Equibles

10-Q

EZCORP INC (EZPW)

10-Q 2023-05-03 For: 2023-03-31
View Original
Added on April 10, 2026

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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 March 31, 2023 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

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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 TX 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 April 28, 2023, 52,447,860 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.

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EZCORP, Inc.

INDEX TO FORM 10-Q

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2023 and 2022and September 30,2022 1
Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2023 and 2022 2
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended March 31, 2023 and 2022 3
Condensed Consolidated Statements of Stockholders’ Equity for the Periods Ended March 31, 2023 and 2022 4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2023 and 2022 5
Notes to Interim Condensed Consolidated Financial Statements 6
Note 1: Organization and Summary of Significant Accounting Policies 6
Note 2: Goodwill 7
Note 3: (Loss) Earnings Per Share 8
Note 4: Leases 9
Note 5: Strategic Investments 11
Note 6: Fair Value Measurements 12
Note 7: Debt 14
Note 8: Common Stock and Stock Compensation 17
Note 9: Commitments and Contingencies 18
Note 10: Segment Information 19
Note 11: Supplemental Consolidated Financial Information 22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosures about Market Risk 36
Item 4. Controls and Procedures 37
PART II — OTHER INFORMATION
Item 1. Legal Proceedings 37
Item 1A. Risk Factors 37
Item 2. Unregistered Sale of Equity Security and Use of Proceeds 38
Item 6. Exhibits 39
SIGNATURES 40

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EZCORP, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts) March 31,<br><br>2023 March 31,<br><br>2022 September 30,<br><br>2022
Assets:
Current assets:
Cash and cash equivalents $ 243,128 $ 254,964 $ 206,028
Restricted cash 8,451 8,713 8,341
Pawn loans 206,096 173,618 210,009
Pawn service charges receivable, net 33,116 28,319 33,476
Inventory, net 150,297 119,890 151,615
Prepaid expenses and other current assets 45,564 27,267 34,694
Total current assets 686,652 612,771 644,163
Investments in unconsolidated affiliates 10,681 42,002 37,733
Other investments 39,220 18,000 24,220
Property and equipment, net 59,775 50,874 56,725
Right-of-use asset, net 234,287 204,343 221,405
Goodwill 300,078 286,214 286,828
Intangible assets, net 59,620 62,145 56,819
Notes receivable, net 1,233 1,198 1,215
Deferred tax asset, net 19,127 15,908 12,145
Other assets 9,859 6,541 6,625
Total assets $ 1,420,532 $ 1,299,996 $ 1,347,878
Liabilities and equity:
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $ 72,695 $ 69,695 $ 84,509
Customer layaway deposits 18,761 15,046 16,023
Operating lease liabilities, current 53,921 52,446 52,334
Total current liabilities 145,377 137,187 152,866
Long-term debt, net 359,287 312,168 312,903
Deferred tax liability, net 368 179 373
Operating lease liabilities 191,874 163,506 180,756
Other long-term liabilities 11,038 11,940 8,749
Total liabilities 707,944 624,980 655,647
Commitments and contingencies (Note 9)
Stockholders’ equity:
Class A Non-voting Common Stock, par value $0.01 per share; shares authorized: 100 million; issued and outstanding: 52,561,071 as of March 31, 2023; 53,685,333 as of March 31, 2022; and 53,454,885 as of September 30, 2022 526 537 534
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 343,088 341,913 345,330
Retained earnings 405,961 384,246 402,006
Accumulated other comprehensive loss (37,017) (51,710) (55,669)
Total equity 712,588 675,016 692,231
Total liabilities and equity $ 1,420,532 $ 1,299,996 $ 1,347,878

See accompanying notes to unaudited interim condensed consolidated financial statements

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EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended<br><br>March 31, Six Months Ended<br><br>March 31,
(in thousands, except per share amount) 2023 2022 2023 2022
Revenues:
Merchandise sales $ 152,507 $ 133,556 $ 316,294 $ 271,276
Jewelry scrapping sales 12,825 5,690 20,709 12,634
Pawn service charges 93,030 76,683 185,623 152,708
Other revenues, net 61 53 124 358
Total revenues 258,423 215,982 522,750 436,976
Merchandise cost of goods sold 97,339 82,246 202,216 165,357
Jewelry scrapping cost of goods sold 11,902 4,808 18,855 10,580
Gross profit 149,182 128,928 301,679 261,039
Operating expenses:
Store expenses 101,269 85,743 202,072 172,514
General and administrative 15,609 12,227 31,085 27,772
Depreciation and amortization 7,963 7,450 15,951 15,024
Loss (gain) on sale or disposal of assets 73 (697) 57 (692)
Other (2,465) — (2,465) —
Total operating expenses 122,449 104,723 246,700 214,618
Operating income 26,733 24,205 54,979 46,421
Interest expense 3,390 2,527 9,580 4,958
Interest income (1,898) (255) (2,562) (559)
Equity in net loss of unconsolidated affiliates 32,501 1,439 30,917 301
Other expense (income) 80 371 (154) 251
(Loss) income before income taxes (7,340) 20,123 17,198 41,470
Income (benefit) tax expense (550) 5,236 7,210 10,862
Net (loss) income $ (6,790) $ 14,887 $ 9,988 $ 30,608
Basic earnings per share $ (0.12) $ 0.26 $ 0.18 $ 0.54
Diluted earnings per share $ (0.12) $ 0.20 $ 0.11 $ 0.42
Weighted-average basic shares outstanding 55,648 56,561 55,981 56,370
Weighted-average diluted shares outstanding 55,648 82,407 65,269 82,270

See accompanying notes to unaudited interim condensed consolidated financial statements

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EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended<br><br>March 31, Six Months Ended<br><br>March 31,
(in thousands) 2023 2022 2023 2022
Net (loss) income $ (6,790) $ 14,887 $ 9,988 $ 30,608
Other comprehensive income:
Foreign currency translation adjustment, net of tax 16,148 3,666 18,652 6,705
Comprehensive income $ 9,358 $ 18,553 $ 28,640 $ 37,313

See accompanying notes to unaudited interim condensed consolidated financial statements

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EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

Common Stock Additional<br>Paid-in<br>Capital Retained<br>Earnings Accumulated<br>Other<br>Comprehensive Loss Total Stockholders' Equity
(in thousands) Shares Par Value
Balances as of September 30, 2022 56,425 $ 564 $ 345,330 $ 402,006 $ (55,669) $ 692,231
Stock compensation — — 1,886 — — 1,886
Transfer of equity consideration for acquisition 10 — 99 — — 99
Release of restricted stock, net of shares withheld for taxes 235 2 — — — 2
Taxes paid related to net share settlement of equity awards — — (1,138) — — (1,138)
Foreign currency translation gain — — — — 2,504 2,504
Purchase and retirement of treasury stock (822) (7) (3,165) (3,855) — (7,027)
Net income — — — 16,778 — 16,778
Balances as of December 31, 2022 55,848 $ 559 $ 343,012 $ 414,929 $ (53,165) $ 705,335
Stock compensation — — 1,855 — — 1,855
Release of restricted stock, net of shares withheld for taxes 132 2 — — — 2
Taxes paid related to net share settlement of equity awards (1) — (11) — — (11)
Foreign currency translation gain — — — — 16,148 16,148
Purchase and retirement of treasury stock (448) (5) (1,768) (2,178) — (3,951)
Net loss — — — (6,790) — (6,790)
Balances as of March 31, 2023 55,531 $ 556 $ 343,088 $ 405,961 $ (37,017) $ 712,588 Common Stock Additional<br>Paid-in<br>Capital Retained<br>Earnings Accumulated<br>Other<br>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
Stock compensation — — 460 — — 460
Transfer of consideration for other investment 213 2 1,498 — — 1,500
Release of restricted stock, net of shares withheld for taxes 129 2 — — — 2
Foreign currency translation gain — — — — 3,666 3,666
Net income — — — 14,887 — 14,887
Balances as of March 31, 2022 56,656 $ 567 $ 341,913 $ 384,246 $ (51,710) $ 675,016

See accompanying notes to unaudited interim condensed consolidated financial statements

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EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended<br><br>March 31,
(in thousands) 2023 2022
Operating activities:
Net income $ 9,988 $ 30,608
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 15,951 15,024
Amortization of debt discount and deferred financing costs 736 698
Non-cash lease expense 27,546 25,746
Deferred income taxes (6,987) 212
Other adjustments (2,386) (708)
Provision for inventory reserve 280 (1,780)
Stock compensation expense 3,741 2,158
Equity in net loss of unconsolidated affiliates 30,917 301
Net loss on extinguishment of debt 3,545 —
Changes in operating assets and liabilities, net of acquisitions:
Service charges and fees receivable 1,357 687
Inventory (2,306) (2,779)
Prepaid expenses, other current assets and other assets (3,639) 88
Accounts payable, accrued expenses and other liabilities (43,969) (50,258)
Customer layaway deposits 1,426 2,342
Income taxes 8,852 6,576
Dividends from unconsolidated affiliates 1,775 1,660
Net cash provided by operating activities 46,827 30,575
Investing activities:
Loans made (378,717) (329,459)
Loans repaid 230,604 199,836
Recovery of pawn loan principal through sale of forfeited collateral 171,504 129,311
Capital expenditures, net (18,439) (10,498)
Acquisitions, net of cash acquired (12,968) —
Issuance of notes receivable (15,500) (1,000)
Investment in unconsolidated affiliates (2,133) (3,577)
Investment in other investments (15,000) (16,500)
Net cash used in investing activities (40,649) (31,887)
Financing activities:
Taxes paid related to net share settlement of equity awards (1,149) (792)
Proceeds from issuance of debt 230,000 —
Debt issuance cost (7,458) —
Cash paid on extinguishment of debt (1,951) —
Payments on debt (178,488) —
Repurchase of common stock (10,978) —
Net cash provided by (used in) financing activities 29,976 (792)
Effect of exchange rate changes on cash and cash equivalents and restricted cash 1,056 2,157
Net increase in cash, cash equivalents and restricted cash 37,210 53
Cash, cash equivalents and restricted cash at beginning of period 214,369 263,624
Cash, cash equivalents and restricted cash at end of period $ 251,579 $ 263,677

See accompanying notes to unaudited interim condensed consolidated financial statements

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Notes to Interim Condensed Consolidated Financial Statements (Unaudited)

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 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 30,2022, filed with the Securities and Exchange Commission ("SEC") on November 16, 2022 (“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 six-month period ended March 31, 2023, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2023 or any other period due, in part, to seasonal variations. There have been no changes that have had a material impact in significant accounting policies as described in our 2022 Annual Report.

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 differ materially from these estimates under different assumptions or conditions.

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.

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NOTE 2: GOODWILL

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

Six Months Ended March 31, 2023
(in thousands) U.S. Pawn Latin America Pawn Consolidated
Balances as of September 30, 2022 $ 245,503 $ 41,325 $ 286,828
Acquisitions 9,468 — 9,468
Effect of foreign currency translation changes — 3,782 3,782
Balances as of March 31, 2023 $ 254,971 $ 45,107 $ 300,078
Six Months Ended March 31, 2022
--- --- --- --- --- --- ---
(in thousands) U.S. Pawn Latin America Pawn Consolidated
Balances as of September 30, 2021 $ 244,471 $ 41,287 $ 285,758
Measurement period adjustments — (678) $ (678)
Effect of foreign currency translation changes — 1,134 1,134
Balances as of March 31, 2022 $ 244,471 $ 41,743 $ 286,214

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 $13.0 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 3: (LOSS) EARNINGS PER SHARE

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

Three Months Ended<br><br>March 31, Six Months Ended<br><br>March 31,
(in thousands, except per share amounts) 2023 2022 2023 2022
Basic (loss) earnings per common share:
Net (loss) income - basic $ (6,790) $ 14,887 $ 9,988 $ 30,608
Weighted shares outstanding - basic 55,648 56,561 55,981 56,370
Basic (loss) earnings per common share $ (0.12) $ 0.26 $ 0.18 $ 0.54
Diluted (loss) earnings per common share:
Net (loss) income - basic $ (6,790) $ 14,887 $ 9,988 $ 30,608
Add: Convertible Notes interest expense, net of tax* — 1,846 (2,733) 3,730
Net (loss) income - diluted $ (6,790) $ 16,733 $ 7,255 $ 34,338
Weighted shares outstanding - basic 55,648 56,561 55,981 56,370
Equity-based compensation awards - effect of dilution** — 622 1,067 676
Convertible Notes - effect of dilution — 25,224 8,221 25,224
Weighted shares outstanding - diluted 55,648 82,407 65,269 82,270
Diluted (loss) earnings per common share $ (0.12) $ 0.20 $ 0.11 $ 0.42
Potential common shares excluded from the calculation of diluted (loss) earnings per common share above:
Equity-based compensation awards** 1,014 — — —
Convertible Notes*** 30,417 — 20,141 —
Restricted stock**** 1,504 1,756 1,528 1,847
Total 32,935 1,756 21,669 1,847

*    The six months ended March 31, 2023 includes $5.4 million gain on the partial extinguishment of debt, associated with the 2025 Convertible Notes, which was recorded to "Interest expense" in the Company's condensed consolidated statement of operations. See Note 7: Debt for additional information.

**    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 7: Debt for conversion rate of the 2024 Convertible Notes, 2025 Convertible Notes, and 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.

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NOTE 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 table below presents balances of our lease assets and liabilities and their balance sheet locations for both operating and financing leases:

(in thousands) Balance Sheet Location March 31, 2023 March 31, 2022 September 30, 2022
Lease assets:
Operating lease right-of-use assets Right-of-use assets, net $ 234,287 $ 204,343 $ 221,405
Financing lease assets Other assets 1,289 — 181
Total lease assets $ 235,576 $ 204,343 $ 221,586
Lease liabilities:
Current:
Operating lease liabilities Operating lease liabilities, current $ 53,921 $ 52,446 $ 52,334
Financing lease liabilities Accounts payable, accrued expenses and other current liabilities 282 — 37
Total current lease liabilities $ 54,203 $ 52,446 $ 52,371
Non-current:
Operating lease liabilities Operating lease liabilities $ 191,874 $ 163,506 $ 180,756
Financing lease liabilities Other long-term liabilities 1,024 — 148
Total non-current lease liabilities $ 192,898 $ 163,506 $ 180,904
Total lease liabilities $ 247,101 $ 215,952 $ 233,275

The table below provides major components of our lease costs:

Three Months Ended<br><br>March 31, Six Months Ended<br><br>March 31,
(in thousands) 2023 2022 2023 2022
Operating lease cost:
Operating lease cost * $ 18,023 $ 16,789 $ 35,518 $ 33,151
Variable lease cost 4,028 3,834 7,880 7,376
Total operating lease cost $ 22,051 $ 20,623 $ 43,398 $ 40,527
Financing lease cost:
Amortization of financing lease assets $ 55 $ — $ 74 $ —
Interest on financing lease liabilities 24 — 35 —
Total financing lease cost $ 79 $ — $ 109 $ —
Total lease cost $ 22,130 $ 20,623 $ 43,507 $ 40,527

* Includes a reduction for sublease rental income of $1.1 million and $0.8 million for the three months ended March 31, 2023 and 2022, respectively and $1.8 million and $1.7 million for the six months ended March 31, 2023 and 2022, 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 was $18.9 million and $18.0 million for the three months ended March 31, 2023 and 2022, respectively and $37.4 million and $35.6 million for the six months ended March 31, 2023 and 2022, respectively.

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The weighted-average term and discount rates for leases are as follows:

Six Months Ended<br><br>March 31,
2023 2022
Weighted-average remaining lease term (years):
Operating leases 5.16 5.00
Financing leases 3.97 N/A
Weighted-average discount rate:
Operating leases 8.42 % 8.27 %
Financing leases 11.14 % N/A

As of March 31, 2023, maturities of lease liabilities under ASC 842 by fiscal year were as follows:

(in thousands) Operating Leases Financing Leases
Remaining 2023 $ 36,727 $ 310
Fiscal 2024 68,717 413
Fiscal 2025 58,855 413
Fiscal 2026 48,125 401
Fiscal 2027 34,973 81
Thereafter 55,547 —
Total lease liabilities $ 302,944 $ 1,618
Less: portion representing imputed interest 57,149 312
Total net lease liabilities $ 245,795 $ 1,306
Less: current portion 53,921 282
Total long term net lease liabilities $ 191,874 $ 1,024

We recorded $34.5 million and $28.1 million in non-cash additions to our right-of-use assets and lease liabilities for the six months ended March 31, 2023 and March 31, 2022, respectively.

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NOTE 5: STRATEGIC INVESTMENTS

Cash Converters International Limited

The following table presents the Company's ownership in Cash Converters International Limited ("Cash Converters") for the periods presented:

Date of purchase Purchase amount<br><br>(in thousands) Shares purchased Shares owned Ownership percentage
October 1, 2021 $2,500 13,000,000 236,702,991 37.7 %
March 10, 2022 $1,000 5,500,000 242,239,157 38.6 %
April 5, 2022 $2,500 13,000,000 255,239,157 40.7 %
September 15, 2022 $900 5,700,000 260,939,157 41.6 %
November 2, 2022 $2,100 13,000,000 273,939,157 43.7 %

On October 2021, April 2022 and November 2022, we received cash dividends of $1.7 million, $1.7 million and $1.8 million, respectively, from Cash Converters.

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

December 31,
(in thousands) 2022 2021
Current assets $ 189,179 $ 162,558
Non-current assets 98,301 185,780
Total assets $ 287,480 $ 348,338
Current liabilities $ 91,601 $ 59,701
Non-current liabilities 56,792 59,915
Shareholders’ equity 139,087 228,722
Total liabilities and shareholders’ equity $ 287,480 $ 348,338
Half-Year Ended December 31,
--- --- --- --- ---
(in thousands) 2022 2021
Gross revenues $ 98,768 $ 84,185
Gross profit 63,800 55,280
Net profit (73,197) 1

During the quarter ended March 31, 2023, we recorded a $32.5 million loss on our share of losses from Cash Converters, which included $32.4 million as our share of their non-cash goodwill impairment charge, that was recorded to "Equity in net loss of unconsolidated affiliates" in the condensed consolidated statements of operations.

See Note 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 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 common interest in Founders held 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 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 $30.0 million carrying value of the investment and $15.0 million Demand Promissory Note are included in “Other investments” and "Prepaid expenses and other current assets"

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in our consolidated balance sheets, respectively. Our maximum exposure for losses related to our investment in Founders is our $30.0 million equity investment and $15.0 million Demand Promissory Note plus accrued and unpaid interest.

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

NOTE 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.

•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.

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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
March 31, 2023 March 31, 2023 Fair Value Measurement Using
(in thousands) Level 1 Level 2 Level 3
Financial assets:
2.89% promissory note receivable due April 2024 $ 1,233 $ 1,233 $ — $ — $ 1,233
12.00% promissory note receivable from Founders 15,600 15,600 — — 15,600
Investments in unconsolidated affiliates 10,681 42,917 42,917 — —
Other investments 39,220 39,220 — — 39,220
Financial liabilities:
2024 Convertible Notes $ 34,184 $ 34,389 $ — $ 34,389 $ —
2025 Convertible Notes 102,312 94,690 — 94,690 —
2029 Convertible Notes 222,791 221,529 — 221,529 — Carrying Value Estimated Fair Value
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
March 31, 2022 March 31, 2022 Fair Value Measurement Using
(in thousands) Level 1 Level 2 Level 3
Financial assets:
2.89% promissory note receivable due April 2024 $ 1,198 $ 1,198 $ — $ — $ 1,198
Investments in unconsolidated affiliates 42,002 51,502 44,529 — 6,973
Other investments 18,000 18,000 — — 18,000
Financial liabilities:
2024 Convertible Notes $ 142,248 $ 141,594 $ — $ 141,594 $ —
2025 Convertible Notes 169,920 153,525 — 153,525 — Carrying Value Estimated Fair Value
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
September 30, 2022 September 30, 2022 Fair Value Measurement Using
(in thousands) Level 1 Level 2 Level 3
Financial assets:
2.89% promissory note receivable due April 2024 $ 1,215 $ 1,215 $ — $ — $ 1,215
Investments in unconsolidated affiliates 37,733 40,279 40,279 — —
Other investments 24,220 24,220 — — 24,220
Financial liabilities:
2024 Convertible Notes $ 142,575 $ 157,727 $ — $ 157,727 $ —
2025 Convertible Notes 170,328 147,488 — 147,488 —

Due to the short-term nature of cash and cash equivalents, pawn loans and pawn service charges receivable, 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, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates.

The Company remeasures its acquisition-related contingent obligation associated with the acquisition in June 2021 of PLO del Bajio S. de R.S. de C.V., which owned stores operating under the name "Cash Apoyo Efectivo," at the end of each reporting period. This remeasurement resulted in a $2.5 million reduction of the obligation with an offset recorded to "Other" as an operating item in our condensed consolidated statement of operations during the second quarter of fiscal 2023. The remaining obligation of $2.5 million is included in "Accounts payable, accrued expenses and other current liabilities" in our Consolidated Balance Sheet as of March 31, 2023. 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.

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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 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 March 31, 2023.

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 March 31, 2023.

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.

The $39.2 million in "Other investments" as of March 31, 2023, includes $30.0 million related to our investment in 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. The $18.0 million "Other investments" as of March 31, 2022, includes $15.0 million related to our investment in Founders.

We determined the fair value of the 2024, 2025 and 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.

NOTE 7: DEBT

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

March 31, 2023 March 31, 2022 September 30, 2022
(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 $ 230,000 $ (7,209) $ 222,791 $ — $ — $ — $ — $ — $ —
2025 Convertible Notes 103,373 (1,061) 102,312 172,500 (2,580) 169,920 172,500 (2,172) 170,328
2024 Convertible Notes 34,389 (205) 34,184 143,750 (1,502) 142,248 143,750 (1,175) 142,575
Total long-term debt $ 367,762 $ (8,475) $ 359,287 $ 316,250 $ (4,082) $ 312,168 $ 316,250 $ (3,347) $ 312,903

The following table presents the Company's contractual maturities related to the debt instruments as of March 31, 2023:

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

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The following table presents the Company's interest expense related to the Convertible Notes for the three and six months ended March 31, 2023 and 2022:

Three Months Ended<br><br>March 31, Six Months Ended<br><br>March 31,
(in thousands) 2023 2022 2023 2022
2029 Convertible Notes:
Contractual interest expense $ 2,156 $ — $ 2,587 $ —
Amortization of deferred financing costs 197 — 249 —
Total interest expense $ 2,353 $ — $ 2,836 $ —
2025 Convertible Notes:
Contractual interest expense $ 614 $ 1,024 $ 1,556 $ 2,048
Amortization of deferred financing costs 120 182 308 389
Gain on extinguishment — — (5,389) —
Total interest expense $ 734 $ 1,206 $ (3,525) $ 2,437
2024 Convertible Notes:
Contractual interest expense $ 247 $ 1,033 $ 1,123 $ 2,066
Amortization of deferred financing costs 41 142 179 309
Loss on extinguishment — — 8,935 —
Total interest expense $ 288 $ 1,175 $ 10,237 $ 2,375

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, 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 and six months ended March 31, 2023 was approximately 4.28%. As of March 31, 2023, 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

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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 March 31, 2023. As of March 31, 2023, 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 March 31, 2023. 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 six months ended March 31, 2023 was approximately 2.88% for the 2025 Convertible Notes. As of March 31, 2023, 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.

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 March 31, 2023. As of March 31, 2023, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

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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 March 31, 2023. 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 six months ended March 31, 2023 was approximately 3.35%. As of March 31, 2023, 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 March 31, 2023. As of March 31, 2023, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount.

NOTE 8: COMMON STOCK AND STOCK COMPENSATION

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 (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. As of March 31, 2023, the Company has repurchased and retired 929,336 shares of our Class A Common Stock for $8.0 million under the Common Stock Repurchase Program, of which $3.9 million was repurchased during the quarter ended March 31, 2023. The repurchase amount is allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets.

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Other Common Stock Repurchases

During December 2022, the Company used approximately $5.0 million of 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<br>Average<br>Grant Date<br>Fair Value
Outstanding as of September 30, 2022 2,113,323 $ 5.88
Granted 1,008,180 7.82
Released (a) (480,238) 4.86
Cancelled (54,497) 6.55
Outstanding as of March 31, 2023 2,586,768 $ 6.81

(a) 114,311 shares were withheld to satisfy related income tax withholding.

NOTE 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. 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.

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. 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. 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. 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, which was approved by the court on October 24, 2022. The period for submitting claims expired on November 8, 2022. The Company recorded a $2.0 million charge during the quarter ended June 30, 2022, which amount has since been paid to the third party claims administrator in final satisfaction of claims and related costs. The claims administrator is in the process of disbursing settlement funds.

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NOTE 10: SEGMENT INFORMATION

Our operations are primarily managed on a geographical basis and are comprised of three 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 income of Cash Converters along with our investment in 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.

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

Three Months Ended March 31, 2023
(in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated
Revenues:
Merchandise sales $ 108,740 $ 43,767 $ — $ 152,507 $ — $ 152,507
Jewelry scrapping sales 9,814 3,011 — 12,825 — 12,825
Pawn service charges 69,945 23,085 — 93,030 — 93,030
Other revenues 32 19 10 61 — 61
Total revenues 188,531 69,882 10 258,423 — 258,423
Merchandise cost of goods sold 67,643 29,696 — 97,339 — 97,339
Jewelry scrapping cost of goods sold 8,550 3,352 — 11,902 — 11,902
Gross profit 112,338 36,834 10 149,182 — 149,182
Segment and corporate expenses (income):
Store expenses 71,946 29,323 — 101,269 — 101,269
General and administrative — — — — 15,609 15,609
Depreciation and amortization 2,560 2,332 — 4,892 3,071 7,963
Loss (gain) loss on sale or disposal of assets 81 (8) — 73 — 73
Other — (2,465) — (2,465) — (2,465)
Interest expense — — — — 3,390 3,390
Interest income (1) (298) — (299) (1,599) (1,898)
Equity in net loss of unconsolidated affiliates — — 32,501 32,501 — 32,501
Other (income) expense — (46) 6 (40) 120 80
Segment contribution (loss) $ 37,752 $ 7,996 $ (32,497) $ 13,251
Income (loss) before income taxes $ 13,251 $ (20,591) $ (7,340)

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Three Months Ended March 31, 2022
(in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated
Revenues:
Merchandise sales $ 100,064 $ 33,492 $ — $ 133,556 $ — $ 133,556
Jewelry scrapping sales 3,480 2,210 — 5,690 — 5,690
Pawn service charges 58,772 17,911 — 76,683 — 76,683
Other revenues 24 — 29 53 — 53
Total revenues 162,340 53,613 29 215,982 — 215,982
Merchandise cost of goods sold 58,613 23,633 — 82,246 — 82,246
Jewelry scrapping cost of goods sold 2,798 2,010 — 4,808 — 4,808
Gross profit 100,929 27,970 29 128,928 — 128,928
Segment and corporate expenses (income):
Store expenses 64,492 21,251 — 85,743 — 85,743
General and administrative — — — — 12,227 12,227
Depreciation and amortization 2,625 1,891 — 4,516 2,934 7,450
Loss on sale or disposal of assets and other — (9) — (9) (688) (697)
Interest expense — — — — 2,527 2,527
Interest income — (255) — (255) — (255)
Equity in net income of unconsolidated affiliates — — 1,439 1,439 — 1,439
Other (income) expense — 334 8 342 29 371
Segment contribution $ 33,812 $ 4,758 $ (1,418) $ 37,152
Income (loss) before income taxes $ 37,152 $ (17,029) $ 20,123
Six Months Ended March 31, 2023
--- --- --- --- --- --- --- --- --- --- --- --- ---
(in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated
Revenues:
Merchandise sales $ 227,054 $ 89,240 $ — $ 316,294 $ — $ 316,294
Jewelry scrapping sales 16,990 3,719 — 20,709 — 20,709
Pawn service charges 139,255 46,368 — 185,623 — 185,623
Other revenues 57 35 32 124 — 124
Total revenues 383,356 139,362 32 522,750 — 522,750
Merchandise cost of goods sold 140,899 61,317 — 202,216 — 202,216
Jewelry scrapping cost of goods sold 14,766 4,089 — 18,855 — 18,855
Gross profit 227,691 73,956 32 301,679 — 301,679
Segment and corporate expenses (income):
Store expenses 145,250 56,822 — 202,072 — 202,072
General and administrative — (3) — (3) 31,088 31,085
Depreciation and amortization 5,315 4,547 — 9,862 6,089 15,951
Loss (gain) on sale or disposal of assets 84 (27) — 57 — 57
Other — (2,465) — (2,465) — (2,465)
Interest expense — — — — 9,580 9,580
Interest income (1) (467) — (468) (2,094) (2,562)
Equity in net loss of unconsolidated affiliates — — 30,917 30,917 — 30,917
Other expense (income) — 24 10 34 (188) (154)
Segment contribution (loss) $ 77,043 $ 15,525 $ (30,895) $ 61,673
Income (loss) before income taxes $ 61,673 $ (44,475) $ 17,198

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Six Months Ended March 31, 2022
(in thousands) U.S. Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated
Revenues:
Merchandise sales $ 202,142 $ 69,134 $ — $ 271,276 $ — $ 271,276
Jewelry scrapping sales 8,460 4,174 — 12,634 — 12,634
Pawn service charges 115,329 37,379 — 152,708 — 152,708
Other revenues 46 240 72 358 — 358
Total revenues 325,977 110,927 72 436,976 — 436,976
Merchandise cost of goods sold 116,445 48,912 — 165,357 — 165,357
Jewelry scrapping cost of goods sold 6,773 3,807 — 10,580 — 10,580
Gross profit 202,759 58,208 72 261,039 — 261,039
Segment and corporate expenses (income):
Store expenses 129,181 43,333 — 172,514 — 172,514
General and administrative — — — — 27,772 27,772
Depreciation and amortization 5,295 3,871 — 9,166 5,858 15,024
Gain on sale or disposal of assets and other — (4) — (4) (688) (692)
Interest expense — — — — 4,958 4,958
Interest income — (437) — (437) (122) (559)
Equity in net income of unconsolidated affiliates — — 301 301 — 301
Other (income) expense — 200 (4) 196 55 251
Segment contribution $ 68,283 $ 11,245 $ (225) $ 79,303
Income (loss) before income taxes $ 79,303 $ (37,833) $ 41,470

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

(in thousands) U.S. Pawn Latin America Pawn Other<br>Investments Corporate Items Total
As of March 31, 2023
Pawn loans $ 157,043 $ 49,053 $ — $ — $ 206,096
Inventory, net 112,147 38,150 — — 150,297
As of March 31, 2022
Pawn loans $ 133,515 $ 40,103 $ — $ — $ 173,618
Inventory, net 93,320 26,570 — — 119,890

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NOTE 11: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

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

(in thousands) March 31, 2023 March 31, 2022 September 30, 2022
Gross pawn service charges receivable $ 42,335 $ 35,886 $ 44,192
Allowance for uncollectible pawn service charges receivable (9,219) (7,567) (10,716)
Pawn service charges receivable, net $ 33,116 $ 28,319 $ 33,476
Gross inventory $ 153,348 $ 123,944 $ 153,673
Inventory reserves (3,051) (4,054) (2,058)
Inventory, net $ 150,297 $ 119,890 $ 151,615
Prepaid expenses and other $ 7,677 $ 10,245 $ 8,336
Accounts receivable, notes receivable and other 27,817 8,255 8,435
Income taxes prepaid and receivable 10,070 8,767 17,923
Prepaid expenses and other current assets $ 45,564 $ 27,267 $ 34,694
Property and equipment, gross $ 325,458 $ 293,087 $ 306,667
Accumulated depreciation (265,683) (242,213) (249,942)
Property and equipment, net $ 59,775 $ 50,874 $ 56,725
Accounts payable $ 18,443 $ 17,756 $ 24,056
Accrued payroll 8,842 8,631 8,365
Incentive accrual 8,997 8,196 17,403
Other payroll related expenses 8,351 7,877 9,592
Accrued sales and VAT taxes 6,949 8,022 7,279
Accrued income taxes payable 3,662 4,346 2,663
Other current liabilities 17,451 14,867 15,151
Accounts payable, accrued expenses and other current liabilities $ 72,695 $ 69,695 $ 84,509

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

Six Months Ended<br><br>March 31,
(in thousands) 2023 2022
Supplemental disclosure of cash flow information
Cash and cash equivalents $ 243,128 $ 254,964
Restricted cash 8,451 8,713
Total cash and cash equivalents and restricted cash $ 251,579 $ 263,677
Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory $ 159,398 $ 134,562
Transfer of consideration for other investment — 1,500
Transfer of equity consideration for acquisition 99 —
Acquisition earn-out contingency 2,000 —
Accrued acquisition consideration 1,145 —

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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 30,2022, 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

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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).

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 and six months ended March 31, 2023 and 2022:

353

The following chart presents sources of gross profit by geographic disbursement for the three and six months ended March 31, 2023 and 2022:

470

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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 six months ended March 31, 2023 and March 31, 2022 were as follows:

March 31, Three Months Ended<br><br>March 31, Six Months Ended<br><br>March 31,
2023 2022 2023 2022 2023 2022
Mexican peso 18.1 19.9 18.7 20.5 19.2 20.6
Guatemalan quetzal 7.6 7.5 7.6 7.5 7.6 7.5
Honduran lempira 24.4 24.1 24.3 24.2 24.3 24.0
Australian dollar 1.5 1.3 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 March 31, 2023
U.S. Pawn Latin America Pawn Consolidated
As of December 31, 2022 525 661 1,186
New locations opened 2 11 13
As of March 31, 2023 527 672 1,199

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Three Months Ended March 31, 2022
U.S. Pawn Latin America Pawn Consolidated
As of December 31, 2021 516 633 1,149
New locations opened — 3 3
As of March 31, 2022 516 636 1,152
Six Months Ended March 31, 2023
--- --- ---
U.S. Pawn Latin America Pawn Consolidated
As of September 30, 2022 515 660 1,175
New locations opened 2 13 15
Locations acquired 10 — 10
Locations sold, combined or closed — (1) (1)
As of March 31, 2023 527 672 1,199 Six Months Ended March 31, 2022
--- --- ---
U.S. Pawn Latin America Pawn Consolidated
As of September 30, 2021 516 632 1,148
New locations opened — 4 4
As of March 31, 2022 516 636 1,152

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Three Months Ended March 31, 2023 vs. Three Months Ended March 31, 2022

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:

Three Months Ended March 31, Change
(in thousands) 2023 2022
Gross profit:
Pawn service charges $ 69,945 $ 58,772 19%
Merchandise sales 108,740 100,064 9%
Merchandise sales gross profit 41,097 41,451 (1)%
Gross margin on merchandise sales 38 % 41 % (300)bps
Jewelry scrapping sales 9,814 3,480 182%
Jewelry scrapping sales gross profit 1,264 682 85%
Gross margin on jewelry scrapping sales 13 % 20 % (700)bps
Other revenues 32 24 33%
Gross profit 112,338 100,929 11%
Segment operating expenses:
Store expenses 71,946 64,492 12%
Depreciation and amortization 2,560 2,625 (2)%
Loss on sale or disposal of assets and other 81 — *
Segment operating contribution 37,751 33,812 12%
Other segment (income) expense (1) — *
Segment contribution $ 37,752 $ 33,812 12%
Other data:
Net earning assets (a) $ 269,190 $ 226,835 19%
Inventory turnover 2.6 2.6 —%
Average monthly ending pawn loan balance per store (b) $ 310 $ 270 15%
Monthly average yield on pawn loans outstanding 14 % 14 % —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 ended the quarter at $157.0 million, up 18% (14% on a same store basis).

Total revenue was up 16% and gross profit increased 11%, reflecting increased PSC and higher merchandise sales..

PSC increased 19% as a result of higher average PLO.

Merchandise sales increased 9% and gross margin decreased to 38% from 41%, reflecting a more normalized operating environment. Aged general merchandise increased to 1.4% of total general merchandise inventory, primarily driven by recent acquisitions.

Net inventory increased 20% reflecting a return towards normalized inventory levels. Inventory turnover remained flat at 2.6x.

Store expenses increased 12%, primarily due to increased labor in-line with store activity, higher store count and, to a lesser extent, expenses related to our loyalty program.

Segment contribution increased 12% to $37.8 million, due to the changes noted above.

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Segment store count increased by two de novo stores during this 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 March 31,
(in thousands) 2023 (GAAP) 2022 (GAAP) Change (GAAP) 2023 (Constant Currency) Change (Constant Currency)
Gross profit:
Pawn service charges $ 23,085 $ 17,911 29% $ 21,674 21%
Merchandise sales 43,767 33,492 31% 40,694 22%
Merchandise sales gross profit 14,071 9,859 43% 13,012 32%
Gross margin on merchandise sales 32 % 29 % 300bps 32 % 300bps
Jewelry scrapping sales 3,011 2,210 36% 2,846 29%
Jewelry scrapping sales gross profit (341) 200 (271)% (314) (257)%
Gross margin on jewelry scrapping sales (11) % 9 % * (11) % *
Other revenues, net 19 — * 17 *
Gross profit 36,834 27,970 32% 34,389 23%
Segment operating expenses:
Store expenses 29,323 21,251 38% 27,399 29%
Depreciation and amortization 2,332 1,891 23% 2,160 14%
Other (2,465) — * (2,336) *
Segment operating contribution 7,644 4,828 58% 7,166 48%
Other segment income (352) 70 (603)% (429) (713)%
Segment contribution $ 7,996 $ 4,758 68% $ 7,595 60%
Other data:
Net earning assets (a) $ 87,203 $ 66,673 31% $ 81,237 22%
Inventory turnover 3.5 3.8 (8)% 3.5 (8)%
Average monthly ending pawn loan balance per store (b) $ 71 $ 60 18% $ 71 18%
Monthly average yield on pawn loans outstanding 17 % 16 % 100bps 17 % 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. 2023 Change<br><br>(GAAP) 2023 Change<br><br>(Constant Currency)
--- --- ---
Same Store data:
PLO 19% 12%
PSC 26% 18%
Merchandise Sales 25% 16%
Merchandise Sales Gross Profit 61% 49%
Store Expenses 32% 24%

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PLO improved to $49.1 million, up 22% (14% on constant currency basis). On a same store basis, PLO increased 19% (12% on a constant currency basis).

Total revenue was up 30% (22% on constant currency basis), while gross profit increased 32% (23% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.

PSC increased 29% (21% on a constant currency basis) as a result of higher average PLO and yield.

Merchandise sales gross margin increased from 29% to 32%. Aged general merchandise inventory increased to 3.2% from 1.0% of total merchandise inventory.

Net inventory increased 44% (33% on a constant currency basis), reflecting a return towards normalized inventory levels. Inventory turnover remains strong at 3.5x.

Store expenses increased 38% (29% on a constant currency basis), primarily due to increased labor in line with store activity and higher store count. Same-store expenses increased 32% (24% on a constant currency basis).

Segment contribution increased 68% (60% on a constant currency basis) to $8.0 million, this increase was primarily due to the reversal of a contingent consideration liability in connection with a previously completed acquisition, which was recorded to "Other," and the changes in revenue and store expenses described above..

Segment store count increased by 11 de novo stores 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 March 31, Change
(in thousands) 2023 2022
Gross profit:
Consumer loan fees, interest and other $ 10 $ 29 (66)%
Gross profit 10 29 (66)%
Segment operating expenses:
Equity in net loss of unconsolidated affiliates 32,501 1,439 2,159%
Segment operating loss (32,491) (1,410) 2,204%
Other segment expense 6 8 (25)%
Segment loss $ (32,497) $ (1,418) 2,192%

Segment loss was $32.5 million, a decrease of $31.1 million due to the net loss on our share of Cash Converters related to their non-cash goodwill impairment charge taken during the quarter ended March 31, 2023. Additionally, See "Part II, Item 1A — Risk Factors" of this Report. A decline in future operating results of Cash Converters, if any, resulting from the change of law could adversely affect our investment.

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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 March 31, Percentage Change
(in thousands) 2023 2022
Segment contribution $ 13,251 $ 37,152 (64)%
Corporate expenses (income):
General and administrative 15,609 12,227 28%
Depreciation and amortization 3,071 2,934 5%
(Gain) loss on sale or disposal of assets and other — (688) *
Interest expense 3,390 2,527 34%
Interest income (1,599) — *
Other expense 120 29 *
(Loss) income before income taxes (7,340) 20,123 (136)%
Income tax (benefit) expense (550) 5,236 (111)%
Net (loss) income $ (6,790) $ 14,887 (146)%
* Represents a percentage computation that is not mathematically meaningful.
--- ---

Segment contribution decreased $23.9 million or 64% over the prior year quarter primarily due to the decrease in Other Investments segment due to the net loss on our share of Cash Converters, offset by improved operating results of the U.S. Pawn and Latin America Pawn segments above.

General and administrative expense increased $3.4 million or 28%, primarily due to the impact related to the reversal of incentive compensation for the departed CEO in the prior period and to a lesser extent, an overall increase in incentive-based compensation.

Interest income increased $1.6 million, due primarily to our treasury management with increased market interest rates, and, to a lesser extent, loans to certain strategic investees.

Income tax expense decreased $5.8 million primarily due to a decrease in income before income taxes of $27.5 million this quarter compared to the prior year associated with the net loss on our share of Cash Converters, offset by the improved operating results within the U.S. Pawn segment and the Latin American Pawn segment.

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.

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Six Months Ended March 31, 2023 vs. Six Months Ended March 31, 2022

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:

Six Months Ended March 31, Change
(in thousands) 2023 2022
Gross profit:
Pawn service charges $ 139,255 $ 115,329 21%
Merchandise sales 227,054 202,142 12%
Merchandise sales gross profit 86,155 85,697 1%
Gross margin on merchandise sales 38 % 42 % (400)bps
Jewelry scrapping sales 16,990 8,460 101%
Jewelry scrapping sales gross profit 2,224 1,687 32%
Gross margin on jewelry scrapping sales 13 % 20 % (700)bps
Other revenues 57 46 24%
Gross profit 227,691 202,759 12%
Segment operating expenses:
Store expenses 145,250 129,181 12%
Depreciation and amortization 5,315 5,295 —%
Loss on sale or disposal of assets and other 84 *
Segment operating contribution 77,042 68,283 13%
Other segment (income) expense (1) — *
Segment contribution $ 77,043 $ 68,283 13%
Other data:
Average monthly ending pawn loan balance per store (a) $ 312 $ 270 16%
Monthly average yield on pawn loans outstanding 14 % 14 % —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 12% compared to the prior year. Merchandise sales increase was driven primarily by our continued focus on customer engagement and pricing merchandise to maintain strong inventory turnover. Offsetting the sales increase, merchandise sales gross margin decreased 400 bps reflecting a return toward more normalized margins.

Store expenses increased 12%, primarily due to increased labor in-line with store activity, higher store count and expenses associated with our loyalty program.

Segment contribution increased $8.8 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.

Six Months Ended March 31,
(in thousands) 2023 (GAAP) 2022 (GAAP) Change (GAAP) 2023 (Constant Currency) Change (Constant Currency)
Gross profit:
Pawn service charges $ 46,368 $ 37,379 24% $ 44,153 18%
Merchandise sales 89,240 69,134 29% 84,289 22%
Merchandise sales gross profit 27,923 20,222 38% 26,300 30%
Gross margin on merchandise sales 31 % 29 % 200bps 31 % 200bps
Jewelry scrapping sales 3,719 4,174 (11)% 3,518 (16)%
Jewelry scrapping sales gross profit (370) 367 (201)% (343) (193)%
Gross margin on jewelry scrapping sales (10) % 9 % (1,900)bps (10) % (1,900)bps
Other revenues, net 35 240 * 32 *
Gross profit 73,956 58,208 27% 70,142 21%
Segment operating expenses:
Store expenses 56,822 43,333 31% 53,836 24%
Depreciation and amortization 4,547 3,871 17% 4,285 11%
Other (2,465) — * (2,336) *
Segment operating contribution 15,052 11,004 37% 14,357 30%
Other segment income (a) (473) (241) 96% (723) 200%
Segment contribution $ 15,525 $ 11,245 38% $ 15,080 34%
Other data:
Average monthly ending pawn loan balance per store (a) $ 71 $ 60 18% $ 71 18%
Monthly average yield on pawn loans outstanding 17 % 16 % 100bps 17 % 100bps * 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. 2023 Change<br><br>(GAAP) 2023 Change<br><br>(Constant Currency)
--- --- ---
Same Store data:
PLO 19% 12%
PSC 22% 16%
Merchandise Sales 24% 17%
Merchandise Sales Gross Profit 56% 47%
Store Expenses 20% 14%

During the six months ended March 31, 2023, our Latin America pawn segment opened thirteen de novo stores.

PSC increased 24% to $46.4 million (18% to $44.2 million on a constant currency basis) as a result of higher average PLO for the year.

Merchandise sales increased 29% (22% on a constant currency basis) and 24% on a same store basis (17% on a constant currency basis). Merchandise sales increase was driven primarily by our continued focus on customer engagement, pricing merchandise to maintain strong inventory turnover and increase in stores. Merchandise sales gross margin increased 200 bps from 29% to 31% and on a constant currency basis, reflecting a return to more normalized margins.

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Store expenses increased by 31% (24% on a constant currency basis) primarily due to higher store count and increased labor in-line with store activity. On a same-store basis, store expenses increased 20% (14% on a constant currency basis) due to rising labor costs resulting from growing transaction volume.

Segment contribution increased $4.3 million, or 38%, to $15.5 million. This increase was primarily due to the reversal of a contingent consideration liability in connection with a previously completed acquisition, which was recorded to "Other," and 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:

Six Months Ended March 31, Change
(in thousands) 2023 2022
Gross profit:
Consumer loan fees, interest and other 32 72 (56)%
Gross profit 32 72 (56)%
Segment operating expenses:
Equity in net loss of unconsolidated affiliates 30,917 301 *
Segment operating loss (30,885) (229) *
Other segment loss (income) 10 (4) (350)%
Segment loss $ (30,895) $ (225) *
* Represents a percentage computation that is not mathematically meaningful.
--- ---

Segment loss was $30.9 million, a decrease of $30.7 million from the prior-year six months ended March 31, 2022, primarily due to the net loss on our share of Cash Converters related to their non-cash goodwill impairment charge.

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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:

Six Months Ended March 31, Percentage Change
(in thousands) 2023 2022
Segment contribution $ 61,673 $ 79,303 (22)%
Corporate expenses (income):
General and administrative 31,088 27,772 12%
Depreciation and amortization 6,089 5,858 4%
(Gain) loss on sale or disposal of assets — (688) *
Interest expense 9,580 4,958 93%
Interest income (2,094) (122) *
Other (income) expense (188) 55 (442)%
Income from continuing operations before income taxes 17,198 41,470 (59)%
Income tax expense 7,210 10,862 (34)%
Net income $ 9,988 $ 30,608 (67)%
* Represents a percentage computation that is not mathematically meaningful.
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Segment contribution decreased $17.6 million or 22% over the prior year six months ended March 31, 2022, primarily due to the equity pickup of Cash Converters' net results partially offset by the improved operating results of the segments above.

General and administrative expenses increased $3.3 million or 12%, primarily due to the impact related to the reversal of incentive compensation for the departed CEO in the prior period and to a lesser extent, an overall increase in incentive-based compensation.

Interest expense increased $4.6 million, primarily driven by the net loss recorded on the partial extinguishments of the 2024 convertible notes and 2025 convertible notes, and higher average total debt outstanding at overall higher average effective interest rates due to the issuance of the 2029 convertible notes during December 2022. See Note 7: Debt to the consolidated financials for further discussion.

Income tax expense decreased $3.7 million, primarily due to a decrease in income before income taxes of $24.3 million for the six months ended March 31, 2022 compared to the same prior year six 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, 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

Cash and Cash Equivalents

Our cash and equivalents balance was $243.1 million at March 31, 2023 compared to $206.0 million at September 30, 2022. At March 31, 2023, 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:

Six Months Ended<br><br>March 31, Percentage<br>Change
(in thousands) 2023 2022
Net cash provided by operating activities $ 46,827 $ 30,575 53%
Net cash used in investing activities (40,649) (31,887) 27%
Net cash provided by (used in) financing activities 29,976 (792) *
Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,056 2,157 (51)%
Net increase in cash, cash equivalents and restricted cash $ 37,210 $ 53 *
* Represents a percentage computation that is not mathematically meaningful.
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The increase in cash flows provided by operating activities year-over-year was primarily due to an increase in net income (when considering adjustments for non-cash items affecting net income) as well as changes in working capital primarily related to the timing of payments of accounts payable.

The $8.8 million increase in cash flows used in investing activities year-over-year was primarily due to $24.5 million higher outgoing cash flows used to fund acquisitions and strategic investments and an increase of $18.5 million in net pawn lending, partially offset by an $42.2 million increase in the sale of forfeited collateral. Of the $24.5 million increase year-over-year 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 $30.8 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 $37.2 million increase in cash on hand during the current year to date period, resulting in a $251.6 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". The shares repurchased in conjunction with the transactions discussed above were authorized separately from, and not considered part of, the publicly announced share repurchase program referred to below.

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 March 31, 2023, we have repurchased 929,336 shares of our Class A Common Stock under the program for $8.0 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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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 ongoing operations, debt service requirements, tax payments, 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.

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, 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.

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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 March 31, 2023. Our principal executive officer and principal financial officer have concluded that as of March 31, 2023, 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 March 31, 2023 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 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 30,2022, 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. Cash Converters recognized a one-time, non-cash impairment expense of AUD$110.5 million against goodwill in their financial statements for the period ended December 31, 2022 and, based upon our 43.7% ownership of Cash Converters, after translation to USD, we recorded a $32.5 million equity method loss during the quarter. A decline in the operating results of Cash Converters, if any, resulting from the change of law could adversely affect our investment.

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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 March 31, 2023.

Share Repurchases
Total Number of Shares Purchased (1) 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)
January 1, 2023 through January 31, 2023 218,905 $ 8.86 218,905 $ 44,001
February 1, 2023 through February 28, 2023 83,228 $ 9.02 83,228 $ 43,250
March 1, 2023 through March 31, 2023 146,198 $ 8.54 146,198 $ 42,001
Quarter ended March 31, 2023 448,331 $ 8.79 448,331 $ 42,001 (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.
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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 x
31.2 Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 x
32.1† Certifications of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 x
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 x
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document x
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document x
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document x
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document x
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.

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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: May 3, 2023 /s/Timothy K. Jugmans
Timothy K. Jugmans,<br>Chief Financial Officer

40

Document

Exhibit 31.1

Certification of Lachlan P. Given, Chief Executive Officer,

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

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Lachlan P. Given, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of EZCORP, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2023

/s/ Lachlan P. Given
Lachlan P. Given
Chief Executive Officer

Document

Exhibit 31.2

Certification of Timothy K. Jugmans, Chief Financial Officer,

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

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Timothy K. Jugmans, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of EZCORP, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2023

/s/ Timothy K. Jugmans
Timothy K. Jugmans
Chief Financial Officer

Document

Exhibit 32.1

Certification of Lachlan P. Given, Chief Executive Officer, and Timothy K. Jugmans, Chief Financial Officer,

pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned officers of EZCORP, Inc. hereby certify that (a) EZCORP’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission, fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended, and (b) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of EZCORP.

Date: May 3, 2023 /s/ Lachlan P. Given
Lachlan P. Given
Chief Executive Officer
Date: May 3, 2023 /s/ Timothy K. Jugmans
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Timothy K. Jugmans
Chief Financial Officer

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