
253
93
160
Total adjustments $ 17,278
$ 6,392
$ 10,886
$ 34,130
$ 9,681
$ 24,449
(1)The following table details AFF purchase accounting adjustments for the three and nine months ended September 30, 2022 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022						2022
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Amortization of fair value adjustment on acquired finance receivables	$	7,111	$	1,635	$	5,476	$	34,798	$	8,004	$	26,794
Amortization of fair value adjustment on acquired leased merchandise	839		194		645		6,796		1,564		5,232
Amortization of acquired intangible assets	14,175		3,260		10,915		42,526		9,780		32,746
Total AFF purchase accounting adjustments	$	22,125	$	5,089	$	17,036	$	84,120	$	19,348	$	64,772

The fair value adjustments on acquired finance receivables and leased merchandise was a result of recognizing these acquired assets at fair value in purchase accounting, the amortization of which is non-cash. There is approximately $7.9 million of fair value premium and other purchase accounting adjustments related to acquired finance receivables remaining and $0.9 million of fair value premium and other purchase accounting adjustments related to acquired leased merchandise remaining, which are expected to be substantially amortized by the end of 2022. The acquired intangible assets will be amortized through 2028.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

The Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDA as EBITDA adjusted for certain items, as listed below, that management considers to be non-operating in nature and not representative of its actual operating performance. The Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance and adjusted EBITDA is used as a starting point in the calculation of the ~~Net Debt Ratio~~consolidated total debt ratio as defined in the Company’s senior ~~notes covenants.~~unsecured notes. The following table provides a reconciliation of net income to EBITDA and adjusted ~~EBITDA:~~EBITDA (in thousands):


									Trailing Twelve
	Three Months Ended				Nine Months Ended				Months Ended
	September 30,				September 30,				September 30,
	2022		2021		2022		2021		2022		2021
Net income	$	59,316	$	33,396	$	173,429	$	95,538	$	202,800	$	128,264
Provision for income taxes		16,079		10,900		48,598		33,834		56,357		44,215
Depreciation and amortization		25,971		11,217		77,495		32,731		90,670		43,412
Interest expense		18,282		7,961		50,749		22,389		60,746		29,780
Interest income		(206)		(143)		(1,104)		(420)		(1,380)		(751)
EBITDA		119,442		63,331		349,167		184,072		409,193		244,920
Adjustments:
Merger and acquisition expenses		733		12		1,712		1,264		15,897		2,371
Non-cash foreign currency loss (gain) related to lease liability		359		513		(350)		366		(72)		(1,890)
AFF purchase accounting adjustments, (1)		7,950		—		41,594		—		87,956		—
Gain on revaluation of contingent acquisition consideration		(19,800)		—		(82,789)		—		(100,660)		—
Other expenses (income), net		164		361		(2,721)		1,640		(3,412)		4,046


Adjusted EBITDA	$	108,848	$	64,217	$	306,613	$	187,342	$	408,902	$	249,447

Trailing Twelve
Three Months Ended Nine Months Ended Months Ended
September 30, September 30, September 30,
2017 2016 2017 2016 2017 2016
Net income (loss) $ 28,274
$ (1,412 ) $ 76,158
$ 23,435
$ 112,850
$ 42,845
Income taxes 13,293
1,835
39,119
13,895
58,544
22,112
Depreciation and amortization 13,872
7,281
42,804
17,165
57,504
21,453
Interest expense 6,129
5,073
17,827
13,859
24,288
18,264
Interest income (418 ) (138 ) (1,138 ) (636 ) (1,253 ) (1,059 )
EBITDA 61,150
12,639
174,770
67,718
251,933
103,615
Adjustments:
Merger related expenses 911
29,398
3,164
33,727
5,657
33,727
Other acquisition expenses —
—
—
150
300
1,850
Loss on extinguishment of debt 20
—
14,114
—
14,114
—
Net (gain) / loss on sale of common stock of Enova —
253
—
253
(1,552 ) 253
Adjusted EBITDA $ 62,081
$ 42,290
$ 192,048
$ 101,848
$ 270,452
$ 139,445

Net Debt Ratio calculated as follows:
Total debt (outstanding principal) $ 440,000
$ 560,000
Less: cash and cash equivalents (93,411 ) (83,356 )
Net debt $ 346,589
$ 476,644
Adjusted EBITDA $ 270,452
$ 139,445
Net Debt Ratio 1.28 :1
3.42 :1

(1)Excludes $14.2 million, $42.5 million and $44.6 million of amortization expense related to identifiable intangible assets as a result of the AFF Acquisition for the three months, nine months and trailing twelve months ended September 30, 2022, respectively, which is included in the add back of depreciation and amortization to net income used to calculate EBITDA.

Free Cash Flow and Adjusted Free Cash Flow

For purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow as cash flow from operating activities less purchases of ~~property~~furniture, fixtures, equipment and ~~equipment~~improvements and net fundings/repayments of pawn loan and ~~consumer loans,~~finance receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing ~~activities, and adjusted~~activities. Adjusted free cash flow is defined as free cash flow adjusted for ~~Merger related~~merger and acquisition expenses paid that management considers to be non-operating in nature.

Free cash flow and adjusted free cash flow are commonly used by investors as an additional ~~measure~~measures of cash generated by business operations that may be used to repay scheduled debt maturities and debt service or, following payment of such debt obligations and other non-discretionary items, that may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP. The following table reconciles ~~net~~ cash flow from operating activities to free cash flow and adjusted free cash ~~flow:~~flow (in thousands):


									Trailing Twelve
	Three Months Ended				Nine Months Ended				Months Ended
	September 30,				September 30,				September 30,
	2022		2021		2022		2021		2022		2021
Cash flow from operating activities	$	99,031	$	24,101	$	325,798	$	137,850	$	411,252	$	182,748
Cash flow from certain investing activities:
Pawn loans, net (1)	(42,442)		(62,145)		(74,707)		(70,637)		(77,410)		(109,569)
Finance receivables, net	(26,088)		—		(49,634)		—		(55,478)		10
Purchases of furniture, fixtures, equipment and improvements	(9,944)		(10,583)		(29,630)		(31,608)		(40,044)		(41,298)
Free cash flow	20,557		(48,627)		171,827		35,605		238,320		31,891
Merger and acquisition expenses paid, net of tax benefit	564		8		1,317		950		12,239		1,790
Adjusted free cash flow	$	21,121	$	(48,619)	$	173,144	$	36,555	$	250,559	$	33,681

(1)Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

Trailing Twelve
Three Months Ended Nine Months Ended Months Ended
September 30, September 30, September 30,
2017 2016 2017 2016 2017 2016
Cash flow from operating activities $ 46,033
$ 901
$ 148,846
$ 40,474
$ 205,226
$ 68,101
Cash flow from investment activities:
Loan receivables, net of cash repayments (28,702 ) (22,020 ) 5,261
(31,486 ) 20,675
(12,903 )
Purchases of property and equipment (9,194 ) (6,353 ) (26,595 ) (23,426 ) (37,032 ) (28,971 )
Free cash flow 8,137
(27,472 ) 127,512
(14,438 ) 188,869
26,227
Merger related expenses paid, net of tax benefit 898
18,158
4,443
19,715
5,667
19,715
Adjusted free cash flow $ 9,035
$ (9,314 ) $ 131,955
$ 5,277
$ 194,536
$ 45,942


Table of Contents

Retail POS Payment Solutions Segment Purchase Accounting Adjustments

Management believes the presentation of certain retail POS payment solutions segment metrics adjusted to exclude the impacts of purchase accounting provides investors with greater transparency and provides a more complete understanding of AFF’s financial performance and prospects for the future by excluding the impacts of purchase accounting, which management believes is non-operating in nature and not representative of AFF’s core operating performance. See the retail POS payment solutions segment tables in “Results of Operations” above for additional reconciliation of certain amounts adjusted to exclude the impacts of purchase accounting to as reported GAAP amounts.

Additionally, the following table provides a reconciliation of consolidated total revenue presented in accordance with GAAP to adjusted total revenue, which excludes the impacts of purchase accounting (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Total revenue, as reported	$	672,143	$	399,674	$	1,979,598	$	1,197,191

AFF purchase accounting adjustments (1)	7,111		—		34,798		—
Adjusted total revenue	$	679,254	$	399,674	$	2,014,396	$	1,197,191


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	FCFS	The Nasdaq Stock Market



~~PART I.~~	~~FINANCIAL INFORMATION~~

Item 1.	Financial Statements (Unaudited)			1
			~~Condensed~~ Consolidated Balance Sheets		1
			~~Condensed~~ Consolidated Statements of Income ~~(Loss)~~		2
			~~Condensed~~ Consolidated Statements of Comprehensive Income ~~(Loss)~~		3
			~~Condensed~~ Consolidated Statements of Changes in ~~Stockholders'~~Stockholders’ Equity		34
			~~Condensed~~ Consolidated Statements of Cash Flows		56
			Notes to ~~Condensed~~ Consolidated Financial Statements		68
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations		1725
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		4452
Item 4.			Controls and Procedures		4553

PART II.			OTHER INFORMATION

Item 1.			Legal Proceedings		4554
Item 1A.			Risk Factors		4554
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		4554
Item 3.			Defaults Upon Senior Securities		4655
Item 4.			Mine Safety Disclosures		4655
Item 5.			Other Information		4655
Item 6.			Exhibits		4756

~~SIGNATURES~~		48



~~[ X ]~~☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



~~[ ]~~☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



FIRSTCASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	September 30,						December 31,
	2017			2016			2016
ASSETS
Cash and cash equivalents	$	93,411		$	83,356		$	89,955
Fees and service charges receivable	45,134			45,708			41,013
Pawn loans	371,367			373,169			350,506
Consumer loans, net	24,515			27,792			29,204
Inventories	308,683			332,862			330,683
Income taxes receivable	27,867			36,449			25,510
Prepaid expenses and other current assets	23,818			31,935			25,264
Investment in common stock of Enova	—			54,786			—
Total current assets	894,795			986,057			892,135

Property and equipment, net	234,309			240,749			236,057
Goodwill	834,883			865,350			831,151
Intangible assets, net	95,991			106,502			104,474
Other assets	59,054			69,125			71,679
Deferred tax assets	12,694			9,912			9,707
Total assets	$	2,131,726		$	2,277,695		$	2,145,203

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities	$	94,769		$	129,997		$	109,354
Customer deposits	37,626			37,591			33,536
Income taxes payable	3,763			910			738
Total current liabilities	136,158			168,498			143,628

Revolving unsecured credit facilities	140,000			360,000			260,000
Senior unsecured notes	294,961			196,373			196,545
Deferred tax liabilities	73,203			42,125			61,275
Other liabilities	19,725			77,645			33,769
Total liabilities	664,047			844,641			695,217

Stockholders’ equity:
Preferred stock	—			—			—
Common stock	493			493			493
Additional paid-in capital	1,219,589			1,217,820			1,217,969
Retained earnings	436,159			359,926			387,401
Accumulated other comprehensive loss	(88,445		)	(109,114		)	(119,806		)
Common stock held in treasury, at cost	(100,117		)	(36,071		)	(36,071		)
Total stockholders’ equity	1,467,679			1,433,054			1,449,986
Total liabilities and stockholders’ equity	$	2,131,726		$	2,277,695		$	2,145,203

The accompanying notes are an integral part of these condensed consolidated financial statements.



FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(unaudited, in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenue:
Retail merchandise sales	$	246,334		$	152,215		$	750,150		$	386,534
Pawn loan fees	132,545			79,505			383,428			182,816
Wholesale scrap jewelry sales	37,528			18,956			107,285			35,906
Consumer loan and credit services fees	19,005			10,477			58,754			21,079
Total revenue	435,412			261,153			1,299,617			626,335

Cost of revenue:
Cost of retail merchandise sold	161,350			93,399			483,458			239,166
Cost of wholesale scrap jewelry sold	36,831			16,977			102,370			30,701
Consumer loan and credit services loss provision	6,185			3,413			15,419			5,780
Total cost of revenue	204,366			113,789			601,247			275,647

Net revenue	231,046			147,364			698,370			350,688

Expenses and other income:
Store operating expenses	138,966			80,574			412,780			190,563
Administrative expenses	29,999			24,500			93,542			58,277
Depreciation and amortization	13,872			7,281			42,804			17,165
Interest expense	6,129			5,073			17,827			13,859
Interest income	(418		)	(138		)	(1,138		)	(636		)
Merger and other acquisition expenses	911			29,398			3,164			33,877
Loss on extinguishment of debt	20			—			14,114			—
Net loss on sale of common stock of Enova	—			253			—			253
Total expenses and other income	189,479			146,941			583,093			313,358

Income before income taxes	41,567			423			115,277			37,330

Provision for income taxes	13,293			1,835			39,119			13,895

Net income (loss)	$	28,274		$	(1,412	)	$	76,158		$	23,435

Net income (loss) per share:
Basic	$	0.59		$	(0.04	)	$	1.58		$	0.77
Diluted	$	0.59		$	(0.04	)	$	1.58		$	0.77

Dividends declared per common share	$	0.190		$	0.125		$	0.570		$	0.375

The accompanying notes are an integral part of these condensed consolidated financial statements.



FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017		2016
Net income (loss)	$	28,274		$	(1,412	)	$	76,158	$	23,435
Other comprehensive income (loss):
Currency translation adjustment	(4,981		)	(12,248		)	31,361		(28,951		)
Change in fair value of investment in common stock of Enova ⁽¹⁾	—			(1,753		)	—		(1,753		)
Comprehensive income (loss)	$	23,293		$	(15,413	)	$	107,519	$	(7,269	)

(1) Net of tax benefit of $1,031 for the three and nine months ended September 30, 2016.

The accompanying notes are an integral part of these condensed consolidated financial statements.



FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands)

	Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			Accum- ulated Other Compre- hensive Loss			Common Stock Held in Treasury					Total Stock- holders’ Equity
	Shares	Amount		Shares	Amount											Shares		Amount
Balance at 12/31/2016	—	$	—	49,276	$	493	$	1,217,969		$	387,401		$	(119,806	)	769		$	(36,071	)	$	1,449,986
Shares issued under share-based com-pensation plan	—	—		—	—		(440		)	—			—			(10	)	440			—
Exercise of stock options	—	—		—	—		(242		)	—			—			(13	)	549			307
Share-based compensa-tion expense	—	—		—	—		2,302			—			—			—		—			2,302
Net income	—	—		—	—		—			76,158			—			—		—			76,158
Dividends paid	—	—		—	—		—			(27,400		)	—			—		—			(27,400		)
Currency translation adjustment	—	—		—	—		—			—			31,361			—		—			31,361
Repurchases of treasury stock	—	—		—	—		—			—			—			1,182		(65,035		)	(65,035		)
Balance at 9/30/2017	—	$	—	49,276	$	493	$	1,219,589		$	436,159		$	(88,445	)	1,928		$	(100,117	)	$	1,467,679

The accompanying notes are an integral part of these condensed consolidated financial statements.



FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Nine Months Ended
	September 30,
	2017			2016
Cash flow from operating activities:
Net income	$	76,158		$	23,435
Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of credit loss provision	10,012			2,368
Share-based compensation expense	2,302			4,025
Net loss on sale of common stock of Enova	—			253
Depreciation and amortization expense	42,804			17,165
Amortization of debt issuance costs	1,322			1,083
Amortization of favorable/(unfavorable) lease intangibles, net	(744		)	(58		)
Loss on extinguishment of debt	14,114			—
Deferred income taxes, net	11,137			8,665
Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable	(3,017		)	(2,630		)
Inventories	5,206			(4,924		)
Prepaid expenses and other assets	7,819			1,774
Accounts payable, accrued liabilities and other liabilities	(21,036		)	2,990
Income taxes	2,769			(13,672		)
Net cash flow provided by operating activities	148,846			40,474
Cash flow from investing activities:
Loan receivables, net of cash repayments	5,261			(31,486		)
Purchases of property and equipment	(26,595		)	(23,426		)
Portion of aggregate merger consideration paid in cash, net of cash acquired	—			(8,251		)
Acquisitions of pawn stores, net of cash acquired	(1,141		)	(28,756		)
Proceeds from sale of common stock of Enova	—			2,962
Net cash flow used in investing activities	(22,475		)	(88,957		)
Cash flow from financing activities:
Borrowings from revolving credit facilities	181,000			396,000
Repayments of revolving credit facilities	(301,000		)	(94,000		)
Repayments of debt assumed from acquisitions	—			(238,532		)
Issuance of senior unsecured notes	300,000			—
Repurchase/redemption of senior unsecured notes	(200,000		)	—
Repurchase/redemption premiums paid on senior unsecured notes	(10,895		)	—
Debt issuance costs paid	(5,342		)	(2,340		)
Purchases of treasury stock	(65,035		)	—
Proceeds from exercise of share-based compensation awards	307			—
Dividends paid	(27,400		)	(10,591		)
Net cash flow provided by (used in) financing activities	(128,365		)	50,537
Effect of exchange rates on cash	5,450			(5,652		)
Change in cash and cash equivalents	3,456			(3,598		)
Cash and cash equivalents at beginning of the period	89,955			86,954
Cash and cash equivalents at end of the period	$	93,411		$	83,356

The accompanying notes are an integral part of these condensed consolidated financial statements.



	Three Months Ended September 30, 2017
	U.S. Operations		Latin America Operations		Corporate			Consolidated
Revenue:
Retail merchandise sales	$	160,598	$	85,736	$	—		$	246,334
Pawn loan fees	95,266		37,279		—			132,545
Wholesale scrap jewelry sales	32,397		5,131		—			37,528
Consumer loan and credit services fees	18,525		480		—			19,005
Total revenue	306,786		128,626		—			435,412

Cost of revenue:
Cost of retail merchandise sold	107,561		53,789		—			161,350
Cost of wholesale scrap jewelry sold	31,518		5,313		—			36,831
Consumer loan and credit services loss provision	6,068		117		—			6,185
Total cost of revenue	145,147		59,219		—			204,366

Net revenue	161,639		69,407		—			231,046

Expenses and other income:
Store operating expenses	104,555		34,411		—			138,966
Administrative expenses	—		—		29,999			29,999
Depreciation and amortization	5,919		2,704		5,249			13,872
Interest expense	—		—		6,129			6,129
Interest income	—		—		(418		)	(418		)
Merger and other acquisition expenses	—		—		911			911
Loss on extinguishment of debt	—		—		20			20
Total expenses and other income	110,474		37,115		41,890			189,479

Income (loss) before income taxes	$	51,165	$	32,292	$	(41,890	)	$	41,567



	Three Months Ended September 30, 2016
	U.S. Operations		Latin America Operations		Corporate			Consolidated
Revenue:
Retail merchandise sales	$	84,547	$	67,668	$	—		$	152,215
Pawn loan fees	48,840		30,665		—			79,505
Wholesale scrap jewelry sales	15,046		3,910		—			18,956
Consumer loan and credit services fees	9,991		486		—			10,477
Total revenue	158,424		102,729		—			261,153

Cost of revenue:
Cost of retail merchandise sold	51,922		41,477		—			93,399
Cost of wholesale scrap jewelry sold	13,955		3,022		—			16,977
Consumer loan and credit services loss provision	3,275		138		—			3,413
Total cost of revenue	69,152		44,637		—			113,789

Net revenue	89,272		58,092		—			147,364

Expenses and other income:
Store operating expenses	52,480		28,094		—			80,574
Administrative expenses	—		—		24,500			24,500
Depreciation and amortization	2,906		2,602		1,773			7,281
Interest expense	—		—		5,073			5,073
Interest income	—		—		(138		)	(138		)
Merger and other acquisition expenses	—		—		29,398			29,398
Net loss on sale of common stock of Enova	—		—		253			253
Total expenses and other income	55,386		30,696		60,859			146,941

Income (loss) before income taxes	$	33,886	$	27,396	$	(60,859	)	$	423



	Nine Months Ended September 30, 2017
	U.S. Operations		Latin America Operations		Corporate			Consolidated
Revenue:
Retail merchandise sales	$	519,116	$	231,034	$	—		$	750,150
Pawn loan fees	287,338		96,090		—			383,428
Wholesale scrap jewelry sales	91,430		15,855		—			107,285
Consumer loan and credit services fees	57,425		1,329		—			58,754
Total revenue	955,309		344,308		—			1,299,617

Cost of revenue:
Cost of retail merchandise sold	337,789		145,669		—			483,458
Cost of wholesale scrap jewelry sold	87,600		14,770		—			102,370
Consumer loan and credit services loss provision	15,115		304		—			15,419
Total cost of revenue	440,504		160,743		—			601,247

Net revenue	514,805		183,565		—			698,370

Expenses and other income:
Store operating expenses	318,044		94,736		—			412,780
Administrative expenses	—		—		93,542			93,542
Depreciation and amortization	18,759		7,723		16,322			42,804
Interest expense	—		—		17,827			17,827
Interest income	—		—		(1,138		)	(1,138		)
Merger and other acquisition expenses	—		—		3,164			3,164
Loss on extinguishment of debt	—		—		14,114			14,114
Total expenses and other income	336,803		102,459		143,831			583,093

Income (loss) before income taxes	$	178,002	$	81,106	$	(143,831	)	$	115,277



	Nine Months Ended September 30, 2016
	U.S. Operations		Latin America Operations		Corporate			Consolidated
Revenue:
Retail merchandise sales	$	186,673	$	199,861	$	—		$	386,534
Pawn loan fees	94,929		87,887		—			182,816
Wholesale scrap jewelry sales	25,910		9,996		—			35,906
Consumer loan and credit services fees	19,619		1,460		—			21,079
Total revenue	327,131		299,204		—			626,335

Cost of revenue:
Cost of retail merchandise sold	114,632		124,534		—			239,166
Cost of wholesale scrap jewelry sold	22,914		7,787		—			30,701
Consumer loan and credit services loss provision	5,380		400		—			5,780
Total cost of revenue	142,926		132,721		—			275,647

Net revenue	184,205		166,483		—			350,688

Expenses and other income:
Store operating expenses	107,196		83,367		—			190,563
Administrative expenses	—		—		58,277			58,277
Depreciation and amortization	5,827		7,919		3,419			17,165
Interest expense	—		—		13,859			13,859
Interest income	—		—		(636		)	(636		)
Merger and other acquisition expenses	—		—		33,877			33,877
Net loss on sale of common stock of Enova	—		—		253			253
Total expenses and other income	113,023		91,286		109,049			313,358

Income (loss) before income taxes	$	71,182	$	75,197	$	(109,049	)	$	37,330



			Consumer
	Pawn		Loan	Total
	Locations ⁽¹⁾		Locations ⁽²⁾	Locations
U.S.:
Total locations, beginning of period	1,073		44	1,117
New locations opened	1		—	1
Locations closed or consolidated	(1	)	—	(1	)
Total locations, end of period	1,073		44	1,117

Latin America:
Total locations, beginning of period	952		28	980
New locations opened	9		—	9
Total locations, end of period	961		28	989

Total:
Total locations, beginning of period	2,025		72	2,097
New locations opened	10		—	10
Locations closed or consolidated	(1	)	—	(1	)
Total locations, end of period	2,034		72	2,106



	Balance at September 30,						Increase /
	2017			2016			(Decrease)
U.S. Operations Segment
Earning assets:
Pawn loans	$	281,217		$	300,646			(6	)%
Consumer loans, net ⁽¹⁾		24,108			27,381			(12	)%
Inventories		240,384			280,429			(14	)%
	$	545,709		$	608,456			(10	)%

Average outstanding pawn loan amount (in ones)	$	152		$	145			5	%

Composition of pawn collateral:
General merchandise	36		%	39		%
Jewelry	64		%	61		%
	100		%	100		%

Composition of inventories:
General merchandise	43		%	48		%
Jewelry	57		%	52		%
	100		%	100		%

Percentage of inventory aged greater than one year	9		%	6		%


⁽¹⁾	Does not include the off-balance sheet principal portion of active CSO extensions of credit made by independent third-party lenders. These amounts, net of the Company’s estimated fair value of its liability for guaranteeing the extensions of credit, totaled $9,251 and $11,641 as of September 30, 2017 and 2016, respectively.



										Constant Currency Basis
										Balance at
										September 30,		Increase /
	Balance at September 30,						Increase /			2017		(Decrease)
	2017			2016			(Decrease)			(Non-GAAP)		(Non-GAAP)
Latin America Operations Segment
Earning assets:
Pawn loans	$	90,150		$	72,523			24	%	$	84,378		16	%
Consumer loans, net		407			411			(1	)%	380			(8	)%
Inventories		68,299			52,433			30	%	63,855			22	%
	$	158,856		$	125,367			27	%	$	148,613		19	%

Average outstanding pawn loan amount (in ones)	$	67		$	59			14	%	$	63		7	%

Composition of pawn collateral:
General merchandise	82		%	82		%
Jewelry	18		%	18		%
	100		%	100		%

Composition of inventories:
General merchandise	75		%	80		%
Jewelry	25		%	20		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	1		%


⁽¹⁾	~~Resulting tax benefit for the three and nine months ended September 30, 2016 is less than the statutory rate as a portion of the transaction costs were not deductible for tax purposes.~~


	Total Number Of Shares Purchased	Average Price Paid Per Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans	Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans








July 1 through July 31, 2022	137,000	$	69.66	137,000	$	69,991
August 1 through August 31, 2022	163,000	78.05		163,000	57,297
September 1 through September 30, 2022	386,000	77.16		386,000	27,497
Total	686,000	75.88		686,000


Plan Announcement Date	Plan Completion Date	Dollar Amount Authorized		Shares Purchased in 2022	Dollar Amount Purchased in 2022		Remaining Dollar Amount Authorized For Future Purchases
January 28, 2021	March 28, 2022	$	100,000	1,048,000	$	72,217	$	—
April 28, 2022	Currently active	$	100,000	987,000	$	72,503	$	27,497


⁽¹⁾Table of Contents			~~The 2,000,000 share repurchase program was terminated in May 2017.~~



Dated: October 31, 2022		FIRSTCASH HOLDINGS, INC.
~~Dated: November 1, 2017~~		~~FIRSTCASH, INC.~~(Registrant)
		~~(Registrant)~~

	/s/ RICK L. WESSEL
		Rick L. Wessel
		Chief Executive Officer
		(On behalf of the Registrant)

		/s/ R. DOUGLAS ORR
		R. Douglas Orr
		Executive Vice President and Chief Financial Officer
		(As Principal Financial and Accounting Officer)