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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the Quarterly Period Ended September 30, ~~2021~~2022


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

For the transition period from __________ to ___________

Commission file number 001-10960

FIRSTCASH HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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)

(817) 335-1100

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


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

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. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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). ☒ Yes ☐ No


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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.


☒	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. ☐

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

As of October ~~19, 2021,~~26, 2022, there were ~~40,433,427~~46,318,065 shares of common stock outstanding.


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FIRSTCASH HOLDINGS, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, ~~2021~~2022

INDEX


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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.

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, ~~the~~ risks ~~uncertainties and regulatory developments: (1)~~ related to the ~~COVID-19 pandemic,~~American First Finance (“AFF”) transaction, including the ~~unknown duration~~failure of the transaction to deliver the estimated value and ~~severity~~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 associated with the legal and regulatory 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,~~pandemic; potential changes in consumer behavior and shopping patterns which could impact demand for the ~~impact of governmental responses that have been,~~Company’s pawn loan, retail, lease-to-own and ~~may~~retail finance products; labor shortages and increased labor costs; inflation; rising interest rates; a deterioration in the ~~future be, imposed~~economic conditions in ~~response to~~ the ~~pandemic,~~United States and ~~(2)~~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 the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), including the risks described in Part 1, Item 1A, “Risk Factors” thereof, and other reports filed ~~subsequently by the Company~~ 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.


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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


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

		September 30,				December 31,			September 30,				December 31,
		2021		2020		2020			2022		2021		2021
ASSETS	ASSETS							ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	49,907	$	78,844	$	65,850	Cash and cash equivalents	$	100,620	$	49,907	$	120,046
Fees and service charges receivable		43,492		36,423		41,110
Accounts receivable, net								Accounts receivable, net	58,435		43,492		55,356
Pawn loans	Pawn loans	348,993		270,619		308,231		Pawn loans	404,227		348,993		347,973

Finance receivables, net								Finance receivables, net	111,945		—		181,021
Inventories	Inventories	254,260		168,664		190,352		Inventories	295,428		254,260		263,311
Income taxes receivable		4,791		7,534		9,634
Leased merchandise, net								Leased merchandise, net	132,097		—		143,944
Prepaid expenses and other current assets	Prepaid expenses and other current assets	10,002		10,647		9,388		Prepaid expenses and other current assets	38,322		14,793		17,707
Total current assets	Total current assets	711,445		572,731		624,565		Total current assets	1,141,074		711,445		1,129,358

Property and equipment, net	Property and equipment, net	411,042		341,827		373,667		Property and equipment, net	535,584		411,042		462,526
Operating lease right of use asset	Operating lease right of use asset	300,040		289,175		298,957		Operating lease right of use asset	299,052		300,040		306,061
Goodwill	Goodwill	1,014,052		932,329		977,381		Goodwill	1,523,699		1,014,052		1,536,178
Intangible assets, net	Intangible assets, net	83,019		83,837		83,651		Intangible assets, net	345,512		83,019		388,184
Other assets	Other assets	8,413		9,087		9,818		Other assets	9,133		8,413		8,531
Deferred tax assets		5,472		6,509		4,158
Deferred tax assets, net								Deferred tax assets, net	6,906		5,472		5,614
Total assets	Total assets	$	2,533,483	$	2,235,495	$	2,372,197	Total assets	$	3,860,960	$	2,533,483	$	3,836,452

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	87,629	$	79,979	$	81,917	Accounts payable and accrued liabilities	$	175,964	$	88,151	$	244,327
Customer deposits		46,702		36,189		34,719
Income taxes payable		522		183		1,148
Customer deposits and prepayments								Customer deposits and prepayments	63,066		46,702		57,310
Lease liability, current	Lease liability, current	89,502		84,970		88,622		Lease liability, current	91,115		89,502		90,570
Total current liabilities	Total current liabilities	224,355		201,321		206,406		Total current liabilities	330,145		224,355		392,207

Revolving unsecured credit facilities	Revolving unsecured credit facilities	246,000		40,000		123,000		Revolving unsecured credit facilities	338,000		246,000		259,000

Senior unsecured notes	Senior unsecured notes	493,499		492,775		492,916		Senior unsecured notes	1,035,226		493,499		1,033,904
Deferred tax liabilities		78,191		69,261		71,173
Deferred tax liabilities, net								Deferred tax liabilities, net	155,263		78,191		126,098
Lease liability, non-current	Lease liability, non-current	197,618		188,212		194,887		Lease liability, non-current	197,171		197,618		203,166

Other liabilities								Other liabilities	—		—		13,950
Total liabilities	Total liabilities	1,239,663		991,569		1,088,382		Total liabilities	2,055,805		1,239,663		2,028,325

Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:

Common stock	Common stock	493		493		493		Common stock	573		493		573
Additional paid-in capital	Additional paid-in capital	1,222,432		1,226,512		1,221,788		Additional paid-in capital	1,732,500		1,222,432		1,724,956
Retained earnings	Retained earnings	849,438		767,683		789,303		Retained earnings	995,669		849,438		866,679
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(125,761)		(164,877)		(118,432)		Accumulated other comprehensive loss	(127,366)		(125,761)		(131,299)
Common stock held in treasury, at cost	Common stock held in treasury, at cost	(652,782)		(585,885)		(609,337)		Common stock held in treasury, at cost	(796,221)		(652,782)		(652,782)
Total stockholders’ equity	Total stockholders’ equity	1,293,820		1,243,926		1,283,815		Total stockholders’ equity	1,805,155		1,293,820		1,808,127
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,533,483	$	2,235,495	$	2,372,197	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.	The accompanying notes are an integral part of these consolidated financial statements.							The accompanying notes are an integral part of these consolidated financial statements.


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

		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenue:	Revenue:									Revenue:
Retail merchandise sales	Retail merchandise sales	$	268,726	$	234,982	$	806,335	$	819,011	Retail merchandise sales	$	300,899	$	268,726	$	901,975	$	806,335
Pawn loan fees	Pawn loan fees	121,365		99,570		346,796		343,675		Pawn loan fees	145,727		121,365		411,613		346,796
Leased merchandise income										Leased merchandise income	158,089		—		455,736		—
Interest and fees on finance receivables										Interest and fees on finance receivables	48,846		—		135,039		—
Wholesale scrap jewelry sales	Wholesale scrap jewelry sales	9,583		25,281		44,060		74,437		Wholesale scrap jewelry sales	18,582		9,583		75,235		44,060
Consumer loan and credit services fees		—		57		—		2,003
Total revenue	Total revenue	399,674		359,890		1,197,191		1,239,126		Total revenue	672,143		399,674		1,979,598		1,197,191

Cost of revenue:	Cost of revenue:									Cost of revenue:
Cost of retail merchandise sold	Cost of retail merchandise sold	158,057		137,230		468,634		493,436		Cost of retail merchandise sold	182,199		158,057		543,722		468,634
Depreciation of leased merchandise										Depreciation of leased merchandise	86,519		—		262,830		—
Provision for lease losses										Provision for lease losses	31,916		—		109,771		—
Provision for loan losses										Provision for loan losses	31,956		—		83,453		—
Cost of wholesale scrap jewelry sold	Cost of wholesale scrap jewelry sold	8,528		19,818		37,657		61,022		Cost of wholesale scrap jewelry sold	16,261		8,528		64,371		37,657
Consumer loan and credit services loss provision		—		104		—		(480)
Total cost of revenue	Total cost of revenue	166,585		157,152		506,291		553,978		Total cost of revenue	348,851		166,585		1,064,147		506,291

Net revenue	Net revenue	233,089		202,738		690,900		685,148		Net revenue	323,292		233,089		915,451		690,900

Expenses and other income:	Expenses and other income:									Expenses and other income:
Store operating expenses		138,619		132,061		415,071		426,612
Operating expenses										Operating expenses	185,547		138,619		539,398		415,071
Administrative expenses	Administrative expenses	30,208		24,354		88,605		85,642		Administrative expenses	36,951		30,208		110,882		88,605
Depreciation and amortization	Depreciation and amortization	11,217		10,426		32,731		31,424		Depreciation and amortization	25,971		11,217		77,495		32,731
Interest expense	Interest expense	7,961		6,561		22,389		21,953		Interest expense	18,282		7,961		50,749		22,389
Interest income	Interest income	(143)		(499)		(420)		(1,209)		Interest income	(206)		(143)		(1,104)		(420)
Loss (gain) on foreign exchange										Loss (gain) on foreign exchange	255		558		(198)		248
Merger and acquisition expenses	Merger and acquisition expenses	12		7		1,264		209		Merger and acquisition expenses	733		12		1,712		1,264
Loss (gain) on foreign exchange		558		(432)		248		1,639
Write-off of certain Cash America merger related lease intangibles		361		837		1,640		4,649
Loss on extinguishment of debt		—		11,737		—		11,737
Impairment of certain other assets		—		—		—		1,900
Gain on revaluation of contingent acquisition consideration										Gain on revaluation of contingent acquisition consideration	(19,800)		—		(82,789)		—
Other expenses (income), net										Other expenses (income), net	164		361		(2,721)		1,640

Total expenses and other income	Total expenses and other income	188,793		185,052		561,528		584,556		Total expenses and other income	247,897		188,793		693,424		561,528

Income before income taxes	Income before income taxes	44,296		17,686		129,372		100,592		Income before income taxes	75,395		44,296		222,027		129,372

Provision for income taxes	Provision for income taxes	10,900		2,624		33,834		26,739		Provision for income taxes	16,079		10,900		48,598		33,834

Net income	Net income	$	33,396	$	15,062	$	95,538	$	73,853	Net income	$	59,316	$	33,396	$	173,429	$	95,538

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	0.83	$	0.36	$	2.34	$	1.78	Basic	$	1.26	$	0.83	$	3.65	$	2.34
Diluted	Diluted	$	0.82	$	0.36	$	2.34	$	1.77	Diluted	$	1.26	$	0.82	$	3.64	$	2.34

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


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

		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income	Net income	$	33,396	$	15,062	$	95,538	$	73,853	Net income	$	59,316	$	33,396	$	173,429	$	95,538
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Currency translation adjustment	Currency translation adjustment	(9,971)		7,273		(7,329)		(67,908)		Currency translation adjustment	(7,372)		(9,971)		3,933		(7,329)
Comprehensive income	Comprehensive income	$	23,425	$	22,335	$	88,209	$	5,945	Comprehensive income	$	51,944	$	23,425	$	177,362	$	88,209

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


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

Nine Months Ended September 30, 2021
Nine Months Ended September 30, 2022																		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					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								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)
As of 12/31/2021																		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																		Shares issued under share-based compensation plan		—	—		(1,281)		—		—		(17)	1,281		—

Share-based compensation expense	Share-based compensation expense		—	—		3,625		—		—		—		—		3,625		Share-based compensation expense		—	—		3,075		—		—		—	—		3,075
Net income	Net income		—	—		—		33,715		—		—		—		33,715		Net income		—	—		—		28,005		—		—	—		28,005
Cash dividends ($0.27 per share)			—	—		—		(11,097)		—		—		—		(11,097)
Cash dividends ($0.30 per share)																		Cash dividends ($0.30 per share)		—	—		—		(14,546)		—		—	—		(14,546)
Currency translation adjustment	Currency translation adjustment		—	—		—		—		(12,335)		—		—		(12,335)		Currency translation adjustment		—	—		—		—		11,789		—	—		11,789
Purchases of treasury stock	Purchases of treasury stock		—	—		—		—		—		84		(4,967)		(4,967)		Purchases of treasury stock		—	—		—		—		—		1,048	(72,217)		(72,217)

As of 3/31/2021			49,276	$	493	$	1,218,323	$	811,921	$	(130,767)	8,249		$	(608,877)	$	1,291,093
As of 3/31/2022																		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	Share-based compensation expense		—	—		1,625		—		—		—		—		1,625		Share-based compensation expense		—	—		2,875		—		—		—	—		2,875
Net income	Net income		—	—		—		28,427		—		—		—		28,427		Net income		—	—		—		86,108		—		—	—		86,108
Cash dividends ($0.30 per share)	Cash dividends ($0.30 per share)		—	—		—		(12,308)		—		—		—		(12,308)		Cash dividends ($0.30 per share)		—	—		—		(14,235)		—		—	—		(14,235)
Currency translation adjustment	Currency translation adjustment		—	—		—		—		14,977		—		—		14,977		Currency translation adjustment		—	—		—		—		(484)		—	—		(484)
Purchases of treasury stock	Purchases of treasury stock		—	—		—		—		—		452		(32,998)		(32,998)		Purchases of treasury stock		—	—		—		—		—		301	(20,499)		(20,499)

As of 6/30/2021			49,276	$	493	$	1,219,948	$	828,040	$	(115,790)	8,701		$	(641,875)	$	1,290,816
As of 6/30/2022																		As of 6/30/2022		57,322	$	573	$	1,729,625	$	952,011	$	(119,994)	10,175	$	(744,217)	$	1,817,998

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

Share-based compensation expense	Share-based compensation expense		—	—		2,842		—		—		—		—		2,842		Share-based compensation expense		—	—		2,875		—		—		—	—		2,875
Net income	Net income		—	—		—		33,396		—		—		—		33,396		Net income		—	—		—		59,316		—		—	—		59,316
Cash dividends ($0.30 per share)			—	—		—		(11,998)		—		—		—		(11,998)
Cash dividends ($0.33 per share)																		Cash dividends ($0.33 per share)		—	—		—		(15,658)		—		—	—		(15,658)
Currency translation adjustment	Currency translation adjustment		—	—		—		—		(9,971)		—		—		(9,971)		Currency translation adjustment		—	—		—		—		(7,372)		—	—		(7,372)
Purchases of treasury stock	Purchases of treasury stock		—	—		—		—		—		152		(11,645)		(11,645)		Purchases of treasury stock		—	—		—		—		—		686	(52,004)		(52,004)

As of 9/30/2021			49,276	$	493	$	1,222,432	$	849,438	$	(125,761)	8,843		$	(652,782)	$	1,293,820
As of 9/30/2022																		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.	The accompanying notes are an integral part of these consolidated financial statements.												The accompanying notes are an integral part of these consolidated financial statements.


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

Nine Months Ended September 30, 2020
Nine Months Ended September 30, 2021																		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					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								Shares	Amount
As of 12/31/2019			49,276	$	493	$	1,231,528	$	727,476	$	(96,969)	6,947		$	(512,493)	$	1,350,035
Shares issued under share-based compensation plan, net of 46 shares net-settled			—	—		(10,266)		—		—		(93)		6,939		(3,327)
As of 12/31/2020																		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																		Shares issued under share-based compensation plan, net of 28 shares net-settled		—	—		(7,090)		—		—		(73)	5,427		(1,663)

Share-based compensation expense	Share-based compensation expense		—	—		2,851		—		—		—		—		2,851		Share-based compensation expense		—	—		3,625		—		—		—	—		3,625
Net income	Net income		—	—		—		32,918		—		—		—		32,918		Net income		—	—		—		33,715		—		—	—		33,715
Cash dividends ($0.27 per share)	Cash dividends ($0.27 per share)		—	—		—		(11,268)		—		—		—		(11,268)		Cash dividends ($0.27 per share)		—	—		—		(11,097)		—		—	—		(11,097)
Currency translation adjustment	Currency translation adjustment		—	—		—		—		(83,503)		—		—		(83,503)		Currency translation adjustment		—	—		—		—		(12,335)		—	—		(12,335)
Purchases of treasury stock	Purchases of treasury stock		—	—		—		—		—		981		(80,331)		(80,331)		Purchases of treasury stock		—	—		—		—		—		84	(4,967)		(4,967)

As of 3/31/2020			49,276	$	493	$	1,224,113	$	749,126	$	(180,472)	7,835		$	(585,885)	$	1,207,375
As of 3/31/2021																		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	Share-based compensation expense		—	—		2,399		—		—		—		—		2,399		Share-based compensation expense		—	—		1,625		—		—		—	—		1,625
Net income	Net income		—	—		—		25,873		—		—		—		25,873		Net income		—	—		—		28,427		—		—	—		28,427
Cash dividends ($0.27 per share)			—	—		—		(11,189)		—		—		—		(11,189)
Cash dividends ($0.30 per share)																		Cash dividends ($0.30 per share)		—	—		—		(12,308)		—		—	—		(12,308)
Currency translation adjustment	Currency translation adjustment		—	—		—		—		8,322		—		—		8,322		Currency translation adjustment		—	—		—		—		14,977		—	—		14,977
Purchases of treasury stock																		Purchases of treasury stock		—	—		—		—		—		452	(32,998)		(32,998)

As of 6/30/2020			49,276	$	493	$	1,226,512	$	763,810	$	(172,150)	7,835		$	(585,885)	$	1,232,780
As of 6/30/2021																		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																		Exercise of stock options		—	—		(358)		—		—		(10)	738		380

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

Net income			—	—		—		15,062		—		—		—		15,062
Cash dividends ($0.27 per share)			—	—		—		(11,189)		—		—		—		(11,189)
Currency translation adjustment			—	—		—		—		7,273		—		—		7,273

As of 9/30/2020			49,276	$	493	$	1,226,512	$	767,683	$	(164,877)	7,835		$	(585,885)	$	1,243,926
As of 9/30/2021																		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.	The accompanying notes are an integral part of these consolidated financial statements.												The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH, INC.
FIRSTCASH HOLDINGS, INC.						FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS	CONSOLIDATED STATEMENTS OF CASH FLOWS					CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)	(unaudited, in thousands)					(unaudited, in thousands)
		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
		2021		2020			2022		2021
Cash flow from operating activities:	Cash flow from operating activities:					Cash flow from operating activities:
Net income	Net income	$	95,538	$	73,853	Net income	$	173,429	$	95,538
Adjustments to reconcile net income to net cash flow provided by operating activities:	Adjustments to reconcile net income to net cash flow provided by operating activities:					Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of consumer loan credit loss provision		—		(829)
Depreciation of leased merchandise						Depreciation of leased merchandise	262,830		—
Provision for lease losses						Provision for lease losses	109,771		—
Provision for loan losses						Provision for loan losses	83,453		—
Share-based compensation expense	Share-based compensation expense	8,092		5,250		Share-based compensation expense	8,825		8,092
Depreciation and amortization expense	Depreciation and amortization expense	32,731		31,424		Depreciation and amortization expense	77,495		32,731
Amortization of debt issuance costs	Amortization of debt issuance costs	1,223		1,219		Amortization of debt issuance costs	2,208		1,223

Write-off of certain Cash America merger related lease intangibles		1,640		4,649
Loss on extinguishment of debt		—		11,737
Impairment of certain other assets		—		1,900
Net amortization of premiums, discounts and unearned origination fees on finance receivables						Net amortization of premiums, discounts and unearned origination fees on finance receivables	35,257		—
Gain on revaluation of contingent acquisition consideration						Gain on revaluation of contingent acquisition consideration	(82,789)		—
Impairments and dispositions of certain other assets						Impairments and dispositions of certain other assets	482		1,640

Deferred income taxes, net	Deferred income taxes, net	5,622		11,401		Deferred income taxes, net	46,142		5,622
Changes in operating assets and liabilities, net of business combinations:	Changes in operating assets and liabilities, net of business combinations:					Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable		(2,302)		8,291
Accounts receivable, net						Accounts receivable, net	(2,953)		(2,302)
Inventories purchased directly from customers, wholesalers or manufacturers	Inventories purchased directly from customers, wholesalers or manufacturers	(25,592)		26,628		Inventories purchased directly from customers, wholesalers or manufacturers	(11,017)		(25,592)
Leased merchandise, net						Leased merchandise, net	(360,755)		—
Prepaid expenses and other assets	Prepaid expenses and other assets	229		75		Prepaid expenses and other assets	(2,144)		229
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	16,538		12,971		Accounts payable, accrued liabilities and other liabilities	7,256		16,538
Income taxes	Income taxes	4,131		(11,203)		Income taxes	(21,692)		4,131
Net cash flow provided by operating activities	Net cash flow provided by operating activities	137,850		177,366		Net cash flow provided by operating activities	325,798		137,850
Cash flow from investing activities:	Cash flow from investing activities:					Cash flow from investing activities:
Loan receivables, net		(70,637)		145,930
Pawn loans, net (1)						Pawn loans, net (1)	(74,707)		(70,637)
Finance receivables, net						Finance receivables, net	(49,634)		—
Purchases of furniture, fixtures, equipment and improvements	Purchases of furniture, fixtures, equipment and improvements	(31,608)		(27,853)		Purchases of furniture, fixtures, equipment and improvements	(29,630)		(31,608)
Purchases of store real property	Purchases of store real property	(38,256)		(20,946)		Purchases of store real property	(77,689)		(38,256)

Acquisitions of pawn stores, net of cash acquired	Acquisitions of pawn stores, net of cash acquired	(49,434)		(9,340)		Acquisitions of pawn stores, net of cash acquired	(7,072)		(49,434)

Net cash flow (used in) provided by investing activities		(189,935)		87,791
Net cash flow used in investing activities						Net cash flow used in investing activities	(238,732)		(189,935)
Cash flow from financing activities:	Cash flow from financing activities:					Cash flow from financing activities:
Borrowings from unsecured credit facilities	Borrowings from unsecured credit facilities	338,000		221,925		Borrowings from unsecured credit facilities	196,000		338,000
Repayments of unsecured credit facilities	Repayments of unsecured credit facilities	(215,000)		(520,433)		Repayments of unsecured credit facilities	(117,000)		(215,000)

Issuance of senior unsecured notes due 2028		—		500,000
Redemption of senior unsecured notes due 2024		—		(300,000)
Redemption premium and other redemption costs on senior unsecured notes due 2024		—		(8,781)

Debt issuance costs paid	Debt issuance costs paid	—		(5,285)		Debt issuance costs paid	(1,745)		—
Purchases of treasury stock	Purchases of treasury stock	(49,610)		(80,331)		Purchases of treasury stock	(140,391)		(49,610)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	380		—		Proceeds from exercise of stock options	—		380

Payment of withholding taxes on net share settlements of restricted stock awards		(1,663)		(3,327)
Payment of withholding taxes on net share settlements of restricted stock unit awards and stock options exercised						Payment of withholding taxes on net share settlements of restricted stock unit awards and stock options exercised	—		(1,663)
Dividends paid	Dividends paid	(35,403)		(33,646)		Dividends paid	(44,439)		(35,403)
Net cash flow provided by (used in) financing activities		36,704		(229,878)
Effect of exchange rates on cash		(562)		(2,962)
Change in cash and cash equivalents		(15,943)		32,317
Cash and cash equivalents at beginning of the period		65,850		46,527
Cash and cash equivalents at end of the period		$	49,907	$	78,844
Net cash flow (used in) provided by financing activities						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 CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 - General

Basis of Presentation

The accompanying consolidated balance sheet as of December 31, ~~2020,~~2021, which is derived from audited consolidated financial statements, and the unaudited 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 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations for 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 on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the ~~Securities and Exchange Commission (the “SEC”)~~SEC on February ~~1, 2021.~~28, 2022. The consolidated financial statements as of September 30, ~~2021~~2022 and ~~2020,~~2021, and for the three month and nine month periods ended September 30, ~~2021~~2022 and ~~2020,~~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, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the full year.

On December 17, 2021, the Company completed the acquisition of AFF (the “AFF Acquisition”), which is a leading technology-driven retail point-of-sale (“POS”) payment solutions platform primarily focused on providing lease-to-own (“LTO”) products.

The Company has operations in Latin America, where in Mexico, Guatemala and Colombia, the functional currency is the Mexican peso, Guatemalan quetzal 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 respective period. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar.

~~Continuing Impact of COVID-19~~

The Company continues to monitor the impact of the COVID-19 pandemic on all aspects of its business. The extent to which COVID-19 continues to impact the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic, which may be impacted by variants of the COVID-19 virus and the adoption rate of the COVID-19 vaccines in the jurisdictions in which the Company operates, and the actions taken to contain the impact of COVID-19, as well as further actions taken to limit the resulting economic impact. In particular, government stimulus and other transfer programs have and may continue to have a material adverse impact on demand for pawn loans in future periods.

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 ~~statements~~balance sheets as of ~~income and consolidated statements of cash flows for the nine months ended~~ September 30, ~~2020~~2021 and December 31, 2021 have been reclassified in order to conform to the ~~2021~~2022 presentation.


~~Table of Contents~~

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board issued ASU No 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The adoption of ASU 2019-12 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2020, the Financial Accounting Standards Board issued ASU No 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ~~(LIBOR)~~(“LIBOR”) and other ~~interbank offered~~interbank-offered rates to alternative reference rates. ASU 2020-04 was effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. ~~The~~As the Company ~~does not expect~~no longer has any LIBOR based contracts (see Note 8), ASU 2020-04 ~~to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.~~

In August 2021, the Financial Accounting Standards Board issued ASU No 2021-06, “Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946): Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses, and No.33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants” (“ASU 2021-06”). ASU 2021-06 amends certain SEC disclosure guidance that is included in the accounting standards codification to reflect the SEC’s recent issuance of rules intended to modernize and streamline disclosure requirements. The Company adopted ASU 2021-06 upon issuance, which didwill not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.


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In March 2022, the Financial Accounting Standards Board issued ASU No 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”). ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. ASU 2022-02 is effective for fiscal years beginning after December 15, 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 expanded disclosures to its vintage disclosures, the Company does not expect ASU 2022-02 to have a material effect on the Company’s current financial position, results of operations or financial statements.

Note 2 - Earnings Per Share

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


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Numerator:	Numerator:									Numerator:
Net income	Net income	$	33,396	$	15,062	$	95,538	$	73,853	Net income	$	59,316	$	33,396	$	173,429	$	95,538

Denominator:	Denominator:									Denominator:
Weighted-average common shares for calculating basic earnings per share	Weighted-average common shares for calculating basic earnings per share	40,453		41,440		40,745		41,597		Weighted-average common shares for calculating basic earnings per share	46,902		40,453		47,518		40,745
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Stock options and restricted stock unit awards	Stock options and restricted stock unit awards	63		96		44		94		Stock options and restricted stock unit awards	120		63		84		44
Weighted-average common shares for calculating diluted earnings per share	Weighted-average common shares for calculating diluted earnings per share	40,516		41,536		40,789		41,691		Weighted-average common shares for calculating diluted earnings per share	47,022		40,516		47,602		40,789

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	0.83	$	0.36	$	2.34	$	1.78	Basic	$	1.26	$	0.83	$	3.65	$	2.34
Diluted	Diluted	$	0.82	$	0.36	$	2.34	$	1.77	Diluted	$	1.26	$	0.82	$	3.64	$	2.34


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Note 3 - Acquisitions

~~Consistent with~~American First Finance Acquisition

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

The following table details the preliminary purchase price allocation as of December 31, 2021, the measurement period adjustments made during the nine months ended September 30, ~~2021,~~2022 and the ~~Company acquired 28 pawn stores in the U.S. in 2 separate transactions. The aggregate~~preliminary purchase price ~~for these acquisitions totaled $50.7 million, net~~allocation as of ~~cash acquired and~~September 30, 2022, subject to future ~~post-closing adjustments. The aggregate purchase price was composed of $48.5 million in cash paid at closing and remaining short-term amounts payable to the sellers of approximately $2.2 million.~~

The purchase price of each of the 2021 acquisitions was allocated to assets acquired and liabilities assumed based upon the estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill. The goodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired. These acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements.

The estimated fair value of the assets acquired and liabilities assumed are preliminary, as the Company is gathering information to finalize the valuation of these assets and liabilities. The preliminary allocation of the aggregate purchase price for these individually immaterial acquisitions during the nine months ended September 30, 2021 is as followsmeasurement period adjustments (in thousands):


~~Pawn loans~~	$	~~5,658~~
~~Pawn loan fees receivable~~	~~306~~

~~Inventories~~	~~5,481~~
~~Other current assets~~	~~161~~
~~Property and equipment~~	~~839~~
~~Goodwill~~ ~~(1)~~	~~38,920~~
~~Intangible assets~~	~~620~~

~~Current liabilities~~	~~(1,271)~~


~~Aggregate purchase price~~	$	~~50,714~~


	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)~~Substantially all~~Measurement period adjustment is primarily a result of the ~~goodwill is expected~~seller finalizing the ending tax basis in the assets and liabilities acquired, which carried over to ~~be deductible for U.S. income tax purposes.~~the Company.

The results of operations for the acquired stores have been consolidated since the respective acquisition dates. During the nine months ended September 30, 2021, revenue from the acquired stores was $11.1 million and the earnings from the combined acquisitions since the acquisition dates (including $1.0 million of transaction and integration costs, net of tax) was approximately $1.4 million.

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 ~~for~~ 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 ~~as of~~was 4.1 years for both September 30, ~~2021~~2022 and ~~2020 was 4.1 years.~~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 ~~2020 was~~ 6.4% ~~and 7.2%~~, respectively.


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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 ~~$0.5~~$0.4 million and ~~a gain of $0.4~~$0.5 million during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, related to the remeasurement of these U.S. dollar denominated operating leases, which is included in loss (gain) ~~loss~~ on foreign exchange in the accompanying consolidated statements of income. During the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recognized a foreign currency ~~loss~~gain of $0.4 million and ~~$3.5~~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 lease expense included in ~~store~~ operating expenses in the consolidated statements of income during the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Operating lease expense	Operating lease expense	$	31,595	$	30,038	$	94,034	$	90,673	Operating lease expense	$	31,988	$	31,595	$	95,590	$	94,034
Variable lease expense (1)	Variable lease expense (1)	4,120		3,656		11,893		10,604		Variable lease expense (1)	4,216		4,120		12,619		11,893
Total operating lease expense	Total operating lease expense	$	35,715	$	33,694	$	105,927	$	101,277	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, ~~2021~~2022 (in thousands):

Three months ending December 31, 2021 $ 28,216
2022 99,302
2023 79,255
2024 55,771
2025 30,568
Thereafter 33,062
Total $ 326,174
Less amount of lease payments representing interest (39,054)
Total present value of lease payments $ 287,120

~~The following table details supplemental cash flow information related to operating leases for the nine months ended September 30, 2021 and 2020 (in thousands):~~

Nine Months Ended
September 30,
2021 2020
Cash paid for amounts included in the measurement of operating lease liabilities $ 85,565 $ 82,473
Leased assets obtained in exchange for new operating lease liabilities $ 78,280 $ 81,151


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~~Note 5 - 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,
2021 2020 2020
Revolving unsecured credit facility, maturing 2024 (1)
$ 246,000 $ 40,000 $ 123,000
4.625% senior unsecured notes due 2028 (2)
493,499 492,775 492,916
Total long-term debt $ 739,499 $ 532,775 $ 615,916


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

~~(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, 2021, 2020 and December 31, 2020, deferred debt issuance costs of $6.5 million, $7.2 million and $7.1 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.

~~Revolving Unsecured Credit Facility~~

As of September 30, 2021, 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. The Credit Facility matures on December 19, 2024. As of September 30, 2021, the Company had $246.0 million in outstanding borrowings and $3.2 million in outstanding letters of credit under the Credit Facility, leaving $250.8 million available for future borrowings, subject to certain financial covenants. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing 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 (2) 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 0.325% 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, 2021 was 2.63% based on 1 week LIBOR. 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, 2021. During the nine months ended September 30, 2021, the Company received net proceeds of $123.0 million from borrowings pursuant to the Credit Facility.

~~Revolving Unsecured Uncommitted Credit Facility~~

As of September 30, 2021, 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 the Mexican Central Bank’s interbank equilibrium rate (“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, 2021. At September 30, 2021, 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 “Notes”), all of which are currently outstanding. Interest on the Notes is payable semi-annually in arrears on March 1 and September 1. 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 Credit Facility. The 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 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, 2021, the Company’s consolidated total debt


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~~ratio was 2.7~~The following table details supplemental cash flow information related to ~~1. While~~operating leases for the 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 provides the Company with continued flexibility to make restricted payments when the Company’s consolidated total debt ratio is greater than 2.75 to 1.nine months ended September 30, 2022 and 2021 (in thousands):

The Company utilized the net proceeds from the offering of the Notes to redeem all of the $300.0 million aggregate principal amount of the Company’s 5.375% senior notes due 2024 and to repay a portion of the Company’s Credit Facility.


	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 65 - 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, ~~2021, 2020~~2022 and December 31, ~~2020,~~2021 that are measured at fair value on a recurring 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 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 orand liabilities that are measured at fair value on a recurring ~~basis.~~basis as of September 30, 2021.

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired. During the nine months ended September 30, 2020, the Company recorded a $1.9 million impairment related to a non-financial, non-operating asset that was included in other assets in the consolidated balance sheets.

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, 2022, September 30, 2021 ~~2020~~ and December 31, ~~2020~~2021 that are not measured at fair value in the consolidated balance sheets are as follows (in thousands):


		Carrying Value		Estimated Fair Value									Carrying Value		Estimated Fair Value
		September 30,		September 30,		Fair Value Measurements Using							September 30,		September 30,		Fair Value Measurements Using
		2021		2021		Level 1		Level 2		Level 3			2022		2022		Level 1		Level 2		Level 3
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	49,907	$	49,907	$	49,907	$	—	$	—	Cash and cash equivalents	$	100,620	$	100,620	$	100,620	$	—	$	—
Fees and service charges receivable		43,492		43,492		—		—		43,492
Accounts receivable, net												Accounts receivable, net	58,435		58,435		—		—		58,435
Pawn loans	Pawn loans	348,993		348,993		—		—		348,993		Pawn loans	404,227		404,227		—		—		404,227

Finance receivables, net (1)												Finance receivables, net (1)	111,945		193,750		—		—		193,750
		$	442,392	$	442,392	$	49,907	$	—	$	392,485		$	675,227	$	757,032	$	100,620	$	—	$	656,412

Financial liabilities:	Financial liabilities:											Financial liabilities:
Revolving unsecured credit facilities	Revolving unsecured credit facilities	$	246,000	$	246,000	$	—	$	246,000	$	—	Revolving unsecured credit facilities	$	338,000	$	338,000	$	—	$	338,000	$	—
Senior unsecured notes (outstanding principal)	Senior unsecured notes (outstanding principal)	500,000		516,000		—		516,000		—		Senior unsecured notes (outstanding principal)	1,050,000		887,000		—		887,000		—
		$	746,000	$	762,000	$	—	$	762,000	$	—		$	1,388,000	$	1,225,000	$	—	$	1,225,000	$	—

(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									Carrying Value		Estimated Fair Value
		September 30,		September 30,		Fair Value Measurements Using							September 30,		September 30,		Fair Value Measurements Using
		2020		2020		Level 1		Level 2		Level 3			2021		2021		Level 1		Level 2		Level 3
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	78,844	$	78,844	$	78,844	$	—	$	—	Cash and cash equivalents	$	49,907	$	49,907	$	49,907	$	—	$	—
Fees and service charges receivable		36,423		36,423		—		—		36,423
Accounts receivable, net												Accounts receivable, net	43,492		43,492		—		—		43,492
Pawn loans	Pawn loans	270,619		270,619		—		—		270,619		Pawn loans	348,993		348,993		—		—		348,993

		$	385,886	$	385,886	$	78,844	$	—	$	307,042		$	442,392	$	442,392	$	49,907	$	—	$	392,485

Financial liabilities:	Financial liabilities:											Financial liabilities:
Revolving unsecured credit facilities	Revolving unsecured credit facilities	$	40,000	$	40,000	$	—	$	40,000	$	—	Revolving unsecured credit facilities	$	246,000	$	246,000	$	—	$	246,000	$	—
Senior unsecured notes (outstanding principal)	Senior unsecured notes (outstanding principal)	500,000		508,000		—		508,000		—		Senior unsecured notes (outstanding principal)	500,000		516,000		—		516,000		—
		$	540,000	$	548,000	$	—	$	548,000	$	—		$	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
		2020		2020		Level 1		Level 2		Level 3			2021		2021		Level 1		Level 2		Level 3
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	65,850	$	65,850	$	65,850	$	—	$	—	Cash and cash equivalents	$	120,046	$	120,046	$	120,046	$	—	$	—
Fees and service charges receivable		41,110		41,110		—		—		41,110
Accounts receivable, net												Accounts receivable, net	55,356		55,356		—		—		55,356
Pawn loans	Pawn loans	308,231		308,231		—		—		308,231		Pawn loans	347,973		347,973		—		—		347,973

Finance receivables, net (1)												Finance receivables, net (1)	181,021		233,000		—		—		233,000
		$	415,191	$	415,191	$	65,850	$	—	$	349,341		$	704,396	$	756,375	$	120,046	$	—	$	636,329

Financial liabilities:	Financial liabilities:											Financial liabilities:
Revolving unsecured credit facilities	Revolving unsecured credit facilities	$	123,000	$	123,000	$	—	$	123,000	$	—	Revolving unsecured credit facilities	$	259,000	$	259,000	$	—	$	259,000	$	—
Senior unsecured notes (outstanding principal)	Senior unsecured notes (outstanding principal)	500,000		516,000		—		516,000		—		Senior unsecured notes (outstanding principal)	1,050,000		1,058,000		—		1,058,000		—
		$	623,000	$	639,000	$	—	$	639,000	$	—		$	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.

Finance receivables are measured at amortized cost, net of an allowance for loan losses on the consolidated balance 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 adjusted for credit risk, among other factors).

The carrying value of the unsecured credit facilities ~~approximate~~approximates fair value as of September 30, 2022, September 30, 2021 ~~2020~~ and December 31, ~~2020.~~2021. The fair value of the unsecured credit facilities 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 ~~LIBOR~~the prevailing secured overnight financing rate (“SOFR”) or ~~TIIE~~the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) and reprice with any changes in ~~LIBOR~~SOFR or TIIE. The fair value of the senior unsecured notes is estimated based on quoted prices in markets that 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 710 - Segment Information

The Company organizes its operations into 2three reportable segments as follows:

•U.S. ~~operations~~pawn

•Latin America ~~operations - includes operations in Mexico, Guatemala, Colombia and El Salvador~~pawn

•Retail POS payment solutions (AFF)

Corporate expenses and income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, ~~merger and acquisition expenses,~~ loss (gain) on foreign exchange, ~~write-offs~~merger and acquisition expenses, gain on revaluation of ~~certain lease intangibles~~contingent acquisition consideration, and ~~impairments of certain~~ other ~~assets,~~expenses (income), net, are ~~incurred or earned in both the U.S. and Latin America, but~~ presented on a consolidated basis and are not allocated between the U.S. ~~operations~~pawn segment, ~~and~~ Latin America ~~operations~~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 are eliminated to arrive at consolidated totals.

~~The following tables present reportable segment information for the three and nine month periods ended September 30, 2021 and 2020 (in thousands):~~

Three Months Ended September 30, 2021
U.S.
Operations Latin America
Operations Corporate 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:
Store 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)
Merger and acquisition expenses — — 12 12
Loss on foreign exchange — — 558 558
Write-off of certain Cash America merger related lease intangibles — — 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

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Three Months Ended September 30, 2020
U.S.
Operations Latin America
Operations Corporate Consolidated
Revenue:
Retail merchandise sales $ 151,618 $ 83,364 $ — $ 234,982
Pawn loan fees 66,180 33,390 — 99,570
Wholesale scrap jewelry sales 12,692 12,589 — 25,281
Consumer loan and credit services fees 57 — — 57
Total revenue 230,547 129,343 — 359,890
Cost of revenue:
Cost of retail merchandise sold 84,673 52,557 — 137,230
Cost of wholesale scrap jewelry sold 10,316 9,502 — 19,818
Consumer loan and credit services loss provision 104 — — 104
Total cost of revenue 95,093 62,059 — 157,152
Net revenue 135,454 67,284 — 202,738
Expenses and other income:
Store operating expenses 92,678 39,383 — 132,061
Administrative expenses — — 24,354 24,354
Depreciation and amortization 5,390 3,903 1,133 10,426
Interest expense — — 6,561 6,561
Interest income — — (499) (499)
Merger and acquisition expenses — — 7 7
Gain on foreign exchange — — (432) (432)
Write-off of certain Cash America merger related lease intangibles — — 837 837
Loss on extinguishment of debt — — 11,737 11,737
Total expenses and other income 98,068 43,286 43,698 185,052
Income (loss) before income taxes $ 37,386 $ 23,998 $ (43,698) $ 17,686
The following tables present reportable segment information for the three and nine month periods ended September 30, 2022 and 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

(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, 2021									Nine Months Ended September 30, 2022
		U.S. Operations		Latin America Operations		Corporate		Consolidated			U.S. Pawn		Latin America Pawn		Retail POS Payment Solutions		Corporate/ Eliminations			Consolidated
Revenue:	Revenue:									Revenue:
Retail merchandise sales	Retail merchandise sales	$	530,468	$	275,867	$	—	$	806,335	Retail merchandise sales	$	596,165	$	308,356	$	—	$	(2,546)	(1)	$	901,975
Pawn loan fees	Pawn loan fees	220,013		126,783		—		346,796		Pawn loan fees	274,304		137,309		—		—			411,613
Leased merchandise income										Leased merchandise income	—		—		455,736		—			455,736
Interest and fees on finance receivables										Interest and fees on finance receivables	—		—		135,039		—			135,039
Wholesale scrap jewelry sales	Wholesale scrap jewelry sales	20,217		23,843		—		44,060		Wholesale scrap jewelry sales	45,153		30,082		—		—			75,235

Total revenue	Total revenue	770,698		426,493		—		1,197,191		Total revenue	915,622		475,747		590,775		(2,546)			1,979,598

Cost of revenue:	Cost of revenue:									Cost of revenue:
Cost of retail merchandise sold	Cost of retail merchandise sold	295,455		173,179		—		468,634		Cost of retail merchandise sold	349,007		196,057		—		(1,342)		(1)	543,722
Depreciation of leased merchandise										Depreciation of leased merchandise	—		—		263,014		(184)		(1)	262,830
Provision for lease losses										Provision for lease losses	—		—		110,205		(434)		(1)	109,771
Provision for loan losses										Provision for loan losses	—		—		83,453		—			83,453
Cost of wholesale scrap jewelry sold	Cost of wholesale scrap jewelry sold	16,678		20,979		—		37,657		Cost of wholesale scrap jewelry sold	39,150		25,221		—		—			64,371

Total cost of revenue	Total cost of revenue	312,133		194,158		—		506,291		Total cost of revenue	388,157		221,278		456,672		(1,960)			1,064,147

Net revenue	Net revenue	458,565		232,335		—		690,900		Net revenue	527,465		254,469		134,103		(586)		(1)	915,451

Expenses and other income:	Expenses and other income:									Expenses and other income:
Store operating expenses		282,068		133,003		—		415,071
Operating expenses										Operating expenses	302,572		141,574		95,252		—			539,398
Administrative expenses	Administrative expenses	—		—		88,605		88,605		Administrative expenses	—		—		—		110,882			110,882
Depreciation and amortization	Depreciation and amortization	16,391		13,388		2,952		32,731		Depreciation and amortization	17,261		13,520		2,156		44,558			77,495
Interest expense	Interest expense	—		—		22,389		22,389		Interest expense	—		—		—		50,749			50,749
Interest income	Interest income	—		—		(420)		(420)		Interest income	—		—		—		(1,104)			(1,104)
Gain on foreign exchange										Gain on foreign exchange	—		—		—		(198)			(198)
Merger and acquisition expenses	Merger and acquisition expenses	—		—		1,264		1,264		Merger and acquisition expenses	—		—		—		1,712			1,712
Loss on foreign exchange		—		—		248		248
Write-off of certain Cash America merger related lease intangibles		—		—		1,640		1,640

Gain on revaluation of contingent acquisition consideration										Gain on revaluation of contingent acquisition consideration	—		—		—		(82,789)			(82,789)
Other expenses (income), net										Other expenses (income), net	—		—		—		(2,721)			(2,721)

Total expenses and other income	Total expenses and other income	298,459		146,391		116,678		561,528		Total expenses and other income	319,833		155,094		97,408		121,089			693,424

Income (loss) before income taxes	Income (loss) before income taxes	$	160,106	$	85,944	$	(116,678)	$	129,372	Income (loss) before income taxes	$	207,632	$	99,375	$	36,695	$	(121,675)		$	222,027


	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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		Nine Months Ended September 30, 2020									Three Months Ended September 30, 2021
		U.S. Operations		Latin America Operations		Corporate		Consolidated			U.S. Pawn		Latin America Pawn		Corporate/ Eliminations		Consolidated
Revenue:	Revenue:									Revenue:
Retail merchandise sales	Retail merchandise sales	$	556,528	$	262,483	$	—	$	819,011	Retail merchandise sales	$	167,257	$	101,469	$	—	$	268,726
Pawn loan fees	Pawn loan fees	235,937		107,738		—		343,675		Pawn loan fees	76,674		44,691		—		121,365

Wholesale scrap jewelry sales	Wholesale scrap jewelry sales	37,727		36,710		—		74,437		Wholesale scrap jewelry sales	4,168		5,415		—		9,583
Consumer loan and credit services fees		2,003		—		—		2,003
Total revenue	Total revenue	832,195		406,931		—		1,239,126		Total revenue	248,099		151,575		—		399,674

Cost of revenue:	Cost of revenue:									Cost of revenue:
Cost of retail merchandise sold	Cost of retail merchandise sold	325,863		167,573		—		493,436		Cost of retail merchandise sold	93,326		64,731		—		158,057

Cost of wholesale scrap jewelry sold	Cost of wholesale scrap jewelry sold	32,754		28,268		—		61,022		Cost of wholesale scrap jewelry sold	3,778		4,750		—		8,528
Consumer loan and credit services loss provision		(480)		—		—		(480)
Total cost of revenue	Total cost of revenue	358,137		195,841		—		553,978		Total cost of revenue	97,104		69,481		—		166,585

Net revenue	Net revenue	474,058		211,090		—		685,148		Net revenue	150,995		82,094		—		233,089

Expenses and other income:	Expenses and other income:									Expenses and other income:
Store operating expenses		303,686		122,926		—		426,612
Operating expenses										Operating expenses	93,247		45,372		—		138,619
Administrative expenses	Administrative expenses	—		—		85,642		85,642		Administrative expenses	—		—		30,208		30,208
Depreciation and amortization	Depreciation and amortization	16,352		11,568		3,504		31,424		Depreciation and amortization	5,662		4,591		964		11,217
Interest expense	Interest expense	—		—		21,953		21,953		Interest expense	—		—		7,961		7,961
Interest income	Interest income	—		—		(1,209)		(1,209)		Interest income	—		—		(143)		(143)
Loss on foreign exchange										Loss on foreign exchange	—		—		558		558
Merger and acquisition expenses	Merger and acquisition expenses	—		—		209		209		Merger and acquisition expenses	—		—		12		12
Loss on foreign exchange		—		—		1,639		1,639
Write-off of certain Cash America merger related lease intangibles		—		—		4,649		4,649
Loss on extinguishment of debt		—		—		11,737		11,737
Impairment of certain other assets		—		—		1,900		1,900

Other expenses (income), net										Other expenses (income), net	—		—		361		361

Total expenses and other income	Total expenses and other income	320,038		134,494		130,024		584,556		Total expenses and other income	98,909		49,963		39,921		188,793

Income (loss) before income taxes	Income (loss) before income taxes	$	154,020	$	76,596	$	(130,024)	$	100,592	Income (loss) before income taxes	$	52,086	$	32,131	$	(39,921)	$	44,296

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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


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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 (together, the “Company”) should be read in conjunction with the Company’s 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 on Form 10-K for the year ended December 31, ~~2020.~~2021.

GENERAL

The Company’s primary line of business is the operation of retail pawn stores, also known as “pawnshops,” which focus on serving cash and credit-constrained consumers. The Company is athe leading operator of ~~retail-based~~ pawn stores ~~with over 2,800 store locations~~ in the U.S. and Latin America. ~~The Company’s pawn stores generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. In addition, the~~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 ~~and held by the Company~~ over the typical 30-day term of the ~~loan plus~~loan. Pawn stores also generate 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 ~~stated grace period.~~leading provider of technology-driven, retail POS payment solutions focused on serving credit-constrained consumers. The 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 goods and services to their customers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions. As one of the largest omni-channel providers of “no credit 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 organizes its operations~~Company’s two business lines are organized into ~~two~~three reportable segments. The U.S. ~~operations~~pawn segment consists of all pawn operations in the U.S. and the Latin America ~~operations~~pawn segment consists of all pawn 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, ~~2021,~~2022, the Company ~~had 2,808~~operated 2,839 pawn store locations ~~composed~~comprised of ~~1,069~~1,076 stores in 2425 U.S. states and the District of Columbia, ~~1,651~~1,674 stores in 32 states in Mexico, 60 stores in Guatemala, 15 stores in Colombia and 1314 stores in El Salvador.

The following tables detail pawn store count activity:


		Three Months Ended September 30, 2021
		U.S.	Latin America
		Operations Segment	Operations Segment	Total Locations
Total locations, beginning of period		1,071	1,733	2,804
New locations opened		—	14	14

Consolidation of existing pawn locations (1)		(2)	(8)	(10)

Total locations, end of period		1,069	1,739	2,808

		Nine Months Ended September 30, 2021
		U.S.	Latin America			Three Months Ended September 30, 2022
		Operations Segment	Operations Segment	Total Locations		U.S.	Latin America	Total
Total locations, beginning of period	Total locations, beginning of period	1,046	1,702	2,748	Total locations, beginning of period	1,076	1,758	2,834
New locations opened	New locations opened	1	49	50	New locations opened	—	9	9
Locations acquired	Locations acquired	28	—	28	Locations acquired	2	—	2

Consolidation of existing pawn locations (1)	Consolidation of existing pawn locations (1)	(6)	(12)	(18)	Consolidation of existing pawn locations (1)	(2)	(4)	(6)

Total locations, end of period	Total locations, end of period	1,069	1,739	2,808	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					Total locations, beginning of period	1,081	1,744	2,825
New locations opened (2)					New locations opened (2)	—	28	28
Locations acquired					Locations acquired	3	—	3

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

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

(1)Store consolidations were primarily acquired locations over the past ~~five~~six years which have been combined with overlapping stores and for which the Company expects to maintain a significant portion of the acquired customer base in the consolidated location.

(2)In addition to new store openings, the Company strategically relocated two stores in the U.S. and one store in Latin America during the nine months ended September 30, 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.

CRITICAL ACCOUNTING ESTIMATES

The financial statements have been prepared in accordance with 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 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, 2022.


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~~CRITICAL ACCOUNTING POLICIES~~

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The significant accounting policies 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 2020 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, 2021.

RESULTS OF OPERATIONS (unaudited)

Continuing Impact of COVID-19

The ~~Company continues to monitor~~COVID-19 pandemic and its contributory impacts on the ~~impact~~economy have impacted numerous aspects of the Company’s business. In particular, the COVID-19 pandemic ~~on all aspects of its business. The extent to which COVID-19 continues to impact the Company’s operations, results of operations, liquidity~~ and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic, which may be impacted by variants of the COVID-19 virus and the adoption rate of the COVID-19 vaccines in the jurisdictions in which the Company operates, and the actions taken to contain the impact of COVID-19, as well as further actions taken to limit the resulting economic impact. In particular, government ~~stimulus and other transfer programs have and may continue to have a material~~responses thereto had an initial adverse impact on pawn loan demand, ~~for~~which impacted pawn ~~loans~~receivables, inventories and revenues. This adverse impact in ~~future periods.~~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 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 results at prior-year average exchange rates. The wholesale scrap jewelry sales in Latin America are priced and settled in U.S. dollars and are not affected by foreign currency translation, as are a small percentage of the operating and administrative expenses in Latin America which are billed and paid in U.S. dollars. Amounts presented on a constant currency basis are denoted as such. See “Non-GAAP Financial Information” for additional discussion of constant currency operating results.

Business operations in Mexico, Guatemala and Colombia are transacted in Mexican pesos, Guatemalan quetzales 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, Guatemalan quetzal and Colombian peso for the current and prior-year periods:


		September 30,		Favorable /				September 30,		Favorable /
		2021	2020	(Unfavorable)				2022	2021	(Unfavorable)
Mexican peso / U.S. dollar exchange rate:	Mexican peso / U.S. dollar exchange rate:						Mexican peso / U.S. dollar exchange rate:
End-of-period	End-of-period	20.3	22.5		10	%	End-of-period	20.3	20.3		—	%
Three months ended	Three months ended	20.0	22.1		10	%	Three months ended	20.2	20.0		(1)	%
Nine months ended	Nine months ended	20.1	21.8		8	%	Nine months ended	20.3	20.1		(1)	%

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

Colombian peso / U.S. dollar exchange rate:	Colombian peso / U.S. dollar exchange rate:						Colombian peso / U.S. dollar exchange rate:
End-of-period	End-of-period	3,835	3,879		1	%	End-of-period	4,532	3,835		(18)	%
Three months ended	Three months ended	3,844	3,730		(3)	%	Three months ended	4,375	3,844		(14)	%
Nine months ended	Nine months ended	3,696	3,703		—	%	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.~~

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Operating Results for the Three Months Ended September 30, ~~2021~~2022 Compared to the Three Months Ended September 30, ~~2020~~2021

U.S. ~~Operations~~Pawn Segment

The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the U.S. ~~operations~~pawn segment, as of September 30, ~~2021~~2022 compared to September 30, ~~2020~~2021 (dollars in thousands, except as otherwise noted):


		As of September 30,										As of September 30,
		2021			2020			Increase				2022			2021			Increase
U.S. Operations Segment
U.S. Pawn Segment											U.S. Pawn Segment
Earning assets:	Earning assets:										Earning assets:
Pawn loans	Pawn loans	$	242,825		$	188,819			29	%	Pawn loans	$	279,645		$	242,825			15	%
Inventories	Inventories		175,047			120,397			45	%	Inventories		204,359			175,047			17	%
		$	417,872		$	309,216			35	%		$	484,004		$	417,872			16	%

Average outstanding pawn loan amount (in ones)	Average outstanding pawn loan amount (in ones)	$	208		$	188			11	%	Average outstanding pawn loan amount (in ones)	$	232		$	208			12	%

Composition of pawn collateral:	Composition of pawn collateral:										Composition of pawn collateral:
General merchandise	General merchandise	36		%	34		%				General merchandise	32		%	36		%
Jewelry	Jewelry	64		%	66		%				Jewelry	68		%	64		%
		100		%	100		%					100		%	100		%

Composition of inventories:	Composition of inventories:										Composition of inventories:
General merchandise	General merchandise	48		%	42		%				General merchandise	43		%	48		%
Jewelry	Jewelry	52		%	58		%				Jewelry	57		%	52		%
		100		%	100		%					100		%	100		%

Percentage of inventory aged greater than one year	Percentage of inventory aged greater than one year	1		%	2		%				Percentage of inventory aged greater than one year	1		%	1		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	2.9 times			3.2 times						Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	2.7 times			2.9 times

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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, ~~2021~~2022 compared to the three months ended September 30, ~~2020~~2021 (dollars in thousands). ~~Store operating~~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, Increase /
2021 2020 (Decrease)
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 167,257 $ 151,618 10 %
Pawn loan fees 76,674 66,180 16 %
Wholesale scrap jewelry sales 4,168 12,692 (67) %
Consumer loan and credit services fees (1)
— 57 (100) %
Total revenue 248,099 230,547 8 %
Cost of revenue:
Cost of retail merchandise sold 93,326 84,673 10 %
Cost of wholesale scrap jewelry sold 3,778 10,316 (63) %
Consumer loan and credit services loss provision (1)
— 104 (100) %
Total cost of revenue 97,104 95,093 2 %
Net revenue 150,995 135,454 11 %
Segment expenses:
Store operating expenses 93,247 92,678 1 %
Depreciation and amortization 5,662 5,390 5 %
Total segment expenses 98,909 98,068 1 %
Segment pre-tax operating income $ 52,086 $ 37,386 39 %
Operating metrics:
Retail merchandise sales margin 44 % 44 %
Net revenue margin 61 % 59 %
Segment pre-tax operating margin 21 % 16 %

~~(1)Effective June 30, 2020, the Company no longer offers an unsecured consumer loan product in the U.S.~~


	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		%

Retail Merchandise Sales Operations

U.S. retail merchandise sales increased ~~10%~~17% to ~~$167.3~~$195.9 million during the third quarter of ~~2021~~2022 compared to ~~$151.6~~$167.3 million for the third quarter of ~~2020.~~2021. Same-store retail sales increased 6%16% in the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020.~~2021. The increase in total and same-store retail sales was primarily due to increased inventory levels during the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020.~~2021 and greater demand for value-priced consumer goods. The gross profit margin on retail merchandise sales in the U.S. was 41% in the third quarter of 2022 and 44% in ~~both~~the third quarter of 2021. The decrease in the retail merchandise margins was primarily due to lower-than-normal inventory levels during the third quarter of 2021, ~~and 2020.~~which limited the need for normal discounting.

U.S. inventories increased ~~45%~~17% from ~~$120.4 million at September 30, 2020 to~~ $175.0 million at September 30, ~~2021.~~2021 to $204.4 million at September 30, 2022. The increase was primarily due to ~~lower than normal~~lower-than-normal inventory balances at September 30, ~~2020~~2021 due to the impacts of the COVID-19 pandemic. Inventories aged greater than one year in the U.S. were 1% at both September 30, ~~2021 compared to 2% at September 30, 2020.~~2022 and 2021.

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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 ~~16%~~25% to ~~$76.7~~$96.2 million during the third quarter of ~~2021~~2022 compared to ~~$66.2~~$76.7 million for the third quarter of ~~2020.~~2021. Same-store pawn fees in the third quarter of ~~2021~~2022 also increased ~~11%~~25% compared to the third quarter of ~~2020. Pawn loan receivables as of September 30, 2021 increased 29% in total and 23% on a same-store basis compared to September 30, 2020.~~2021. The increase in total and same-store ~~pawn receivables and resulting~~ pawn loan fees was primarily due to the continued recovery in pawn ~~lending demand~~loan receivables, as described above.

Segment Expenses

U.S. operating expenses increased 10% to $102.5 million during the third quarter of ~~2021 towards pre-pandemic levels.~~

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

~~U.S. store operating expenses increased 1%~~2022 compared to $93.2 million during the third quarter of 2021 ~~compared to $92.7 million during the third quarter of 2020~~ while same-store operating expenses ~~decreased 3%~~increased 9% compared with the prior-year period. The ~~decrease~~increase in total and same-store operating expenses was primarily due to ~~cost saving initiatives~~inflationary increases in ~~response to COVID-19.~~wages and other certain operating costs and increased store-level incentive compensation driven by increased revenues and store operating profit during the third quarter of 2022.

Segment Pre-Tax Operating Income

The U.S. segment pre-tax operating income for the third quarter of ~~2021~~2022 was ~~$52.1~~$70.5 million, which generated a pre-tax segment operating margin of ~~21%~~23% compared to ~~$37.4~~$52.1 million and ~~16%~~21% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected ~~increases in gross profit from retail sales and pawn loan fees, partially offset by a decrease in gross profit from scrap sales and a slight~~an 18% increase in ~~operating~~net revenue further leveraged by the 10% increase in segment expenses.

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Latin America Operations Segment

Latin American results of operations for the three months ended September 30, ~~2021~~2022 compared to the three months ended September 30, ~~2020 benefited from~~2021 were impacted by a ~~10% favorable~~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, ~~2021~~2022 compared to September 30, ~~2020 benefited from a 10% favorable change in~~2021 were not affected by the end-of-period ~~value of the~~ Mexican peso compared to the U.S. ~~dollar.~~dollar exchange rate as it was unchanged compared to the prior-year period.

The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Latin America ~~operations~~pawn segment, as of September 30, ~~2021~~2022 compared to September 30, ~~2020~~2021 (dollars in thousands, except as otherwise noted):


											Constant Currency Basis															Constant Currency Basis
											As of															As of
											September 30,															September 30,
		As of September 30,									2021		Increase				As of September 30,									2022		Increase
		2021			2020			Increase			(Non-GAAP)		(Non-GAAP)				2022			2021			Increase			(Non-GAAP)		(Non-GAAP)
Latin America Operations Segment
Latin America Pawn Segment																Latin America Pawn Segment
Earning assets:	Earning assets:															Earning assets:
Pawn loans	Pawn loans	$	106,168		$	81,800			30	%	$	96,443		18	%	Pawn loans	$	124,582		$	106,168			17	%	$	124,711		17	%
Inventories	Inventories		79,213			48,267			64	%	71,927			49	%	Inventories		91,069			79,213			15	%	91,167			15	%

		$	185,381		$	130,067			43	%	$	168,370		29	%		$	215,651		$	185,381			16	%	$	215,878		16	%

Average outstanding pawn loan amount (in ones)	Average outstanding pawn loan amount (in ones)	$	76		$	64			19	%	$	69		8	%	Average outstanding pawn loan amount (in ones)	$	79		$	76			4	%	$	79		4	%

Composition of pawn collateral:	Composition of pawn collateral:															Composition of pawn collateral:
General merchandise	General merchandise	68		%	66		%									General merchandise	69		%	68		%
Jewelry	Jewelry	32		%	34		%									Jewelry	31		%	32		%
		100		%	100		%										100		%	100		%

Composition of inventories:	Composition of inventories:															Composition of inventories:
General merchandise	General merchandise	67		%	60		%									General merchandise	71		%	67		%
Jewelry	Jewelry	33		%	40		%									Jewelry	29		%	33		%
		100		%	100		%										100		%	100		%

Percentage of inventory aged greater than one year	Percentage of inventory aged greater than one year	1		%	2		%									Percentage of inventory aged greater than one year	1		%	1		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	4.2 times			4.1 times											Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	4.0 times			4.2 times

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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, ~~2021~~2022 compared to the three months ended September 30, ~~2020~~2021 (dollars in thousands). ~~Store operating~~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																			Constant Currency Basis
														Three Months																			Three Months
														Ended																			Ended
			Three Months Ended											September 30,			Increase /					Three Months Ended											September 30,
			September 30,							Increase /				2021			(Decrease)					September 30,							Increase /				2022			Increase
			2021				2020			(Decrease)				(Non-GAAP)			(Non-GAAP)					2022				2021			(Decrease)				(Non-GAAP)			(Non-GAAP)
Latin America Operations Segment
Latin America Pawn Segment																				Latin America Pawn Segment
Revenue:	Revenue:																			Revenue:
Retail merchandise sales	Retail merchandise sales		$	101,469			$	83,364			22	%		$	92,367			11	%	Retail merchandise sales		$	107,591			$	101,469			6	%		$	108,808			7	%
Pawn loan fees	Pawn loan fees		44,691				33,390				34	%		40,662				22	%	Pawn loan fees		49,505				44,691				11	%		50,067				12	%
Wholesale scrap jewelry sales	Wholesale scrap jewelry sales		5,415				12,589				(57)	%		5,415				(57)	%	Wholesale scrap jewelry sales		5,626				5,415				4	%		5,626				4	%

Total revenue	Total revenue		151,575				129,343				17	%		138,444				7	%	Total revenue		162,722				151,575				7	%		164,501				9	%

Cost of revenue:	Cost of revenue:																			Cost of revenue:
Cost of retail merchandise sold	Cost of retail merchandise sold		64,731				52,557				23	%		58,945				12	%	Cost of retail merchandise sold		68,642				64,731				6	%		69,415				7	%
Cost of wholesale scrap jewelry sold	Cost of wholesale scrap jewelry sold		4,750				9,502				(50)	%		4,300				(55)	%	Cost of wholesale scrap jewelry sold		4,923				4,750				4	%		4,977				5	%

Total cost of revenue	Total cost of revenue		69,481				62,059				12	%		63,245				2	%	Total cost of revenue		73,565				69,481				6	%		74,392				7	%

Net revenue	Net revenue		82,094				67,284				22	%		75,199				12	%	Net revenue		89,157				82,094				9	%		90,109				10	%

Segment expenses:	Segment expenses:																			Segment expenses:
Store operating expenses			45,372				39,383				15	%		41,555				6	%
Operating expenses																				Operating expenses		47,979				45,372				6	%		48,527				7	%
Depreciation and amortization	Depreciation and amortization		4,591				3,903				18	%		4,229				8	%	Depreciation and amortization		4,566				4,591				(1)	%		4,630				1	%
Total segment expenses	Total segment expenses		49,963				43,286				15	%		45,784				6	%	Total segment expenses		52,545				49,963				5	%		53,157				6	%

Segment pre-tax operating income	Segment pre-tax operating income		$	32,131			$	23,998			34	%		$	29,415			23	%	Segment pre-tax operating income		$	36,612			$	32,131			14	%		$	36,952			15	%

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

Net revenue margin	Net revenue margin	54			%	52			%				54			%				Net revenue margin	55			%	54			%				55			%
Segment pre-tax operating margin	Segment pre-tax operating margin	21			%	19			%				21			%				Segment pre-tax operating margin	22			%	21			%				22			%

Retail Merchandise Sales Operations

Latin America retail merchandise sales increased ~~22% (11%~~6% (7% on a constant currency basis) to ~~$101.5~~$107.6 million during the third quarter of ~~2021~~2022 compared to ~~$83.4~~$101.5 million for the third quarter of ~~2020.~~2021. Same-store retail sales increased ~~21% (10%~~5% (7% on a constant currency basis) during the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020.~~2021. The increase in total and same-store retail sales was primarily due to increased inventory levels during the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020.~~2021 and greater demand for value-priced consumer goods. The gross profit margin on retail merchandise sales was 36% during both the third quarter of ~~2021 compared to 37% during the third quarter of 2020.~~2022 and 2021.

~~Inventories in~~ Latin America inventories increased ~~64% (49% on a constant currency basis)~~15% from ~~$48.3 million at September 30, 2020 to~~ $79.2 million at September 30, ~~2021.~~2021 to $91.1 million at September 30, 2022. The increase was primarily due to ~~lower than normal~~lower-than-normal inventory balances at September 30, ~~2020~~2021 due to the impacts of the COVID-19 pandemic. Inventories aged greater than one year in Latin America were 1% at both September 30, ~~2021~~2022 and ~~2% at September 30, 2020.~~2021.

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Pawn Lending Operations

Latin America pawn loan receivables increased 17% as of September 30, 2022 compared to September 30, 2021, and on a same-store basis pawn loan receivables also increased 17%. The increase in total and same-store pawn receivables was primarily due to the continued recovery in pawn loan demand during the third quarter of 2022 to pre-pandemic levels.

Latin America pawn loan fees increased ~~34% (22%~~11% (12% on a constant currency basis), totaling ~~$44.7~~$49.5 million during the third quarter of ~~2021~~2022 compared to ~~$33.4~~$44.7 million for the third quarter of ~~2020.~~2021. Same-store pawn fees increased ~~33% (21%~~10% (12% on a constant currency basis) in the third quarter of ~~2021~~2022 compared to the third quarter of 2020. Pawn loan receivables increased 30% (18% on a constant currency basis) as of September 30, 2021 compared to September 30, 2020, and on a same-store basis pawn loan receivables increased 29% (17% on a constant currency basis).2021. The increase in total and same-store ~~pawn receivables and resulting~~constant currency pawn loan fees was primarily due to the continued recovery in pawn ~~lending demand~~loan receivables, as described above.

Segment Expenses

Operating expenses increased 6% (7% on a constant currency basis) to $48.0 million during the third quarter of ~~2021 towards pre-pandemic levels.~~

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

~~Store operating expenses increased 15% (6% on a constant currency basis)~~2022 compared to $45.4 million during the third quarter of 2021, ~~compared to $39.4 million during the third quarter of 2020. Currency adjusted~~reflecting continued store growth and modest inflationary pressure on labor and other operating expenses ~~increased primarily due to the 1% increase~~ in the ~~Latin America weighted-average store count.~~current quarter. Same-store operating expenses increased ~~14% (5%~~5% (6% on a constant currency basis). compared to the prior-year period.

Segment Pre-Tax Operating Income

The segment pre-tax operating income for the third quarter of ~~2021~~2022 was ~~$32.1~~$36.6 million, which generated a pre-tax segment operating margin of ~~21%~~22% compared to ~~$24.0~~$32.1 million and ~~19%~~21% in the prior year, respectively. The increase in the segment pre-tax operating income and margin ~~was primarily due to an~~reflected a 9% increase in ~~gross profit from retail sales and pawn loan fees~~net revenue further leveraged by a 5% increase in segment expenses and a ~~10% favorable~~1% unfavorable change in the average value of the Mexican ~~peso, partially offset by an increase~~peso.


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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 ~~store operating expenses.~~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.

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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


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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, ~~2021~~2022 compared to the three months ended September 30, ~~2020~~2021 (dollars in thousands):


		Three Months Ended								Three Months Ended
		September 30,				Increase /				September 30,				Increase /
		2021		2020		(Decrease)				2022		2021		(Decrease)
Consolidated Results of Operations	Consolidated Results of Operations								Consolidated Results of Operations
Segment pre-tax operating income:	Segment pre-tax operating income:								Segment pre-tax operating income:
U.S. operations		$	52,086	$	37,386		39	%
Latin America operations		32,131		23,998			34	%
U.S. pawn									U.S. pawn	$	70,481	$	52,086		35	%
Latin America pawn									Latin America pawn	36,612		32,131			14	%
Retail POS payment solutions (1)									Retail POS payment solutions (1)	20,091		—			—	%
Intersegment elimination (2)									Intersegment elimination (2)	(586)		—			—	%
Consolidated segment pre-tax operating income	Consolidated segment pre-tax operating income	84,217		61,384			37	%	Consolidated segment pre-tax operating income	126,598		84,217			50	%

Corporate expenses and other income:	Corporate expenses and other income:								Corporate expenses and other income:
Administrative expenses	Administrative expenses	30,208		24,354			24	%	Administrative expenses	36,951		30,208			22	%
Depreciation and amortization	Depreciation and amortization	964		1,133			(15)	%	Depreciation and amortization	14,824		964			1,438	%
Interest expense	Interest expense	7,961		6,561			21	%	Interest expense	18,282		7,961			130	%
Interest income	Interest income	(143)		(499)			(71)	%	Interest income	(206)		(143)			44	%
Loss on foreign exchange									Loss on foreign exchange	255		558			(54)	%
Merger and acquisition expenses	Merger and acquisition expenses	12		7			71	%	Merger and acquisition expenses	733		12			6,008	%
Loss (gain) on foreign exchange		558		(432)			(229)	%
Write-off of certain Cash America merger related lease intangibles		361		837			(57)	%
Loss on extinguishment of debt		—		11,737			(100)	%
Gain on revaluation of contingent acquisition consideration									Gain on revaluation of contingent acquisition consideration	(19,800)		—			—	%
Other expenses (income), net									Other expenses (income), net	164		361			(55)	%

Total corporate expenses and other income	Total corporate expenses and other income	39,921		43,698			(9)	%	Total corporate expenses and other income	51,203		39,921			28	%

Income before income taxes	Income before income taxes	44,296		17,686			150	%	Income before income taxes	75,395		44,296			70	%

Provision for income taxes	Provision for income taxes	10,900		2,624			315	%	Provision for income taxes	16,079		10,900			48	%

Net income	Net income	$	33,396	$	15,062		122	%	Net income	$	59,316	$	33,396		78	%

(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.

(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 ~~24%~~22% to ~~$30.2~~$37.0 million during the third quarter of ~~2021~~2022 compared to ~~$24.4~~$30.2 million in the third quarter of ~~2020,~~2021, primarily due to ~~increased incentive compensation and a 10% favorable change in~~ the ~~average value of the Mexican peso resulting in higher U.S. dollar translated expenses.~~AFF Acquisition. As a percentage of revenue, administrative expenses ~~increased~~decreased from ~~7% during the third quarter of 2020 to~~ 8% during the third quarter of ~~2021.~~2021 to 5% during the third quarter of 2022.

~~Interest~~Corporate depreciation and amortization expense increased ~~21%~~1,438% to ~~$8.0~~$14.8 million during the third quarter of ~~2021~~2022 compared to ~~$6.6~~$1.0 million in the third quarter of ~~2020,~~2021, primarily due to ~~an increase~~$14.2 million in the Company’s outstanding senior unsecured notes and higher average balances outstanding on the Company’s unsecured credit facilities, partially offset by lower weighted-average interest rates on the Company’s debtamortization expense during the third quarter of ~~2021 compared~~2022 related to identified intangible assets in the ~~third quarter of 2020. See Note 5 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”~~AFF Acquisition.

During the third quarter of 2020, the Company redeemed its outstanding $300.0 million, 5.375% senior notes due 2024, incurring a loss on extinguishment of debt of $11.7 million, which includes an early redemption premium and other redemption costs of $8.8 million and the write-off of unamortized debt issuance costs of $2.9 million.

Consolidated effective income tax rates for the third quarter of 2021 and 2020 were 24.6% and 14.8%, respectively. The increase in the effective tax rate was primarily due to the Internal Revenue Service finalizing regulations in July 2020 for the global intangible low-taxed income tax (“GILTI”) provisions for foreign operations in the U.S. federal tax code. The finalized

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~~regulations essentially eliminated~~Interest expense increased 130% to $18.3 million during the ~~impact~~third quarter of ~~the incremental GILTI tax on the Company on a retroactive basis, which resulted in a significant tax benefit being recorded~~2022 compared to $8.0 million in the third quarter of ~~2020. This~~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 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 ~~partially offset by~~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 2022 and 2021 were 21.3% and 24.6%, respectively. The decrease in the effective tax rate was primarily due to an increase in U.S. sourced income, primarily a result of the AFF Acquisition, which is taxed at a lower rate than the Latin American countries the Company operates in, and an increased foreign permanent tax benefit recorded in the third quarter of 2022 compared to the third quarter of 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 $1.0 million permanent domestic tax benefit in the third quarter of 2022 related to the $19.8 million gain on revaluation of certain contingent consideration related to the AFF Acquisition as described above.

~~Operating Results for the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020~~

~~U.S. Operations Segment~~

The following table presents segment pre-tax operating income and other operating metrics of the U.S. operations segment for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 (dollars in thousands). Store operating expenses include salary and benefit expense of store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores.

Nine Months Ended
September 30, Increase /
2021 2020 (Decrease)
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 530,468 $ 556,528 (5) %
Pawn loan fees 220,013 235,937 (7) %
Wholesale scrap jewelry sales 20,217 37,727 (46) %
Consumer loan and credit services fees (1)
— 2,003 (100) %
Total revenue 770,698 832,195 (7) %
Cost of revenue:
Cost of retail merchandise sold 295,455 325,863 (9) %
Cost of wholesale scrap jewelry sold 16,678 32,754 (49) %
Consumer loan and credit services loss provision (1)
— (480) (100) %
Total cost of revenue 312,133 358,137 (13) %
Net revenue 458,565 474,058 (3) %
Segment expenses:
Store operating expenses 282,068 303,686 (7) %
Depreciation and amortization 16,391 16,352 — %
Total segment expenses 298,459 320,038 (7) %
Segment pre-tax operating income $ 160,106 $ 154,020 4 %
Operating metrics:
Retail merchandise sales margin 44 % 41 %
Net revenue margin 59 % 57 %
Segment pre-tax operating margin 21 % 19 %

~~(1)Effective June 30, 2020, the Company no longer offers an unsecured consumer loan product in the U.S.~~

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Operating Results for the Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

U.S. Pawn Segment

The following table presents segment pre-tax operating income and other operating metrics of the U.S. pawn segment for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 (dollars in thousands). Operating expenses include salary and benefit expense of 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		%

Retail Merchandise Sales Operations

U.S. retail merchandise sales ~~decreased 5%~~increased 12% to ~~$530.5~~$596.2 million during the nine months ended September 30, ~~2021~~2022 compared to ~~$556.5~~$530.5 million for the nine months ended September 30, ~~2020.~~2021. Same-store retail sales ~~decreased 7%~~increased 9% during the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020.~~2021. The ~~decrease~~increase in total and same-store retail sales was primarily due to ~~higher than normal retail sales~~increased inventory levels during the nine months ended September 30, ~~2020, driven by~~2022 compared to the ~~impacts of COVID-19.~~

nine months ended September 30, 2021 and greater demand for value-priced consumer goods. During the nine months ended September 30, ~~2021,~~2022, the gross profit margin on retail merchandise sales in the U.S. was ~~44%~~41% compared to a margin of ~~41%~~44% during the nine months ended September 30, ~~2020.~~2021. The ~~increase~~decrease in ~~margin~~the retail merchandise margins was primarily ~~a result of continued retail demand for value-priced pre-owned merchandise, increased buying of merchandise directly from customers and lower~~due to lower-than-normal inventory levels ~~of aged inventory,~~during the nine months ended September 30, 2021, which limited the need for normal discounting.


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Pawn Lending Operations

U.S. pawn loan fees ~~decreased 7%, totaling $220.0~~increased 25% to $274.3 million during the nine months ended September 30, ~~2021~~2022 compared to ~~$235.9~~$220.0 million for the nine months ended September 30, ~~2020.~~2021. Same-store pawn fees ~~decreased 9%~~increased 22% during the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020.~~2021. The ~~decline~~increase in total and same-store pawn loan fees was primarily due to the ~~significantly lower than normal beginning pawn loan levels, partially offset by the~~ continued recovery in pawn loan ~~demand towards~~receivables to pre-pandemic levels, ~~during 2021.~~combined with inflationary pressures driving additional demand for consumer credit.

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

U.S. store operating expenses ~~decreased~~increased 7% to $302.6 million during the nine months ended September 30, 2022 compared to $282.1 million during the nine months ended September 30, 2021 and same-store operating expenses increased 5% compared with the prior-year period. The increase in operating expenses was primarily due to ~~$303.7 million~~inflationary increases in wages and other certain operating costs and increased store-level incentive compensation driven by increased revenues and segment profit during the nine months ended September 30, 2020 and same-store operating expenses decreased 9% compared with the prior-year period. The decrease in total and same-store operating expenses was primarily due to cost saving initiatives in response to COVID-19.2022.

Segment Pre-Tax Operating Income

The U.S. segment pre-tax operating income for the nine months ended September 30, ~~2021~~2022 was ~~$160.1~~$207.6 million, which generated a pre-tax segment operating margin of ~~21%~~23% compared to ~~$154.0~~$160.1 million and ~~19%~~21% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected ana 15% increase in ~~gross profit from retail sales and a decrease in operating expenses, partially offset~~net revenue further leveraged by a ~~decrease~~7% increase in ~~pawn loan fees, gross profit from scrap sales and net revenue from consumer loan and credit services products as a result of discontinuing consumer lending operations in 2020.~~segment expenses.

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Latin America Operations Segment

Latin American results of operations for the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020 benefited from~~2021 were impacted by a ~~8% favorable~~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, ~~2021~~2022 compared to the nine months ended September 30, ~~2020~~2021 (dollars in thousands). ~~Store operating~~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																			Constant Currency Basis
														Nine Months																			Nine Months
														Ended																			Ended
			Nine Months Ended											September 30,			Increase /					Nine Months Ended											September 30,
			September 30,							Increase /				2021			(Decrease)					September 30,											2022			Increase
			2021				2020			(Decrease)				(Non-GAAP)			(Non-GAAP)					2022				2021			Increase				(Non-GAAP)			(Non-GAAP)
Latin America Operations Segment
Latin America Pawn Segment																				Latin America Pawn Segment
Revenue:	Revenue:																			Revenue:
Retail merchandise sales	Retail merchandise sales		$	275,867			$	262,483			5	%		$	256,116			(2)	%	Retail merchandise sales		$	308,356			$	275,867			12	%		$	310,446			13	%
Pawn loan fees	Pawn loan fees		126,783				107,738				18	%		117,662				9	%	Pawn loan fees		137,309				126,783				8	%		138,244				9	%
Wholesale scrap jewelry sales	Wholesale scrap jewelry sales		23,843				36,710				(35)	%		23,843				(35)	%	Wholesale scrap jewelry sales		30,082				23,843				26	%		30,082				26	%

Total revenue	Total revenue		426,493				406,931				5	%		397,621				(2)	%	Total revenue		475,747				426,493				12	%		478,772				12	%

Cost of revenue:	Cost of revenue:																			Cost of revenue:
Cost of retail merchandise sold	Cost of retail merchandise sold		173,179				167,573				3	%		160,821				(4)	%	Cost of retail merchandise sold		196,057				173,179				13	%		197,379				14	%
Cost of wholesale scrap jewelry sold	Cost of wholesale scrap jewelry sold		20,979				28,268				(26)	%		19,449				(31)	%	Cost of wholesale scrap jewelry sold		25,221				20,979				20	%		25,394				21	%

Total cost of revenue	Total cost of revenue		194,158				195,841				(1)	%		180,270				(8)	%	Total cost of revenue		221,278				194,158				14	%		222,773				15	%

Net revenue	Net revenue		232,335				211,090				10	%		217,351				3	%	Net revenue		254,469				232,335				10	%		255,999				10	%

Segment expenses:	Segment expenses:																			Segment expenses:
Store operating expenses			133,003				122,926				8	%		124,080				1	%
Operating expenses																				Operating expenses		141,574				133,003				6	%		142,553				7	%
Depreciation and amortization	Depreciation and amortization		13,388				11,568				16	%		12,544				8	%	Depreciation and amortization		13,520				13,388				1	%		13,642				2	%
Total segment expenses	Total segment expenses		146,391				134,494				9	%		136,624				2	%	Total segment expenses		155,094				146,391				6	%		156,195				7	%

Segment pre-tax operating income	Segment pre-tax operating income		$	85,944			$	76,596			12	%		$	80,727			5	%	Segment pre-tax operating income		$	99,375			$	85,944			16	%		$	99,804			16	%

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

Net revenue margin	Net revenue margin	54			%	52			%				55			%				Net revenue margin	53			%	54			%				53			%
Segment pre-tax operating margin	Segment pre-tax operating margin	20			%	19			%				20			%				Segment pre-tax operating margin	21			%	20			%				21			%

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Retail Merchandise Sales Operations

Latin America retail merchandise sales increased ~~5% (decreased 2%~~12% (13% on a constant currency basis) to ~~$275.9~~$308.4 million during the nine months ended September 30, ~~2021~~2022 compared to ~~$262.5~~$275.9 million for the nine months ended September 30, ~~2020.~~2021. Same-store retail sales increased ~~3% (decreased 4%~~11% (also 11% on a constant currency basis) during the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020.~~2021. The ~~decrease~~increase in total and same-store ~~constant currency~~ retail sales was primarily ~~a result of significantly lower than normal~~due to increased inventory levels ~~at the beginning of 2021, which limited retail sales~~ during the ~~first half of~~nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 ~~partially offset by the government imposed COVID-19 retail restrictions, which limited retail sales during the second quarter of 2020.~~and greater demand for value-priced consumer goods. The gross profit margin on retail merchandise sales was 36% during the nine months ended September 30, 2022 compared to 37% during the nine months ended September 30, ~~2021 compared to 36% during the nine months ended September 30, 2020.~~2021.

Pawn Lending Operations

~~Pawn~~Latin America pawn loan fees ~~in Latin America~~ increased ~~18%~~8% (9% on a constant currency basis) ~~totaling $126.8~~to $137.3 million during the nine months ended September 30, ~~2021~~2022 compared to ~~$107.7~~$126.8 million for the nine months ended September 30, ~~2020.~~2021. Same-store pawn fees increased ~~16%~~7% (8% on a constant currency basis) during the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020.~~2021. The increase in total and same-store constant currency pawn loan fees was primarily due to the continued ~~improvement~~recovery of pawn loan ~~origination activity~~receivables.

Segment Expenses

Store operating expenses increased 6% (7% on a constant currency basis) to $141.6 million during the nine months ended September 30, ~~2021, partially offset by significantly lower than normal beginning pawn loan levels.~~

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

~~Store operating expenses increased 8% (1% on a constant currency basis)~~2022 compared to $133.0 million during the nine months ended September 30, 2021, ~~compared to $122.9 million~~reflecting continued store growth and inflationary pressure on labor and other operating expenses during the ~~nine months ended September 30, 2020.~~current period. Same-store operating expenses increased 6% ~~(decreased 1%~~(also 6% on a constant currency basis) compared to the prior-year period.

Segment Pre-Tax Operating Income

The segment pre-tax operating income for the nine months ended September 30, ~~2021~~2022 was ~~$85.9~~$99.4 million, which generated a pre-tax segment operating margin of ~~20%~~21% compared to ~~$76.6~~$85.9 million and ~~19%~~20% in the prior year, respectively. The increase in the segment pre-tax operating income ~~and margin was primarily due to an~~reflected a 10% increase in ~~gross profit from retail sales~~net revenue further leveraged by a 6% increase in segment expenses and ~~pawn loan fees and an 8% favorable~~a 1% unfavorable change in the average value of the Mexican ~~peso, partially offset by a decrease in gross profit from scrap sales and a slight increase in store operating expenses.~~peso.


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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


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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, ~~2021~~2022 compared to the nine months ended September 30, ~~2020~~2021 (dollars in thousands):


		Nine Months Ended								Nine Months Ended
		September 30,				Increase /				September 30,				Increase /
		2021		2020		(Decrease)				2022		2021		(Decrease)
Consolidated Results of Operations	Consolidated Results of Operations								Consolidated Results of Operations
Segment pre-tax operating income:	Segment pre-tax operating income:								Segment pre-tax operating income:
U.S. operations	U.S. operations	$	160,106	$	154,020		4	%	U.S. operations	$	207,632	$	160,106		30	%
Latin America operations		85,944		76,596			12	%
Latin America pawn									Latin America pawn	99,375		85,944			16	%
Retail POS payment solutions (1)									Retail POS payment solutions (1)	36,695		—			—	%
Intersegment eliminations (2)									Intersegment eliminations (2)	(586)		—			—	%
Consolidated segment pre-tax operating income	Consolidated segment pre-tax operating income	246,050		230,616			7	%	Consolidated segment pre-tax operating income	343,116		246,050			39	%

Corporate expenses and other income:	Corporate expenses and other income:								Corporate expenses and other income:
Administrative expenses	Administrative expenses	88,605		85,642			3	%	Administrative expenses	110,882		88,605			25	%
Depreciation and amortization	Depreciation and amortization	2,952		3,504			(16)	%	Depreciation and amortization	44,558		2,952			1,409	%
Interest expense	Interest expense	22,389		21,953			2	%	Interest expense	50,749		22,389			127	%
Interest income	Interest income	(420)		(1,209)			(65)	%	Interest income	(1,104)		(420)			163	%
(Gain) loss on foreign exchange									(Gain) loss on foreign exchange	(198)		248			(180)	%
Merger and acquisition expenses	Merger and acquisition expenses	1,264		209			505	%	Merger and acquisition expenses	1,712		1,264			35	%
Loss on foreign exchange		248		1,639			(85)	%
Write-off of certain Cash America merger related lease intangibles		1,640		4,649			(65)	%
Loss on extinguishment of debt		—		11,737			(100)	%
Impairment of certain other assets		—		1,900			(100)	%
Gain on revaluation of contingent acquisition consideration									Gain on revaluation of contingent acquisition consideration	(82,789)		—			—	%
Other expenses (income), net									Other expenses (income), net	(2,721)		1,640			(266)	%

Total corporate expenses and other income	Total corporate expenses and other income	116,678		130,024			(10)	%	Total corporate expenses and other income	121,089		116,678			4	%

Income before income taxes	Income before income taxes	129,372		100,592			29	%	Income before income taxes	222,027		129,372			72	%

Provision for income taxes	Provision for income taxes	33,834		26,739			27	%	Provision for income taxes	48,598		33,834			44	%

Net income	Net income	$	95,538	$	73,853		29	%	Net income	$	173,429	$	95,538		82	%

(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 3%25% to $110.9 million during the nine months ended September 30, 2022 compared to $88.6 million during the nine months ended September 30, 2021, ~~compared~~primarily due to ~~$85.6~~the AFF Acquisition. As a percentage of revenue, administrative expenses decreased from 7% during the nine months ended September 30, 2021 to 6% during the nine months ended September 30, 2022.

Corporate depreciation and amortization expense increased 1,409% to $44.6 million during the nine months ended September 30, ~~2020, primarily due~~2022 compared to ~~increased incentive compensation and an 8% favorable change~~$3.0 million in the average value of the Mexican peso resulting in higher U.S. dollar translated expenses, partially offset by reduced travel costs and other cost saving initiatives in response to COVID-19. Administrative expenses were 7% of revenue during both the nine months ended September 30, 2021, ~~and 2020.~~

~~Interest~~primarily due to $42.5 million in amortization expense ~~increased 2% to $22.4 million~~ during the nine months ended September 30, ~~2021 compared~~2022 related to ~~$22.0 million for the nine months ended September 30, 2020, primarily due to an increase~~identified intangible assets in the Company’s outstanding senior unsecured notes and higher average balances outstanding on the Company’s unsecured credit facilities, partially offset by lower weighted-average interest rates on the Company’s debt during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. See Note 5 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”

During the nine months ended September 30, 2020, the Company redeemed its outstanding $300.0 million, 5.375% senior notes due 2024, incurring a loss on extinguishment of debt of $11.7 million, which includes an early redemption premium and other redemption costs of $8.8 million and the write-off of unamortized debt issuance costs of $2.9 million.

AFF Acquisition.

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~~During~~Interest expense increased 127% to $50.7 million during the nine months ended September 30, 2022 compared to $22.4 million for the nine months ended September 30, 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 Note 8 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”

The Company ~~recorded~~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 ~~$1.6~~gain of $82.8 million ~~write-off of certain Cash America merger related lease intangibles compared to a $4.6 million write-off of certain Cash America merger related lease intangibles~~ during the nine months ended September 30, ~~2020.~~ 2022 as a result of a decrease in the liability for the estimated fair value of certain contingent consideration related to 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 ~~also recorded~~recognized a ~~$1.9~~gain of $3.2 million ~~impairment related to~~during the nine months ended September 30, 2022 as a result of a cash distribution received from a non-operating ~~asset during~~investment acquired in conjunction with the ~~first quarter~~merger with Cash America International, Inc. (“Cash America Merger”), which was included in other expenses (income), net in the accompanying consolidated statements of ~~2020.~~income.

Consolidated effective income tax rates for the nine months ended September 30, 2022 and 2021 were 21.9% and ~~2020 were~~ 26.2% ~~and 26.6%~~, respectively. The decrease in the effective tax rate was primarily due to an increase in U.S. sourced income, primarily a result of the AFF Acquisition, which is taxed at a lower rate than the Latin American countries the Company operates in, and an increased foreign permanent tax benefit recorded ~~during~~in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, related to an increased inflation index adjustment allowed in Mexico as a result of elevated inflation in Mexico, which started during ~~2021, partially offset by~~ the ~~Internal Revenue Service finalizing regulations in July 2020 for~~latter half of 2021. In addition, the ~~GILTI provisions for foreign operations~~Company recognized a $4.3 million permanent domestic tax benefit in the ~~U.S. federal tax code~~nine months ended September 30, 2022 related to the $82.8 million gain on revaluation of certain contingent consideration related to the AFF Acquisition as ~~noted in the quarter-to-date section~~described above.

LIQUIDITY AND CAPITAL RESOURCES

~~As of September 30, 2021, the~~Material Capital Requirements

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

•Expand pawn operations through growth of ~~liquidity were $49.9 million~~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, $280.4 million of~~ available and unused funds under ~~the Company’s~~its revolving unsecured credit facilities ~~subject~~will be adequate to ~~certain financial covenants, $392.5 million~~meet its liquidity and capital needs for these items in ~~customer loans~~the short-term over the next 12 months and ~~fees and service charges receivable and $254.3 million~~also in ~~inventories. See Note 5 of Notes to Consolidated Financial Statements. The Company had working capital of $487.1 million as of September 30, 2021.~~the long-term beyond the next 12 months.


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Expand Pawn Operations

The Company intends to continue expansion through new store openings ~~primarily~~and acquisitions. For 2022, the Company expects to add up to 60 full-service pawn locations. Future store openings are subject to the Company’s ability to identify locations in ~~Latin America,~~markets with attractive demographics, available real estate with favorable leases and ~~through opportunistic~~limited competition. Additional factors include uncertainties related to the COVID-19 pandemic, including but not limited to, the ability to continue construction projects and obtain necessary licenses and permits, utility services, store equipment, supplies and staffing. The Company evaluates potential acquisitions ~~both~~based upon growth potential, purchase price, available liquidity, debt covenant restrictions, strategic fit and quality of management personnel, among other factors. During the nine months ended September 30, 2022, the Company acquired three pawn stores in the U.S. for a cumulative purchase price of $5.5 million, net of cash acquired and ~~Latin America. Additionally,~~subject to future post-closing adjustments.

Although viewed by management as ~~opportunities arise at reasonable valuations,~~a discretionary expenditure not required to operate its pawn stores, the Company may continue to purchase real estate from its landlords at existing stores or in conjunction with pawn store ~~acquisitions.~~acquisitions as opportunities arise at reasonable valuations. The Company purchased the real estate at 38 store locations, primarily from landlords at existing stores, for a cumulative purchase price of $77.7 million during the nine months ended September 30, 2022.

Expand Retail POS Payment Solutions Operations

AFF expects to 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 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 October ~~2021,~~2022, the Company’s Board of Directors declared a ~~$0.30~~$0.33 per share fourth quarter cash dividend on common shares outstanding, or an aggregate of ~~$12.1~~$15.3 million based on the September 30, ~~2021~~2022 share count, ~~which will~~to be paid on November 30, ~~2021~~2022 to stockholders of record as of November 15, ~~2021.~~2022. While the Company currently expects to continue the payment of quarterly cash dividends, the amount, declaration and payment of cash dividends in the future (quarterly or otherwise) will be made by the Board of Directors, from time to time, subject to the Company’s financial condition, results of operations, business requirements, compliance with legal requirements, debt covenant restrictions and other relevant ~~factors, including the impact of COVID-19.~~factors.

During the nine months ended September 30, ~~2021,~~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, and during the nine months ended September 30, 2020, repurchased 981,000 shares of common stock at an aggregate cost of $80.3 million and an average cost per share of $81.84.~~$72.10. The Company has approximately ~~$72.2~~$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 ~~authorized stock repurchase program.~~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, ~~and~~operating expenses or other similar cash needs of the ~~impact of COVID-19.~~Company’s foreign operations.

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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,
2021 2020
Cash flow provided by operating activities $ 137,850 $ 177,366
Cash flow (used in) provided by investing activities $ (189,935) $ 87,791
Cash flow provided by (used in) financing activities $ 36,704 $ (229,878)

As of September 30,
2021 2020
Working capital $ 487,090 $ 371,410
Current ratio 3.2:1 2.8:1
Liabilities to equity ratio 1.0:1 0.8:1
Net debt ratio (1)
2.8:1 1.7:1


	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

~~(1)~~
~~Adjusted EBITDA, a component of the net debt ratio, is a non-GAAP financial measure. See “Non-GAAP Financial Information” for a calculation of the net debt ratio.~~

Cash Flow Provided by Operating Activities

Net cash provided by operating activities ~~decreased $39.5~~increased $187.9 million, or ~~22%~~136%, from ~~$177.4 million for the nine months ended September 30, 2020 to~~ $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), ~~partially offset by~~and an increase in net income of ~~$21.7~~$77.9 million.

Cash Flow Used in Investing Activities

Net cash used in investing activities increased ~~$277.7~~$48.8 million, or ~~316%~~26%, from ~~net cash provided by investing activities of $87.8 million for the nine months ended September 30, 2020 to net cash used in investing activities of~~ $189.9 million for the nine months ended September 30, ~~2021.~~2021 to $238.7 million for the nine months ended September 30, 2022. Cash flows from investing activities ~~include funding of pawn store~~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 ~~$49.4 million in cash related to current and prior-year store acquisitions, $31.6~~$29.6 million for furniture, fixtures, equipment and improvements and ~~$38.3~~$77.7 million for discretionary pawn store real property purchases during the nine months ended September 30, ~~2021~~2022 compared to ~~$9.3 million, $27.9~~$31.6 million and ~~$20.9~~$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, ~~whereas~~and the Company ~~received funds from~~funded a net ~~decrease~~increase in ~~pawn loans~~finance receivables of ~~$145.9~~$49.6 million during the nine months ended September 30, ~~2020.~~

Net cash provided by financing activities increased $266.6 million, or 116%, from net cash used in financing activities of $229.9 million for the nine months ended September 30, 2020 to net cash provided by financing activities of $36.7 million for the nine months ended September 30, 2021. Net borrowings on the credit facilities were $123.0 million during the nine months ended September 30, 2021 compared to net payments of $298.5 million during the nine months ended September 30, 2020. During the nine months ended September 30, 2020, the Company received $500.0 million in proceeds from the private offering of the 4.625% senior unsecured notes due on September 1, 2028 (the “Notes”) and paid $5.3 million in debt issuance costs. Using part of the proceeds from the Notes, the Company redeemed the $300.0 million aggregate principal amount of the Company’s 5.375% senior notes due 2024 (the “2024 Notes”) and paid redemption premiums over the face value of the 2024 Notes and other redemption costs of $8.8 million during the nine months ended September 30, 2020. The Company funded $49.6 million worth of share repurchases and paid dividends of $35.4 million during the nine months ended September 30, 2021, compared to funding $80.3 million worth of share repurchases and dividends paid of $33.6 million during the nine months ended September 30, 2020. In addition, the Company paid $1.7 million in withholding taxes on net share settlements of restricted stock awards during the nine months ended September 30, 2021 compared to $3.3 million during the nine months ended September 30, 2020.2022.

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~~The continued developments and fluidity~~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 ~~COVID-19 pandemic make it difficult~~nine months ended September 30, 2021 to ~~predict~~net cash used in financing activities of $107.6 million for the ~~impact of COVID-19~~nine months ended September 30, 2022. Net borrowings on the Company’s liquidity and presents a material uncertainty which could adversely affect the Company’s results of operations, financial condition and cash flows in the future. Other factors such as changes in general customer traffic and demand, loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, seasonality, operating expenses, administrative expenses, merger and acquisition activities and related expenses, tax rates, gold prices, foreign currency exchange rates and the pace of new store expansion and acquisitions, affect the Company’s liquidity. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “Regulatory Developments.” Additionally, a prolonged reduction in earnings and EBITDA could limit the Company’s future ability to fully borrow under its credit facilities ~~under current leverage covenants.~~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 remains~~Company’s pawn, LTO and retail finance businesses are subject to significant regulation ~~of its pawn and general business operations~~ 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 ~~2020~~2021 Annual Report on Form 10-K filed with the ~~Securities and Exchange Commission (“SEC”)~~SEC on February ~~1, 2021.~~ 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, ~~2020.~~

On March 23, 2021, the governor of Illinois signed into law the Predatory Loan Prevention Act (“PLPA”) that caps annual effective interest rates at 36% on most consumer loans, including payday and car title loans. The Company does not believe the PLPA applies to collateralized pawn loans, and on May 19, 2021, along with the Illinois Pawnbrokers Association and other Illinois pawn industry plaintiffs, filed a complaint for declaratory judgment and injunctive relief in Illinois Circuit Court to prevent enforcement of the PLPA against pawn transactions primarily on the grounds that the PLPA does not apply to pawn transactions (the “Petition”). On September 7, 2021, the court granted the Petition and ordered a preliminary injunction. The Illinois consumer finance regulator did not appeal the court’s decision within the permitted timeframe, and therefore the injunction against the PLPA’s application to pawn transactions will remain in effect until any further action on the Petition.2021.

NON-GAAP FINANCIAL INFORMATION

The Company uses certain financial calculations such as adjusted net income, adjusted 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 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 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 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 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 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, the non-GAAP financial measures, as presented, may not be comparable to other ~~similarly titled~~similarly-titled measures of other companies.

While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses, 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 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 technology systems and corporate facilities, among others.


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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 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 to improve comparability of current periods presented with prior periods.


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In conjunction with the Cash America ~~merger~~Merger in 2016, the Company recorded certain lease intangibles related to ~~above~~above- or ~~below market~~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~~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.


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Adjusted Net Income and Adjusted Diluted Earnings Per Share

Management believes the presentation of adjusted net income and adjusted diluted earnings per share 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 of its continuing operations.~~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 net income and diluted earnings per share calculated in accordance with GAAP to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
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 $ 33,396 $ 0.82 $ 15,062 $ 0.36 $ 95,538 $ 2.34 $ 73,853 $ 1.77
Adjustments, net of tax:
Merger and acquisition expenses 8 — 5 — 950 0.02 151 —
Non-cash foreign currency loss (gain) loss related to lease liability 359 0.01 (308) (0.01) 256 0.01 2,453 0.06
Non-cash write-off of certain Cash America merger related lease intangibles 278 0.01 644 0.02 1,263 0.03 3,579 0.09
Loss on extinguishment of debt — — 9,037 0.22 — — 9,037 0.22
Non-cash impairment of certain other assets (1)
— — — — — — 1,463 0.03
Consumer lending wind-down costs and asset impairments — — 13 — — — 84 —
Adjusted net income and diluted earnings per share $ 34,041 $ 0.84 $ 24,453 $ 0.59 $ 98,007 $ 2.40 $ 90,620 $ 2.17


	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)~~Impairment related~~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 ~~asset~~investment acquired in ~~which~~conjunction with the Cash America Merger. The Company ~~determined that an other than temporary impairment existed as~~has elected to exclude the gain from adjusted earnings given the non-operating nature of ~~March 31, 2020.~~the income.

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

Three Months Ended September 30,
2021 2020
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger and acquisition expenses $ 12 $ 4 $ 8 $ 7 $ 2 $ 5
Non-cash foreign currency loss (gain) related to lease liability 513 154 359 (439) (131) (308)
Non-cash write-off of certain Cash America merger related lease intangibles 361 83 278 837 193 644
Loss on extinguishment of debt — — — 11,737 2,700 9,037
Consumer lending wind-down costs and asset impairments — — — 17 4 13
Total adjustments $ 886 $ 241 $ 645 $ 12,159 $ 2,768 $ 9,391
Nine Months Ended September 30,
2021 2020
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger and acquisition expenses $ 1,264 $ 314 $ 950 $ 209 $ 58 $ 151
Non-cash foreign currency loss related to lease liability 366 110 256 3,505 1,052 2,453
Non-cash write-off of certain Cash America merger related lease intangibles 1,640 377 1,263 4,649 1,070 3,579
Loss on extinguishment of debt — — — 11,737 2,700 9,037
Non-cash impairment of certain other assets — — — 1,900 437 1,463
Consumer lending wind-down costs and asset impairments — — — 109 25 84
Total adjustments $ 3,270 $ 801 $ 2,469 $ 22,109 $ 5,342 $ 16,767


	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


	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

(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.

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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 consolidated total debt ratio as defined in the Company’s senior unsecured notes. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA ~~(dollars in~~(in thousands):


										Trailing Twelve															Trailing Twelve
		Three Months Ended				Nine Months Ended				Months Ended							Three Months Ended				Nine Months Ended				Months Ended
		September 30,				September 30,				September 30,							September 30,				September 30,				September 30,
		2021		2020		2021		2020		2021			2020				2022		2021		2022		2021		2022		2021
Net income	Net income	$	33,396	$	15,062	$	95,538	$	73,853	$	128,264		$	128,007		Net income	$	59,316	$	33,396	$	173,429	$	95,538	$	202,800	$	128,264
Income taxes			10,900		2,624		33,834		26,739		44,215			44,103
Provision for income taxes																Provision for income taxes		16,079		10,900		48,598		33,834		56,357		44,215
Depreciation and amortization	Depreciation and amortization		11,217		10,426		32,731		31,424		43,412			42,270		Depreciation and amortization		25,971		11,217		77,495		32,731		90,670		43,412
Interest expense	Interest expense		7,961		6,561		22,389		21,953		29,780			30,148		Interest expense		18,282		7,961		50,749		22,389		60,746		29,780
Interest income	Interest income		(143)		(499)		(420)		(1,209)		(751)			(1,476)		Interest income		(206)		(143)		(1,104)		(420)		(1,380)		(751)
EBITDA	EBITDA		63,331		34,174		184,072		152,760		244,920			243,052		EBITDA		119,442		63,331		349,167		184,072		409,193		244,920
Adjustments:	Adjustments:															Adjustments:
Merger and acquisition expenses	Merger and acquisition expenses		12		7		1,264		209		2,371			465		Merger and acquisition expenses		733		12		1,712		1,264		15,897		2,371
Non-cash foreign currency loss (gain) related to lease liability	Non-cash foreign currency loss (gain) related to lease liability		513		(439)		366		3,505		(1,890)			2,621		Non-cash foreign currency loss (gain) related to lease liability		359		513		(350)		366		(72)		(1,890)
Non-cash write-off of certain Cash America merger related lease intangibles			361		837		1,640		4,649		4,046			4,649
Loss on extinguishment of debt			—		11,737		—		11,737		—			11,737
Non-cash impairment of certain other assets			—		—		—		1,900		—			1,900
AFF purchase accounting adjustments, (1)																AFF purchase accounting adjustments, (1)		7,950		—		41,594		—		87,956		—
Gain on revaluation of contingent acquisition consideration																Gain on revaluation of contingent acquisition consideration		(19,800)		—		(82,789)		—		(100,660)		—
Other expenses (income), net																Other expenses (income), net		164		361		(2,721)		1,640		(3,412)		4,046

Consumer lending wind-down costs and asset impairments			—		17		—		109		—			268

Adjusted EBITDA	Adjusted EBITDA	$	64,217	$	46,333	$	187,342	$	174,869	$	249,447		$	264,692		Adjusted EBITDA	$	108,848	$	64,217	$	306,613	$	187,342	$	408,902	$	249,447

Net debt ratio calculation:
Total debt (outstanding principal)										$	746,000		$	540,000
Less: cash and cash equivalents											(49,907)			(78,844)
Net debt										$	696,093		$	461,156
Adjusted EBITDA										$	249,447		$	264,692
Net debt ratio (net debt divided by adjusted EBITDA)										2.8		:1	1.7		: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.

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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 furniture, fixtures, equipment and improvements and net fundings/repayments of pawn loan and finance receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing activities. Adjusted free cash flow is defined as free cash flow adjusted for 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 cash flow from operating activities to free cash flow and adjusted free cash flow (in thousands):


										Trailing Twelve													Trailing Twelve
		Three Months Ended				Nine Months Ended				Months Ended					Three Months Ended				Nine Months Ended				Months Ended
		September 30,				September 30,				September 30,					September 30,				September 30,				September 30,
		2021		2020		2021		2020		2021		2020			2022		2021		2022		2021		2022		2021
Cash flow from operating activities	Cash flow from operating activities	$	24,101	$	34,067	$	137,850	$	177,366	$	182,748	$	245,138	Cash flow from operating activities	$	99,031	$	24,101	$	325,798	$	137,850	$	411,252	$	182,748
Cash flow from certain investing activities:	Cash flow from certain investing activities:													Cash flow from certain investing activities:
Loan receivables, net (1)		(62,145)		(32,349)		(70,637)		145,930		(109,559)		183,334
Pawn loans, net (1)														Pawn loans, net (1)	(42,442)		(62,145)		(74,707)		(70,637)		(77,410)		(109,569)
Finance receivables, net														Finance receivables, net	(26,088)		—		(49,634)		—		(55,478)		10
Purchases of furniture, fixtures, equipment and improvements	Purchases of furniture, fixtures, equipment and improvements	(10,583)		(7,377)		(31,608)		(27,853)		(41,298)		(39,060)		Purchases of furniture, fixtures, equipment and improvements	(9,944)		(10,583)		(29,630)		(31,608)		(40,044)		(41,298)
Free cash flow	Free cash flow	(48,627)		(5,659)		35,605		295,443		31,891		389,412		Free cash flow	20,557		(48,627)		171,827		35,605		238,320		31,891
Merger and acquisition expenses paid, net of tax benefit	Merger and acquisition expenses paid, net of tax benefit	8		5		950		151		1,790		330		Merger and acquisition expenses paid, net of tax benefit	564		8		1,317		950		12,239		1,790
Adjusted free cash flow	Adjusted free cash flow	$	(48,619)	$	(5,654)	$	36,555	$	295,594	$	33,681	$	389,742	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.


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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

(1)Adjustment relates to the net amortization of the fair value premium on acquired finance receivables, which is recognized as an adjustment to interest income on an effective yield basis over the lives of the acquired finance receivables. See the retail POS payment solutions segment tables in “Results of Operations” above for additional segment level reconciliations.

Constant Currency Results

The Company’s reporting currency is the U.S. dollar. However, certain performance metrics discussed in this report are presented on a “constant currency” basis, which is considered a non-GAAP financial measure. The Company’s management uses constant currency results to evaluate operating results of business operations in Latin America, which are primarily transacted in local currencies.

The Company believes constant currency results provide valuable supplemental information regarding the underlying performance of its business operations in Latin America, consistent with how the Company’s management evaluates such performance and operating results. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. Business operations in Mexico, Guatemala and Colombia are transacted in Mexican pesos, Guatemalan quetzales and Colombian pesos. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar. See the Latin America ~~operations~~pawn segment tables in “Results of Operations” above for additional reconciliation of certain constant currency amounts to as reported GAAP amounts.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Company’s operations result primarily from changes in interest rates, gold prices and foreign currency exchange rates and are described in detail in the Company’s ~~2020~~2021 Annual Report on Form 10-K. The impact of current-year fluctuations in foreign currency exchange rates, in particular, are further discussed in Part I, Item 2 herein. The Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. There have been no material changes to the Company’s exposure to market risks since December 31, ~~2020.~~2021.


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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in ~~Rules~~Rule 13a-15(e) under the Securities Exchange Act of 1934) as of September 30, ~~2021~~2022 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s management is in the process of documenting and testing AFF’s internal control over financial reporting and expects to incorporate AFF into its annual assessment of internal control over financial reporting for the Company’s year ending December 31, 2022.

Limitations on Effectiveness of Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls will prevent all possible error and fraud. The Company’s disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective at that reasonable assurance level.


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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~There have been no material changes~~See Note 9 - Commitments and Contingencies of Notes to Consolidated Financial Statements contained in ~~the status~~Part I, Item 1 of ~~legal proceedings previously reported in the Company’s 2020 Annual Report on Form 10-K.~~this report which is incorporated to this Part II, Item 1 by reference.

ITEM 1A. RISK FACTORS

Important risk factors that could materially affect the Company’s business, financial condition or results of operations in future periods are described in Part I, Item 1A, “Risk Factors” of the Company’s ~~2020~~2021 Annual Report on Form 10-K. These factors are supplemented by those discussed under “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” and “Regulatory Developments” in Part I, Item 2 of this quarterly report and in “Governmental Regulation” in Part I, Item 1 of the Company’s ~~2020~~2021 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors from those in Part I, Item 1A, “Risk Factors” of the Company’s ~~2020~~2021 Annual Report on Form 10-K.


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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the nine months ended September 30, ~~2021,~~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, 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 intends to continue repurchases under its active share repurchase program, including 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, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, the Company’s dividend policy and the availability of alternative investment ~~opportunities, including acquisitions, and the impact of COVID-19.~~opportunities.

The following table provides the information with respect to purchases made by the Company of shares of its common stock during each month a share repurchase program was in effect during the three months ended September 30, ~~2021~~2022 (dollars in thousands, except per share amounts):

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, 2021 152,000 $ 76.43 152,000 $ 72,217
August 1 through August 31, 2021 — — — 72,217
September 1 through September 30, 2021 — — — 72,217
Total 152,000 76.43 152,000


	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

The following table provides information regarding purchases made by the Company of shares of its common stock under each share repurchase program in effect during the nine months ended September 30, ~~2021~~2022 (dollars in thousands):

Plan Authorization Date Plan Completion Date Dollar Amount Authorized Shares Purchased in 2021 Dollar Amount Purchased in 2021 Remaining Dollar Amount Authorized For Future Purchases
January 28, 2020 May 4, 2021 $ 100,000 318,000 $ 21,827 $ —
January 27, 2021 Currently active 100,000 370,000 27,783 72,217
Total 688,000 $ 49,610 $ 72,217


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


Table of Contents

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

4155


Table of Contents

ITEM 6. EXHIBITS

Incorporated by Reference
Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed Herewith
3.1
Amended and Restated Certificate of Incorporation
DEF 14A 0-19133 B 04/29/2004
3.2
Amendment to Amended and Restated Certificate of Incorporation
8-K 001-10960 3.1 09/02/2016
3.3
Amended and Restated Bylaws
10-Q 001-10960 3.3 04/26/2021
31.1
Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Rick L. Wessel, Chief Executive Officer
X
31.2
Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act provided by R. Douglas Orr, Chief Financial Officer
X
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by Rick L. Wessel, Chief Executive Officer
X
32.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by R. Douglas Orr, Chief Financial Officer
X
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101) X

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation

DEF 14A

0-19133

04/29/2004

3.2

Amendment to Amended and Restated Certificate of Incorporation

8-K

001-10960

3.1

09/02/2016

3.3

Amended and Restated Certificate of Incorporation of FirstCash Holdings, Inc., dated December 16, 2021

8-K12B

001-10960

3.1

12/16/2021

3.4

Amended and Restated Bylaws of FirstCash Holdings, Inc., dated December 16, 2021

8-K12B

001-10960

3.2

12/16/2021

10.1

Sixth Amendment to Amended and Restated Credit Agreement, dated August 30, 2022, between FirstCash Holdings, Inc., FirstCash, Inc., certain subsidiaries of the borrower from time to time party thereto, the lenders party thereto, and Wells Fargo Bank, National Association.

8-K

001-10960

10.1

08/31/2022

31.1

Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act, provided by Rick L. Wessel, Chief Executive Officer

31.2

Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act, provided by R. Douglas Orr, Chief Financial Officer

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, provided by Rick L. Wessel, Chief Executive Officer

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, provided by R. Douglas Orr, Chief Financial Officer

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101)

4256


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Dated: October ~~25, 2021~~31, 2022			FIRSTCASH HOLDINGS, INC.
			(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)

4357


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Changes in Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	78
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1825
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4052
Item 4.	Controls and Procedures	4053

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	4054
Item 1A.	Risk Factors	4054
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4154
Item 3.	Defaults Upon Senior Securities	4155
Item 4.	Mine Safety Disclosures	4155
Item 5.	Other Information	4155
Item 6.	Exhibits	4256

SIGNATURES		4357


Three months ending December 31, 2021	$	28,216
2022	99,302
2023	79,255
2024	55,771
2025	30,568
Thereafter	33,062
Total	$	326,174
Less amount of lease payments representing interest	(39,054)
Total present value of lease payments	$	287,120


	Three Months Ended September 30, 2020
	U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	151,618	$	83,364	$	—	$	234,982
Pawn loan fees	66,180		33,390		—		99,570
Wholesale scrap jewelry sales	12,692		12,589		—		25,281
Consumer loan and credit services fees	57		—		—		57
Total revenue	230,547		129,343		—		359,890

Cost of revenue:
Cost of retail merchandise sold	84,673		52,557		—		137,230
Cost of wholesale scrap jewelry sold	10,316		9,502		—		19,818
Consumer loan and credit services loss provision	104		—		—		104
Total cost of revenue	95,093		62,059		—		157,152

Net revenue	135,454		67,284		—		202,738

Expenses and other income:
Store operating expenses	92,678		39,383		—		132,061
Administrative expenses	—		—		24,354		24,354
Depreciation and amortization	5,390		3,903		1,133		10,426
Interest expense	—		—		6,561		6,561
Interest income	—		—		(499)		(499)
Merger and acquisition expenses	—		—		7		7
Gain on foreign exchange	—		—		(432)		(432)
Write-off of certain Cash America merger related lease intangibles	—		—		837		837
Loss on extinguishment of debt	—		—		11,737		11,737

Total expenses and other income	98,068		43,286		43,698		185,052

Income (loss) before income taxes	$	37,386	$	23,998	$	(43,698)	$	17,686


Plan Authorization Date	Plan Completion Date	Dollar Amount Authorized		Shares Purchased in 2021	Dollar Amount Purchased in 2021		Remaining Dollar Amount Authorized For Future Purchases
January 28, 2020	May 4, 2021	$	100,000	318,000	$	21,827	$	—
January 27, 2021	Currently active	100,000		370,000	27,783		72,217
Total				688,000	$	49,610	$	72,217