UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 ~~June 30,~~December 31, 2022 or


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

For the transition period from to

Commission File No. 0-19424

EZCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware

74-2540145

(State or other jurisdiction of incorporation or organization)

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

2500 Bee Cave Road

Bldg One

Suite 200

Rollingwood

78746

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (512) 314-3400

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Non-voting Common Stock, par value $.01 per share

EZPW

NASDAQ Stock Market

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition 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 ☒

The only class of voting securities of the registrant issued and outstanding is the Class B Voting Common Stock, par value $.01 per share, all of which is owned by an affiliate of the registrant. There is no trading market for the Class B Voting Common Stock.

As of ~~July 29, 2022, 53,685,333~~January 27, 2023, 52,680,840 shares of the registrant’s Class A Non-voting Common Stock ("Class A Common Stock"), par value $.01 per share, and 2,970,171 shares of the registrant’s Class B Voting Common Stock, par value $.01 per share, were outstanding.

Table of Contents

EZCORP, Inc.

INDEX TO FORM 10-Q


PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of ~~June 30~~,December 31, 2022 and 2021 (Unaudited) and September ~~30, 2021~~30,2022			1
Condensed Consolidated Statements of Operations for the Three ~~and~~ ~~Nine~~ M ~~onths~~Months Ended ~~June 30,~~December 31, 2022 and 2021 (Unaudited)			2
Condensed Consolidated Statements of Comprehensive Income for the Three ~~and~~ ~~Nine~~ M ~~onths~~Months Ended ~~June 30,~~December 31, 2022 and 2021 (Unaudited)			3
Condensed Consolidated Statements of Stockholders’ Equity for the Periods Ended ~~June 30,~~December 31, 2022 and 2021 (Unaudited)			4
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~ M ~~onths~~Three Months Ended ~~June 30,~~December 31, 2022 and 2021 (Unaudited)			5
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)			6
Note 1: Organization and Summary of Significant Accounting Policies			6


Note 2: ~~Acquisitions~~Goodwill			7

Note 3: ~~Goodwill~~			9

~~Note 4:~~ Earnings Per Share			107
Note 4: Leases			8
Note 5: ~~Leases~~Strategic Investments			10
Note 6: ~~Strategic Investments~~Fair Value Measurements			1211
Note 7: ~~Fair Value Measurements~~Debt			1213
Note 8: ~~Debt~~			14
~~Note 9: Share-Based~~Common Stock and Stock Compensation			16

Note ~~10:~~9: Commitments and Contingencies			1716
Note ~~11:~~10: Segment Information			17
Note ~~12:~~11: Supplemental Consolidated Financial Information			2019

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2120
Item 3. Quantitative and Qualitative Disclosures about Market Risk			3529
Item 4. Controls and Procedures			3530
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			3630
Item 1A. Risk Factors			3630
Item 2. Unregistered Sale of Equity Security and Use of Proceeds			31
Item 6. Exhibits			3732
SIGNATURES			3833

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EZCORP, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands, except share and per share amounts)	(in thousands, except share and per share amounts)	June 30, 2022		June 30, 2021		September 30, 2021		(in thousands, except share and per share amounts)	December 31, 2022		December 31, 2021		September 30, 2022
		(Unaudited)							(Unaudited)
Assets:	Assets:							Assets:
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	222,342	$	283,668	$	253,667	Cash and cash equivalents	$	207,658	$	233,274	$	206,028
Restricted cash	Restricted cash	8,614		13,795		9,957		Restricted cash	8,359		8,692		8,341
Pawn loans	Pawn loans	204,155		157,155		175,901		Pawn loans	209,855		176,586		210,009
Pawn service charges receivable, net	Pawn service charges receivable, net	32,000		24,965		29,337		Pawn service charges receivable, net	34,921		29,765		33,476
Inventory, net	Inventory, net	132,713		92,242		110,989		Inventory, net	156,064		119,313		151,615

Prepaid expenses and other current assets	Prepaid expenses and other current assets	29,822		28,343		31,010		Prepaid expenses and other current assets	45,559		31,209		34,694
Total current assets	Total current assets	629,646		600,168		610,861		Total current assets	662,416		598,839		644,163
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	43,384		35,387		37,724		Investments in unconsolidated affiliates	37,789		42,513		37,733
Other investments	Other investments	18,000		—		—		Other investments	39,220		16,500		24,220
Property and equipment, net	Property and equipment, net	51,505		55,630		53,811		Property and equipment, net	55,612		52,201		56,725
Right-of-use asset, net	Right-of-use asset, net	217,506		185,467		200,990		Right-of-use asset, net	230,554		201,527		221,586
Goodwill	Goodwill	286,798		283,619		285,758		Goodwill	297,361		284,619		286,828
Intangible assets, net	Intangible assets, net	61,017		61,922		62,104		Intangible assets, net	58,029		61,458		56,819
Notes receivable, net	Notes receivable, net	1,207		1,173		1,181		Notes receivable, net	1,224		1,190		1,215
Deferred tax asset, net	Deferred tax asset, net	15,773		10,292		9,746		Deferred tax asset, net	12,428		15,623		12,145
Other assets	Other assets	5,991		4,992		4,736		Other assets	7,682		5,851		6,444
Total assets	Total assets	$	1,330,827	$	1,238,650	$	1,266,911	Total assets	$	1,402,315	$	1,280,321	$	1,347,878

Liabilities and stockholders' equity:
Liabilities and equity:								Liabilities and equity:
Current liabilities:	Current liabilities:							Current liabilities:

Accounts payable, accrued expenses and other current liabilities	Accounts payable, accrued expenses and other current liabilities	$	76,566	$	84,966	$	90,268	Accounts payable, accrued expenses and other current liabilities	$	69,930	$	75,531	$	84,509
Customer layaway deposits	Customer layaway deposits	14,927		11,884		12,557		Customer layaway deposits	16,276		13,142		16,023
Lease liability		53,358		47,241		52,263
Operating lease liabilities, current								Operating lease liabilities, current	52,799		51,843		52,334
Total current liabilities	Total current liabilities	144,851		144,091		155,088		Total current liabilities	139,005		140,516		152,866
Long-term debt, net	Long-term debt, net	312,521		260,632		264,186		Long-term debt, net	358,984		311,844		312,903
Deferred tax liability, net	Deferred tax liability, net	307		1,309		3,684		Deferred tax liability, net	—		221		373
Lease liability		175,489		149,342		161,330
Operating lease liabilities								Operating lease liabilities	188,730		161,841		180,756
Other long-term liabilities	Other long-term liabilities	11,905		10,058		10,385		Other long-term liabilities	10,261		11,398		8,749
Total liabilities	Total liabilities	645,073		565,432		594,673		Total liabilities	696,980		625,820		655,647
Commitments and contingencies (Note 10)		0		0		0
Commitments and contingencies (Note 9)								Commitments and contingencies (Note 9)
Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:
Class A Non-voting Common Stock, par value $0.01 per share; shares authorized: 100 million; issued and outstanding: 53,685,333 as of June 30, 2022; 53,086,438 as of June 30, 2021; and 53,086,438 as of September 30, 2021		537		530		530
Class A Non-voting Common Stock, par value $0.01 per share; shares authorized: 100 million; issued and outstanding: 52,877,930 as of December 31, 2022; 53,344,218 as of December 31, 2021; and 53,454,885 as of September 30, 2022								Class A Non-voting Common Stock, par value $0.01 per share; shares authorized: 100 million; issued and outstanding: 52,877,930 as of December 31, 2022; 53,344,218 as of December 31, 2021; and 53,454,885 as of September 30, 2022	529		533		534
Class B Voting Common Stock, convertible, par value $0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171	Class B Voting Common Stock, convertible, par value $0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171	30		30		30		Class B Voting Common Stock, convertible, par value $0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171	30		30		30
Additional paid-in capital	Additional paid-in capital	343,763		402,522		403,312		Additional paid-in capital	343,012		339,955		345,330
Retained earnings	Retained earnings	396,461		325,228		326,781		Retained earnings	414,929		369,359		402,006
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(55,037)		(55,092)		(58,415)		Accumulated other comprehensive loss	(53,165)		(55,376)		(55,669)
Total stockholders' equity		685,754		673,218		672,238
Total liabilities and stockholders' equity		$	1,330,827	$	1,238,650	$	1,266,911
Total equity								Total equity	705,335		654,501		692,231
Total liabilities and equity								Total liabilities and equity	$	1,402,315	$	1,280,321	$	1,347,878

See accompanying notes to unaudited interim condensed consolidated financial statements

Table of Contents

EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended December 31,
(in thousands, except per share amount)	(in thousands, except per share amount)	2022		2021		2022		2021		(in thousands, except per share amount)	2022		2021

Revenues:	Revenues:									Revenues:
Merchandise sales	Merchandise sales	$	128,334	$	107,808	$	399,610	$	330,816	Merchandise sales	$	163,787	$	137,720
Jewelry scrapping sales	Jewelry scrapping sales	7,168		5,673		19,802		18,507		Jewelry scrapping sales	7,884		6,944
Pawn service charges	Pawn service charges	80,291		60,431		232,999		187,356		Pawn service charges	92,593		76,025
Other revenues, net	Other revenues, net	49		121		407		428		Other revenues, net	63		305
Total revenues	Total revenues	215,842		174,033		652,818		537,107		Total revenues	264,327		220,994
Merchandise cost of goods sold	Merchandise cost of goods sold	80,167		60,539		245,524		190,872		Merchandise cost of goods sold	104,877		83,111
Jewelry scrapping cost of goods sold	Jewelry scrapping cost of goods sold	6,167		5,473		16,747		16,076		Jewelry scrapping cost of goods sold	6,953		5,772

Gross profit	Gross profit	129,508		108,021		390,547		330,159		Gross profit	152,497		132,111
Operating expenses:	Operating expenses:									Operating expenses:
Store expenses	Store expenses	89,430		81,803		261,944		242,261		Store expenses	100,803		86,771
General and administrative	General and administrative	18,715		14,589		46,487		40,870		General and administrative	15,476		15,545

Depreciation and amortization	Depreciation and amortization	7,746		7,419		22,770		23,080		Depreciation and amortization	7,988		7,574
(Gain) loss on sale or disposal of assets and other	(Gain) loss on sale or disposal of assets and other	—		—		(692)		90		(Gain) loss on sale or disposal of assets and other	(16)		5
Other charges		—		497		—		497

Total operating expenses	Total operating expenses	115,891		104,308		330,509		306,798		Total operating expenses	124,251		109,895
Operating income	Operating income	13,617		3,713		60,038		23,361		Operating income	28,246		22,216
Interest expense	Interest expense	2,693		5,569		7,651		16,542		Interest expense	6,190		2,431
Interest income	Interest income	(190)		(512)		(749)		(1,918)		Interest income	(664)		(304)
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	(1,758)		(643)		(1,457)		(2,409)		Equity in net income of unconsolidated affiliates	(1,584)		(1,138)
Other expense (income)		(210)		65		41		(389)
Income (loss) before income taxes		13,082		(766)		54,552		11,535
Other income										Other income	(234)		(120)

Income before income taxes										Income before income taxes	24,538		21,347
Income tax expense	Income tax expense	867		1,804		11,729		4,476		Income tax expense	7,760		5,626
Net income (loss)		$	12,215	$	(2,570)	$	42,823	$	7,059
Net income										Net income	$	16,778	$	15,721

Basic earnings (loss) per share		$	0.22	$	(0.05)	$	0.76	$	0.13
Diluted earnings (loss) per share		$	0.17	$	(0.05)	$	0.59	$	0.13
Basic earnings per share										Basic earnings per share	$	0.30	$	0.28
Diluted earnings per share										Diluted earnings per share	$	0.25	$	0.21

Weighted-average basic shares outstanding	Weighted-average basic shares outstanding	56,656		55,898		56,465		55,639		Weighted-average basic shares outstanding	56,308		56,183
Weighted-average diluted shares outstanding	Weighted-average diluted shares outstanding	82,504		55,898		82,349		55,653		Weighted-average diluted shares outstanding	83,779		81,948

See accompanying notes to unaudited interim condensed consolidated financial statements

Table of Contents

EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended December 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021

Net income (loss)		$	12,215	$	(2,570)	$	42,823	$	7,059
Net income										Net income	$	16,778	$	15,721
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Foreign currency translation adjustment, net of tax	Foreign currency translation adjustment, net of tax	(3,327)		3,459		3,378		12,976		Foreign currency translation adjustment, net of tax	2,504		3,039

Comprehensive income	Comprehensive income	$	8,888	$	889	$	46,201	$	20,035	Comprehensive income	$	19,282	$	18,760

See accompanying notes to unaudited interim condensed consolidated financial statements

Table of Contents

EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

~~(Unaudited except for balances as of September 30, 2021 and September 30, 2020)~~(Unaudited)


		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss					Total Stockholders' Equity				Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss				Total Stockholders' Equity
(in thousands)	(in thousands)	Shares	Par Value								Total Stockholders' Equity	(in thousands)	Shares					Par Value	Additional Paid-in Capital

Balances as of September 30, 2021		56,057	$	560	$	403,312	$	326,781	$	(58,415)						$	672,238
Balances as of September 30, 2022																Balances as of September 30, 2022		56,425			$	564	$	345,330	$	402,006	$	(55,669)			$	692,231
Stock compensation	Stock compensation	—	—		1,698		—		—					1,698		Stock compensation		—	—		1,886		—		—				1,886
Transfer of consideration for acquisition																Transfer of consideration for acquisition		10	—		99		—		—				99

Release of restricted stock		257	3		—		—		—					3
Release of restricted stock, net of shares withheld for taxes																Release of restricted stock, net of shares withheld for taxes		235	2		—		—		—				2
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	—	—		(792)		—		—					(792)		Taxes paid related to net share settlement of equity awards		—	—		(1,138)		—		—				(1,138)
Cumulative effect of adoption of ASU 2020-06 (Note 1)		—	—		(64,263)		26,857		—					(37,406)

Foreign currency translation gain		—	—		—		—		3,039					3,039

Net income		—	—		—		15,721		—					15,721
Balances as of December 31, 2021		56,314	$	563	$	339,955	$	369,359	$	(55,376)				$	654,501
Stock compensation		—	—		460		—		—					460

Transfer of consideration for other investment		213	2		1,498		—		—					1,500
Release of restricted stock		129	2		—		—		—					2

Foreign currency translation gain	Foreign currency translation gain	—	—		—		—		3,666					3,666		Foreign currency translation gain		—	—		—		—		2,504				2,504

Purchase and retirement of treasury stock																Purchase and retirement of treasury stock		(822)	(7)		(3,165)		(3,855)		—				(7,027)

Net income	Net income	—	—		—		14,887		—					14,887		Net income		—	—		—		16,778		—				16,778
Balances as of March 31, 2022		56,656	$	567	$	341,913	$	384,246	$	(51,710)				$	675,016
Stock compensation		—	—		1,850		—		—					1,850
Balances as of December 31, 2022																Balances as of December 31, 2022		55,848	$	559	$	343,012	$	414,929	$	(53,165)			$	705,335

Foreign currency translation loss		—	—		—		—		(3,327)					(3,327)

Net income		—	—		—		12,215		—					12,215
Balances as of June 30, 2022		56,656	$	567	$	343,763	$	396,461	$	(55,037)				$	685,754

Common Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive Loss Total Stockholders' Equity
(in thousands) Shares Par Value
Balances as of September 30, 2020 55,303 $ 551 $ 398,475 $ 318,169 $ (68,068) $ 649,127
Stock compensation — — 524 — — 524
Release of restricted stock 296 5 — — — 5
Taxes paid related to net share settlement of equity awards — — (730) — — (730)
Foreign currency translation gain — — — — 11,277 11,277
Net income — — — 4,299 — 4,299
Balances as of December 31, 2020 55,599 $ 556 $ 398,269 $ 322,468 $ (56,791) $ 664,502
Stock compensation — — 1,094 — — 1,094
Transfer of consideration for acquisition 33 — 185 — — 185
Release of restricted stock 212 2 — — — 2
Taxes paid related to net share settlement of equity awards — — (109) — — (109)
Foreign currency translation loss — — — — (1,760) (1,760)
Net Income — — — 5,330 — 5,330
Balances as of March 31, 2021 55,844 $ 558 $ 399,439 $ 327,798 $ (58,551) $ 669,244
Stock compensation — — 1,538 — — 1,538
Transfer of consideration for acquisition 213 2 1,545 — — 1,547
Foreign currency translation gain — — — — 3,459 3,459
Net loss — — — (2,570) — (2,570)
Balances as of June 30, 2021 56,057 $ 560 $ 402,522 $ 325,228 $ (55,092) $ 673,218


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(in thousands)	Shares	Par Value

Balances as of September 30, 2021	56,057	$	560	$	403,312	$	326,781	$	(58,415)	$	672,238
Stock compensation	—	—		1,698		—		—		1,698


Release of restricted stock, net of shares withheld for taxes	257	3		—		—		—		3
Taxes paid related to net share settlement of equity awards	—	—		(792)		—		—		(792)
Cumulative effect of adoption of ASU 2020-06	—	—		(64,263)		26,857		—		(37,406)




Foreign currency translation gain	—	—		—		—		3,039		3,039



Net income	—	—		—		15,721		—		15,721
Balances as of December 31, 2021	56,314	$	563	$	339,955	$	369,359	$	(55,376)	$	654,501

See accompanying notes to unaudited interim condensed consolidated financial statements

Table of Contents

EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine Months Ended June 30,					Three Months Ended December 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2022		2021

Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	42,823	$	7,059	Net income	$	16,778	$	15,721
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	22,770		23,080		Depreciation and amortization	7,988		7,574
Amortization of debt discount and deferred financing costs	Amortization of debt discount and deferred financing costs	1,051		10,243		Amortization of debt discount and deferred financing costs	378		374
Amortization of lease right-of-use asset		39,061		35,885
Non-cash lease expense						Non-cash lease expense	13,596		12,694

Deferred income taxes	Deferred income taxes	475		(576)		Deferred income taxes	656		587

Other adjustments	Other adjustments	(734)		(331)		Other adjustments	(91)		(30)
Provision for inventory reserve	Provision for inventory reserve	(2,096)		(6,812)		Provision for inventory reserve	532		(820)
Stock compensation expense	Stock compensation expense	4,008		3,156		Stock compensation expense	1,886		1,698
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	(1,457)		(2,409)		Equity in net income of unconsolidated affiliates	(1,584)		(1,138)
Loss on extinguishment of debt						Loss on extinguishment of debt	3,545		—
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Service charges and fees receivable	Service charges and fees receivable	(2,949)		(2,832)		Service charges and fees receivable	(691)		(419)
Inventory	Inventory	(7,837)		5,382		Inventory	(1,881)		(2,314)
Prepaid expenses, other current assets and other assets	Prepaid expenses, other current assets and other assets	2,025		7,908		Prepaid expenses, other current assets and other assets	(2,280)		(2,330)

Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	(53,209)		(51,565)		Accounts payable, accrued expenses and other liabilities	(34,761)		(29,531)
Customer layaway deposits	Customer layaway deposits	2,265		511		Customer layaway deposits	(752)		551
Income taxes	Income taxes	(1,068)		4,423		Income taxes	6,574		4,741
Dividends from unconsolidated affiliates	Dividends from unconsolidated affiliates	3,366		—		Dividends from unconsolidated affiliates	1,775		1,660
Net cash provided by operating activities	Net cash provided by operating activities	48,494		33,122		Net cash provided by operating activities	11,668		9,018
Investing activities:	Investing activities:					Investing activities:
Loans made	Loans made	(524,965)		(423,450)		Loans made	(189,074)		(166,480)
Loans repaid	Loans repaid	295,823		260,536		Loans repaid	109,125		95,542
Recovery of pawn loan principal through sale of forfeited collateral	Recovery of pawn loan principal through sale of forfeited collateral	191,082		155,595		Recovery of pawn loan principal through sale of forfeited collateral	88,030		65,297
Capital expenditures, net	Capital expenditures, net	(18,100)		(14,635)		Capital expenditures, net	(7,182)		(4,985)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(1,850)		(15,132)		Acquisitions, net of cash acquired	(12,884)		—
Issuance of note receivable		(1,000)		—
Issuance of notes receivable						Issuance of notes receivable	(15,500)		(1,000)
Investment in unconsolidated affiliates	Investment in unconsolidated affiliates	(6,079)		—		Investment in unconsolidated affiliates	(2,133)		(2,477)
Investment in other investments	Investment in other investments	(16,500)		—		Investment in other investments	(15,000)		(16,500)

Net cash used in investing activities	Net cash used in investing activities	(81,589)		(37,086)		Net cash used in investing activities	(44,618)		(30,603)
Financing activities:	Financing activities:					Financing activities:
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(792)		(839)		Taxes paid related to net share settlement of equity awards	(1,138)		(792)

Payments on assumed debt and other borrowings		—		(15,363)

Net cash used in financing activities		(792)		(16,202)
Proceeds from issuance of debt						Proceeds from issuance of debt	230,000		—
Debt issuance cost						Debt issuance cost	(7,403)		—
Cash paid on extinguishment of debt						Cash paid on extinguishment of debt	(1,951)		—
Payments on debt						Payments on debt	(178,488)		—
Repurchase of common stock						Repurchase of common stock	(7,027)		—
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	33,993		(792)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	1,219		5,076		Effect of exchange rate changes on cash and cash equivalents and restricted cash	605		719
Net decrease in cash, cash equivalents and restricted cash		(32,668)		(15,090)
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	1,648		(21,658)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	263,624		312,553		Cash, cash equivalents and restricted cash at beginning of period	214,369		263,624
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	230,956	$	297,463	Cash, cash equivalents and restricted cash at end of period	$	216,017	$	241,966

Supplemental disclosure of cash flow information
Cash and cash equivalents		$	222,342	$	283,668
Restricted cash		8,614		13,795
Total cash and cash equivalents and restricted cash		$	230,956	$	297,463

Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory		$	204,662	$	145,839
Transfer of consideration for other investment		1,500		—
Transfer of consideration for acquisition		—		1,547
Acquisition earn-out contingency		—		4,608
Accrued acquisition consideration held as restricted cash		—		5,824

See accompanying notes to unaudited interim condensed consolidated financial statements

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Notes to Interim Condensed Consolidated Financial Statements

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

EZCORP, Inc. (collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) is a ~~leading~~ provider of pawn loans in the United States ("U.S.") and Latin America. Pawn loans are non-recourse loans collateralized by tangible property. We also sell merchandise, primarily collateral forfeited from pawn lending operations and pre-owned merchandise purchased from customers.

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements (“Condensed Consolidated Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended September 30, ~~2021,~~2022, filed with the Securities and Exchange Commission ("SEC") on November ~~17, 2021~~16, 2022 (“~~2021~~2022 Annual Report”).

In the opinion of management, the accompanying Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Financial results for the ~~three and nine-month periods~~three-month period ended ~~June 30,~~December 31, 2022, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, ~~2022.~~

~~Our business is subject~~2023 or any other period due, in part, to seasonal variations, and operating results for the three and nine months ended June 30, 2022 and 2021 (the "current quarter" and "prior-year quarter," respectively) are not necessarily indicative of the results of operations for the full fiscal year.variations. There have been no changes that have had a material impact in significant accounting policies as described in our ~~2021~~2022 Annual Report~~except for as disclosed below related to the adoption of Accounting Standards Update ("ASU") 2020-06.~~.

Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of EZCORP, Inc. and its wholly-owned subsidiaries. We use the equity method of accounting for entities in which we have a 50% or less investment and exercise significant influence. We account for equity investments for which we do not have significant influence and without readily determinable fair values at cost with adjustments for observable changes in price in orderly transactions for identical or similar investments of the same issuer or impairments. All inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include the determination of inventory reserves, expected credit losses, useful lives of long-lived and intangible assets, valuation of share-based compensation, valuation of equity investments, valuation of deferred tax assets and liabilities, loss contingencies related to litigation and discount rates used for operating leases. We base our estimates on historical experience, observable trends and various other assumptions we believe are reasonable. Actual results may ~~result in actual amounts differing~~differ materially from ~~reported amounts.~~these estimates under different assumptions or conditions.

~~Impact of COVID-19~~

The COVID-19 pandemic adversely affected our gross profit and earnings during the latter half of fiscal 2020 and into fiscal 2021. During the latter part of fiscal 2021, we saw pawn transaction activity start to rebuild. That has continued to date, and our pawn loans outstanding ("PLO") balances now exceed pre-pandemic levels, which will drive accelerating pawn service charges ("PSC") revenue in the coming quarters given the natural lag between pawn originations and related fees. Despite the recovery in pawn transaction activity, the continuing pandemic, driven by the proliferation of various COVID-19 variants, continues to affect portions of our business, such as managing appropriate staffing at the store level. Our estimates, judgments and assumptions related to COVID-19 could vary over time, and there can be no assurance that the continuing pandemic will not have an adverse effect on our results of operations, financial position and cash flows in future periods.

~~Table of Contents~~

~~Recently Adopted Accounting Policies~~

~~In August 2020, the Financial Accounting Standards Board ("FASB") issued its ASU 2020-06,~~ ~~Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)~~, (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Additionally, ASU 2020-06 eliminates beneficial conversion feature and cash conversion models resulting in more convertible instruments being accounted for as a single unit. The ASU 2020-06 amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. We early adopted this standard on October 1, 2021 under the modified retrospective basis.

~~Impact of the Adoption of ASU 2020-06~~

~~On October 1, 2021, we early adopted ASU 2020-06 on a modified retrospective basis. Under ASU 2020-06, we no longer separate the convertible senior notes into liability and equity components.~~ We recognized a cumulative effect of initially applying the ASU as an adjustment to the October 1, 2021 opening balance of retained earnings. The conversion option that was previously accounted for in equity under the cash conversion model was recombined into the convertible debt outstanding, and as a result, additional paid in capital and the related unamortized debt discount on the convertible senior notes were reduced. The removal of the remaining debt discounts recorded for this previous separation has the effect of increasing our net debt balance. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

(in thousands) As Reported
September 30, 2021 Adjustments Under ASU 2020-06
October 1, 2021
Principal $ 316,250 $ — $ 316,250
Unamortized debt discount (48,785) 48,785 —
Deferred financing costs, net (3,279) (1,500) (4,779)
Net carrying amount 264,186 47,285 311,471
Deferred tax asset 9,746 5,839 15,585
Deferred tax liability 3,684 (4,040) (356)
Additional paid-in capital 403,312 (64,263) 339,049
Retained earnings 326,781 26,857 353,638

The impact of adoption on our condensed consolidated statements of operations for the three and nine months ended June 30, 2022 was primarily to decrease interest expense by $3.5 million and $10.3 million, respectively. This had the effect of increasing our basic earnings per share for the three and nine months ended June 30, 2022 by $0.05 and $0.14, respectively, and decreasing our diluted earnings per common share for the nine months ended June 30, 2022 by $0.02. Additionally, adoption of the standard requires interest charges on the convertible debt to be added to net income as well as the use of the “if-converted” method to calculate diluted earnings per common share. Refer to Note 4: Earnings Per Share for a discussion of the effect of the convertible notes on diluted earnings per common share.

Recently Issued Accounting Pronouncements

We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact on our Condensed Consolidated Financial Statements.

~~NOTE 2: ACQUISITIONS~~

On June 8, 2021, we completed the acquisition of 100% of the common shares of PLO del Bajio S. de R.L. de C.V. (“Bajio”) and gained control of the entity, further expanding our geographic footprint within Mexico with the addition of 128 pawn stores. These stores operate under the name "Cash Apoyo Efectivo" and are located principally in the Mexico City metropolitan area.

At the time of acquisition, the total consideration for Bajio was $23.6 million, consisting of $17.4 million of cash, and 212,870 shares of our Class A Non-Voting Common Stock valued at $1.6 million. In addition, the sellers are entitled to additional payments of up to $4.6 million to be paid in 2 payments over two years, contingent on the growth of the loan portfolios of the acquired stores. Up to 50% of any future contingent payments can be made in shares of our Class A Non-Voting Common Stock at our discretion. The value of the contingent consideration was included in the total consideration as the metrics were considered achievable on the date of acquisition. Cash paid at closing was $11.6 million and an additional $3.8 million was paid during the fourth quarter of 2021.

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During the first quarter of fiscal 2022, both parties completed the formal working capital reconciliation stipulated within the purchase agreement. As part of the working capital reconciliation, the Company and the seller agreed to reduce the purchase price, which was held in restricted cash as of September 30, 2021, by $1.3 million. As the working capital adjustment was recorded as of September 30, 2021, this reduction to the purchase price is a measurement period adjustment, and resulted in a $1.3 million reduction to goodwill during the period ended December 31, 2021. This reduced the total consideration for Bajio to $22.3 million. As the future payments decreased, we released $1.3 million of the previously held $2.0 million in restricted cash to our unrestricted cash. Of the remaining $0.7 million in restricted cash as of June 30, 2022, $0.3 million was paid during July 2022, and the remaining $0.4 million is expected to be paid on or around the fifth anniversary of the date of acquisition. During the second quarter of fiscal 2022, we obtained new information about the seller's calculation of pawn service charges receivable balance as of the date of acquisition, which resulted in a $0.6 million measurement period adjustment to reduce pawn service charges receivable and increase goodwill.

The assets acquired and liabilities assumed are based upon the estimated fair values at the date of acquisition. The excess purchase price over the estimated fair market value of the new assets acquired has been recorded as goodwill.

~~The purchase price allocation is as follows, in thousands:~~


~~Cash and cash equivalents~~	$	~~308~~
~~Pawn loans~~	~~4,619~~
~~Pawn service charges receivable~~	~~691~~
~~Inventory~~	~~1,319~~
~~Property and equipment~~	~~2,025~~
~~Right-of-use assets~~	~~10,651~~
~~Goodwill~~	~~25,422~~
~~Intangible assets~~	~~3,965~~
~~Deferred tax asset, net~~	~~381~~
~~Other assets~~	~~746~~
~~Accounts payable, accrued expenses and other liabilities~~	~~(2,290)~~
~~Debt~~	~~(14,931)~~
~~Lease liabilities~~	~~(10,651)~~
~~Total consideration~~	$	~~22,255~~

~~Intangible assets acquired consist of indefinite-lived trade names.~~

The results of Bajio have been included in our condensed consolidated financial statements from June 9, 2021 through June 30, 2021, and are reported in our Latin America Pawn segment. The acquired business contributed revenues of $1.7 million and net income of $0.1 million to us for the period from June 9, 2021 to June 30, 2021.

The following unaudited pro forma summary presents consolidated information for us as if the business combination had occurred on October 1, 2019. The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, nor does it reflect additional revenue opportunities following the acquisition. The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed.

Three Months Ended
June 30,
Nine Months Ended
June 30,
(in thousands, except per share amounts) 2021 2021
Revenue $ 180,854 $ 558,426
Net (loss) income (2,475) 6,775
Basic (loss) earnings per common share (0.04) 0.12
Diluted (loss) earnings per common share (0.04) 0.12

~~We did not have any~~ material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma net revenue and net income. These pro forma amounts have been calculated after applying the Company's accounting policies and adjusting the results to reflect the additional amortization that would have been incurred assuming the amortization of the trade name had been applied from October 1, 2019.

~~Table of Contents~~

During the three and nine months ended June 30, 2021, we incurred total acquisition costs of $0.2 million and $0.4 million, respectively. The acquisition costs were primarily related to legal, accounting and consulting services, were expensed as incurred through June 30, 2021 and are included in general and administrative expenses in the consolidated statements of operations.

NOTE 3:2: GOODWILL

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


		Nine Months Ended June 30, 2022							Three Months Ended December 31, 2022
(in thousands)	(in thousands)	U.S. Pawn		Latin America Pawn		Consolidated		(in thousands)	U.S. Pawn		Latin America Pawn		Consolidated

Balances as of September 30, 2021		$	244,471	$	41,287	$	285,758
Balances as of September 30, 2022								Balances as of September 30, 2022	$	245,503	$	41,325	$	286,828
Acquisitions	Acquisitions	1,032		—		1,032		Acquisitions	9,413		—		9,413
Measurement period adjustments		—		(678)		(678)

Effect of foreign currency translation changes	Effect of foreign currency translation changes	—		686		686		Effect of foreign currency translation changes	—		1,120		1,120
Balances as of June 30, 2022		$	245,503	$	41,295	$	286,798
Balances as of December 31, 2022								Balances as of December 31, 2022	$	254,916	$	42,445	$	297,361

Nine Months Ended June 30, 2021
(in thousands) U.S. Pawn Latin America Pawn Consolidated
Balances as of September 30, 2020 $ 241,928 $ 15,654 $ 257,582
Acquisitions 2,394 22,957 25,351
Effect of foreign currency translation changes — 686 686
Balances as of June 30, 2021 $ 244,322 $ 39,297 $ 283,619


	Three Months Ended December 31, 2021
(in thousands)	U.S. Pawn		Latin America Pawn		Consolidated

Balances as of September 30, 2021	$	244,471	$	41,287	$	285,758

Measurement period adjustments	—		(1,322)		$	(1,322)
Effect of foreign currency translation changes	—		183		183

Balances as of December 31, 2021	$	244,471	$	40,148	$	284,619

During the first quarter of fiscal 2023, we acquired nine pawn stores located in Houston, Texas and one luxury pawn store in Las Vegas, Nevada for total cash consideration of $12.9 million, inclusive of all ancillary arrangements, of which $9.4 million was recorded as goodwill. These acquisitions expand our position in these strategic markets and expands our offerings by providing a dedicated and targeted focus on higher-end products. These acquisitions were immaterial, individually and in the aggregate, and we have therefore omitted or aggregated certain disclosures.

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NOTE 4:3: EARNINGS PER SHARE

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

Three Months Ended
June 30,
Nine Months Ended
June 30,
(in thousands, except per share amounts) 2022 2021 2022 2021
Basic earnings per common share:
Net income (loss) - basic $ 12,215 $ (2,570) $ 42,823 $ 7,059
Weighted shares outstanding - basic 56,656 55,898 56,465 55,639
Basic earnings (loss) per common share $ 0.22 $ (0.05) $ 0.76 $ 0.13
Diluted earnings per common share:
Net income (loss) - basic $ 12,215 $ (2,570) $ 42,823 $ 7,059
Add: Convertible Notes interest expense, net of tax 1,868 — 5,598 —
Net income (loss) - diluted $ 14,083 $ (2,570) $ 48,421 $ 7,059
Weighted shares outstanding - basic 56,656 55,898 56,465 55,639
Effect of dilution from equity-based compensation awards* 624 — 660 14
Effect of dilution from if-converted Convertible Notes** 25,224 — 25,224 —
Weighted shares outstanding - diluted 82,504 55,898 82,349 55,653
Diluted earnings (loss) per common share $ 0.17 $ (0.05) $ 0.59 $ 0.13
Potential common shares excluded from the calculation of diluted earnings per share above:
Restricted stock*** 1,825 1,154 2,066 896


	Three Months Ended December 31,
(in thousands, except per share amounts)	2022		2021

Basic earnings per common share:
Net income - basic	$	16,778	$	15,721
Weighted shares outstanding - basic	56,308		56,183
Basic earnings per common share	$	0.30	$	0.28

Diluted earnings per common share:
Net income - basic	$	16,778	$	15,721
Add: Convertible Notes interest expense, net of tax*	4,540		1,884
Net income - diluted	$	21,318	$	17,605
Weighted shares outstanding - basic	56,308		56,183
Effect of dilution from equity-based compensation awards**	1,118		541
Effect of dilution from if-converted Convertible Notes***	26,353		25,224
Weighted shares outstanding - diluted	83,779		81,948
Diluted earnings per common share	$	0.25	$	0.21

Potential common shares excluded from the calculation of diluted earnings per share above:
Restricted stock****	1,552		1,936

* Includes $3.5 million loss on extinguishment of debt recorded to "Interest expense" in the Company's condensed consolidated statement of operations.

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

*** See Note 8:7: Debt for conversion price and initial conversion rate of the 2024 Convertible Notes, 2025 Convertible Notes and ~~2025~~2029 Convertible Notes.

**** Includes antidilutive share-based awards as well as performance-based share-based awards that are contingently issuable, but for which the condition for issuance has not been met as of the end of the reporting period.

~~As a result~~Table of our adoption of ASU 2020-06 on October 1, 2021, the dilutive impact of the Convertible Notes for our calculation of diluted net income per share is considered using the if-converted method. During the three and nine months ended June 30, 2022, we increased net income ~~by $1.9 million and $5.6 million, respectively, t~~o arrive at the numerator used to calculate diluted earnings per common share, which represents interest expense recognized on the convertible notes that were subject to this change in methodology. For periods prior to our October 1, 2021 adoption of ASU 2020-06, we applied the treasury stock method to account for the dilutive impact of the 2024 and 2025 Convertible Notes for diluted earnings per share purposes.Contents

NOTE 5:4: LEASES

We determine if a contract contains a lease at inception. Our lease portfolio consists primarily of operating leases for pawn store locations and corporate offices with lease terms ranging from three to ten years.

The ~~information below provides a summary of our leasing activities. See Note 12: Leases in our 2021 Annual Report for additional information about our leasing activities. The~~ table below presents balances of our lease assets and liabilities and their balance sheet locations for both operating and financing leases:

(in thousands) June 30, 2022 June 30, 2021
September 30,
2021
Right-of-use asset $ 217,506 $ 185,467 $ 200,990
Lease liability, current $ 53,358 $ 47,241 $ 52,263
Lease liability, non-current 175,489 149,342 161,330
Total lease liability $ 228,847 $ 196,583 $ 213,593

~~Table of Contents~~


(in thousands)	Balance Sheet Location	December 31, 2022		December 31, 2021		September 30, 2022
Lease assets:
Operating lease right-of-use assets	Right-of-use assets, net	$	229,991	$	201,527	$	221,405
Financing lease assets	Right-of-use assets, net	563		—		181
Total lease assets		$	230,554	$	201,527	$	221,586




Lease liabilities:
Current:
Operating lease liabilities	Operating lease liabilities, current	$	52,799	$	51,843	$	52,334
Financing lease liabilities	Accounts payable, accrued expenses and other current liabilities	121		—		37
Total current lease liabilities		$	52,920	$	51,843	$	52,371

Non-current:
Operating lease liabilities	Operating lease liabilities	$	188,730	$	161,841	$	180,756
Financing lease liabilities	Other long-term liabilities	447		—		148
Total non-current lease liabilities		$	189,177	$	161,841	$	180,904
Total lease liabilities		$	242,097	$	213,684	$	233,275

The table below provides ~~the composition~~major components of our lease costs:

Three Months Ended
June 30,
Nine Months Ended
June 30,
(in thousands) 2022 2021 2022 2021
Operating lease expense* $ 17,264 $ 14,854 $ 50,415 $ 44,667
Variable lease expense 3,824 3,601 11,200 9,768
Total lease expense $ 21,088 $ 18,455 $ 61,615 $ 54,435
* Includes a reduction for sublease rental income.


	Three Months Ended December 31,
(in thousands)	2022		2021

Operating lease cost:
Operating lease cost *	$	17,495	$	16,362
Variable lease cost	3,852		3,542
Total operating lease cost	$	21,347	$	19,904

Financing lease cost:
Amortization of financing lease assets	$	19	$	—
Interest on financing lease liabilities	11		—
Total financing lease cost	$	30	$	—
Total lease cost	$	21,377	$	19,904

* Includes a reduction for sublease rental income of $0.8 million and $0.8 million for the quarters ended December 31, 2022 and 2021, respectively.

Lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense are included in "Store" and "General and Administrative" expense, based on the underlying lease use. Cash paid for operating leases are $21.4 million and $19.9 million for the quarters ended December 31, 2022 and 2021, respectively.

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~~Other supplemental information includes the following~~The weighted-average term and discount rates for ~~our operating leases:~~

Nine Months Ended
June 30,
2022 2021
Weighted-average remaining contractual lease term (years)
5.14 5.21
Weighted-average incremental borrowing rate 8.20 % 7.86 %
leases are as follows:


	Three Months Ended December 31,
	2022		2021

Weighted-average remaining lease term (years):
Operating leases	5.21		5.05
Financing leases	4.03		N/A

Weighted-average discount rate:
Operating leases	8.36	%	8.10	%
Financing leases	11.14	%	N/A

~~Maturities~~As of December 31, 2022, maturities of lease liabilities ~~as of June 30, 2022~~under ASC 842 by fiscal year were as ~~follows (in thousands):~~follows:


~~Remaining 2022~~	$	~~17,427~~
~~Fiscal 2023~~	~~66,988~~
~~Fiscal 2024~~	~~55,727~~
~~Fiscal 2025~~	~~44,883~~
~~Fiscal 2026~~	~~34,908~~
~~Thereafter~~	~~60,419~~
~~Total lease payments~~	$	~~280,352~~
~~Less: Portion representing interest~~	~~51,505~~
~~Present value of operating lease liabilities~~	$	~~228,847~~
~~Less: Current portion~~	~~53,358~~
~~Non-current portion~~	$	~~175,489~~


(in thousands)	Operating Leases		Financing Leases
Remaining 2023	$	53,547	$	176
Fiscal 2024	64,242		177
Fiscal 2025	54,470		177
Fiscal 2026	44,077		166
Fiscal 2027	31,338		12
Thereafter	50,420		—
Total lease liabilities	$	298,094	$	708
Less: portion representing imputed interest	56,565		140
Total net lease liabilities	$	241,529	$	568
Less: current portion	52,799		121
Total long term net lease liabilities	$	188,730	$	447

We recorded ~~$55.3~~$20.5 million and ~~$33.5~~$14.3 million in non-cash additions to our ~~right of use~~right-of-use assets and lease liabilities for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 and ~~June 30,~~December 31, 2021, respectively.

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NOTE 6:5: STRATEGIC INVESTMENTS

Cash Converters International Limited

On October 1, 2021, we purchased an additional 13 million shares of Cash Converters International Limited ("Cash Converters") for $2.5 million. This purchase increased our total ownership in Cash Converters to 236,702,991 shares, representing a 37.72% ownership interest. ~~Additionally, on~~On October 14, 2021, we received a cash dividend of $1.7 million from Cash Converters.

On March 10, 2022, we purchased an additional 5.5 million shares of Cash Converters for $1.0 million. This purchase increased our total ownership in Cash Converters to 242,239,157 shares, representing a 38.60% ownership interest.

On April 5, 2022, we acquired an additional 13 million shares for $2.5 million, bringing our total ownership to 255,239,157 shares, representing an ownership interest of 40.67%. ~~Additionally, on~~On April 14, 2022, we received a cash dividend of $1.7 million from Cash Converters.

On September 15, 2022, we acquired an additional 5.7 million shares for $0.9 million, bringing our total ownership to 260,939,157 shares, representing an ownership interest of 41.6%.

On November 2, 2022, we purchased an additional 13 million shares of Cash Converters for $2.1 million. This purchase increased our total ownership in Cash Converters to 273,939,157 shares, representing a 43.7% ownership interest. During November 2022, we received a cash dividend of $1.8 million from Cash Converters.

The following tables present summary financial information for Cash Converters most recently reported results at ~~December 31, 2021~~June 30, 2022 after translation to U.S. dollars:


		December 31,					June 30,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021

Current assets	Current assets	$	162,558	$	170,412	Current assets	$	158,987	$	167,553
Non-current assets	Non-current assets	185,780		189,810		Non-current assets	170,798		191,788
Total assets	Total assets	$	348,338	$	360,222	Total assets	$	329,785	$	359,341

Current liabilities	Current liabilities	$	59,701	$	59,962	Current liabilities	$	59,256	$	61,395
Non-current liabilities	Non-current liabilities	59,915		58,368		Non-current liabilities	53,045		57,511
Shareholders’ equity	Shareholders’ equity	228,722		241,892		Shareholders’ equity	217,484		240,435
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	348,338	$	360,222	Total liabilities and shareholders’ equity	$	329,785	$	359,341


		Half-Year Ended December 31,					Full-Year Ended June 30,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021

Gross revenues	Gross revenues	$	84,185	$	71,153	Gross revenues	$	178,215	$	150,165
Gross profit	Gross profit	55,280		51,231		Gross profit	116,106		105,851
Net profit	Net profit	1		5,561		Net profit	8,099		12,081

See Note 7:6: Fair Value Measurements for the fair value and carrying value of our investment in Cash Converters.

Founders One, LLC

In October 2021, we invested $15.0 million in exchange for a non-redeemable voting participating preferred equity interest in Founders One, LLC (“Founders”), a then newly-formed entity with one other member. Founders used that $15.0 million to acquire an equity interest in Simple Management Group, Inc. (“SMG”),.

On December 2, 2022, we contributed an additional $15.0 million to Founders associated with our preferred interest, which ~~owns and operates 20 pawn stores principally~~proceeds were used by Founders to acquire additional common stock in SMG. In addition, we loaned $15.0 million to Founders in exchange for a Demand Promissory Note secured by the ~~Caribbean region, with plans to build and acquire more stores in that region. The investment~~common interest in Founders isheld by the other member.

We have an interest in Founders, a variable interest entity, but because the Company is not the primary beneficiary, we do not consolidate ~~it.~~Founders. Further, as we are not the appointed manager, we do not have the ability to direct the activities of the investment entity that most significantly impact its economic performance. Consequently, our equity investment in Founders is accounted for utilizing the measurement alternative within Accounting Standards Codification ("ASC") 321, Investments — Equity Securities. Our ~~$15.0~~$30.0 million carrying value of the investment isand $15.0 million Demand Promissory Note are included in “Other investments” and "Prepaid expenses and other current assets" in our consolidated balance ~~sheets.~~sheets, respectively. Our maximum exposure for losses related to our investment in ~~this~~Founders is our $30.0 million equity investment ~~is its contributed investment~~and $15.0 million Demand Promissory Note plus accrued and unpaid interest.

Table of ~~$15.0 million.~~Contents

See Note 7:6: Fair Value Measurements for the fair ~~value~~values and carrying ~~value~~values of our investment in ~~Founders.~~and loan to Founders, respectively.

NOTE 7:6: FAIR VALUE MEASUREMENTS

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

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

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•Level 2 — Other observable market-based inputs or unobservable inputs that are corroborated by market data.

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

We have elected not to measure at fair value any eligible items for which fair value measurement is optional.

There were no transfers in or out of Level 1, Level 2 or Level 3 for financial assets or liabilities measured at fair value on a recurring basis during the periods presented.

Financial Assets and Liabilities Not Measured at Fair Value

The tables below present our estimates of fair value of financial assets and liabilities that were not measured at fair value:


		Carrying Value		Estimated Fair Value									Carrying Value		Estimated Fair Value
		June 30, 2022		June 30, 2022		Fair Value Measurement Using							December 31, 2022		December 31, 2022		Fair Value Measurement Using
(in thousands)	(in thousands)					Level 1		Level 2		Level 3		(in thousands)					Level 1		Level 2		Level 3

Financial assets:	Financial assets:											Financial assets:
2.89% promissory note receivable due April 2024	2.89% promissory note receivable due April 2024	$	1,207	$	1,207	$	—	$	—	$	1,207	2.89% promissory note receivable due April 2024	$	1,224	$	1,224	$	—	$	—	$	1,224
12.00% promissory note receivable from Founders												12.00% promissory note receivable from Founders	15,100		15,100		—		—		15,100

Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	43,384		47,973		41,342		—		6,631		Investments in unconsolidated affiliates	37,789		43,497		43,497		—		—
Other investments	Other investments	18,000		18,000		—		—		18,000		Other investments	39,220		39,220		—		—		39,220
Financial liabilities:	Financial liabilities:											Financial liabilities:
2024 Convertible Notes	2024 Convertible Notes	$	142,404	$	143,951	$	—	$	143,951	$	—	2024 Convertible Notes	$	34,143	$	35,851	$	—	$	35,851	$	—
2025 Convertible Notes	2025 Convertible Notes	170,117		144,555		—		144,555		—		2025 Convertible Notes	102,192		89,883		—		89,883		—
2029 Convertible Notes												2029 Convertible Notes	222,649		225,975		—		225,975		—


		Carrying Value		Estimated Fair Value									Carrying Value		Estimated Fair Value
		June 30, 2021		June 30, 2021		Fair Value Measurement Using							December 31, 2021		December 31, 2021		Fair Value Measurement Using
(in thousands)	(in thousands)					Level 1		Level 2		Level 3		(in thousands)					Level 1		Level 2		Level 3

Financial assets:	Financial assets:											Financial assets:
2.89% promissory note receivable due April 2024	2.89% promissory note receivable due April 2024	$	1,173	$	1,173	$	—	$	—	$	1,173	2.89% promissory note receivable due April 2024	$	1,190	$	1,190	$	—	$	—	$	1,190
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	35,387		43,440		35,970		—		7,470		Investments in unconsolidated affiliates	42,513		52,671		45,650		—		7,021

Other investments												Other investments	16,500		16,500		—		—		16,500
Financial liabilities:	Financial liabilities:											Financial liabilities:
2024 Convertible Notes	2024 Convertible Notes	$	121,910	$	150,219	$	—	$	150,219	$	—	2024 Convertible Notes	$	142,106	$	147,063	$	—	$	147,063	$	—
2025 Convertible Notes	2025 Convertible Notes	138,722		154,129		—		154,129		—		2025 Convertible Notes	169,738		155,060		—		155,060		—


		Carrying Value		Estimated Fair Value									Carrying Value		Estimated Fair Value
		September 30, 2021		September 30, 2021		Fair Value Measurement Using							September 30, 2022		September 30, 2022		Fair Value Measurement Using
(in thousands)	(in thousands)					Level 1		Level 2		Level 3		(in thousands)					Level 1		Level 2		Level 3

Financial assets:	Financial assets:											Financial assets:
2.89% promissory note receivable due April 2024	2.89% promissory note receivable due April 2024	$	1,181	$	1,181	$	—	$	—	$	1,181	2.89% promissory note receivable due April 2024	$	1,215	$	1,215	$	—	$	—	$	1,215
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	37,724		48,954		41,638		—		7,316		Investments in unconsolidated affiliates	37,733		40,279		40,279		—		—

Other investments												Other investments	24,220		24,220		—		—		24,220
Financial liabilities:	Financial liabilities:											Financial liabilities:
2024 Convertible Notes	2024 Convertible Notes	$	123,543	$	153,281	$	—	$	153,281	$	—	2024 Convertible Notes	$	142,575	$	157,727	$	—	$	157,727	$	—
2025 Convertible Notes	2025 Convertible Notes	140,643		155,250		—		155,250		—		2025 Convertible Notes	170,328		147,488		—		147,488		—

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Due to the short-term nature of cash and cash equivalents, pawn loans and pawn service charges receivable, ~~and other debt,~~ we estimate that the carrying value approximates fair value. We consider our cash and cash equivalents to be measured using Level 1 inputs and our pawn loans, pawn service charges receivable and other debt to be measured using Level 3 inputs. Significant increases or decreases in the underlying assumptions used to value pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates.

Included in ~~“Accounts~~"Accounts payable, accrued expenses and other current ~~liabilities“~~liabilities" in our Consolidated Balance ~~Sheets~~Sheet as of ~~June 30,~~December 31, 2022 is $4.6 million, ~~which represents~~representing the fair value of acquisition-related contingent consideration ~~as discussed~~associated with the acquisition in ~~Note 2: Acquisitions.~~June 2021 of PLO del Bajio S. de R.S. de C.V., which owned stores operating under the name "Cash Apoyo Efectivo" and located principally in the Mexico City metropolitan area. The key assumptions used to determine the fair value of acquisition-related contingent consideration are estimated by management, not observable in the market and, therefore, considered Level 3 inputs within the fair value hierarchy.

In March 2019, we received $1.1 million in previously escrowed seller funds as a result of settling certain indemnification claims with the seller of GPMX. In April 2019, we loaned the $1.1 million back to the seller of GPMX in exchange for a promissory note. The note bears interest at the rate of 2.89% per annum and is secured by certain marketable securities owned by the seller and held in a U.S. brokerage

~~Table of Contents~~

account. All principal and accrued interest is due and payable in April 2024. The fair value of the note approximated its carrying value as of ~~June 30,~~December 31, 2022.

In December 2022, we loaned $15.0 million to Founders in exchange for a Demand Promissory Note secured by the common interest in Founders held by the other member. The note bears interest at the rate of 12.00% per annum, and all principal and accrued interest is due on demand. The fair value of the note approximated its carrying value as of December 31, 2022.

We use the equity method of accounting to account for our ownership interest in Cash Converters. The inputs used to generate the fair value of the investment in Cash Converters were considered Level 1 inputs. These inputs consist of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period. We included no control premium for owning a large percentage of outstanding shares.

~~We use the equity method of accounting to account for our~~ ~~14.57%~~ ownership in Rich Data Corporation ("RDC"), a previously consolidated variable interest entity for which we no longer have the power to direct the activities that most significantly affect its economic performance. We believe its fair value approximated carrying value although such fair value is highly variable and includes significant unobservable inputs.

Of the ~~$18.0~~$39.2 million of "Other investments" included in the table above, ~~$15.0~~$30.0 million is related the investment in ~~Founders.~~Founders and $6.2 million related to our investment in Rich Data Corporation ("RDC"). We believe the investment's fair value approximated its carrying value although such fair value is highly variable and includes significant unobservable ~~inputs~~.inputs.

We measured the fair value of the 2024, 2025 and ~~2025~~2029 Convertible Notes using quoted price inputs. The notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease.

~~In September 2020, we received the final payment from AlphaCredit on the notes receivable related to the sale~~

Table of Grupo Finmart and recorded the amount under “Restricted cash” in our consolidated balance sheet as of June 30, 2022. In August 2019, AlphaCredit notified us of an indemnity claim for certain pre-closing taxes, but the nature, extent and validity of such claim has yet to be determined.Contents

NOTE 8:7: DEBT

~~The Company adopted ASU 2020-06 on October 1, 2021. See Note 1: Organization And Summary Of Significant Accounting Policies for further discussion of this recently adopted accounting policy.~~

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


		June 30, 2022						June 30, 2021						September 30, 2021							December 31, 2022						December 31, 2021						September 30, 2022
(in thousands)	(in thousands)	Gross Amount		Debt Issuance Costs		Carrying Amount		Gross Amount		Debt Discount and Issuance Costs		Carrying Amount		Gross Amount		Debt Discount and Issuance Costs		Carrying Amount		(in thousands)	Gross Amount		Debt Issuance Costs		Carrying Amount		Gross Amount		Debt Issuance Costs		Carrying Amount		Gross Amount		Debt Issuance Costs		Carrying Amount

2029 Convertible Notes																				2029 Convertible Notes	$	230,000	$	(7,351)	$	222,649	$	—	$	—	$	—	$	—	$	—	$	—
2025 Convertible Notes																				2025 Convertible Notes	103,373		(1,181)		102,192		172,500		(2,762)		169,738		172,500		(2,172)		170,328
2024 Convertible Notes	2024 Convertible Notes	$	143,750	$	(1,346)	$	142,404	$	143,750	$	(21,840)	$	121,910	$	143,750	$	(20,207)	$	123,543	2024 Convertible Notes	34,389		(246)		34,143		143,750		(1,644)		142,106		143,750		(1,175)		142,575
2025 Convertible Notes		172,500		(2,383)		170,117		172,500		(33,778)		138,722		172,500		(31,857)		140,643

Total long-term debt	Total long-term debt	$	316,250	$	(3,729)	$	312,521	$	316,250	$	(55,618)	$	260,632	$	316,250	$	(52,064)	$	264,186	Total long-term debt	$	367,762	$	(8,778)	$	358,984	$	316,250	$	(4,406)	$	311,844	$	316,250	$	(3,347)	$	312,903

The following table presents the Company's contractual maturities related to the debt instruments as of ~~June 30,~~December 31, 2022:

Schedule of Contractual Maturities
(in thousands) Total Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years
2024 Convertible Notes $ 143,750 $ — $ 143,750 $ — $ —
2025 Convertible Notes 172,500 — 172,500 — —
$ 316,250 $ — $ 316,250 $ — $ —

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	Schedule of Contractual Maturities
(in thousands)	2029 Convertible Notes		2025 Convertible Notes		2024 Convertible Notes		Total

Remaining 2023	$	—	$	—	$	—	$	—
Fiscal 2024	—		—		34,389		34,389
Fiscal 2025	—		103,373		—		103,373
Fiscal 2026	—		—		—		—
Fiscal 2027	—		—		—		—
Thereafter	230,000		—		—		230,000
Total long-term debt	$	230,000	$	103,373	$	34,389	$	367,762

The following table presents the Company's interest expense related to the Convertible Notes for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and 2021:


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended December 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021

2024 Convertible Notes:
2029 Convertible Notes:										2029 Convertible Notes:
Contractual interest expense	Contractual interest expense	$	1,033	$	1,033	$	3,099	$	3,100	Contractual interest expense	$	431	$	—
Amortization of deferred financing costs	Amortization of deferred financing costs	156		112		465		335		Amortization of deferred financing costs	52		—
Amortization of debt discount		—		1,490		—		4,381

Total interest expense	Total interest expense	$	1,189	$	2,635	$	3,564	$	7,816	Total interest expense	$	483	$	—

2025 Convertible Notes:	2025 Convertible Notes:									2025 Convertible Notes:
Contractual interest expense	Contractual interest expense	$	1,025	$	1,024	$	3,073	$	3,073	Contractual interest expense	$	942	$	1,024
Amortization of deferred financing costs	Amortization of deferred financing costs	197		139		586		420		Amortization of deferred financing costs	188		207
Amortization of debt discount		—		1,747		—		5,138

Total interest expense	Total interest expense	$	1,222	$	2,910	$	3,659	$	8,631	Total interest expense	$	1,130	$	1,231

2024 Convertible Notes:										2024 Convertible Notes:
Contractual interest expense										Contractual interest expense	$	876	$	1,033
Amortization of deferred financing costs										Amortization of deferred financing costs	138		167

Total interest expense										Total interest expense	$	1,014	$	1,200

3.750% Convertible Senior Notes Due 2029

In December 2022, we issued $230.0 million aggregate principal amount of 3.750% Convertible Senior Notes Due 2029 (the “2029 Convertible Notes”). The 2029 Convertible Notes were issued pursuant to an indenture dated December 12, 2022 (the "2022 Indenture") by and between the Company and Truist Bank, as trustee. The 2029 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2029 Convertible Notes pay interest semi-annually in arrears at a rate of 3.750% per annum on June 15 and December 15 of each year, commencing June 15, 2023, and mature on December 15, 2029 (the "2029 Maturity Date"), unless converted,

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redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2029 Convertible Notes will be entitled to receive cash equal to the principal of the 2029 Convertible Notes plus accrued interest.

The effective interest rate for the three months ended December 31, 2022 was approximately 4.28%. As of December 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2029 Maturity Date assuming no early conversion.

The 2029 Convertible Notes are convertible based on an initial conversion rate of 89.0313 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $11.23 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2029 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.

Prior to June 15, 2029, the 2029 Convertible Notes will be convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on March 31, 2023 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2022 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2029 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2022 Indenture. On or after June 15, 2029 until the close of business on the business day immediately preceding the 2029 Maturity Date, holders of 2029 Convertible Notes may, at their option, convert their 2029 Convertible Notes at any time, regardless of the foregoing circumstances.

We may not redeem the Notes prior to December 21, 2026. At our option, we may redeem for cash all or any portion of the 2029 Convertible Notes on or after December 21, 2026, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2022. As of December 31, 2022, the if-converted value of the 2029 Convertible Notes did not exceed the principal amount.

Note Repurchases

In December 2022, the Company repurchased approximately $109.4 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 for approximately $62.9 million plus accrued interest and recognized a $3.5 million loss on extinguishment of debt recorded to "Interest expense" in the Company's condensed consolidated statement of operations.

2.375% 2025 Convertible Senior Notes Due 2025

In May 2018, we issued $172.5 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 (the “2025 Convertible Notes”), for which $103.4 million remains outstanding as of December 31, 2022. The 2025 Convertible Notes were issued pursuant to an indenture dated May 14, 2018 (the "2018 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2018 Indenture. The 2025 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375% per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date.

The effective interest rate for the three months ended December 31, 2022 was approximately 2.88% for the 2025 Convertible Notes. As of December 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2025 Maturity Date assuming no early conversion.

The 2025 Convertible Notes are convertible based on an initial conversion rate of 62.8931 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $15.90 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2025 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.

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Prior to November 1, 2024, the 2025 Convertible Notes are convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2018 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2018 Indenture. On or after November 1, 2024 until the close of business on the business day immediately preceding the 2025 Maturity Date, holders of 2025 Convertible Notes may, at their option, convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances.

We may not redeem the 2025 Convertible Notes prior to May 1, 2022. At our option, we may redeem for cash all or any portion of the 2025 Convertible Notes on or after May 1, 2022, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2022. As of December 31, 2022, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

2.875% Convertible Senior Notes Due 2024

In July 2017, we issued $143.75 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 (the “2024 Convertible Notes”)., for which $34.4 million remains outstanding as of December 31, 2022. The 2024 Convertible Notes were issued pursuant to an indenture dated July 5, 2017 (the "2017 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2017 Indenture. The 2024 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2024 Convertible Notes pay interest semi-annually in arrears at a rate of 2.875% per annum on January 1 and July 1 of each year, commencing January 1, 2018, and mature on July 1, 2024 (the "2024 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2024 Convertible Notes will be entitled to receive cash equal to the principal of the 2024 Convertible Notes plus accrued interest.

The effective interest rate for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 was approximately 3.35%. As of ~~June 30,~~December 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2024 Maturity Date assuming no early conversion.

The 2024 Convertible Notes are convertible based on an initial conversion rate of 100 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $10.00 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2024 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.

Prior to January 1, 2024, the 2024 Convertible Notes will be convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2017 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2017 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2024 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2017 Indenture. On or after January 1, 2024 until the close of business on the business day immediately preceding the 2024 Maturity Date, holders of 2024 Convertible Notes may, at their option, convert their 2024 Convertible Notes at any time, regardless of the foregoing circumstances.

At our option, we may redeem for cash all or any portion of the 2024 Convertible Notes on or after July 6, 2021, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2024 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of June 30, 2022. As of June 30, 2022, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount.

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~~2.375% 2025 Convertible Senior Notes Due 2025~~

In May 2018, we issued $172.5 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 (the “2025 Convertible Notes”). The 2025 Convertible Notes were issued pursuant to an indenture dated May 14, 2018 (the "2018 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2018 Indenture. The 2025 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375% per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date.

The effective interest rate for the three and nine months ended June 30, 2022 was approximately 2.88% for the 2025 Convertible Notes. As of June 30, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2025 Maturity Date assuming no early conversion.

Prior to November 1, 2024, the 2025 Convertible Notes are convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5 business day period after any 5 consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2018 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2018 Indenture. On or after November 1, 2024 until the close of business on the business day immediately preceding the 2025 Maturity Date, holders of 2025 Convertible Notes may, at their option, convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of ~~June 30,~~December 31, 2022. As of ~~June 30,~~December 31, 2022, the if-converted value of the ~~2025~~2024 Convertible Notes did not exceed the principal amount.

NOTE 9:8: COMMON STOCK AND STOCK COMPENSATION

~~Share~~Common Stock Repurchase Program

On May 3, 2022, the Company's Board of Directors (the "Board") authorized the repurchase of up to $50 million of our Class A Common Stock over three ~~years.~~years (the "Common Stock Repurchase Program"). Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.

The amount and timing of purchases will be dependent on a variety of factors, including stock price, trading volume, general market conditions, legal and regulatory requirements, general business conditions, the level of cash flows, and corporate considerations determined by management and the Board, such as liquidity and capital needs and the availability of attractive alternative investment opportunities. The Board of Directors has reserved the right to modify, suspend or terminate the program at any time. ~~To date,~~As of December 31, 2022, the Company has ~~not~~ repurchased ~~any~~and retired 481,005 shares of our Class A Common Stock for $4.1 million under the ~~May 3, 2022 authorized share~~Common Stock Repurchase Program. The repurchase ~~program.~~amount is allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets.

Other Common Stock Repurchases

~~Table~~During December 2022, the Company used approximately $5.0 million of ~~Contents~~

the net proceeds from the 2029 Convertible Notes offering to repurchase for cash 578,703 shares of its Class A common stock from purchasers of the notes in privately negotiated transactions. Such transactions were authorized separately from, and not considered a part of, the publicly announced share repurchase program discussed above. The repurchase amount is allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets.

Stock Compensation

We maintain a Board-approved incentive plan to retain the services of our valued officers, directors and employees and to incentivize such persons to make contributions to our company and motivate excellent performance (the "Incentive Plan"). Under the Incentive Plan, we grant awards of restricted stock or restricted stock units to employees and non-employee directors. Awards granted to employees are typically subject to performance and service conditions. Awards granted to non-employee directors are time-based awards subject only to service conditions. Awards granted under the Incentive Plan are measured at the grant date fair value with compensation costs associated with the awards recognized over the requisite service period, usually the vesting period, on a straight-line basis.

The following table presents a summary of stock compensation activity:


		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value

Outstanding as of September 30, 2021		2,218,777	$	4.86
Outstanding as of September 30, 2022					Outstanding as of September 30, 2022	2,113,323	$	5.88
Granted	Granted	1,365,878	7.37		Granted	917,990	7.72
Released (a)	Released (a)	(486,627)	4.77		Released (a)	(347,788)	4.71
Cancelled	Cancelled	(743,299)	6.46		Cancelled	(54,497)	6.55
Outstanding as of June 30, 2022		2,354,729	$	6.30
Outstanding as of December 31, 2022					Outstanding as of December 31, 2022	2,629,028	$	6.66

(a) ~~101,103~~113,333 shares were withheld to satisfy related income tax withholding.

NOTE ~~10:~~9: CONTINGENCIES

Currently, and from time to time, we are involved in various claims, disputes, lawsuits, investigations, and legal and regulatory proceedings, including the matter described below. We accrue for contingencies if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because these matters are inherently unpredictable and unfavorable developments or resolutions can occur, assessing contingencies requires judgments and is highly subjective about future events, and the amount of resulting loss may differ from these estimates. ~~Except as noted below, we~~We do not believe the resolution of any particular matter will have a material adverse effect on our financial condition, results of operations or liquidity.

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On October 14, 2021, Andrew Kowlessar filed an action in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida styled Andrew Kowlessar, individually and on behalf of all others similarly situated vs. EZCORP, Inc. d/b/a Value Pawn & Jewelry ~~(Case No. CACE-21-018864)~~. The matter subsequently was amended and removed to the United States District Court of the Southern District of Florida as Andrew Kowlessar, individually and on behalf of all others similarly situated vs. EZPAWN Florida, Inc. d/b/a Value Pawn & Jewelry ~~(Case No. 0:21-cv-62362-RKA)~~. In May 2022, the federal court action was dismissed and the case was refiled in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, ~~Florida (Case No. 2022-008506-CA-01).~~Florida. The complaint was brought under Section 501.059, Florida Statutes, the Florida Telephone Solicitation Act (“Act”), and alleges certain text messages were sent in violation of the Act. The matter involves claims by a single individual, but alleges a class of persons who may have similar claims of violations of the Act and seeks class certification. On June 16, 2022, following discovery and pre-trial mediation, the parties agreed to a settlement of all asserted claims and entered into a Settlement Agreement and Release. The agreed settlement requires the Company to make available up to $5 million to be used to pay verified claims (not to exceed $70 per verified claimant), as well as attorneys’ fees and costs. The agreed settlement ~~which~~ was ~~preliminarily~~ approved by the court on ~~July 22, 2022, remains subject~~October 24, 2022; the period for submitting claims expired on November 8, 2022; and the third-party claims administrator has verified the submitted claims and is set to ~~the court's~~undertake final ~~approval.~~resolution. The Company recorded a charge during the quarter ended June 30, 2022, representing the estimated liability for the settlement of this matter and believes the accrual remains sufficient to cover the Company’s liability in this matter.

NOTE ~~11:~~10: SEGMENT INFORMATION

Our operations are primarily managed on a geographical basis and are comprised of 3three reportable segments. The factors for determining our reportable segments include the manner in which our chief operating decision maker ("CODM") evaluates performance for purposes of allocating resources and assessing performance.

We currently report our segments as follows:

•U.S. Pawn — all pawn activities in the United States;

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

•Other Investments — primarily our equity interest in the net ~~results~~income of Cash Converters ~~and RDC~~ along with our investment in ~~Founders.~~Founders and RDC.

There are no inter-segment revenues presented below, and the amounts below were determined in accordance with the same accounting principles used in our condensed consolidated financial statements.

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~~principles used in our condensed consolidated financial statements.~~

The following tables present revenue for each reportable segment, disaggregated revenue within our 3three reportable segments and Corporate, segment profits and segment contribution.


		Three Months Ended June 30, 2022													Three Months Ended December 31, 2022
(in thousands)	(in thousands)	U.S. Pawn		Latin America Pawn		Other Investments		Total Segments		Corporate Items		Consolidated		(in thousands)	U.S. Pawn		Latin America Pawn		Other Investments		Total Segments		Corporate Items		Consolidated

Revenues:	Revenues:													Revenues:
Merchandise sales	Merchandise sales	$	94,005	$	34,329	$	—	$	128,334	$	—	$	128,334	Merchandise sales	$	118,314	$	45,473	$	—	$	163,787	$	—	$	163,787
Jewelry scrapping sales	Jewelry scrapping sales	5,404		1,764		—		7,168		—		7,168		Jewelry scrapping sales	7,176		708		—		7,884		—		7,884
Pawn service charges	Pawn service charges	59,322		20,969		—		80,291		—		80,291		Pawn service charges	69,310		23,283		—		92,593		—		92,593
Other revenues	Other revenues	21		7		21		49		—		49		Other revenues	25		16		22		63		—		63
Total revenues	Total revenues	158,752		57,069		21		215,842		—		215,842		Total revenues	194,825		69,480		22		264,327		—		264,327
Merchandise cost of goods sold	Merchandise cost of goods sold	55,885		24,282		—		80,167		—		80,167		Merchandise cost of goods sold	73,256		31,621		—		104,877		—		104,877
Jewelry scrapping cost of goods sold	Jewelry scrapping cost of goods sold	4,506		1,661		—		6,167		—		6,167		Jewelry scrapping cost of goods sold	6,216		737		—		6,953		—		6,953

Gross profit	Gross profit	98,361		31,126		21		129,508		—		129,508		Gross profit	115,353		37,122		22		152,497		—		152,497
Segment and corporate expenses (income):	Segment and corporate expenses (income):													Segment and corporate expenses (income):
Store expenses	Store expenses	66,036		23,394		—		89,430		—		89,430		Store expenses	73,304		27,499		—		100,803		—		100,803
General and administrative	General and administrative	—		—		—		—		18,715		18,715		General and administrative	—		(3)		—		(3)		15,479		15,476

Depreciation and amortization	Depreciation and amortization	2,572		1,987		—		4,559		3,187		7,746		Depreciation and amortization	2,755		2,215		—		4,970		3,018		7,988

(Gain) loss on sale or disposal of assets and other														(Gain) loss on sale or disposal of assets and other	3		(19)		—		(16)		—		(16)

Interest expense	Interest expense	—		—		—		—		2,693		2,693		Interest expense	—		—		—		—		6,190		6,190
Interest income	Interest income	(1)		(189)		—		(190)		—		(190)		Interest income	—		(169)		—		(169)		(495)		(664)
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	—		—		(1,758)		(1,758)		—		(1,758)		Equity in net income of unconsolidated affiliates	—		—		(1,584)		(1,584)		—		(1,584)

Other (income) expense	Other (income) expense	—		(163)		19		(144)		(66)		(210)		Other (income) expense	—		70		4		74		(308)		(234)

Segment contribution	Segment contribution	$	29,754	$	6,097	$	1,760	$	37,611					Segment contribution	$	39,291	$	7,529	$	1,602	$	48,422
Income (loss) before income taxes	Income (loss) before income taxes							$	37,611	$	(24,529)	$	13,082	Income (loss) before income taxes							$	48,422	$	(23,884)	$	24,538


		Three Months Ended June 30, 2021													Three Months Ended December 31, 2021
(in thousands)	(in thousands)	U.S. Pawn		Latin America Pawn		Other Investments		Total Segments		Corporate Items		Consolidated		(in thousands)	U.S. Pawn		Latin America Pawn		Other Investments		Total Segments		Corporate Items		Consolidated

Revenues:	Revenues:													Revenues:
Merchandise sales	Merchandise sales	$	84,465	$	23,343	$	—	$	107,808	$	—	$	107,808	Merchandise sales	$	102,078	$	35,642	$	—	$	137,720	$	—	$	137,720
Jewelry scrapping sales	Jewelry scrapping sales	1,908		3,765		—		5,673		—		5,673		Jewelry scrapping sales	4,980		1,964		—		6,944		—		6,944
Pawn service charges	Pawn service charges	44,039		16,392		—		60,431		—		60,431		Pawn service charges	56,557		19,468		—		76,025		—		76,025
Other revenues	Other revenues	32		—		89		121		—		121		Other revenues	22		240		43		305		—		305
Total revenues	Total revenues	130,444		43,500		89		174,033		—		174,033		Total revenues	163,637		57,314		43		220,994		—		220,994
Merchandise cost of goods sold	Merchandise cost of goods sold	45,310		15,229		—		60,539		—		60,539		Merchandise cost of goods sold	57,832		25,279		—		83,111		—		83,111
Jewelry scrapping cost of goods sold	Jewelry scrapping cost of goods sold	1,878		3,595		—		5,473		—		5,473		Jewelry scrapping cost of goods sold	3,975		1,797		—		5,772		—		5,772

Gross profit	Gross profit	83,256		24,676		89		108,021		—		108,021		Gross profit	101,830		30,238		43		132,111		—		132,111
Segment and corporate expenses (income):	Segment and corporate expenses (income):													Segment and corporate expenses (income):
Store expenses	Store expenses	62,507		19,296		—		81,803		—		81,803		Store expenses	64,689		22,082		—		86,771		—		86,771
General and administrative	General and administrative	—		—		—		—		14,589		14,589		General and administrative	—		—		—		—		15,545		15,545

Depreciation and amortization	Depreciation and amortization	2,600		1,806		—		4,406		3,013		7,419		Depreciation and amortization	2,670		1,980		—		4,650		2,924		7,574
Loss on sale or disposal of assets and other														Loss on sale or disposal of assets and other	—		5		—		5		—		5

Other Charges		—		497		—		497		—		497
Interest expense	Interest expense	—		—		—		—		5,569		5,569		Interest expense	—		—		—		—		2,431		2,431
Interest income	Interest income	—		(484)		—		(484)		(28)		(512)		Interest income	—		(182)		—		(182)		(122)		(304)
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	—		—		(643)		(643)		—		(643)		Equity in net income of unconsolidated affiliates	—		—		(1,138)		(1,138)		—		(1,138)

Other (income) expense	Other (income) expense	—		(5)		18		13		52		65		Other (income) expense	—		(134)		(12)		(146)		26		(120)
Segment contribution	Segment contribution	$	18,149	$	3,566	$	714	$	22,429					Segment contribution	$	34,471	$	6,487	$	1,193	$	42,151
Income (loss) before income taxes	Income (loss) before income taxes							$	22,429	$	(23,195)	$	(766)	Income (loss) before income taxes							$	42,151	$	(20,804)	$	21,347

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Nine Months Ended June 30, 2022
(in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated
Revenues:
Merchandise sales $ 296,147 $ 103,463 $ — $ 399,610 $ — $ 399,610
Jewelry scrapping sales 13,864 5,938 — 19,802 — 19,802
Pawn service charges 174,651 58,348 — 232,999 — 232,999
Other revenues 67 247 93 407 — 407
Total revenues 484,729 167,996 93 652,818 — 652,818
Merchandise cost of goods sold 172,330 73,194 — 245,524 — 245,524
Jewelry scrapping cost of goods sold 11,279 5,468 — 16,747 — 16,747
Gross profit 301,120 89,334 93 390,547 — 390,547
Segment and corporate expenses (income):
Store expenses 195,217 66,727 — 261,944 — 261,944
General and administrative — — — — 46,487 46,487
Depreciation and amortization 7,867 5,858 — 13,725 9,045 22,770
Gain on sale or disposal of assets and other — (4) — (4) (688) (692)
Interest expense — — — — 7,651 7,651
Interest income (1) (626) — (627) (122) (749)
Equity in net income of unconsolidated affiliates — — (1,457) (1,457) — (1,457)
Other expense (income) — 37 15 52 (11) 41
Segment contribution $ 98,037 $ 17,342 $ 1,535 $ 116,914
Income (loss) before income taxes $ 116,914 $ (62,362) $ 54,552

Nine Months Ended June 30, 2021
(in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated
Revenues:
Merchandise sales $ 260,545 $ 70,271 $ — $ 330,816 $ — $ 330,816
Jewelry scrapping sales 9,493 9,014 — 18,507 — 18,507
Pawn service charges 143,836 43,520 — 187,356 — 187,356
Other revenues 83 7 338 428 — 428
Total revenues 413,957 122,812 338 537,107 — 537,107
Merchandise cost of goods sold 145,181 45,691 — 190,872 — 190,872
Jewelry scrapping cost of goods sold 7,871 8,205 — 16,076 — 16,076
Gross profit 260,905 68,916 338 330,159 — 330,159
Segment and corporate expenses (income):
Store expenses 188,256 54,005 — 242,261 — 242,261
General and administrative — — — — 40,870 40,870
Depreciation and amortization 7,972 5,459 — 13,431 9,649 23,080
Loss on sale or disposal of assets and other 27 — — 27 63 90
Other Charges — 497 — 497 — 497
Interest expense — — — — 16,542 16,542
Interest income — (1,819) — (1,819) (99) (1,918)
Equity in net income of unconsolidated affiliates — — (2,409) (2,409) — (2,409)
Other (income) expense — (375) (183) (558) 169 (389)
Segment contribution $ 64,650 $ 11,149 $ 2,930 $ 78,729
Income (loss) before income taxes $ 78,729 $ (67,194) $ 11,535

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~~The following table presents separately identified net earning assets by segment:~~

(in thousands) U.S. Pawn Latin America Pawn Other
Investments Corporate Items Total
As of June 30, 2022
Pawn loans $ 159,680 $ 44,475 $ — $ — $ 204,155
Inventory, net 101,831 30,882 — — 132,713
As of June 30, 2021
Pawn loans $ 117,186 $ 39,969 $ — $ — $ 157,155
Inventory, net 69,136 23,106 — — 92,242

NOTE ~~12:~~11: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

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


(in thousands)	(in thousands)	June 30, 2022		June 30, 2021		September 30, 2021		(in thousands)	December 31, 2022		December 31, 2021		September 30, 2022

Gross pawn service charges receivable	Gross pawn service charges receivable	$	42,277	$	31,648	$	37,360	Gross pawn service charges receivable	$	44,397	$	38,040	$	44,192
Allowance for uncollectible pawn service charges receivable	Allowance for uncollectible pawn service charges receivable	(10,277)		(6,683)		(8,023)		Allowance for uncollectible pawn service charges receivable	(9,476)		(8,275)		(10,716)
Pawn service charges receivable, net	Pawn service charges receivable, net	$	32,000	$	24,965	$	29,337	Pawn service charges receivable, net	$	34,921	$	29,765	$	33,476

Gross inventory	Gross inventory	$	136,475	$	98,761	$	115,300	Gross inventory	$	159,286	$	124,286	$	153,673
Inventory reserves	Inventory reserves	(3,762)		(6,519)		(4,311)		Inventory reserves	(3,222)		(4,973)		(2,058)
Inventory, net	Inventory, net	$	132,713	$	92,242	$	110,989	Inventory, net	$	156,064	$	119,313	$	151,615

Prepaid expenses and other	Prepaid expenses and other	$	14,660	$	7,278	$	5,386	Prepaid expenses and other	$	11,581	$	10,614	$	8,336
Accounts receivable and other		7,465		7,111		9,322
Income taxes receivable		7,697		13,954		16,302
Accounts receivable, notes receivable and other								Accounts receivable, notes receivable and other	22,730		6,258		8,435
Income taxes prepaid and receivable								Income taxes prepaid and receivable	11,248		14,337		17,923
Prepaid expenses and other current assets	Prepaid expenses and other current assets	$	29,822	$	28,343	$	31,010	Prepaid expenses and other current assets	$	45,559	$	31,209	$	34,694

Property and equipment, gross	Property and equipment, gross	$	298,502	$	283,304	$	284,867	Property and equipment, gross	$	312,502	$	288,285	$	306,667
Accumulated depreciation	Accumulated depreciation	(246,997)		(227,674)		(231,056)		Accumulated depreciation	(256,890)		(236,084)		(249,942)
Property and equipment, net	Property and equipment, net	$	51,505	$	55,630	$	53,811	Property and equipment, net	$	55,612	$	52,201	$	56,725

Accounts payable	Accounts payable	$	19,480	$	19,325	$	22,462	Accounts payable	$	20,220	$	18,925	$	24,056
Accrued payroll	Accrued payroll	11,840		11,624		9,093		Accrued payroll	4,952		11,486		8,365
Incentive accrual	Incentive accrual	14,128		10,458		16,868		Incentive accrual	6,010		5,158		17,403
Other payroll related expenses	Other payroll related expenses	7,167		11,269		10,695		Other payroll related expenses	10,911		7,964		9,592
Accrued sales and VAT taxes	Accrued sales and VAT taxes	7,672		13,894		10,936		Accrued sales and VAT taxes	8,086		9,704		7,279
Accrued income taxes payable	Accrued income taxes payable	1,116		3,722		3,826		Accrued income taxes payable	2,562		6,024		2,663
Other current liabilities	Other current liabilities	15,163		14,674		16,388		Other current liabilities	17,189		16,270		15,151
Accounts payable, accrued expenses and other current liabilities	Accounts payable, accrued expenses and other current liabilities	$	76,566	$	84,966	$	90,268	Accounts payable, accrued expenses and other current liabilities	$	69,930	$	75,531	$	84,509

The following table provides supplemental disclosure of Consolidated Statements of Cash Flows information:


	Three Months Ended December 31,
(in thousands)	2022		2021

Supplemental disclosure of cash flow information
Cash and cash equivalents	$	207,658	$	233,274
Restricted cash	8,359		8,692
Total cash and cash equivalents and restricted cash	$	216,017	$	241,966

Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory	$	84,851	$	70,966

Transfer of consideration for acquisition	99		—
Acquisition earn-out contingency	2,000		—
Accrued acquisition consideration	1,250		—

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to inform the reader about matters affecting the financial condition and results of operations of EZCORP, Inc. and its subsidiaries (collectively, “we,” “us”, “our”, "EZCORP" or the “Company”). The following discussion should be read together with our condensed consolidated financial statements and related notes included elsewhere within this report. This discussion contains forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements. See "Part I, Item 1A — Risk Factors" of our Annual Report on Form 10-K for the year ended September 30, ~~2021,~~2022, as supplemented by the information set forth in “Part I, Item 3 — Quantitative and Qualitative Disclosures about Market Risk” and "Part II, Item 1A — Risk Factors" of this Report, for a discussion of certain risks, uncertainties and assumptions associated with these statements.

Business Overview

EZCORP is a Delaware corporation headquartered in Austin, Texas. We are a leading provider of pawn services in the United States and Latin America. Pawn loans are nonrecourse loans collateralized by personal property. We also sell merchandise, primarily collateral forfeited from unpaid loans or goods purchased directly from customers.

We exist to serve our customers’ short-term cash needs, helping them to live and enjoy their lives. We are focused on three strategic pillars:



Strengthen the Core			Relentless focus on superior execution and operational excellence in our core pawn business
Cost Efficiency and Simplification			Shape a culture of cost efficiency through ongoing focus on simplification and optimization
Innovate and Grow			Broaden customer engagement to service more customers more frequently in more locations

Pawn Activities

At our pawn stores, we advance cash against the value of collateralized tangible personal property. We earn pawn service charges (“PSC”) for those cash advances, and the PSC rate varies by state and transaction size. At the time of the transaction, we take possession of the pawned collateral, which consists of tangible personal property, generally jewelry, consumer electronics, tools, sporting goods ~~and~~or musical instruments. If the customer chooses to redeem their pawn, they will repay the amount advanced plus any accrued PSC. If the customer chooses not to redeem their pawn, the pawned collateral becomes our inventory, which we sell in our retail merchandise sales activities or, in some cases, scrap for its inherent gold or precious stone content. Consequently, the success of our pawn business is largely dependent on our ability to accurately assess the probability of pawn redemption and the estimated resale or scrap value of the collateralized personal property.

Our ability to offer quality second-hand goods at prices significantly lower than original retail prices attracts value-conscious customers. The gross profit on sales of inventory depends primarily on our assessment of the estimated resale or scrap value at the time the property is either accepted as pawn collateral or purchased and our ability to sell that merchandise in a timely manner. As a significant portion of our inventory and sales involve gold and jewelry, our results can be influenced by the market price of gold and diamonds.

Growth and Expansion

Our strategy is to expand the number of locations we operate through opening new (“de novo”) locations and through acquisitions and investments in both Latin America, the United States and potential new markets. Our ability to open de novo stores, acquire new stores and make other related investments is dependent on several variables, such as projected achievement of internal investment hurdles, the availability of acceptable sites or acquisition candidates, the alignment of acquirer/seller price expectations, the regulatory environment, local zoning ordinances, access to capital and the availability of qualified personnel.

Seasonality and Quarterly Results

In the United States, PSC is historically highest in our fourth fiscal quarter (July through September) due to a higher average loan balance during the summer lending season. PSC is historically lowest in our third fiscal quarter (April through June) following the tax refund season and merchandise sales are highest in our first and second fiscal quarters (October through March) due to the holiday season, jewelry sales

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surrounding Valentine’s Day and the availability of tax refunds. In Latin America, most of our customers receive additional compensation from their employers in December, and many receive additional compensation in June or July, applying downward pressure on loan balances and fueling some merchandise sales in those periods. As a net effect of these and other factors and excluding discrete charges, our consolidated income/loss before tax is generally highest in our first fiscal quarter (October through December) and lowest in our third fiscal quarter (April through June). ~~These historical trends have been impacted by COVID-19, but we expect these historical trends to return in the future.~~

Financial Highlights

We remain focused on optimizing our balance of pawn loans outstanding (“PLO”) and the resulting higher PSC. The following chart presents sources of gross ~~profit*,~~profit, including PSC, merchandise sales gross profit ("Merchandise sales GP") and jewelry scrapping gross profit ("Jewelry Scrapping GP") for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and 2021:

The following chart presents sources of gross profit by geographic disbursement for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and 2021:

* We have relabeled "net revenues" to "gross profit" throughout our filings, which we believe will improve comparability across industries and companies. This change is effective for this and future filings.

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Business Developments

~~COVID-19~~Convertible Debt

~~The COVID-19 pandemic adversely affected our gross profit and earnings during~~In December 2022, we issued $230.0 million aggregate principal amount of 3.750% Convertible Senior Notes Due 2029 (the “2029 Convertible Notes”). In conjunction with the ~~latter half~~issuance of ~~fiscal 2020 and into fiscal 2021. During~~ the ~~latter part of fiscal 2021,~~2029 Convertible Notes, we saw pawn transaction activity start to rebuild. That has continued to date, and our pawn loans outstanding ("PLO") balances now exceed pre-pandemic levels, which will drive accelerating pawn service charges ("PSC") revenue in the coming quarters given the natural lag between pawn originations and related fees. Despite the recovery in pawn transaction activity, the continuing pandemic, driven by the proliferation of various COVID-19 variants, continues to affect portionsextinguished approximately $109.4 million aggregate principal amount of our ~~business, such as managing appropriate staffing at~~2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest. In addition, we used approximately $5.0 million of the ~~store level. Our estimates, judgments and assumptions related to COVID-19 could vary over time, and there can be no assurance that~~net proceeds from the ~~continuing pandemic will not have an adverse effect on our results of operations, financial position and cash flows in future periods.~~

~~Share Repurchase Program~~

On May 3, 2022, the Company's Board of Directors approved a new share repurchase program, which will replace the previous program that was suspended in March 2020. Under the new program, the Company is authorized2029 Convertible Notes offering to repurchase ~~up to $50 million~~578,703 shares of ~~its outstanding~~our Class A ~~Non-Voting~~ common ~~share over~~stock from purchasers of the ~~next three years. Refer~~notes in privately negotiated transactions. See Note 7 of Notes to ~~"Liquidity and Capital Resources~~Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — ~~Sources and Uses of Cash" below.~~Financial Statements."

Investment in Cash Converters International

On ~~March 10,~~November 2, 2022, we purchased an additional ~~5.5~~13 million shares of Cash Converters for ~~$1.0~~$2.1 million. This purchase increased our total ownership in Cash Converters to ~~242,239,157~~273,939,157 shares, representing a ~~38.60%~~43.7% ownership interest. ~~On April 5, 2022, we acquired an additional 13 million shares for $2.5 million, bringing our total ownership to 255,239,157 shares, representing an ownership interest of 40.67%.~~ Additionally, ~~on April 14,~~during November 2022, we received a cash dividend of $1.8 million from Cash Converters.

Founders

During December 2022, we made additional investments in Founders One, LLC ("Founders") in the form of a $15.0 million additional capital contribution and a $15.0 million loan. The proceeds of these additional investments were passed on to Simple Management Group, Inc. ("SMG") and used by SMG to complete the acquisition of FFI Holdings, Inc. SMG owns and operates 73 pawn stores in the Caribbean and Florida. See Note 5 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

Results of Operations

Non-GAAP Constant Currency and Same Store Financial Information

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide certain other non-GAAP financial information on a constant currency basis ("constant currency") and "same store" basis. We use constant currency results to evaluate our Latin America Pawn operations, which are denominated primarily in Mexican pesos, Guatemalan quetzales and other Latin American currencies. We analyze results on a same store basis (which is defined as stores open during the entirety of the comparable periods) to better understand existing store performance without the influence of increases or decreases resulting solely from changes in store count. We believe presentation of constant currency and same store results is meaningful and useful in understanding the activities and business metrics of our Latin America Pawn operations and reflect an additional way of viewing aspects of our business that, when viewed with GAAP results, provide a better understanding and evaluation of factors and trends affecting our business. We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. We use this non-GAAP financial information to evaluate and compare operating results across accounting periods. Readers should consider the information in addition to, but not rather than or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Constant currency results reported herein are calculated by translating consolidated balance sheet and consolidated statement of operations items denominated in local currency to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations. In addition, we have an equity method investment that is denominated in Australian dollars and is translated into U.S. dollars. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate on a monthly basis during the appropriate period for statement of operations items. Our statement of operations constant currency results reflect the monthly exchange rate fluctuations and are not directly calculable from the rates below. Constant currency results, where presented, also exclude the foreign currency gain or loss. The end-of-period and approximate average exchange rates for each applicable currency as compared to U.S. dollars as of and for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and ~~June 30,~~December 31, 2021 were as follows:

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		June 30,		Three Months Ended June 30,		Nine Months Ended June 30,			December 31,		Three Months Ended December 31,
		2022	2021	2022	2021	2022	2021		2022	2021	2022	2021

Mexican peso	Mexican peso	20.2	19.9	20.0	20.0	20.4	20.3	Mexican peso	19.5	20.5	19.7	20.7
Guatemalan quetzal	Guatemalan quetzal	7.6	7.6	7.5	7.6	7.5	7.6	Guatemalan quetzal	7.7	7.5	7.7	7.6
Honduran lempira	Honduran lempira	24.2	23.6	24.2	23.7	24.1	23.8	Honduran lempira	24.4	24.1	24.3	23.9
Peruvian sol		3.7	3.9	3.7	3.8	3.8	3.7

Australian dollar								Australian dollar	1.5	1.4	1.5	1.4

Operating Results

Segments

We manage our business and report our financial results in three reportable segments;

•U.S. Pawn — Represents all pawn activities in the United States;

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

•Other Investments — Represents our equity interest in the net income of Cash Converters ~~International and Rich Data Corporation,~~ along with our investment in ~~Founders.~~Founders and RDC.

Store Count by Segment


		Three Months Ended June 30, 2022		Three Months Ended December 31, 2022
		U.S. Pawn	Latin America Pawn		Consolidated		U.S. Pawn	Latin America Pawn	Consolidated

As of March 31, 2022		516	636		1,152
As of September 30, 2022						As of September 30, 2022	515	660	1,175
New locations opened	New locations opened	—	8		8	New locations opened	—	2	2
Locations acquired	Locations acquired	3	—		3	Locations acquired	10	—	10

As of June 30, 2022		519	644		1,163
Locations sold, combined or closed						Locations sold, combined or closed	—	(1)	(1)
As of December 31, 2022						As of December 31, 2022	525	661	1,186

Three Months Ended June 30, 2021
U.S. Pawn Latin America Pawn Consolidated
As of March 31, 2021 505 506 1,011
New locations opened — 4 4
Locations acquired 11 128 139
Locations sold, combined or closed — (11) (11)
As of June 30, 2021 516 627 1,143


		Nine Months Ended June 30, 2022		Three Months Ended December 31, 2021
		U.S. Pawn	Latin America Pawn		Consolidated		U.S. Pawn	Latin America Pawn	Consolidated

As of September 30, 2021	As of September 30, 2021	516	632		1,148	As of September 30, 2021	516	632	1,148
New locations opened	New locations opened	—	12		12	New locations opened	—	1	1
Locations acquired		3	—		3

As of June 30, 2022		519	644		1,163

As of December 31, 2021						As of December 31, 2021	516	633	1,149

~~Table of Contents~~

Nine Months Ended June 30, 2021
U.S. Pawn Latin America Pawn Consolidated
As of September 30, 2020 505 500 1,005
New locations opened — 10 10
Locations acquired 11 128 139
Locations sold, combined or closed — (11) (11)
As of June 30, 2021 516 627 1,143

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Three Months Ended ~~June 30,~~December 31, 2022 vs. Three Months Ended ~~June 30,~~December 31, 2021

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

U.S. Pawn

The following table presents selected summary financial data for our U.S. Pawn segment:


		Three Months Ended June 30,						Change		Three Months Ended December 31,						Change
(in thousands)	(in thousands)	2022			2021				(in thousands)	2022			2021

Gross profit:	Gross profit:								Gross profit:
Pawn service charges	Pawn service charges	$	59,322		$	44,039		35%	Pawn service charges	$	69,310		$	56,557		23%

Merchandise sales	Merchandise sales	94,005			84,465			11%	Merchandise sales	118,314			102,078			16%
Merchandise sales gross profit	Merchandise sales gross profit	38,120			39,155			(3)%	Merchandise sales gross profit	45,058			44,246			2%
Gross margin on merchandise sales	Gross margin on merchandise sales	41		%	46		%	(500)bps	Gross margin on merchandise sales	38		%	43		%	(500)bps

Jewelry scrapping sales	Jewelry scrapping sales	5,404			1,908			183%	Jewelry scrapping sales	7,176			4,980			44%
Jewelry scrapping sales gross profit	Jewelry scrapping sales gross profit	898			30			2,893%	Jewelry scrapping sales gross profit	960			1,005			(4)%
Gross margin on jewelry scrapping sales	Gross margin on jewelry scrapping sales	17		%	2		%	1,500bps	Gross margin on jewelry scrapping sales	13		%	20		%	(700)bps

Other revenues	Other revenues	21			32			(34)%	Other revenues	25			22			14%
Gross profit	Gross profit	98,361			83,256			18%	Gross profit	115,353			101,830			13%

Segment operating expenses:	Segment operating expenses:								Segment operating expenses:
Store expenses	Store expenses	66,036			62,507			6%	Store expenses	73,304			64,689			13%
Depreciation and amortization	Depreciation and amortization	2,572			2,600			(1)%	Depreciation and amortization	2,755			2,670			3%
Loss on sale or disposal of assets and other									Loss on sale or disposal of assets and other	3			—			*

Segment operating contribution		29,753			18,149			64%

Other segment income		(1)			—			*

Segment contribution	Segment contribution	$	29,754		$	18,149		64%	Segment contribution	$	39,291		$	34,471		14%

Other data:	Other data:								Other data:
Net earning assets (a)	Net earning assets (a)	$	261,511		$	186,322		40%	Net earning assets (a)	$	284,880		$	231,408		23%
Inventory turnover	Inventory turnover	2.5			2.8			(11)%	Inventory turnover	2.6			2.8			(7)%
Average monthly ending pawn loan balance per store (b)	Average monthly ending pawn loan balance per store (b)	$	290		$	206		41%	Average monthly ending pawn loan balance per store (b)	$	315		$	270		17%
Monthly average yield on pawn loans outstanding	Monthly average yield on pawn loans outstanding	14		%	14		%	—bps	Monthly average yield on pawn loans outstanding	14		%	13		%	100bps
Pawn loan redemption rate		85		%	88		%	(300)bps



*			Represents a percentage computation that is not mathematically meaningful.
(a)			Balance includes pawn loans and inventory.
(b)			Balance is calculated based upon the average of the monthly ending balances during the applicable period.

PLO ~~increased 36% to $159.7~~ended the quarter at $166.9 million, ~~(36%~~up 18% (15% on a same store basis)~~, our highest level to-date, due to increased loan demand reflecting a recovery above pre-COVID levels.~~.

Total revenue was up ~~22%~~19%, and gross profit increased ~~18%~~13%, driven by increased pawn service charges, ~~which were up 35%~~higher merchandise sales and improved merchandise sales gross profit.

PSC increased 23% as a result of higher average ~~PLO for the quarter.~~PLO.

Merchandise ~~sales increased 11% due to our improved retail strategy. Offsetting the sales increase, merchandise~~ sales gross margin decreased to ~~41%~~38% from ~~46%~~43%, reflecting a ~~return to~~ more normalized ~~margins.~~

~~Inventory turnover decreased to 2.5x from 2.8x due to increased inventory levels in the current quarter and stimulus impacts in the prior year.~~operating environment.

Store expenses increased 6%13% primarily due to increased labor in-line with store ~~count~~activity and, ~~labor increases in line~~to a lesser extent, expenses related to our loyalty program and rent associated with ~~business activity.~~lease renewals.

Segment contribution increased ~~$11.6~~14% to $39.3 million, ~~or 64%,~~ due to the changes ~~described~~noted above.

Segment store count increased by 10 stores during this quarter due to two acquisitions.

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~~Segment store count increased by three acquired stores during the quarter.~~

Latin America Pawn

The following table presents selected summary financial data for the Latin America Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currencies noted above under “Results of Operations — Non-GAAP Constant Currency and Same Store Financial Information."


		Three Months Ended June 30,												Three Months Ended December 31,
(in thousands)	(in thousands)	2022 (GAAP)			2021 (GAAP)			Change (GAAP)	2022 (Constant Currency)			Change (Constant Currency)	(in thousands)	2022 (GAAP)			2021 (GAAP)			Change (GAAP)	2022 (Constant Currency)			Change (Constant Currency)

Gross profit:	Gross profit:												Gross profit:
Pawn service charges	Pawn service charges	$	20,969		$	16,392		28%	$	20,953		28%	Pawn service charges	$	23,283		$	19,468		20%	$	22,479		15%

Merchandise sales	Merchandise sales	34,329			23,343			47%	34,315			47%	Merchandise sales	45,473			35,642			28%	43,596			22%
Merchandise sales gross profit	Merchandise sales gross profit	10,047			8,114			24%	10,046			24%	Merchandise sales gross profit	13,852			10,363			34%	13,289			28%
Gross margin on merchandise sales	Gross margin on merchandise sales	29		%	35		%	(600)bps	29		%	(600)bps	Gross margin on merchandise sales	30		%	29		%	100bps	30		%	100bps

Jewelry scrapping sales	Jewelry scrapping sales	1,764			3,765			(53)%	1,761			(53)%	Jewelry scrapping sales	708			1,964			(64)%	672			(66)%
Jewelry scrapping sales gross profit	Jewelry scrapping sales gross profit	103			170			(39)%	103			(39)%	Jewelry scrapping sales gross profit	(29)			167			(117)%	(29)			(117)%
Gross margin on jewelry scrapping sales	Gross margin on jewelry scrapping sales	6		%	5		%	100bps	6		%	100bps	Gross margin on jewelry scrapping sales	(4)		%	9		%	*	(4)		%	*

Other revenues, net	Other revenues, net	7			—			—%	7			—%	Other revenues, net	16			240			*	15			*
Gross profit	Gross profit	31,126			24,676			26%	31,109			26%	Gross profit	37,122			30,238			23%	35,754			18%

Segment operating expenses:	Segment operating expenses:												Segment operating expenses:
Store expenses	Store expenses	23,394			19,296			21%	23,383			21%	Store expenses	27,499			22,082			25%	26,438			20%

Depreciation and amortization	Depreciation and amortization	1,987			1,806			10%	1,986			10%	Depreciation and amortization	2,215			1,980			12%	2,125			7%
Other Charges	Other Charges	—			497			*	—			*	Other Charges	—			—			*	—			*
Segment operating contribution	Segment operating contribution	5,745			3,077			87%	5,740			87%	Segment operating contribution	7,408			6,176			20%	7,191			16%

Other segment income	Other segment income	(352)			(489)			(28)%	(352)			(28)%	Other segment income	(121)			(311)			(61)%	(294)			(5)%
Segment contribution	Segment contribution	$	6,097		$	3,566		71%	$	6,092		71%	Segment contribution	$	7,529		$	6,487		16%	$	7,485		15%

Other data:	Other data:												Other data:
Net earning assets (a)	Net earning assets (a)	$	75,357		$	63,075		19%	$	76,323		21%	Net earning assets (a)	$	81,107		$	64,490		26%	$	78,345		21%
Inventory turnover	Inventory turnover	3.7			4.0			(8)%	3.7			(8)%	Inventory turnover	3.3			3.6			(8)%	3.3			(8)%
Average monthly ending pawn loan balance per store (b)	Average monthly ending pawn loan balance per store (b)	$	69		$	65		6%	$	69		6%	Average monthly ending pawn loan balance per store (b)	$	70		$	60		17%	$	70		17%
Monthly average yield on pawn loans outstanding	Monthly average yield on pawn loans outstanding	16		%	16		%	—bps	16		%	—bps	Monthly average yield on pawn loans outstanding	17		%	17		%	—bps	17		%	—bps
Pawn loan redemption rate (c)		79		%	79		%	—bps	79		%	—bps



*			Represents a percentage computation that is not mathematically meaningful.
(a)			Balance includes pawn loans and inventory.
(b)			Balance is calculated based upon the average of the monthly ending balances during the applicable period.
~~(c)~~			~~Rate is solely inclusive of results from Mexico Pawn.~~

2022 Change
(GAAP)
2022 Change
(Constant Currency)
Same Store data:
PLO 9% 10%
PSC 17% 17%
Merchandise Sales 29% 29%
Merchandise Sales Gross Profit 9% 9%
Store Expenses 4% 6%

~~Table of Contents~~

~~In the current quarter, we opened eight de novo stores, bringing total segment store-count to 644.~~


	2022 Change (GAAP)	2022 Change (Constant Currency)
Same Store data:
PLO	19%	15%
PSC	18%	14%
Merchandise Sales	23%	18%
Merchandise Sales Gross Profit	52%	45%
Store Expenses	22%	18%

PLO ~~increased 11%~~improved to ~~$44.5~~$43.0 million, ~~(13%~~up 21% (17% on constant currency basis). On a same store basis, PLO increased ~~9% (10%~~19% (15% on a constant currency basis)~~, also the highest level to-date, due to increased loan demand reflecting a recovery above pre-COVID levels.~~.

Total revenue was up ~~31% (31%~~21% (16% on a constant currency basis), while gross profit increased ~~26% (26%~~23% (18% on a constant currency basis)., reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.

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PSC increased ~~28% in the current quarter to $21.0 million (up 28% to $21.0 million~~20% (15% on a constant currency basis) as a result of higher average ~~PLO for the quarter.~~PLO.

Merchandise sales gross margin increased ~~47% (47%~~slightly from 29% to 30%.

Store expenses increased 25% (20% on a constant currency basis) and 29% on a same store basis (29% on a constant currency basis) reflecting a renewed focus on customer engagement. Offsetting the sales increase, merchandise sales gross margin decreased from 35% to 29% reflecting a return to more normalized margins.

~~Net inventory increased 34% (35% on a constant currency basis). Inventory turnover remains strong at 3.7x, down from 4.0x.~~

~~Store expenses increased $4.1 million or 21% (21% on a constant currency basis)~~, primarily due to ~~growth in~~increased labor in-line with store activity and, ~~year-over-year store count in line~~to a lesser extent, expenses related to our loyalty program and rent associated with ~~increased business activity. On a same-store basis, store~~lease renewals. Same-store expenses increased ~~by $0.2 million or 4% (6%~~22% (18% on a constant currency basis).

Segment contribution increased ~~$2.5 million, or 71%, to $6.1 million ($2.5 million or 71%~~16% (15% on a constant currency basis). to $7.5 million, due to the changes noted above.

Segment store count increased by one store due to the net impact of opening two de novo stores and the consolidation of one store during the quarter.

Other Investments

The following table presents selected financial data for our Other Investments segment after translation to U.S. dollars from its functional currency of primarily Australian dollars:


		Three Months Ended June 30,				Change		Three Months Ended December 31,				Change
(in thousands)	(in thousands)	2022		2021			(in thousands)	2022		2021

Gross profit:	Gross profit:						Gross profit:
Consumer loan fees, interest and other	Consumer loan fees, interest and other	$	21	$	89	(76)%	Consumer loan fees, interest and other	$	22	$	43	(49)%

Gross profit	Gross profit	21		89		(76)%	Gross profit	22		43		(49)%

Segment operating expenses:	Segment operating expenses:						Segment operating expenses:

Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	(1,758)		(643)		173%	Equity in net income of unconsolidated affiliates	(1,584)		(1,138)		39%
Segment operating contribution	Segment operating contribution	1,779		732		143%	Segment operating contribution	1,606		1,181		36%

Other segment expense	Other segment expense	19		18		6%	Other segment expense	4		(12)		(133)%
Segment contribution	Segment contribution	$	1,760	$	714	146%	Segment contribution	$	1,602	$	1,193	34%

Segment contribution was ~~$1.8~~$1.6 million, an increase of ~~$1.0~~$0.4 million due to the increase in equity income for our unconsolidated ~~affiliates.~~affiliate Cash Converters. A recent law change in Australia could adversely impact Cash Converters' operations and financial position. See "Part II, Item 1A — Risk Factors" of this Report.

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Other Items

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


		Three Months Ended June 30,				Percentage Change		Three Months Ended December 31,				Percentage Change
(in thousands)	(in thousands)	2022		2021			(in thousands)	2022		2021

Segment contribution	Segment contribution	$	37,611	$	22,429	68%	Segment contribution	$	48,422	$	42,151	15%
Corporate expenses (income):	Corporate expenses (income):						Corporate expenses (income):
General and administrative	General and administrative	18,715		14,589		28%	General and administrative	15,479		15,545		*
Depreciation and amortization	Depreciation and amortization	3,187		3,013		6%	Depreciation and amortization	3,018		2,924		3%

Interest expense	Interest expense	2,693		5,569		(52)%	Interest expense	6,190		2,431		155%
Interest income	Interest income	—		(28)		(100)%	Interest income	(495)		(122)		*

Other (income) expense	Other (income) expense	(66)		52		*	Other (income) expense	(308)		26		*
Income (loss) before income taxes		13,082		(766)		1,808%

Income before income taxes							Income before income taxes	24,538		21,347		15%
Income tax expense	Income tax expense	867		1,804		(52)%	Income tax expense	7,760		5,626		38%

Net income (loss)		$	12,215	$	(2,570)	575%
Net income							Net income	$	16,778	$	15,721	7%


*			Represents a percentage computation that is not mathematically meaningful.

Segment contribution increased ~~$15.2~~$6.3 million or ~~68%~~15% over the prior year quarter primarily due to the improved operating results of the segments above.

~~General~~In December 2022, the Company repurchased approximately $109.4 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 for approximately $117.5 million plus accrued interest and ~~administrative expenses increased $4.1~~approximately $69.1 million ~~or 28%, primarily due to~~aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 for approximately $62.9 million plus accrued interest and recorded a ~~litigation accrual and increased performance-based incentive compensation.~~

~~Interest expense decreased $2.9~~$3.5 million ~~primarily driven by the ASU 2020-06 accounting policy change which no longer requires debt discount be included~~loss on ~~our balance sheet effective October 1, 2021. The policy change eliminates the non-cash interest amortization~~extinguishment of ~~that debt discount. See Note 1: Organization And Summary Of Significant Accounting Policies to the consolidated financials for further discussion of this recently adopted accounting policy.~~debt.

Income tax expense ~~decreased $0.9~~increased $2.1 million primarily due to ~~the expiration of the statute of limitations on certain FIN 48 reserves this quarter, partially offset by~~ an increase in income before income taxes of ~~$13.8~~$3.2 million this quarter compared to the prior year ~~quarter.~~quarter as well as the non-deductible loss on the convertible debt refinancing.

Income tax expense includes other items that do not necessarily correspond to pre-tax earnings and create volatility in our effective tax rate. These items include the net effect of state taxes, non-deductible items and changes in valuation allowances for certain foreign operations. See Annual Report on Form 10-K for the year ended September 30, ~~2021 Note 11: Income Taxes of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for quantification of these items.~~

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~~Nine Months Ended June 30,~~ 2022 ~~vs. Nine Months Ended June 30, 2021~~

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

~~U.S. Pawn~~

~~The following table presents selected summary financial data for the U.S. Pawn segment:~~

Nine Months Ended June 30, Change
(in thousands) 2022 2021
Gross profit:
Pawn service charges $ 174,651 $ 143,836 21%
Merchandise sales 296,147 260,545 14%
Merchandise sales gross profit 123,817 115,364 7%
Gross margin on merchandise sales 42 % 44 % (200)bps
Jewelry scrapping sales 13,864 9,493 46%
Jewelry scrapping sales gross profit 2,585 1,622 59%
Gross margin on jewelry scrapping sales 19 % 17 % 200bps
Other revenues 67 83 (19)%
Gross profit 301,120 260,905 15%
Segment operating expenses:
Store expenses 195,217 188,256 4%
Depreciation and amortization 7,867 7,972 (1)%
Segment operating contribution 98,036 64,677 52%
Other segment (income) expense (1) 27 *
Segment contribution $ 98,037 $ 64,650 52%
Other data:
Average monthly ending pawn loan balance per store (a) $ 290 $ 218 33%
Monthly average yield on pawn loans outstanding 14 % 14 % —bps
Pawn loan redemption rate 84 % 87 % (300)bps


*			~~Represents a percentage computation that is not mathematically meaningful.~~
~~(a)~~			~~Balance is calculated based upon the average of the monthly ending balances during the applicable period.~~

~~Pawn service charges increased 21% as a result of higher average PLO for the year.~~

~~Merchandise sales increased 14% compared to the prior year. Offsetting the sales increase, merchandise sales gross margin decreased 200 bps reflecting a return to more normalized margins.~~

~~Store expenses increased by 4% primarily due to increased store count and labor expenses associated with increased business activity.~~

~~Segment contribution increased $33.4 million primarily due to the changes described above.~~

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~~Latin America Pawn~~

The following table presents selected summary financial data our Latin America Pawn segment, including constant currency results, after translation to U.S. dollars from functional currencies. See “Results of Operations — Non-GAAP Constant Currency and Same Store Financial Information” above.

Nine Months Ended June 30,
(in thousands) 2022 (GAAP) 2021 (GAAP) Change (GAAP) 2022 (Constant Currency) Change (Constant Currency)
Gross profit:
Pawn service charges $ 58,348 $ 43,520 34% $ 58,497 34%
Merchandise sales 103,463 70,271 47% 104,031 48%
Merchandise sales gross profit 30,269 24,580 23% 30,436 24%
Gross margin on merchandise sales 29 % 35 % (600)bps 29 % (600)bps
Jewelry scrapping sales 5,938 9,014 (34)% 5,948 (34)%
Jewelry scrapping sales gross profit 470 809 (42)% 472 (42)%
Gross margin on jewelry scrapping sales 8 % 9 % (100)bps 8 % (100)bps
Other revenues, net 247 7 * 248 *
Gross profit 89,334 68,916 30% 89,653 30%
Segment operating expenses:
Store expenses 66,727 54,005 24% 67,029 24%
Depreciation and amortization 5,858 5,459 7% 5,883 8%
Other Charges — 497 * — *
Segment operating contribution 16,749 8,955 87% 16,741 87%
Other segment income (a) (593) (2,194) (73)% (696) (68)%
Segment contribution $ 17,342 $ 11,149 56% $ 17,437 56%
Other data:
Average monthly ending pawn loan balance per store (a) $ 63 $ 58 9% $ 63 9%
Monthly average yield on pawn loans outstanding 16 % 16 % —bps 16 % —bps
Pawn loan redemption rate (b) 80 % 81 % (100)bps 80 % (100)bps


*			~~Represents a percentage computation that is not mathematically meaningful.~~

~~(a)~~			~~Balance is calculated based upon the average of the monthly ending balances during the applicable period.~~
~~(b)~~			~~Rate is solely inclusive of results from Mexico Pawn.~~

2022 Change
(GAAP)
2022 Change
(Constant Currency)
Same Store data:
PLO 9% 10%
PSC 21% 21%
Merchandise Sales 24% 25%
Merchandise Sales Gross Profit 7% 8%
Store Expenses 4% 6%

~~During the nine months ended June 30, 2022, our Latin America pawn segment opened twelve de novo stores.~~

~~PSC increased 34% to $58.3 million (34% to $58.5 million on a constant currency basis) as a result of higher average PLO for the year.~~

Merchandise sales increased 47% (48% on a constant currency basis) and 21% on a same store basis (21% on a constant currency basis). Offsetting the sales increase, merchandise sales gross margin decreased 600 bps from 35% to 29% (29% on a constant currency basis) reflecting a return to more normalized margins.

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Store expenses increased by 24% (24% on a constant currency basis) primarily due to growth in store count. On a same-store basis, store expenses increased by $0.9 million or 4% (6% on a constant currency basis) due to rising labor costs resulting from growing transaction volume.

~~Segment contribution increased $6.2 million, or 56%, to $17.3 million. This increase was primarily due to the changes in revenue and store expenses described above.~~

~~Other Investments~~

~~The following table presents selected financial data for our Other Investments segment after translation to U.S. dollars from its functional currency of primarily Australian dollars:~~

Nine Months Ended June 30, Change
(in thousands) 2022 2021
Gross profit:
Consumer loan fees, interest and other 93 338 (72)%
Gross profit 93 338 (72)%
Segment operating expenses:
Equity in net income of unconsolidated affiliates (1,457) (2,409) (40)%
Segment operating contribution 1,550 2,747 (44)%
Other segment loss (income) 15 (183) (108)%
Segment contribution $ 1,535 $ 2,930 (48)%

Segment income was $1.5 million, a decrease of $1.4 million from the prior-year nine months ended June 30, 2022, primarily due to the decrease in equity income for our unconsolidated affiliates. The decrease in equity in net income in the current nine months ended June 30, 2022 was primarily due to our equity pickup of Cash Converters' net results which included an impairment, primarily of its ROU leased assets, that was attributed to COVID-19.

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~~Other Items~~

Nine Months Ended June 30, Percentage Change
(in thousands) 2022 2021
Segment contribution $ 116,914 $ 78,729 49%
Corporate expenses (income):
General and administrative 46,487 40,870 14%
Depreciation and amortization 9,045 9,649 (6)%
(Gain) loss on sale or disposal of assets (688) 63 *
Interest expense 7,651 16,542 (54)%
Interest income (122) (99) 23%
Other (income) expense (11) 169 (107)%
Income from continuing operations before income taxes 54,552 11,535 373%
Income tax expense 11,729 4,476 162%
Net income $ 42,823 $ 7,059 507%


*			~~Represents a percentage computation that is not mathematically meaningful.~~

~~Segment contribution increased $38.2 million or 49% over the prior year 9 months ended June 30, 2021, primarily due to the improved operating results of the segments above.~~

~~General and administrative expenses increased $5.6 million or 14%, primarily due to a litigation accrual and increased salaries, including performance-based incentive compensation.~~

Interest expense decreased $8.9 million primarily driven by the ASU 2020-06 accounting policy change which no longer requires debt discount be included on our balance sheet effective October 1, 2021. The policy change eliminates the non-cash interest amortization of that debt discount. See Note 1: Organization And Summary Of Significant Accounting Policies to the consolidated financials for further discussion of this recently adopted accounting policy.

Income tax expense increased $7.3 million primarily due to an increase in income before income taxes of $43.0 million for the nine months ended June 30, 2022 compared to the same prior year nine month period.

Income tax expense includes other items that do not necessarily correspond to pre-tax earnings and create volatility in our effective tax rate. These items include the net effect of state taxes, non-deductible items and changes in valuation allowances for certain foreign operations. See Annual Report on Form 10-K for the year ended September 30, 2021 Note 11: Income Taxes of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for quantification of these items.

Liquidity and Capital Resources

We currently believe that, based on available capital resources and projected operating cash flow, we have adequate capital resources to fund working capital needs, currently anticipated capital expenditures, currently anticipated business growth and expansion, tax payments, and current and projected debt service requirements.

Cash and Cash Equivalents

Our cash and equivalents balance was ~~$222.3~~$207.7 million at ~~June 30,~~December 31, 2022 ~~compare~~dcompared to ~~$253.7~~$206.0 million at September 30, ~~2021.~~ 2022. At ~~June 30,~~December 31, 2022, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

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Cash Flows

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

Nine Months Ended
June 30,
Percentage
Change
(in thousands) 2022 2021
Cash flows provided by operating activities $ 48,494 $ 33,122 46%
Cash flows used in investing activities (81,589) (37,086) 120%
Cash flows used in financing activities (792) (16,202) (95)%
Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,219 5,076 (76)%
Net decrease in cash, cash equivalents and restricted cash $ (32,668) $ (15,090) 116%


	Three Months Ended December 31,				Percentage Change
(in thousands)	2022		2021

Net cash provided by operating activities	$	11,668	$	9,018	29%
Net cash used in investing activities	(44,618)		(30,603)		46%
Net cash provided by (used in) financing activities	33,993		(792)		*
Effect of exchange rate changes on cash, cash equivalents and restricted cash	605		719		(16)%
Net increase (decrease) in cash, cash equivalents and restricted cash	$	1,648	$	(21,658)	(108)%


*			Represents a percentage computation that is not mathematically meaningful.

The increase in cash flows provided by operating activities year-over-year was primarily due to favorable changes in working capital primarily related to the timing of payments of accounts payable, partially offset by a ~~$35.8~~$1.1 million increase in net income ~~partially offset by cash outflows used to purchase~~and a higher change in the provision for inventory ~~and other changes to working capital.~~reserve.

The ~~$44.5~~$14.0 million increase in cash flows used in investing activities year-over-year was primarily due to ~~$16.5~~$26.5 million inhigher outgoing cash flows used to fund ~~other~~acquisitions and strategic investments, and an increase of ~~$66.2~~$9.0 million in net pawn lending, partially offset by an ~~$35.5~~$22.7 million increase in the sale of forfeited collateral. Of the ~~$16.5~~$26.5 million used to fund other investments, the largest amount is $15.0 million ~~was invested in~~related to a note receivable from Founders, as discussed in Note 6:5: Strategic Investments in Part I, Item 1 - Notes to Interim Condensed Consolidated Financial Statements.

The $34.8 million increase in cash flows provided by financing activities was primarily related to the December 2022 financing of the 2029 Convertible Notes, in which we issued $230.0 million (less issuance costs) principal amount of 3.750% Convertible Senior Notes Due 2029 offset by the extinguishment of approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest. In addition, we used approximately $5.0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase 578,703 shares of our Class A common stock from purchasers of the notes in privately negotiated transactions.

The net effect of these changes was a ~~$32.7~~$1.6 million ~~decrease~~increase in cash on hand during the current year to date period, resulting in a ~~$231.0~~$216.0 million ending cash and restricted cash balance.

Sources and Uses of Cash

In December 2022, we issued $230.0 million aggregate principal amount of 2029 Convertible Notes. In conjunction with the issuance of the 2029 Convertible Notes, we extinguished approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest. In addition, we used approximately $5.0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase 578,703 shares of our Class A common stock from purchasers of the notes in privately negotiated transactions. See Note 7 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

On May 3, 2022, our Board ~~of Directors approved a new share~~authorized the repurchase ~~program, which replaced the previous program that was suspended in March 2020. Under the new program, the Company is authorized to repurchase~~of up to $50 million of our Class A ~~Non-Voting common~~Common Stock over three years. As of December 31, 2022, we have repurchased 481,005 shares ~~over~~of our Class A Common Stock under the ~~next three years.~~program for $4.1 million. Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.

Under the stock repurchase program, we may purchase Class A Non-Voting common stock from time to time at management’s discretion in accordance with applicable securities laws, including through open market transactions, block or privately negotiated transactions, or any combination thereof. In addition, we may purchase shares pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934.

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~~To date, there were no stock repurchases under the new program.~~ See Note 8 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

We anticipate that cash flows from operations and cash on hand will be adequate to fund any future stock repurchases, strategic investments, our contractual obligations, planned de novo store growth, capital expenditures and working capital requirements through fiscal ~~2022.~~2023. We continue to explore acquisition opportunities, both large and small, and may choose to pursue additional debt, equity or equity-linked financings in the future should the need arise. ~~Given the current uncertainty related to the COVID-19 pandemic, we may adjust our capital or other expenditures.~~ Depending on the level of acquisition activity and other factors, our ability to repay our ~~longer term~~longer-term debt obligations, including the convertible debt maturing in 2024, 2025 and ~~2025,~~2029, may require us to refinance these obligations through the issuance of new debt securities, equity securities, convertible securities or through new credit facilities.

Contractual Obligations

In ~~"Part~~"Part II, Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended September 30, ~~202~~1,2022, we reported that we had ~~$602.6~~$608.0 million in total contractual obligations as of September 30, ~~2021.~~2022. There have been no material changes to this total obligation since September 30, ~~2021,~~2022, other than ~~changes as~~ the ~~result of adoption of accounting standards~~convertible debt refinancing and lease liabilities changes as further discussed in Note ~~1: Organization And Summary Of Significant Accounting Policies~~7: Debt and Note 4: Leases, respectively, of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

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We are responsible for the maintenance, property taxes and insurance at most of our locations. In the fiscal year ended September 30, ~~2021,~~2022, these collectively amounted to ~~$25.5~~$15.2 million.

Recently Adopted Accounting Policies and Recently Issued Accounting Pronouncements

~~In August 2020, the FASB~~We reviewed all recently issued ~~its Accounting Standards Update (“ASU”) 2020-06,~~ ~~Debt – Debt with Conversion~~accounting pronouncements and ~~Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)~~, (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Additionally, ASU 2020-06 eliminates beneficial conversion feature and cash conversion models resulting in more convertible instruments being accounted for asconcluded that they were either not applicable or not expected to have a single unit. We early adopted this standard on October 1, 2021 under the modified retrospective basis. The effect of eliminating our debt discount on the 2024 and 2025 Convertible Notes will decrease non-cash interest expense amortizationmaterial impact on our Condensed Consolidated Statement of Operations, and the reduction of interest expense will affect our basic earnings per common share. When calculating net income per share of common stock attributable to common shareholders, the Company uses the if-converted method as required under ASU 2020-06 to determine the dilutive effect of the Convertible Notes. The Company did not incur any impact to liquidity or cash flows with recently adopted accounting policy.Financial Statements.

Cautionary Statement Regarding Risks and Uncertainties that May Affect Future Results

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements, other than statements of historical facts, regarding our strategy, future operations, financial position, future revenues, projected costs, prospects, plans and objectives are forward-looking statements. These statements are often, but not always, made with words or phrases like "may," "should," "could," "will," "predict," "anticipate," "believe," "estimate," "expect," "intend," "plan," "projection" and similar expressions. Such statements are only predictions of the outcome and timing of future events based on our current expectations and currently available information and, accordingly, are subject to substantial risks, uncertainties and assumptions. Actual results could differ materially from those expressed in the forward-looking statements due to a number of risks and uncertainties, many of which are beyond our control. In addition, we cannot predict all of the risks and uncertainties that could cause our actual results to differ from those expressed in the forward-looking statements. Accordingly, you should not regard any forward-looking statements as a representation that the expected results will be achieved. Important risk factors that could cause results or events to differ from current expectations are identified and described in "Part I, Item 1A — Risk Factors" of our Annual Report on Form 10-K for the year ended September 30, ~~2021~~2022 and "Part II, Item 1A — Risk Factors" of this Report.

We specifically disclaim any responsibility to publicly update any information contained in a forward-looking statement except as required by law. All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in interest rates, gold values and foreign currency exchange rates, and are described in detail in "Part II, Item 7A — Quantitative and Qualitative Disclosures about Market Risk" of our Annual Report on Form 10-K for the year ended September 30, ~~2021. With the exception of the impacts of COVID-19, which are discussed elsewhere in this Report, there~~2022. There have been no material changes in our reported market risks or risk management policies since the filing of our Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022.

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ITEM 4. CONTROLS AND PROCEDURES

This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the "Exchange Act"). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June 30,~~December 31, 2022. Our principal executive officer and

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principal financial officer have concluded that as of ~~June 30,~~December 31, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~June 30,~~December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note ~~10:~~9: Contingencies of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

ITEM 1A. RISK FACTORS

Important risk factors that could affect our operations and financial performance, or that could cause results or events to differ from current expectations, are described in "Part I, Item 1A — Risk Factors" of our Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022, as supplemented by the information set forth below.

A recent law change in Australia could adversely impact Cash Converters’ business

In December 2022, the Australian Parliament passed the Financial Sector Reform Bill 2022, which establishes lending limits on small amount credit contracts. The bill becomes effective in June 2023, and could adversely impact the financial position or results of operations of Cash Converters, in which the Company has an equity investment. We cannot estimate the financial effect that this bill may have on our investment at this time.

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ITEM 2. Unregistered Sale of Equity Security and Use of Proceeds

The table below provides certain information about our repurchase of shares of Class A Non-voting Common Stock during the quarter ended December 31, 2022.


	Share Repurchases
	Total Number of Shares Purchased (1)(2)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs (1)
	(in thousands, except number of shares and average price information)
October 1, 2022 through October 31, 2022	115,902	$	8.32	115,902	$	47,001
November 1, 2022 through November 30, 2022	—	N/A		—	$	47,001
December 1, 2022 through December 31, 2022	705,863	$	8.58	127,160	$	45,941
Quarter ended December 31, 2022	821,765	$	8.55	243,062	$	45,941


(1)			On May 3, 2022, the Board of Directors approved a share repurchase program, under which we are authorized to repurchase up to $50 million of our Class A Non-Voting common shares over a three-year period. All repurchases under this program were in open market transactions at prevailing market prices and were executed pursuant to a trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934. Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.
(2)			On December 12, 2022, we used approximately $5.0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase 578,703 shares of our Class A common stock from purchasers of our 2029 Convertible Notes in privately negotiated transactions. Such transactions were authorized separately from, and not considered a part of, the publicly announced share repurchase program referred to in footnote (1) above.

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ITEM 6. EXHIBITS

The following exhibits are filed with, or incorporated by reference into, this report.

~~Incorporated by Reference~~

~~Filed Herewith~~

~~Exhibit~~

~~Description of Exhibit~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~Filing Date~~

~~31.1~~

~~Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934~~

~~31.2~~

~~Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934~~

~~32.1†~~

~~Certifications of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350~~

~~101.INS~~

~~Inline XBRL Instance Document (the instance document does not appear in the interactive data files because the 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 Labels Linkbase Document~~

~~101.PRE~~

~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~

~~104~~

~~Cover Page Interactive Data File in Inline XBRL format (contained in Exhibit 101)~~

Incorporated by Reference

Filed Herewith

Exhibit

Description of Exhibit

Form

File No.

Exhibit

Filing Date

4.1

Indenture, dated December 12, 2022, between EZCORP, Inc. and Truist Bank, as trustee

8-K

0-19424

4.1

December 13, 2022

10.1

Purchase Agreement, dated December 7, 2022, between EZCORP, Inc. and Morgan Stanley & Co. L.L.C. as representative of the Initial Purchasers

8-K

0-19424

10.1

December 13, 2022

10.2

Amended and Restated EZCORP, Inc. 2022 Long-Term Incentive Plan, effective November 15, 2022

10-K

0-19424

10.5

November 16, 2022

10.3

EZCORP, Inc. Change in Control Severance Plan, effective November 15, 2022

10-K

0-19424

10.6

November 16, 2022

10.4

Amendment to Amended and Restated EZCORP, Inc. 2010 Long-Term Incentive Plan, effective November 15, 2022

10-K

0-19424

10.7

November 16, 2022

31.1

Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2

Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1†

Certifications of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350

101.INS

Inline XBRL Instance Document (the instance document does not appear in the interactive data files because the 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 Labels Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File in Inline XBRL format (contained in Exhibit 101)

_____________________________


†			The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

3732

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.


		EZCORP, INC.

Date:	~~August 3, 2022~~February 1, 2023	/s/Timothy K. Jugmans
		Timothy K. Jugmans, Chief Financial Officer

3833


(in thousands)	As Reported September 30, 2021		Adjustments		Under ASU 2020-06 October 1, 2021
Principal	$	316,250	$	—	$	316,250
Unamortized debt discount	(48,785)		48,785		—
Deferred financing costs, net	(3,279)		(1,500)		(4,779)
Net carrying amount	264,186		47,285		311,471

Deferred tax asset	9,746		5,839		15,585
Deferred tax liability	3,684		(4,040)		(356)

Additional paid-in capital	403,312		(64,263)		339,049
Retained earnings	326,781		26,857		353,638


	Nine Months Ended June 30, 2021
(in thousands)	U.S. Pawn		Latin America Pawn		Consolidated

Balances as of September 30, 2020	$	241,928	$	15,654	$	257,582
Acquisitions	2,394		22,957		25,351
Effect of foreign currency translation changes	—		686		686


Balances as of June 30, 2021	$	244,322	$	39,297	$	283,619


	Nine Months Ended June 30,						Change
(in thousands)	2022			2021

Gross profit:
Pawn service charges	$	174,651		$	143,836		21%

Merchandise sales	296,147			260,545			14%
Merchandise sales gross profit	123,817			115,364			7%
Gross margin on merchandise sales	42		%	44		%	(200)bps

Jewelry scrapping sales	13,864			9,493			46%
Jewelry scrapping sales gross profit	2,585			1,622			59%
Gross margin on jewelry scrapping sales	19		%	17		%	200bps

Other revenues	67			83			(19)%
Gross profit	301,120			260,905			15%

Segment operating expenses:
Store expenses	195,217			188,256			4%

Depreciation and amortization	7,867			7,972			(1)%
Segment operating contribution	98,036			64,677			52%

Other segment (income) expense	(1)			27			*
Segment contribution	$	98,037		$	64,650		52%

Other data:
Average monthly ending pawn loan balance per store (a)	$	290		$	218		33%
Monthly average yield on pawn loans outstanding	14		%	14		%	—bps
Pawn loan redemption rate	84		%	87		%	(300)bps