Notes to Interim Condensed Consolidated Financial Statements
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
EZCORP, Inc. (collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) is a 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-month period ended December 31, 2022, 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.
NOTE 2: GOODWILL
The following table summarizes the changes in the carrying amount of goodwill by segment and in total:
| | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2022 |
(in thousands) | U.S. Pawn | | Latin America Pawn | | Consolidated |
| | | | | |
Balances as of September 30, 2022 | $ | 245,503 | | | $ | 41,325 | | | $ | 286,828 | |
Acquisitions | 9,413 | | | — | | | 9,413 | |
| | | | | |
| | | | | |
Effect of foreign currency translation changes | — | | | 1,120 | | | 1,120 | |
Balances as of December 31, 2022 | $ | 254,916 | | | $ | 42,445 | | | $ | 297,361 | |
| | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2021 |
(in thousands) | U.S. Pawn | | Latin America Pawn | | Consolidated |
| | | | | |
Balances as of September 30, 2021 | $ | 244,471 | | | $ | 41,287 | | | $ | 285,758 | |
| | | | | |
Measurement period adjustments | — | | | (1,322) | | | $ | (1,322) | |
Effect of foreign currency translation changes | — | | | 183 | | | 183 | |
| | | | | |
Balances as of December 31, 2021 | $ | 244,471 | | | $ | 40,148 | | | $ | 284,619 | |
| | | | | |
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During the first quarter of fiscal 2023, we acquired nine pawn stores located in Houston, Texas and one luxury pawn store in Las Vegas, Nevada for total cash consideration of $12.9 million, inclusive of all ancillary arrangements, of which $9.4 million was recorded as goodwill. These acquisitions expand our position in these strategic markets and expands our offerings by providing a dedicated and targeted focus on higher-end products. These acquisitions were immaterial, individually and in the aggregate, and we have therefore omitted or aggregated certain disclosures.
NOTE 3: EARNINGS PER SHARE
The following table reconciles the number of common shares used to compute basic and diluted earnings per share attributable to EZCORP Inc., shareholders:
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| Three Months Ended December 31, | | |
(in thousands, except per share amounts) | 2022 | | 2021 | | | | |
| | | | | | | |
Basic earnings per common share: | | | | | | | |
Net income - basic | $ | 16,778 | | | $ | 15,721 | | | | | |
Weighted shares outstanding - basic | 56,308 | | | 56,183 | | | | |
Basic earnings per common share | $ | 0.30 | | | $ | 0.28 | | | | | |
| | | | | | | |
Diluted earnings per common share: | | | | | | | |
Net income - basic | $ | 16,778 | | | $ | 15,721 | | | | | |
Add: Convertible Notes interest expense, net of tax* | 4,540 | | | 1,884 | | | | | |
Net income - diluted | $ | 21,318 | | | $ | 17,605 | | | | | |
Weighted shares outstanding - basic | 56,308 | | | 56,183 | | | | | |
Effect of dilution from equity-based compensation awards** | 1,118 | | | 541 | | | | | |
Effect of dilution from if-converted Convertible Notes*** | 26,353 | | | 25,224 | | | | | |
Weighted shares outstanding - diluted | 83,779 | | | 81,948 | | | | | |
Diluted earnings per common share | $ | 0.25 | | | $ | 0.21 | | | | | |
| | | | | | | |
Potential common shares excluded from the calculation of diluted earnings per share above: | | | | | | | |
Restricted stock**** | 1,552 | | 1,936 | | | | |
* Includes $3.5 million loss on extinguishment of debt recorded to "Interest expense" in the Company's condensed consolidated statement of operations.
** Includes time-based share-based awards and performance based awards for which targets for fiscal year tranches have been achieved and vesting is subject only to achievement of service conditions.
*** See Note 7: Debt for conversion price and initial 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.
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 | December 31, 2022 | | December 31, 2021 | | September 30, 2022 | | |
Lease assets: | | | | | | | | |
Operating lease right-of-use assets | Right-of-use assets, net | $ | 229,991 | | | $ | 201,527 | | | $ | 221,405 | | | |
Financing lease assets | Right-of-use assets, net | 563 | | | — | | | 181 | | | |
Total lease assets | | $ | 230,554 | | | $ | 201,527 | | | $ | 221,586 | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Lease liabilities: | | | | | | | | |
Current: | | | | | | | | |
Operating lease liabilities | Operating lease liabilities, current | $ | 52,799 | | | $ | 51,843 | | | $ | 52,334 | | | |
Financing lease liabilities | Accounts payable, accrued expenses and other current liabilities | 121 | | | — | | | 37 | | | |
Total current lease liabilities | | $ | 52,920 | | | $ | 51,843 | | | $ | 52,371 | | | |
| | | | | | | | |
Non-current: | | | | | | | | |
Operating lease liabilities | Operating lease liabilities | $ | 188,730 | | | $ | 161,841 | | | $ | 180,756 | | | |
Financing lease liabilities | Other long-term liabilities | 447 | | | — | | | 148 | | | |
Total non-current lease liabilities | | $ | 189,177 | | | $ | 161,841 | | | $ | 180,904 | | | |
Total lease liabilities | | $ | 242,097 | | | $ | 213,684 | | | $ | 233,275 | | | |
The table below provides major components of our lease costs:
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| Three Months Ended December 31, | | |
(in thousands) | 2022 | | 2021 | | | | |
| | | | | | | |
Operating lease cost: | | | | | | | |
Operating lease cost * | $ | 17,495 | | | $ | 16,362 | | | | | |
Variable lease cost | 3,852 | | | 3,542 | | | | | |
Total operating lease cost | $ | 21,347 | | | $ | 19,904 | | | | | |
| | | | | | | |
Financing lease cost: | | | | | | | |
Amortization of financing lease assets | $ | 19 | | | $ | — | | | | | |
Interest on financing lease liabilities | 11 | | | — | | | | | |
Total financing lease cost | $ | 30 | | | $ | — | | | | | |
Total lease cost | $ | 21,377 | | | $ | 19,904 | | | | | |
* Includes a reduction for sublease rental income of $0.8 million and $0.8 million for the quarters ended December 31, 2022 and 2021, respectively.Lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense are included in "Store" and "General and Administrative" expense, based on the underlying lease use. Cash paid for operating leases are $21.4 million and $19.9 million for the quarters ended December 31, 2022 and 2021, respectively.
The weighted-average term and discount rates for leases are as follows: | | | | | | | | | | | |
| Three Months Ended December 31, |
| 2022 | | 2021 |
| | | |
Weighted-average remaining lease term (years): | | | |
Operating leases | 5.21 | | 5.05 |
Financing leases | 4.03 | | N/A |
| | | |
Weighted-average discount rate: | | | |
Operating leases | 8.36 | % | | 8.10 | % |
Financing leases | 11.14 | % | | N/A |
| | | |
As of December 31, 2022, maturities of lease liabilities under ASC 842 by fiscal year were as follows:
| | | | | | | | | | | |
(in thousands) | Operating Leases | | Financing Leases |
Remaining 2023 | $ | 53,547 | | | $ | 176 | |
Fiscal 2024 | 64,242 | | | 177 | |
Fiscal 2025 | 54,470 | | | 177 | |
Fiscal 2026 | 44,077 | | | 166 | |
Fiscal 2027 | 31,338 | | | 12 | |
Thereafter | 50,420 | | | — | |
Total lease liabilities | $ | 298,094 | | | $ | 708 | |
Less: portion representing imputed interest | 56,565 | | | 140 | |
Total net lease liabilities | $ | 241,529 | | | $ | 568 | |
Less: current portion | 52,799 | | | 121 | |
Total long term net lease liabilities | $ | 188,730 | | | $ | 447 | |
We recorded $20.5 million and $14.3 million in non-cash additions to our right-of-use assets and lease liabilities for the three months ended December 31, 2022 and December 31, 2021, respectively.
NOTE 5: STRATEGIC INVESTMENTS
Cash Converters International Limited
On October 1, 2021, we purchased an additional 13 million shares of Cash Converters International Limited ("Cash Converters") for $2.5 million. This purchase increased our total ownership in Cash Converters to 236,702,991 shares, representing a 37.72% ownership interest. On October 14, 2021, we received a cash dividend of $1.7 million from Cash Converters.
On March 10, 2022, we purchased an additional 5.5 million shares of Cash Converters for $1.0 million. This purchase increased our total ownership in Cash Converters to 242,239,157 shares, representing a 38.60% ownership interest.
On April 5, 2022, we acquired an additional 13 million shares for $2.5 million, bringing our total ownership to 255,239,157 shares, representing an ownership interest of 40.67%. On April 14, 2022, we received a cash dividend of $1.7 million from Cash Converters.
On September 15, 2022, we acquired an additional 5.7 million shares for $0.9 million, bringing our total ownership to 260,939,157 shares, representing an ownership interest of 41.6%.
On November 2, 2022, we purchased an additional 13 million shares of Cash Converters for $2.1 million. This purchase increased our total ownership in Cash Converters to 273,939,157 shares, representing a 43.7% ownership interest. During November 2022, we received a cash dividend of $1.8 million from Cash Converters.
The following tables present summary financial information for Cash Converters most recently reported results at June 30, 2022 after translation to U.S. dollars:
| | | | | | | | | | | |
| June 30, |
(in thousands) | 2022 | | 2021 |
| | | |
Current assets | $ | 158,987 | | | $ | 167,553 | |
Non-current assets | 170,798 | | | 191,788 | |
Total assets | $ | 329,785 | | | $ | 359,341 | |
| | | |
Current liabilities | $ | 59,256 | | | $ | 61,395 | |
Non-current liabilities | 53,045 | | | 57,511 | |
Shareholders’ equity | 217,484 | | | 240,435 | |
Total liabilities and shareholders’ equity | $ | 329,785 | | | $ | 359,341 | |
| | | | | | | | | | | |
| Full-Year Ended June 30, |
(in thousands) | 2022 | | 2021 |
| | | |
Gross revenues | $ | 178,215 | | | $ | 150,165 | |
Gross profit | 116,106 | | | 105,851 | |
Net profit | 8,099 | | | 12,081 | |
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" 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.
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:
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| | Carrying Value | | Estimated Fair Value |
| | December 31, 2022 | | December 31, 2022 | | Fair Value Measurement Using |
(in thousands) | | Level 1 | | Level 2 | | Level 3 |
| | | | | | | | | | |
Financial assets: | | | | | | | | | | |
2.89% promissory note receivable due April 2024 | | $ | 1,224 | | | $ | 1,224 | | | $ | — | | | $ | — | | | $ | 1,224 | |
12.00% promissory note receivable from Founders | | 15,100 | | | 15,100 | | | — | | | — | | | 15,100 | |
| | | | | | | | | | |
Investments in unconsolidated affiliates | | 37,789 | | | 43,497 | | | 43,497 | | | — | | | — | |
Other investments | | 39,220 | | | 39,220 | | | — | | | — | | | 39,220 | |
Financial liabilities: | | | | | | | | | | |
2024 Convertible Notes | | $ | 34,143 | | | $ | 35,851 | | | $ | — | | | $ | 35,851 | | | $ | — | |
2025 Convertible Notes | | 102,192 | | | 89,883 | | | — | | | 89,883 | | | — | |
2029 Convertible Notes | | 222,649 | | | 225,975 | | | — | | | 225,975 | | | — | |
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| | Carrying Value | | Estimated Fair Value |
| | December 31, 2021 | | December 31, 2021 | | Fair Value Measurement Using |
(in thousands) | | Level 1 | | Level 2 | | Level 3 |
| | | | | | | | | | |
Financial assets: | | | | | | | | | | |
2.89% promissory note receivable due April 2024 | | $ | 1,190 | | | $ | 1,190 | | | $ | — | | | $ | — | | | $ | 1,190 | |
Investments in unconsolidated affiliates | | 42,513 | | | 52,671 | | | 45,650 | | | — | | | 7,021 | |
Other investments | | 16,500 | | | 16,500 | | | — | | | — | | | 16,500 | |
Financial liabilities: | | | | | | | | | | |
2024 Convertible Notes | | $ | 142,106 | | | $ | 147,063 | | | $ | — | | | $ | 147,063 | | | $ | — | |
2025 Convertible Notes | | 169,738 | | | 155,060 | | | — | | | 155,060 | | | — | |
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| | 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, consumer loans, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates.
Included in "Accounts payable, accrued expenses and other current liabilities" in our Consolidated Balance Sheet as of December 31, 2022 is $4.6 million, representing the fair value of acquisition-related contingent consideration 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" and located principally in the Mexico City metropolitan area. The key assumptions used to determine the fair value of acquisition-related contingent consideration are estimated by management, not observable in the market and, therefore, considered Level 3 inputs within the fair value hierarchy.
In March 2019, we received $1.1 million in previously escrowed seller funds as a result of settling certain indemnification claims with the seller of GPMX. In April 2019, we loaned the $1.1 million back to the seller of GPMX in exchange for a promissory note. The note bears interest at the rate of 2.89% per annum and is secured by certain marketable securities owned by the seller and held in a U.S. brokerage 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 December 31, 2022.
In December 2022, we loaned $15.0 million to Founders in exchange for a Demand Promissory Note secured by the common interest in Founders held by the other member. The note bears interest at the rate of 12.00% per annum, and all principal and accrued interest is due on demand. The fair value of the note approximated its carrying value as of December 31, 2022.
We use the equity method of accounting to account for our ownership interest in Cash Converters. The inputs used to generate the fair value of the investment in Cash Converters were considered Level 1 inputs. These inputs consist of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period. We included no control premium for owning a large percentage of outstanding shares.
Of the $39.2 million of "Other investments" included in the table above, $30.0 million is related the 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.
We measured 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:
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| December 31, 2022 | | December 31, 2021 | | 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 | | | $ | (7,351) | | | $ | 222,649 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
2025 Convertible Notes | 103,373 | | | (1,181) | | | 102,192 | | | 172,500 | | | (2,762) | | | 169,738 | | | 172,500 | | | (2,172) | | | 170,328 | |
2024 Convertible Notes | 34,389 | | | (246) | | | 34,143 | | | 143,750 | | | (1,644) | | | 142,106 | | | 143,750 | | | (1,175) | | | 142,575 | |
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Total long-term debt | $ | 367,762 | | | $ | (8,778) | | | $ | 358,984 | | | $ | 316,250 | | | $ | (4,406) | | | $ | 311,844 | | | $ | 316,250 | | | $ | (3,347) | | | $ | 312,903 | |
The following table presents the Company's contractual maturities related to the debt instruments as of December 31, 2022:
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| Schedule of Contractual Maturities |
(in thousands) | 2029 Convertible Notes | | 2025 Convertible Notes | | 2024 Convertible Notes | | Total |
| | | | | | | |
Remaining 2023 | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Fiscal 2024 | — | | | — | | | 34,389 | | | 34,389 | |
Fiscal 2025 | — | | | 103,373 | | | — | | | 103,373 | |
Fiscal 2026 | — | | | — | | | — | | | — | |
Fiscal 2027 | — | | | — | | | — | | | — | |
Thereafter | 230,000 | | | — | | | — | | | 230,000 | |
Total long-term debt | $ | 230,000 | | | $ | 103,373 | | | $ | 34,389 | | | $ | 367,762 | |
The following table presents the Company's interest expense related to the Convertible Notes for the three months ended December 31, 2022 and 2021:
| | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | |
(in thousands) | 2022 | | 2021 | | | | |
| | | | | | | |
2029 Convertible Notes: | | | | | | | |
Contractual interest expense | $ | 431 | | | $ | — | | | | | |
Amortization of deferred financing costs | 52 | | | — | | | | | |
| | | | | | | |
Total interest expense | $ | 483 | | | $ | — | | | | | |
| | | | | | | |
2025 Convertible Notes: | | | | | | | |
Contractual interest expense | $ | 942 | | | $ | 1,024 | | | | | |
Amortization of deferred financing costs | 188 | | | 207 | | | | | |
| | | | | | | |
Total interest expense | $ | 1,130 | | | $ | 1,231 | | | | | |
| | | | | | | |
2024 Convertible Notes: | | | | | | | |
Contractual interest expense | $ | 876 | | | $ | 1,033 | | | | | |
Amortization of deferred financing costs | 138 | | | 167 | | | | | |
| | | | | | | |
Total interest expense | $ | 1,014 | | | $ | 1,200 | | | | | |
3.750% Convertible Senior Notes Due 2029
In December 2022, we issued $230.0 million aggregate principal amount of 3.750% Convertible Senior Notes Due 2029 (the “2029 Convertible Notes”). The 2029 Convertible Notes were issued pursuant to an indenture dated December 12, 2022 (the "2022 Indenture") by and between the Company and Truist Bank, as trustee. The 2029 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2029 Convertible Notes pay interest semi-annually in arrears at a rate of 3.750% per annum on June 15 and December 15 of each year, commencing June 15, 2023, and mature on December 15, 2029 (the "2029 Maturity Date"), unless converted,
redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2029 Convertible Notes will be entitled to receive cash equal to the principal of the 2029 Convertible Notes plus accrued interest.
The effective interest rate for the three months ended December 31, 2022 was approximately 4.28%. As of December 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2029 Maturity Date assuming no early conversion.
The 2029 Convertible Notes are convertible based on an initial conversion rate of 89.0313 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $11.23 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2029 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.
Prior to June 15, 2029, the 2029 Convertible Notes will be convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on March 31, 2023 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2022 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2029 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2022 Indenture. On or after June 15, 2029 until the close of business on the business day immediately preceding the 2029 Maturity Date, holders of 2029 Convertible Notes may, at their option, convert their 2029 Convertible Notes at any time, regardless of the foregoing circumstances.
We may not redeem the Notes prior to December 21, 2026. At our option, we may redeem for cash all or any portion of the 2029 Convertible Notes on or after December 21, 2026, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2022. As of December 31, 2022, the if-converted value of the 2029 Convertible Notes did not exceed the principal amount.
Note Repurchases
In December 2022, the Company repurchased approximately $109.4 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 for approximately $62.9 million plus accrued interest and recognized a $3.5 million loss on extinguishment of debt recorded to "Interest expense" in the Company's condensed consolidated statement of operations.
2.375% 2025 Convertible Senior Notes Due 2025
In May 2018, we issued $172.5 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 (the “2025 Convertible Notes”), for which $103.4 million remains outstanding as of December 31, 2022. The 2025 Convertible Notes were issued pursuant to an indenture dated May 14, 2018 (the "2018 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2018 Indenture. The 2025 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375% per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date.
The effective interest rate for the three months ended December 31, 2022 was approximately 2.88% for the 2025 Convertible Notes. As of December 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2025 Maturity Date assuming no early conversion.
The 2025 Convertible Notes are convertible based on an initial conversion rate of 62.8931 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $15.90 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2025 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.
Prior to November 1, 2024, the 2025 Convertible Notes are convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2018 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2018 Indenture. On or after November 1, 2024 until the close of business on the business day immediately preceding the 2025 Maturity Date, holders of 2025 Convertible Notes may, at their option, convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances.
We may not redeem the 2025 Convertible Notes prior to May 1, 2022. At our option, we may redeem for cash all or any portion of the 2025 Convertible Notes on or after May 1, 2022, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2022. As of December 31, 2022, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.
2.875% Convertible Senior Notes Due 2024
In July 2017, we issued $143.75 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 (the “2024 Convertible Notes”), for which $34.4 million remains outstanding as of December 31, 2022. The 2024 Convertible Notes were issued pursuant to an indenture dated July 5, 2017 (the "2017 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. Effective October 1, 2019, Truist (formerly BB&T) assumed the duties and responsibilities as trustee under the 2017 Indenture. The 2024 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2024 Convertible Notes pay interest semi-annually in arrears at a rate of 2.875% per annum on January 1 and July 1 of each year, commencing January 1, 2018, and mature on July 1, 2024 (the "2024 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. At maturity, the holders of the 2024 Convertible Notes will be entitled to receive cash equal to the principal of the 2024 Convertible Notes plus accrued interest.
The effective interest rate for the three months ended December 31, 2022 was approximately 3.35%. As of December 31, 2022, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2024 Maturity Date assuming no early conversion.
The 2024 Convertible Notes are convertible based on an initial conversion rate of 100 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $10.00 per share). The conversion rate will not be adjusted for any accrued and unpaid interest. The 2024 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments. Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.
Prior to January 1, 2024, the 2024 Convertible Notes will be convertible only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2017 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2017 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; (3) if we call any or all of the 2024 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events, as defined in the 2017 Indenture. On or after January 1, 2024 until the close of business on the business day immediately preceding the 2024 Maturity Date, holders of 2024 Convertible Notes may, at their option, convert their 2024 Convertible Notes at any time, regardless of the foregoing circumstances.
At our option, we may redeem for cash all or any portion of the 2024 Convertible Notes on or after July 6, 2021, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2024 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2022. As of December 31, 2022, 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 December 31, 2022, the Company has repurchased and retired 481,005 shares of our Class A Common Stock for $4.1 million under the Common Stock Repurchase Program. The repurchase amount is allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets.
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 Average Grant Date Fair Value |
| | | |
Outstanding as of September 30, 2022 | 2,113,323 | | | $ | 5.88 | |
Granted | 917,990 | | | 7.72 | |
Released (a) | (347,788) | | | 4.71 | |
Cancelled | (54,497) | | | 6.55 | |
Outstanding as of December 31, 2022 | 2,629,028 | | | $ | 6.66 | |
(a) 113,333 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. The agreed settlement requires the Company to make available up to $5 million to be used to pay verified claims (not to exceed $70 per verified claimant), as well as attorneys’ fees and costs. The agreed settlement was approved by the court on October 24, 2022; the period for submitting claims expired on November 8, 2022; and the third-party claims administrator has verified the submitted claims and is set to undertake final resolution. The Company recorded a charge during the quarter ended June 30, 2022, representing the estimated liability for the settlement of this matter and believes the accrual remains sufficient to cover the Company’s liability in this matter.
NOTE 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 December 31, 2022 |
(in thousands) | U.S. Pawn | | Latin America Pawn | | Other Investments | | Total Segments | | Corporate Items | | Consolidated |
| | | | | | | | | | | |
Revenues: | | | | | | | | | | | |
Merchandise sales | $ | 118,314 | | | $ | 45,473 | | | $ | — | | | $ | 163,787 | | | $ | — | | | $ | 163,787 | |
Jewelry scrapping sales | 7,176 | | | 708 | | | — | | | 7,884 | | | — | | | 7,884 | |
Pawn service charges | 69,310 | | | 23,283 | | | — | | | 92,593 | | | — | | | 92,593 | |
Other revenues | 25 | | | 16 | | | 22 | | | 63 | | | — | | | 63 | |
Total revenues | 194,825 | | | 69,480 | | | 22 | | | 264,327 | | | — | | | 264,327 | |
Merchandise cost of goods sold | 73,256 | | | 31,621 | | | — | | | 104,877 | | | — | | | 104,877 | |
Jewelry scrapping cost of goods sold | 6,216 | | | 737 | | | — | | | 6,953 | | | — | | | 6,953 | |
| | | | | | | | | | | |
Gross profit | 115,353 | | | 37,122 | | | 22 | | | 152,497 | | | — | | | 152,497 | |
Segment and corporate expenses (income): | | | | | | | | | | | |
Store expenses | 73,304 | | | 27,499 | | | — | | | 100,803 | | | — | | | 100,803 | |
General and administrative | — | | | (3) | | | — | | | (3) | | | 15,479 | | | 15,476 | |
| | | | | | | | | | | |
Depreciation and amortization | 2,755 | | | 2,215 | | | — | | | 4,970 | | | 3,018 | | | 7,988 | |
(Gain) loss on sale or disposal of assets and other | 3 | | | (19) | | | — | | | (16) | | | — | | | (16) | |
| | | | | | | | | | | |
Interest expense | — | | | — | | | — | | | — | | | 6,190 | | | 6,190 | |
Interest income | — | | | (169) | | | — | | | (169) | | | (495) | | | (664) | |
Equity in net income of unconsolidated affiliates | — | | | — | | | (1,584) | | | (1,584) | | | — | | | (1,584) | |
| | | | | | | | | | | |
Other (income) expense | — | | | 70 | | | 4 | | | 74 | | | (308) | | | (234) | |
| | | | | | | | | | | |
Segment contribution | $ | 39,291 | | | $ | 7,529 | | | $ | 1,602 | | | $ | 48,422 | | | | | |
Income (loss) before income taxes | | | | | | | $ | 48,422 | | | $ | (23,884) | | | $ | 24,538 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2021 |
(in thousands) | U.S. Pawn | | Latin America Pawn | | Other Investments | | Total Segments | | Corporate Items | | Consolidated |
| | | | | | | | | | | |
Revenues: | | | | | | | | | | | |
Merchandise sales | $ | 102,078 | | | $ | 35,642 | | | $ | — | | | $ | 137,720 | | | $ | — | | | $ | 137,720 | |
Jewelry scrapping sales | 4,980 | | | 1,964 | | | — | | | 6,944 | | | — | | | 6,944 | |
Pawn service charges | 56,557 | | | 19,468 | | | — | | | 76,025 | | | — | | | 76,025 | |
Other revenues | 22 | | | 240 | | | 43 | | | 305 | | | — | | | 305 | |
Total revenues | 163,637 | | | 57,314 | | | 43 | | | 220,994 | | | — | | | 220,994 | |
Merchandise cost of goods sold | 57,832 | | | 25,279 | | | — | | | 83,111 | | | — | | | 83,111 | |
Jewelry scrapping cost of goods sold | 3,975 | | | 1,797 | | | — | | | 5,772 | | | — | | | 5,772 | |
| | | | | | | | | | | |
Gross profit | 101,830 | | | 30,238 | | | 43 | | | 132,111 | | | — | | | 132,111 | |
Segment and corporate expenses (income): | | | | | | | | | | | |
Store expenses | 64,689 | | | 22,082 | | | — | | | 86,771 | | | — | | | 86,771 | |
General and administrative | — | | | — | | | — | | | — | | | 15,545 | | | 15,545 | |
| | | | | | | | | | | |
Depreciation and amortization | 2,670 | | | 1,980 | | | — | | | 4,650 | | | 2,924 | | | 7,574 | |
Loss on sale or disposal of assets and other | — | | | 5 | | | — | | | 5 | | | — | | | 5 | |
| | | | | | | | | | | |
Interest expense | — | | | — | | | — | | | — | | | 2,431 | | | 2,431 | |
Interest income | — | | | (182) | | | — | | | (182) | | | (122) | | | (304) | |
Equity in net income of unconsolidated affiliates | — | | | — | | | (1,138) | | | (1,138) | | | — | | | (1,138) | |
| | | | | | | | | | | |
Other (income) expense | — | | | (134) | | | (12) | | | (146) | | | 26 | | | (120) | |
Segment contribution | $ | 34,471 | | | $ | 6,487 | | | $ | 1,193 | | | $ | 42,151 | | | | | |
Income (loss) before income taxes | | | | | | | $ | 42,151 | | | $ | (20,804) | | | $ | 21,347 | |
NOTE 11: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION
The following table provides supplemental information on net amounts included in our condensed consolidated balance sheets:
| | | | | | | | | | | | | | | | | |
(in thousands) | December 31, 2022 | | December 31, 2021 | | September 30, 2022 |
| | | | | |
Gross pawn service charges receivable | $ | 44,397 | | | $ | 38,040 | | | $ | 44,192 | |
Allowance for uncollectible pawn service charges receivable | (9,476) | | | (8,275) | | | (10,716) | |
Pawn service charges receivable, net | $ | 34,921 | | | $ | 29,765 | | | $ | 33,476 | |
| | | | | |
Gross inventory | $ | 159,286 | | | $ | 124,286 | | | $ | 153,673 | |
Inventory reserves | (3,222) | | | (4,973) | | | (2,058) | |
Inventory, net | $ | 156,064 | | | $ | 119,313 | | | $ | 151,615 | |
| | | | | |
Prepaid expenses and other | $ | 11,581 | | | $ | 10,614 | | | $ | 8,336 | |
Accounts receivable, notes receivable and other | 22,730 | | | 6,258 | | | 8,435 | |
Income taxes prepaid and receivable | 11,248 | | | 14,337 | | | 17,923 | |
Prepaid expenses and other current assets | $ | 45,559 | | | $ | 31,209 | | | $ | 34,694 | |
| | | | | |
Property and equipment, gross | $ | 312,502 | | | $ | 288,285 | | | $ | 306,667 | |
Accumulated depreciation | (256,890) | | | (236,084) | | | (249,942) | |
Property and equipment, net | $ | 55,612 | | | $ | 52,201 | | | $ | 56,725 | |
| | | | | |
Accounts payable | $ | 20,220 | | | $ | 18,925 | | | $ | 24,056 | |
Accrued payroll | 4,952 | | | 11,486 | | | 8,365 | |
Incentive accrual | 6,010 | | | 5,158 | | | 17,403 | |
Other payroll related expenses | 10,911 | | | 7,964 | | | 9,592 | |
Accrued sales and VAT taxes | 8,086 | | | 9,704 | | | 7,279 | |
Accrued income taxes payable | 2,562 | | | 6,024 | | | 2,663 | |
Other current liabilities | 17,189 | | | 16,270 | | | 15,151 | |
Accounts payable, accrued expenses and other current liabilities | $ | 69,930 | | | $ | 75,531 | | | $ | 84,509 | |
The following table provides supplemental disclosure of Consolidated Statements of Cash Flows information:
| | | | | | | | | | | |
| Three Months Ended December 31, |
(in thousands) | 2022 | | 2021 |
| |
Supplemental disclosure of cash flow information | | | |
Cash and cash equivalents | $ | 207,658 | | | $ | 233,274 | |
Restricted cash | 8,359 | | | 8,692 | |
Total cash and cash equivalents and restricted cash | $ | 216,017 | | | $ | 241,966 | |
| | | |
Non-cash investing and financing activities: | | | |
Pawn loans forfeited and transferred to inventory | $ | 84,851 | | | $ | 70,966 | |
| | | |
Transfer of consideration for acquisition | 99 | | | — | |
Acquisition earn-out contingency | 2,000 | | | — | |
Accrued acquisition consideration | 1,250 | | | — | |