# Ezcorp Inc: Form 10-Q for the period ended Dec 31, 2022

- Company: [Ezcorp Inc](/companies/ezpw.md) (CIK 876523)
- Form: 10-Q
- Filed: 2023-02-01
- Accepted by EDGAR: Feb 1, 2023, 16:05 ET
- Period: 2022-12-31
- Accession: 0000876523-23-000007
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/876523/000087652323000007/ezpw-20221231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/876523/000087652323000007/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-10-01 to 2022-12-31 | $264.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Gross profit | 3 months, 2022-10-01 to 2022-12-31 | $152.5m | us-gaap:GrossProfit |
| Operating income | 3 months, 2022-10-01 to 2022-12-31 | $28.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-10-01 to 2022-12-31 | $6.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-10-01 to 2022-12-31 | $7.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-10-01 to 2022-12-31 | $16.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-10-01 to 2022-12-31 | $0.25 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-10-01 to 2022-12-31 | $0.30 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-10-01 to 2022-12-31 | 83,779,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2022-10-01 to 2022-12-31 | $11.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2022-10-01 to 2022-12-31 | $7.2m | us-gaap:PaymentsToAcquireProductiveAssets |
| Share repurchases | 3 months, 2022-10-01 to 2022-12-31 | $7.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2022-12-31 | $207.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-12-31 | $662.4m | us-gaap:AssetsCurrent |
| Total assets | at 2022-12-31 | $1.40bn | us-gaap:Assets |
| Current liabilities | at 2022-12-31 | $139.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-12-31 | $697.0m | us-gaap:Liabilities |
| Long-term debt | at 2022-12-31 | $359.0m | us-gaap:LongTermDebtNoncurrent |

## Management's discussion and analysis

As filed, 30,814 characters.

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, 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 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 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).

### 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, including PSC, merchandise sales gross profit ("Merchandise sales GP") and jewelry scrapping gross profit ("Jewelry Scrapping GP") for the three months ended December 31, 2022 and 2021:

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

### Business Developments

### Convertible Debt

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 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."

### Investment in Cash Converters International

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. Additionally, 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 months ended December 31, 2022 and December 31, 2021 were as follows:

|  | December 31, 2022 | 2021 | Three Months Ended December 31, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Mexican peso | 19.5 | 20.5 | 19.7 | 20.7 |
| Guatemalan quetzal | 7.7 | 7.5 | 7.7 | 7.6 |
| Honduran lempira | 24.4 | 24.1 | 24.3 | 23.9 |
| 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 along with our investment in Founders and RDC.

### Store Count by Segment

|  | Three Months Ended December 31, 2022 U.S. Pawn | Latin America Pawn | Consolidated |
| --- | ---: | ---: | ---: |
| As of September 30, 2022 | 515 | 660 | 1,175 |
| New locations opened | — | 2 | 2 |
| Locations acquired | 10 | — | 10 |
| Locations sold, combined or closed | — | (1) | (1) |
| As of December 31, 2022 | 525 | 661 | 1,186 |

|  | Three Months Ended December 31, 2021 U.S. Pawn | Latin America Pawn | Consolidated |
| --- | ---: | ---: | ---: |
| As of September 30, 2021 | 516 | 632 | 1,148 |
| New locations opened | — | 1 | 1 |
| As of December 31, 2021 | 516 | 633 | 1,149 |

23

### Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

These tables, as well as the 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 our U.S. Pawn segment:

*(in thousands)*

| Gross profit: | Three Months Ended December 31, 2022 | 2021 | Change |
| --- | ---: | ---: | ---: |
| Pawn service charges | $69,310 | $56,557 | 23% |
| Merchandise sales | 118,314 | 102,078 | 16% |
| Merchandise sales gross profit | 45,058 | 44,246 | 2% |
| Gross margin on merchandise sales | 38% | 43% | (500)bps |
| Jewelry scrapping sales | 7,176 | 4,980 | 44% |
| Jewelry scrapping sales gross profit | 960 | 1,005 | (4)% |
| Gross margin on jewelry scrapping sales | 13% | 20% | (700)bps |
| Other revenues | 25 | 22 | 14% |
| Gross profit | 115,353 | 101,830 | 13% |
| Segment operating expenses: |  |  |  |
| Store expenses | 73,304 | 64,689 | 13% |
| Depreciation and amortization | 2,755 | 2,670 | 3% |
| Loss on sale or disposal of assets and other | 3 | — | \* |
| Segment contribution | $39,291 | $34,471 | 14% |
| Other data: |  |  |  |
| Net earning assets (a) | $284,880 | $231,408 | 23% |
| Inventory turnover | 2.6 | 2.8 | (7)% |
| Average monthly ending pawn loan balance per store (b) | $315 | $270 | 17% |
| Monthly average yield on pawn loans outstanding | 14% | 13% | 100bps |

\* 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 ended the quarter at $166.9 million, up 18% (15% on a same store basis).

Total revenue was up 19%, and gross profit increased 13%, driven by increased pawn service charges, higher merchandise sales and improved merchandise sales gross profit.

PSC increased 23% as a result of higher average PLO.

Merchandise sales gross margin decreased to 38% from 43%, reflecting a more normalized operating environment.

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

Segment contribution increased 14% to $39.3 million, due to the changes noted above.

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

### 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."

*(in thousands)*

| Gross profit: | Three Months Ended December 31, 2022 (GAAP) | 2021 (GAAP) | Change (GAAP) | 2022 (Constant Currency) | Change (Constant Currency) |
| --- | ---: | ---: | ---: | ---: | ---: |
| Pawn service charges | $23,283 | $19,468 | 20% | $22,479 | 15% |
| Merchandise sales | 45,473 | 35,642 | 28% | 43,596 | 22% |
| Merchandise sales gross profit | 13,852 | 10,363 | 34% | 13,289 | 28% |
| Gross margin on merchandise sales | 30% | 29% | 100bps | 30% | 100bps |
| Jewelry scrapping sales | 708 | 1,964 | (64)% | 672 | (66)% |
| Jewelry scrapping sales gross profit | (29) | 167 | (117)% | (29) | (117)% |
| Gross margin on jewelry scrapping sales | (4)% | 9% | \* | (4)% | \* |
| Other revenues, net | 16 | 240 | \* | 15 | \* |
| Gross profit | 37,122 | 30,238 | 23% | 35,754 | 18% |
| Segment operating expenses: |  |  |  |  |  |
| Store expenses | 27,499 | 22,082 | 25% | 26,438 | 20% |
| Depreciation and amortization | 2,215 | 1,980 | 12% | 2,125 | 7% |
| Other Charges | — | — | \* | — | \* |
| Segment operating contribution | 7,408 | 6,176 | 20% | 7,191 | 16% |
| Other segment income | (121) | (311) | (61)% | (294) | (5)% |
| Segment contribution | $7,529 | $6,487 | 16% | $7,485 | 15% |
| Other data: |  |  |  |  |  |
| Net earning assets (a) | $81,107 | $64,490 | 26% | $78,345 | 21% |
| Inventory turnover | 3.3 | 3.6 | (8)% | 3.3 | (8)% |
| Average monthly ending pawn loan balance per store (b) | $70 | $60 | 17% | $70 | 17% |
| Monthly average yield on pawn loans outstanding | 17% | 17% | —bps | 17% | —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.

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

PLO improved to $43.0 million, up 21% (17% on constant currency basis). On a same store basis, PLO increased 19% (15% on a constant currency basis).

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

PSC increased 20% (15% on a constant currency basis) as a result of higher average PLO.

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

Store expenses increased 25% (20% on a constant currency basis), primarily due to increased labor in-line with store activity and, to a lesser extent, expenses related to our loyalty program and rent associated with lease renewals. Same-store expenses increased 22% (18% on a constant currency basis).

Segment contribution increased 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:

*(in thousands)*

| Gross profit: | Three Months Ended December 31, 2022 | 2021 | Change |
| --- | ---: | ---: | ---: |
| Consumer loan fees, interest and other | $22 | $43 | (49)% |
| Gross profit | 22 | 43 | (49)% |
| Segment operating expenses: |  |  |  |
| Equity in net income of unconsolidated affiliates | (1,584) | (1,138) | 39% |
| Segment operating contribution | 1,606 | 1,181 | 36% |
| Other segment expense | 4 | (12) | (133)% |
| Segment contribution | $1,602 | $1,193 | 34% |

Segment contribution was $1.6 million, an increase of $0.4 million due to the increase in equity income for our unconsolidated 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.

### 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:

*(in thousands)*

|  | Three Months Ended December 31, 2022 | 2021 | Percentage Change |
| --- | ---: | ---: | ---: |
| Segment contribution | $48,422 | $42,151 | 15% |
| Corporate expenses (income): |  |  |  |
| General and administrative | 15,479 | 15,545 | \* |
| Depreciation and amortization | 3,018 | 2,924 | 3% |
| Interest expense | 6,190 | 2,431 | 155% |
| Interest income | (495) | (122) | \* |
| Other (income) expense | (308) | 26 | \* |
| Income before income taxes | 24,538 | 21,347 | 15% |
| Income tax expense | 7,760 | 5,626 | 38% |
| Net income | $16,778 | $15,721 | 7% |

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

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

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 recorded a $3.5 million loss on extinguishment of debt.

Income tax expense increased $2.1 million primarily due to an increase in income before income taxes of $3.2 million this quarter compared to the prior year 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, 2022 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 $207.7 million at December 31, 2022 compared to $206.0 million at September 30, 2022. At 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.

### Cash Flows

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

*(in thousands)*

|  | Three Months Ended December 31, 2022 | 2021 | Percentage Change |
| --- | ---: | ---: | ---: |
| 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 $1.1 million increase in net income and a higher change in the provision for inventory reserve.

The $14.0 million increase in cash flows used in investing activities year-over-year was primarily due to $26.5 million higher outgoing cash flows used to fund acquisitions and strategic investments, and an increase of $9.0 million in net pawn lending, partially offset by an $22.7 million increase in the sale of forfeited collateral. Of the $26.5 million used to fund other investments, the largest amount is $15.0 million related to a note receivable from Founders, as discussed in Note 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 $1.6 million increase in cash on hand during the current year to date period, resulting in a $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 authorized the repurchase of up to $50 million of our Class A Common Stock over three years. As of December 31, 2022, we have repurchased 481,005 shares of our Class A Common Stock under the 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.

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. 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 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. Depending on the level of acquisition activity and other factors, our ability to repay our longer-term debt obligations, including the convertible debt maturing in 2024, 2025 and 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 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, 2022, we reported that we had $608.0 million in total contractual obligations as of September 30, 2022. There have been no material changes to this total obligation since September 30, 2022, other than the convertible debt refinancing and lease liabilities changes as further discussed in Note 7: Debt and Note 4: Leases, respectively, of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

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

### Recently Adopted Accounting Policies and 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.

### 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, 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.

## Market risk

As filed, 504 characters.

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, 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, 2022.

## Controls and procedures

As filed, 3,185 characters.

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 December 31, 2022. Our principal executive officer and principal financial officer have concluded that as of 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 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.

## Risk factors

As filed, 854 characters.

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, 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.

Filed Feb 1, 2023.
Source: SEC EDGAR, the filing index for accession 0000876523-23-000007. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.