FinanceLooker

Excrept from filing document 2024-09-30

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 The aggregate market value of the Class A Non Voting Common Stock held by non affiliates of the registrant was 567 million based on the closing price on the NASDAQ Stock Market on March 31 2024
This report contains forward looking statements that reflect our future plans estimates beliefs and expected performance Our actual results may differ materially from those currently anticipated and expressed or implied by those forward looking statements because of a number of risks and uncertainties including those discussed under Part I Item 1A Risk Factors We caution that assumptions expectations projections intentions or beliefs about future events may and often do vary from actual results and the differences can be material See also Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results
Unless otherwise specified references to the Company we our us and EZCORP refer to EZCORP Inc and its consolidated subsidiaries collectively References to a fiscal year refer to our fiscal year ended September 30 of the specified year For example fiscal 2024 refers to the fiscal year ended September 30 2024 All currency amounts preceded with are stated in U S dollars except as otherwise indicated
EZCORP Inc is a leading provider of pawn services in the United States U S and Latin America with 1 279 locations and more than 8 000 Team Members We are a Delaware corporation headquartered in Austin Texas
At our pawn stores we advance cash against the value of collateralized tangible personal property and sell merchandise to customers looking for good value The merchandise we sell primarily consists of pre owned collateral forfeited from our pawn activities or merchandise purchased from customers By store count we ar
rgest pawn store owner and operator in the U S and one of the largest in Latin America We also offer web based applications under the name EZ that allow customers to manage their pawn transactions layaways and loyalty rewards online
We own 43 7 of Cash Converters International Limited Cash Converters a publicly traded company ASX CCV headquartered in Perth Western Australia Cash Converters and its controlled companies comprise a diverse group generating revenues from franchising store operations personal finance including pawn transactions and vehicle finance in 669 stores across 17 countries
We own a preferred interest in Founders One LLC Founders that has majority ownership in Simple Management Group Inc SMG which owns and operates 102 pawn stores in the U S Caribbean and Central America with plans to build and acquire more stores in those regions
We generate revenues primarily from pawn service charges PSC on pawn loans outstanding PLO merchandise sales and jewelry scrapping We remain focused on optimizing our balance of 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 fiscal 2024 fiscal 2023 and fiscal 2022
Latin America Pawn which includes our Empeño Fácil Cash Apoyo Efectivo and other branded pawn operations in Mexico as well as our GuatePrenda and MaxiEfectivo pawn operations in Guatemala El Salvador and Honduras referred to as GPMX and
For additional information about our segments and geographic areas see Note 12 Segment Information of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data
At our pawn stores we advance cash against the value of collateralized tangible personal property We earn pawn service charges PSC for those cash advances and the PSC rate varies by state and transaction size At the time of the transaction we take possession of the pawned collateral which consists of tangible personal property generally jewelry consumer electronics tools sporting goods and 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
In the U S PSC rates generally vary between 12 and 25 per month as permitted by applicable law and the pawn term generally ranges between 30 and 90 days Individual pawn transactions typically average between 170 and 200
In Mexico PSC rates generally vary between 15 and 21 per month as permitted by applicable law and the pawn primary term is 30 days Individual pawn transactions typically average between 1 200 and 1 500 Mexican pesos or approximately 65 to 85 on average using the average exchange rate for fiscal 2024
In GPMX PSC rates generally vary between 12 and 18 per month as permitted by applicable law and the pawn primary term is 30 days Individual pawn transactions are made in the local currency of the country and typically average between 120 and 140 using the average exchange rates for fiscal 2024 The average transaction amounts tend to be higher in the GPMX countries than in Mexico due to the higher concentration of jewelry used as pawn collateral
If a customer chooses not to redeem renew or extend their pawn the pawn collateral is forfeited and becomes inventory available for sale We do not record losses or charge offs when the pawned collateral is forfeited because the amount advanced for the unpaid pawn becomes the inventory carrying cost of the forfeited collateral The difference between the subsequent sale of the forfeited collateral and the amount of the pawn offset by any inventory reserve is reflected in merchandise sales gross margin
Our ability to offer quality pre owned 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
Customers in the U S and the majority of our Latin America stores may purchase a product protection plan that allows them to exchange certain general merchandise non jewelry sold through our retail pawn operations within six months of purchase In the U S we also offer a jewelry VIP package which guarantees customers a minimum future pawn advance amount on the item sold allows them full credit if they trade in the item to purchase a more expensive piece of jewelry and provides minor repair service on the item sold Customers may also purchase an item on layaway by paying a minimum layaway deposit of typically 10 of the item s sale price in addition to an upfront fee We typically hold items on layaway for a 90 180 day period during which the customer is required to pay the balance of the sales price through a series of installment payments If a payment is missed we hold the item for up to 30 days after which it is returned to active inventory for sale
Our pawn operations are designed to provide the optimum level of support to the store teams providing coaching mentoring and problem solving to identify opportunities to better serve our customers and position us to be the leader in customer service and satisfaction
Our risk management structure consists of asset protection compliance and internal audit departments which monitor the inventory system lending practices regulatory compliance and compliance with our policies and procedures We perform full physical audits of inventory at each store at least annually and more often in higher risk stores or those experiencing higher shrinkage Inventory counts are completed daily for jewelry and firearms and other inventory categories more susceptible to theft are cycle counted multiple times annually We record shrink adjustments for known losses at the conclusion of each inventory count These adjustments are recorded as estimates during interim periods and as discovered during cycle counts
We performed a Global Employee Engagement Survey administered by Glint in April 2024 and had a 87 participation rate with an overall engagement score of 84 Our engagement score is ten points higher than the global benchmark which contains data from over 1 100 companies of varying size across a variety of industries Finance Healthcare Manufacturing Professional Services Retail Technology and Utilities and includes results from over eight million respondents located in over 150 countries
Our top strengths were Career Customer Focus and Continuous Improvement Our focus areas for improvement included Team Valued Teammate and Work Life Balance Team Members provided over 11 900 comments with mixed sentiment 27 positive 38 neutral and 35 negative To ensure we address issues raised in the survey all people leaders at the District Manager and above level will have Engagement Objectives for fiscal 2025 guided by actions that will yield the greatest business and Team Member impact
We employ approximately 8 000 Team Members across all our geographies including approximately 3 600 in United States 3 500 in Mexico and 900 in Central America We seek to hire and promote Team Members to lead the way today and to step into greater roles in the future We achieve this goal through Training and Development programs that Team Members can use to plan their careers and identify future growth opportunities We engage Team Members at all levels so we can understand their professional and personal goals identify high potential future leaders to strengthen our internal bench support them in their journey and retain our talent
High scoring questions in our 2024 Global Employee Engagement Survey included I know the career path s available to me at EZCORP with an 89 favorability rating and I have good opportunities to learn and develop at EZCORP with an 86 favorability rating
We reinforced the utilization of our career path Operations and career and competency framework Corporate Support Center to build individual development plans to guide the career paths of Team Members and to prepare them for future roles
Our values People Pawn Passion define our priorities as a business and our Guiding Principles Leadership Customer Service Accountability Respect Diversity and Sustainability characterize the expectations for how we interact with Team Members customers and communities Various tools are used globally to demonstrate commitment to our principles values and positive culture including a plain language Code of Conduct and supporting policies annual training on expectations and clear communications from executive management reinforcing ethical behavior and a positive culture
To support our ethical business practices we maintain an Ethics Hotline available to all Team Members and external stakeholders to report anonymously if desired any matter of concern Communications to the hotline which is managed by an independent third party are routed to appropriate functions whether Human Resources Legal or Compliance and in some cases directly to the Board of Directors for investigation and resolution In addition any shareholder or other interested party may send communications to the Board of Directors either individually or as a group through a process that is outlined in the Investor Relations section of our website
At EZCORP we foster an environment that values diversity inclusion and development for all In our 2024 Global Employee Engagement Survey 83 of participants responded positively to the question I feel a sense of belonging at EZCORP In fiscal 2024 we continued to further our Diversity and Inclusion strategy by focusing on the following initiatives
We sponsor affinity groups to foster an inclusive and supportive environment where Team Members with shared characteristics experiences or interests can connect collaborate and contribute effectively The Women s Empowerment Black Empowerment Hispanic Organization for Leadership Advocacy HOLA and EZ Pride affinity groups in the U S and the Women s Empowerment and Working Parents affinity groups in Latin America all aim to enhance diversity equity and inclusion efforts by providing a platform for open dialogue resource sharing professional development and cultural enrichment
1 The term underrepresented minority is used to describe diverse populations including African American Hispanic Asian and Native American Team Members who self identified their race and ethnicity at hire
Our compensation programs are designed to align the compensation of Team Members with individual and Company performance and to provide the proper incentives to attract retain and motivate Team Members to achieve results
We provide wages and incentive plans that are competitive and consistent with positions skill levels experience knowledge and geographic location Additionally on an annual basis U S gender and racial ethnic analysis is performed to ensure pay equity
We engage a nationally recognized outside compensation and benefits consulting firm to independently evaluate the effectiveness of our executive compensation and to provide benchmarking against our selected peer group which includes
All employees are eligible for paid time off Company paid life insurance and participation in a tenure award program which recognizes their commitment and loyalty by awarding EZ Rewards points based on their years of service
The People and Compensation Committee of the Board of Directors has primary responsibility for analyzing advising and as appropriate approving executive compensation The committee is also responsible for organizational development matters and otherwise assisting the Board of Directors in its overall responsibility to enable EZCORP to attract retain develop and motivate qualified executives who will contribute to the long term success of the Company
The committee actively participates in the executive recruitment and selection process Committee members are instrumental in the executive talent management and succession processes including the review and attainment of annual objectives for our executive officers All executive officers have a minimum of one objective related to People generally broken into the areas of Employee Engagement Scores Voluntary Attrition and Inclusion
EZCORP is committed to meeting our customers needs in a responsible manner and in that regard we have aligned purpose vision values guiding principles and business strategy with environmental social and governance sustainability factors
Our pawnbroking and related retail sales activities inherently contribute to the circular economy and promote environmental sustainability We provide unique options for our customers to satisfy their needs for cash options that are not offered by traditional lenders such as banks and credit unions credit card providers or installment and short term lenders For many of our customers pawn transactions provide an essential and financially responsible lifeline for meeting their unexpected expenses Our retail activities rely primarily on local sourcing of pre owned merchandise and the recirculation of those items back into the neighborhoods we serve In short our business is unique essential and sustainable
Our business is fundamentally a neighborhood business where each store principally serves the surrounding neighborhood This local focus reduces the need of our customers to travel long distances to access our products and services and eliminates the need for delivery services
Each of our stores serves as its own supply chain We take in pre owned merchandise either through pawn or purchases from customers and then sell that merchandise after forfeiture in the case of pawn transactions generally in the same store Thus we do not maintain or rely on mass supply distribution or warehousing facilities
Virtually all of the merchandise we sell is pre owned which contributes to pre owned goods recycling and the circular economy In fiscal 2024 we sold approximately 5 2 million pre owned items including over 2 9 million items in the consumer electronics camera and household goods categories 1 4 million other general merchandise items such as tools and musical instruments and 0 8 million jewelry items In addition through our jewelry scrapping activities we recycle significant volumes of gold and diamonds All of these activities effectively extend the useful life of many products reducing waste and lessening the demand for new manufacturing and mining
Our store operations themselves leave a relatively small carbon footprint when compared to big box or other mass retailers that rely on manufacturers and extensive supply chain and distribution channels Our stores are relatively small generally 3 300 square feet or less To reduce energy consumption we have installed energy efficient LED lighting in 78 of our U S stores and 62 of Latin America stores
In all of our facilities including our corporate support offices we promote environmental stewardship by reducing consumption recycling paper products approximately 1 million pounds across all U S locations during fiscal 2024 and responsibly disposing of end of life computers electronics and related accessories through recycling or other sound e waste processing Our corporate office in Austin Texas is LEED Certified Silver status
Our business serves as an essential and responsible financial resource for unbanked and or underserved consumers who have limited access to traditional forms of capital or credit We improve the reach and access to financial services through neighborhood based stores supported by digital offerings We provide instant access to cash in transactions that generally average 185 in the U S Our pawn transactions are simple transparent regulated and safe and funding approval is based on the valuation of the collateral item not on the credit worthiness of the customer The customer is not required to repay the amount advanced rather the customer may choose to repay the amount advanced and the PSC or forfeit the collateralized merchandise We do not engage in collection efforts or take other legal actions against our customers and we do not report transaction histories to external credit agencies
Customer satisfaction measurement and feedback are key factors in improving our customer service and Team Member engagement To capture direct customer feedback we have enabled Google Reviews across all stores and have received over 349 000 Google reviews with an average satisfaction rating of 4 8 out of 5 across U S and Latin America
We offer customers multiple payment options including cross store over the phone and web based and mobile platforms reducing the need to travel to stores to make payments Online payments are accepted on layaways and pawn extensions with electronic payment receipts delivered on these transactions
We have refreshed the mission of EZCORP Foundation our philanthropic arm that is focused on making a difference in communities where we live and operate by supporting charitable organizations that align with our operating values of People Pawn and Passion Current initiatives include supporting financial literacy efforts working to eradicate food insecurity empowering young people to succeed and other poverty intervention activities
At EZCORP we believe that The Way We Do Business is as Important as the Business We Do That belief underlies our Code of Conduct which outlines our expectations and provides guidance on how our Team Members can carry out their daily activities ethically and responsibly Our ethical principles include Honesty Integrity Reliability Loyalty Respect Responsibility Fairness Caring Leadership and Diversity and these principles form the foundation for how we govern our business
Independent directors comprise a majority of our Board of Directors Four of the seven members of our Board of Directors meet all of the independence requirements set forth in the Nasdaq Listing Rules and none of the independent directors have any past or existing relationship with our controlling stockholder outside of their Board service
We satisfy Nasdaq s board diversity rules with two of our seven Board members being diverse directors one of whom self identifies as female and an underrepresented minority and one whom self identifies as an underrepresented minority
Our pawn operations are licensed and supervised in all jurisdictions in which we operate We maintain a strong compliance culture that is monitored and overseen by our Board of Directors and supported by seasoned regulatory and compliance teams
Protecting the privacy integrity and security of our customers data and our enterprise network is a top priority that is also monitored and overseen by our Board of Directors We maintain a separate IT Security team that is responsible for the design and implementation of our cyber risk strategy including deployment of systems enterprise wide training monitoring and reporting of threat incidents and response preparedness
Part of our strategy is to grow the number of locations we operate through opening new de novo locations and through acquisitions in both Latin America and the U S and potential new markets Our ability to add new stores 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 availability of qualified personnel
During fiscal 2024 we continued our expansion in Latin America and the U S with the opening of 41 de novo stores 20 in Mexico 17 in Guatemala 3 in Honduras and 1 in Nevada and the acquisition of 13 stores in the U S We also consolidated 6 stores 5 in Latin America and 1 in the U S We now own a total of 1 279 stores 737 in Latin America 58 and 542 in the U S 42 In fiscal 2024 the Latin America stores represented 27 of our consolidated gross profit as the average scale of Latin America pawn stores is smaller than in the U S We see opportunity for further expansion in Latin America and the U S through both acquisitions and de novo openings
In the U S PSC is historically highest in our fourth fiscal quarter July through September due to a higher average PLO balance during the summer and lowest in our third fiscal quarter April through June following the tax refund season and merchandise sales are highest in our first and second fiscal quarters October through March due to the holiday season jewelry sales surrounding Valentine s Day and the availability of tax refunds In Latin America most of our customers receive additional compensation from their employers in December and many receive additional compensation in June or July applying downward pressure on PLO balances and fueling some merchandise sales in those periods In Mexico we saw similar downward pressure in loan balances during the third quarter of fiscal 2023 due to a change in law related to company profit sharing payments to employees We anticipated this change would impact pawn loan redemptions annually in May and June however in fiscal 2024 the demand for pawn loans in Mexico exceeded any downward pressure related to profit sharing payments As a net effect of these and other factors and excluding discrete charges our consolidated income before tax is generally highest in our first fiscal quarter October through December and lowest in our third fiscal quarter April through June
We encounter significant competition in connection with all of our activities These competitive conditions may have an impact on our revenues profitability and ability to expand We compete with other pawn stores credit service organizations banks credit unions and other financial institutions such as consumer finance companies We believe the primary elements of competition are the quality of customer service and relationship management including understanding our customers needs better than anyone else convenience store location and a customer friendly environment In addition we believe the ability to compete effectively will be based increasingly on strong general management regional focus automated management information systems access to capital and superior customer service
Our competitors for merchandise sales include numerous retail and wholesale stores such as jewelry stores discount retail stores consumer electronics stores other pawn stores other resale stores electronic commerce retailers and auction sites Competitive factors in our retail operations include the ability to provide customers with a variety of merchandise at considerable value coupled with exceptional customer service and convenient locations
The pawn industry in the U S is large relatively mature and highly fragmented The industry consists of a few large operators of which we are the second largest and then independent operators who primarily own one to three locations
The pawn industry in Latin America is also fragmented but less so than in the U S The industry consists of pawn stores owned by independent operators and chains including some not for profit organizations We are the second largest for profit operator in Mexico and the largest operator in Guatemala The pawn industry particularly full line stores dealing in both general merchandise and jewelry remains in an expansion stage in Latin America
members globally This free program allows customers to earn points on most transactions that may be applied as a discount towards retail sales once a certain threshold is met We believe this program provides a distinct competitive advantage over other pawn operators
We operate our U S pawn stores principally under the names EZPAWN or Value Pawn Jewelry our Mexico pawn stores principally under the name EMPEÑO FÁCIL and Cash Apoyo Efectivo our Guatemala pawn stores under the name GuatePrenda and our El Salvador and Honduras pawn stores under the name MaxiEfectivo We have registered the names EZPAWN Value Pawn Jewelry and EZCORP among others with the United States Patent and Trademark Office In Mexico we have registered the names EMPEÑO FÁCIL Bazareño Presta Dinero Montepio San Patricio and Cash Apoyo Efectivo with the Instituto Mexicano de la Propiedad Industrial We have registered the name GuatePrenda in Guatemala and the name MaxiEfectivo in Guatemala El Salvador and Honduras
Compliance with federal state and local laws and regulations is an integral part of how we manage our business and we conduct our business in material compliance with all of these rules The following is a general description of significant regulations affecting our business
Our pawn stores are regulated by the states in which they are located and in some cases by individual municipalities or other local authorities The applicable statutes ordinances and regulations vary from location to location and typically impose licensing requirements for pawn stores or individual pawn store Team Members Licensing requirements typically relate to financial responsibility and character and may establish restrictions on where pawn stores can operate Additional rules regulate various aspects of the day to day pawn operations including the pawn service charges that a pawn store may charge the maximum amount of a pawn loan the minimum or maximum term of a pawn loan the content and format of the pawn ticket and the length of time after a pawn loan default that a pawn store must hold a pawned item before it can be offered for sale Failure to observe applicable regulations could result in a revocation or suspension of pawn licenses the imposition of fines or requirements to refund service charges and fees and other civil or criminal penalties We must also comply with various federal requirements regarding the disclosure of the annual percentage rate finance charge amount financed total of payments and payment schedule related to each pawn loan transaction Additional federal regulations applicable to our pawn lending business are described in Other Regulations below
The majority of our pawn stores voluntarily or pursuant to applicable laws provide periodic generally daily reports to local law enforcement agencies These reports provide local law enforcement with information about the items received from customers whether through pawn or purchase including a detailed description of the goods involved and the name and address of the customer If we accept as collateral or purchase merchandise from a customer and it is determined that our customer was not the rightful owner the merchandise is subject to recovery by the rightful owner and those losses are included in our shrinkag
Some of our pawn stores in the U S handle firearms and each of those stores maintains a federal firearms license as required by federal law The federal Gun Control Act of 1968 and regulations issued by the Bureau of Alcohol Tobacco Firearms and Explosives also require each pawn store dealing in firearms to maintain a permanent written record of all receipts and dispositions of firearms In addition we must comply with the Brady Handgun Violence Prevention Act which requires us to conduct a background check before releasing selling or otherwise disposing of firearms
We are subject to the Truth in Lending Act TILA and its underlying regulations which requires lenders to disclose information about the terms and costs of credit in a standardized manner including in the form of an annual percentage rate The TILA regulations also require us to provide certain disclosure in advertising our products and services
We are subject to the federal Gramm Leach Bliley Act and its underlying regulations as well as various state laws and regulations relating to privacy and data security Under these regulations we are required to disclose to our customers our policies and practices relating to the protection and sharing of customers nonpublic personal information These regulations also require us to ensure that our systems are designed to protect the confidentiality of customers nonpublic personal information and many of these regulations dictate certain actions that we must take to notify customers if their personal information is disclosed in an unauthorized manner In some jurisdictions we are subject to the laws restricting the scope of data we collect and granting rights to our customers to access correct and or delete the information we obtain
We are subject to the Fair Credit Reporting Act which was enacted in part to address privacy concerns associated with the sharing of consumers financial information and credit history contained in consumer credit reports and limits our ability to share certain consumer report information
We are subject to the Federal Fair and Accurate Credit Transactions Act which amended the Fair Credit Reporting Act and requires us to adopt written guidance and procedures for detecting preventing and mitigating identity theft and to adopt various policies and procedures including Team Member training that address and aid in detecting and responding to suspicious activity or identity theft red flags
As a provider of consumer financial products we are prohibited from engaging in any unfair deceptive or abusive act or practice UDAAP under the Dodd Frank Act as they can cause significant financial injury to consumers erode consumer confidence and undermine the financial marketplace
The Equal Credit Opportunity Act prohibits discrimination on the basis of race color religion national origin sex marital status age receipt of public assistance or good faith exercise of any rights under the Consumer Credit Protection Act
Under the USA PATRIOT Act we must maintain an anti money laundering compliance program that includes the development of internal policies procedures and controls the designation of a compliance officer an ongoing Team Member training program and an independent audit function to test the program
We are subject to the Bank Secrecy Act and its underlying regulations which require us to report and maintain records of certain high dollar transactions In addition federal laws and regulations require us to report certain transactions or series of transactions deemed suspicious to the Financial Crimes Enforcement Network of the Treasury Department FinCen Generally a transaction is considered suspicious if we know suspect or have reason to suspect that the transaction a involves funds derived from illegal activity or is intended to hide or disguise such funds b is designed to evade the requirements of the Bank Secrecy Act or c appears to serve no legitimate business or lawful purpose
The Office of Foreign Assets Control OFAC of the Department of the Treasury administers and enforces economic and trade sanctions based on U S foreign policy and national security goals against targeted foreign countries and regimes terrorists international narcotics traffickers those engaged in activities related to the proliferation of weapons of mass destruction and other threats to the national security foreign policy or economy of the United States We are prohibited from doing business with named individuals businesses and countries subject to sanctions and restrictions and we are required to report any transactions involving those named by the US Department of the Treasury
The Foreign Corrupt Practices Act FCPA makes it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business Specifically the anti bribery provisions of the FCPA prohibit the willful use of mail or any means of instrumentality of interstate commerce corruptly in furtherance of any offer payment promise to pay or authorization of the payment of money or anything of value to any person while knowing that all or a portion of such money or thing of value will be offered given or promised directly or indirectly to a foreign official to influence the foreign official in his or her official capacity induce the foreign official to do or omit to do an act in violation of his or her lawful duty or to secure any improper advantage in order to assist in obtaining or retaining business for or with or directing business to any person
Under certain circumstances the federal Consumer Financial Protection Bureau CFPB may be able to exercise regulatory authority over the U S pawn industry through its rule making authority To date the CFPB has not taken any steps to exercise such authority or indicated any intention to do so although it has initiated actions against pawn companies for alleged violations of consumer lending regulations including the Military Lending Act discussed above
Federal law in Mexico provides for administrative regulation of the pawnshop industry by Procuraduría Federal del Consumidor PROFECO Mexico s primary federal consumer protection agency PROFECO regulates the form and terms of pawn loan contracts but not interest or service charge rates and defines certain operating standards and procedures for pawnshops including retail operations and establishes registration disclosure bonding and reporting requirements There are significant fines and sanctions including operating suspensions for failure to comply with PROFECO s rules and regulations
PROFECO requires that we report certain transactions or series of transactions when a customer pawns more than three items of the same category Anti money laundering regulations restrict the use of cash in certain transactions Relevant aspects of the law specifically affecting the pawn industry include monthly reporting on vulnerable activities which includes certain high value pawn and precious metal transactions
The Federal Law on the Protection of Personal Data Held by Private Parties requires us to protect our customers personal information This law requires us to inform customers if we share customer personal information with third parties and to post both online and in store our Data Privacy Policy
Our pawn business in Mexico is also subject to regulation at the state and local level through state laws and local zoning and permitting ordinances For example some states require permits for pawn stores to operate certification of Team Members as trained in the valuation of merchandise and strict customer identification controls State and local agencies often have authority to suspend store operations pending resolution of actual or alleged regulatory licensing and permitting issues
Our pawn business in Mexico is subject to the General Law of Administrative Responsibility GLAR which requires us to implement an integrity policy that contains mechanisms to ensure integrity standards throughout the organization GLAR establishes administrative penalties for improper payments to government officials influence peddling including the hiring of public officials and the use of undue influence and other corrupt acts in public procurement processes
We are also subject to The Federal Law for the Prevention and Identification of Transactions with Funds from Illegal Sources which requires reporting of certain transactions exceeding certain monetary limits the appointment of a compliance officer and maintenance of customer identification records and controls This law affects all vulnerable activities in Mexico and is intended to detect commercial activities arising from illicit or ill gotten means through bilateral cooperation between Mexico s Ministry of Finance and Public Credit and Mexico s Attorney General s Office The law also restricts the use of cash in certain transactions associated with high value assets and limits and to the extent possible money laundering activities protected by the anonymity that such cash tra
g 174 254 85 Mexican pesos and retail transactions of precious metals exceeding 174 254 85 Mexican pesos Retail transactions of precious metals in cash exceeding 348 509 70 Mexican pesos are prohibited There are significant fines and sanctions for failure to comply with these rules
We must also comply with the Official Mexican Standards issued by regulatory agencies in accordance with Article 40 of the Federal Law on Metrology and Standardization which establishes rules applicable to a retail products and services and related disclosures labeling and marketing including NOM 179 SCFI 2016 NOM 017 SCFI 1993 and NOM 024 SCFI 2013
In addition to the above our pawn business in Mexico is subject to various general business regulations in the areas of tax compliance customs consumer protections money laundering civil protection regulations municipal regulations trade code federal public safety and employment matters among others by various federal state and local governmental agencies
Local governmental entities in Guatemala El Salvador and Honduras also regulate lending and retail businesses Certain laws and local zoning and permitting ordinances require basic commercial business licenses and signage permits Operating in these countries also subjects us to other types of regulations including regulations related to financial reporting data protection and privacy tax compliance labor and employment practices real estate transactions anti money laundering commercial and electronic banking restrictions credit card transactions usury law consumer protection marketing advertising and other general business activities As the scope of our international operations increases we may face additional administrative and regulatory costs in managing our business In addition unexpected changes in laws and regulations administrative interpretations of local requirements or legislation or public remarks by elected officials could negatively affect our operations and profitability
We file annual quarterly and current reports and other documents with the Securities and Exchange Commission SEC under the Securities Exchange Act of 1934 as amended the Exchange Act The SEC maintains an internet website that contains reports and other information regarding issuers that file electronically with the SEC The public can obtain any documents that we file with the SEC at www sec gov
We maintain a website at www ezcorp com Our filings with the SEC including our Annual Reports on Form 10 K quarterly reports on Form 10 Q current reports on Form 8 K and Section 16 filings are available free of charge through links maintained on our website under the heading Investor Relations SEC Filings Information contained on our website is not incorporated by reference into this report
There are many risks and uncertainties that may affect our operations performance development and results Many of these risks are beyond our control The following is a description of the important risk factors that may affect our business If any of these risks were to occur our business financial condition or results of operations could be materially adversely affected Additional risks and uncertainties not currently known to us or that we currently consider to be immaterial may also materially adversely affect our business financial condition or results of operations
Our products and services are subject to regulation under various laws and regulations in each country and jurisdiction in which we operate see Part I Item 1 Business Regulation and adverse legislation or regulations could be adopted in any such country or jurisdiction If such legislation or regulation is adopted in any particular jurisdiction we generally evaluate our business in the context of the new rules and determine whether we can continue to operate in that jurisdiction with new or modified products or whether it is feasible to enhance our business with additional product offerings In any case if we are unable to continue to operate profitably under the new rules we may decide to close or consolidate stores resulting in decreased revenues earnings and assets Further our failure to comply with applicable laws and regulations could result in fines penalties or orders to cease or suspend operations which could have a material adverse effect on our results of operations
Negative characterizations of the pawn industry by consumer advocates media or others could result in increased legislative or regulatory activity could adversely affect the market value of our publicly traded stock or could make it harder to operate our business successfully
Many of the legislative and regulatory efforts that are adverse to the pawn industry are the result of negative characterization of the pawn industry by consumer advocacy groups members of the media or others that focus on the cost of pawn loans or instances of pawn operators purchasing stolen property or accepting it as pawn collateral We can give no assurance that there will not be further negative characterizations of our industry or that legislative or regulatory efforts to restrict the availability of pawn loans or otherwise regulate pawn operations will not be successful despite significant customer demand for such services Such efforts if successful could have a material adverse effect on our operations or financial performance
Furthermore negative characterizations of our industry could limit the number of investors who are willing to hold our Class A Common Stock which may adversely affect its market value limit sources of the debt or equity financing that we need in order to conduct our operations and achieve our strategic growth objectives or make it harder for us to attract hire and retain talented executives and other key Team Members
account for a significant portion of our revenues and profitability The legislative regulatory and general business environment in Texas and Florida has been relatively favorable for our pawn business activities but a negative legislative or regulatory change in either of those states could have a material adverse effect on our overall operations and financial performance Further as discussed below areas in Texas and Florida where we have significant operations are particularly susceptible to hurricane and tropical storm activity
Gold jewelry comprises a large portion of the collateral security for our pawn loans and our inventory PSC sales proceeds and our ability to liquidate excess jewelry inventory at an acceptable margin are dependent upon gold values and the volume of gold transactions A decline in the availability of gold or our customers willingness or ability to sell us gold or use gold as collateral for pawn loans could impact our business The impact on our financial position and results of operations of decreases in gold values or volumes or a change in customer behavior cannot be reasonably estimated because the market and customer response to changes in gold values is not known however a significant decline in gold values or gold volumes could result in decreases in sales sales margins PLO and PSC
We regularly experience fluctuations in a variety of operating metrics Changes in any of these metrics as might be caused by changes in the economic environment competitive pressures changes in customers tastes and preferences or a significant decrease in gold prices could materially and adversely affect our profitability and ability to achieve our planned results of operations
Our expansion strategy includes acquiring existing stores and opening de novo store locations Our acquisition strategy is dependent upon the availability of attractive acquisition candidates while the success of our de novo store strategy is contingent upon numerous factors that cannot be predicted or controlled such as the availability of acceptable locations with a desirable customer base the negotiation of acceptable lease terms the ability to obtain required government permits and licenses and the existence of a suitable competitive environment The achievement of our growth objectives is also subject to our ability to attract train and retain qualified Team Members Failure to achieve our expansion goals could adversely affect our prospects future results of operations and future cash flows
Under the terms of the Purchase Agreement related to the sale of our 94 owned subsidiary Prestaciones Finmart S A P I de C V SOFOM E N R Grupo Finmart to Alpha Holding S A de C V AlphaCredit in September 2016 we remain obligated to indemnify AlphaCredit for any pre closing taxes i e tax obligations arising from the Grupo Finmart business that are attributable to periods prior to the completion of the sale in September 2016 Those obligations continue until the expiration of the statute of limitations applicable to the pre closing periods In August 2019 AlphaCredit notified us of a potential indemnity claim for certain pre closing taxes but the nature extent and validity of such claim has yet to be determined The final payments from AlphaCredit totaling 8 0 million were placed into escrow in 2019 pending resolution of the potential indemnity claim
The statute of limitations applicable to most of the pre closing years has now expired but AlphaCredit has informed us that they filed an amended return for 2016 which they claim extends the statute of limitations for that year We are continuing to pursue release of the funds
One person beneficially owns all of our voting stock and generally controls the outcome of all matters requiring a vote of stockholders which may influence the value of our publicly traded non voting stock
Phillip E Cohen is the beneficial owner of all our Class B Voting Common Stock and all our publicly traded stock is non voting stock Consequently stockholders other than Mr Cohen have no vote with respect to the election of directors or any other matter requiring a vote of stockholders except in limited circumstances as required by law Further our Bylaws currently provide that the voting stockholder may appoint or remove officers or take any other action that the Board of Directors may take with respect to officers under the Bylaws The lack of voting rights may adversely affect the market value of our publicly traded Class A Common Stock
Mr Cohen is a member of our Board of Directors and serves as Executive Chairman As a member of the Board Mr Cohen is entitled to vote on all matters requiring approval of the Board Our Bylaws currently provide that the presence of all directors shall constitute a quorum for the transaction of business and that any act of the Board of Directors requires a unanimous approval of all directors Consequently Mr Cohen as is the case with each of the other directors has the ability to block actions of the Board Mr Cohen has agreed that as a member of the Board of Directors he will not participate in any Board vote regarding his position as Executive Chairman
Some of our stores in the U S conduct pawn and retail transactions involving firearms which may be associated with an increased risk of injury and related lawsuits We may be subject to lawsuits relating to the improper use of firearms that we sell including actions by persons attempting to recover damages from firearms retailers relating to misuse of firearms We may also incur fines penalties or liabilities or have our federal firearms licenses revoked or suspended if we fail to properly perform required background checks for and otherwise record and report firearms transactions Any such actions could have a material adverse effect on our business prospects results of operations financial condition and reputation
The nature of our business requires us to maintain significant cash on hand loan collateral and inventories in our stores Consequently we are subject to loss of cash or merchandise as a result of robberies burglaries thefts riots looting and other criminal activity in our stores Further we could be subject to liability to customers or other third parties as a result of such activities While we maintain asset protection and monitoring programs to mitigate these risks as well as insurance programs to protect against catastrophic loss or exposure there can be no assurance that these crimes will not occur or that such losses will not have an adverse effect on our business or results of operations
We encounter significant competition from other pawn stores consumer lending companies other retailers online retailers and auction sites many of which have significantly greater financial resources than we do Increases in the number or size of competitors or other changes in competitive influences such as aggressive marketing and pricing practices could adversely affect our operations In Mexico we compete directly with certain pawn stores owned and operated by government affiliated or sponsored non profit foundations and the government could take actions that would harm our ability to compete in that market
Our continued profitability and growth plans are dependent on our ability to successfully design or acquire deploy and maintain information technology and other business systems to support our current business and our planned growth and expansion
The success of our business depends on the efficiency and reliability of our information technology and business systems and related controls including the point of sale system utilized in our store locations If access to our technology infrastructure is impaired as may occur with a computer virus a cyber attack or other intentional disruption by a third party natural disaster telecommunications system failure electrical system failure or lost connectivity or if there are flaws in the design or roll out of new or refreshed technology systems such as our point of sale system we may be unable to process transactions or otherwise carry on our business in a timely and efficient manner An infrastructure disruption could damage our reputation and cause us to lose customers and revenue We consider security risks from multiple viewpoints including physical security as well as security of infrastructure and databases As our technology infrastructure continues to evolve from on premise to cloud service providers we continue to assess the security of such infrastructure including third party service providers
for strategic reasons Law or regulatory changes in Australia or other jurisdictions in which Cash Converters operates or other factors could adversely affect Cash Converters operating performance our share of which would be reflected in our own financial statements due to the equity method of accounting Further if that operating performance or other factors adversely impact the value of Cash Converters publicly traded stock then we may be required to impair our investment as we have done in the past
We own 43 7 of the outstanding ordinary shares of Cash Converters which is a publicly traded company based in Australia We made the initial investment in November 2009 and have made incremental investments periodically since then The success of this strategic investment is dependent on a variety of factors including Cash Converters business performance and the market s assessment of that performance
In December 2022 the Australian Parliament passed the Financial Sector Reform Bill 2022 which establishes lending limits on small amount credit contracts and that bill became effective in June 2023 To reflect the expected adverse impact to its operating results Cash Converters recorded a one time non cash impairment expense during the period ended December 31 2022 and we recorded our share of that charge during the second quarter of our fiscal 2023
We have recorded a number of impairments to the carrying value of our investment in Cash Converters in the past After an analysis of Cash Converters stock price performance and other factors we determined the fair value of our investment in Cash Converters at September 30 2024 was greater than its carrying value See Note 3 Strategic Investments of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data If the fair value of our investment declines and we determine that such decline is other than temporary we may be required to further impair our investment and recognize the related investment loss which would adversely affect our results of operations and financial position in the period of impairment Furthermore there can be no assurance that we will be able to dispose of some or all of our investment in Cash Converters on favorable terms should we decide to do so in the future
Our ability to recover our investments in other companies such as our indirect investment in Simple Management Group Inc and our investment in Rich Data Corporation is heavily dependent on the success and performance of those companies including their respective ability to obtain further debt or equity financing
We have certain investments in other companies See Note 1 Organization And Summary Of Significant Accounting Policies Investments of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data Our ability to recover our investment in these companies is heavily dependent on their success and performance potentially including their ability to obtain further debt or equity financing To the extent that any of such companies are not successful we may be required in future periods to impair our investment and recognize related investment losses
We maintain a program of insurance coverage for various types of property casualty and other risks The types and amounts of insurance that we obtain vary from time to time depending on availability cost and our decisions with respect to risk retention The policies are subject to deductibles and exclusions that result in our retention of a level of risk on a self insurance basis Losses not covered by insurance could be substantial and may increase our expenses which could harm our results of operations and financial condition
We have significant operations located in areas that are susceptible to hurricanes notably the Atlantic and Gulf Coast regions of Florida the Gulf Coast regions of Texas including Houston as well as Mexico and Central America Certain areas of our operations are also susceptible to other types of natural disasters such as earthquakes volcanoes and tornadoes As noted above not all physical damage that we incur as a result of any such natural disaster will be covered by insurance due to policy deductibles and risk retentions In addition natural disasters could have a significant negative impact on our business beyond physical damage to property including a reduction of our PLO inventory pawn service charges and merchandise sales Only limited portions if any of those negative impacts will be covered by applicable business interruption insurance policies As a result geographically isolated natural disasters could have a material adverse effect on our overall operations and financial performance
Goodwill comprises a significant portion of our total assets We assess goodwill for impairment at least annually which could result in a material non cash write down and could have a material adverse effect on our results of operations and financial conditions
dwill was 306 5 million or approximately 21 of our total assets as of September 30 2024 We test goodwill and intangible assets with an indefinite life for potential impairment annually or more frequently if an event
occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value These events or circumstances could include a significant change in the business climate a change in strategic direction legal factors operating performance indicators a change in the competitive environment the sale or disposition of a significant portion of a reporting unit or future economic factors such as unfavorable changes in the estimated future discounted cash flows of our reporting units
When performing our annual test of goodwill for impairment in the fourth quarter we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount If we elect to perform a qualitative assessment and determine an impairment is more likely than not we are then required to perform a quantitative impairment test otherwise no further analysis is required We also may elect not to perform a qualitative assessment and instead proceed directly to a quantitative impairment test When performing a quantitative impairment test we apply a one step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit s carrying amount over its fair value not to exceed the total amount of goodwill allocated to that reporting unit
When we perform a quantitative goodwill impairment test we estimate the fair value of the reporting unit using an income approach based on the present value of expected future cash flows including terminal value utilizing a market based weighted average cost of capital WACC determined separately for each reporting unit The determination of fair value involves the use of estimates and assumptions including revenue growth rates operating margins and terminal growth rates discounted by an estimated WACC derived from other publicly traded companies that are similar but not identical to us from an operational and economic standpoint We use discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in our internally developed forecasts
of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data If the conversion feature of any of those convertible notes is triggered holders will be entitled to convert the notes at their option at any time during specified periods If one or more holders elect to convert their notes we may be required or may choose to settle the obligation through the payment of cash which could adversely affect our liquidity In addition even if holders do not elect to convert their notes we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the convertible notes as a current rather than long term liability which would result in a material reduction of our net working capital
If it were to occur the conversion of convertible notes would dilute the ownership interests of existing stockholders to the extent we deliver shares of Class A Common Stock upon conversion Any sales in the public market of such shares could adversely affect prevailing market prices of our Class A Common Stock In addition the existence of the convertible notes may encourage short selling by market participants because the conversion of such notes could be used to satisfy short positions or anticipated conversion of the notes into shares of our Class A Common Stock could depress the price of our Class A Common Stock
We have a limited number of unreserved shares available for future issuance which may limit our ability to conduct future financings and other transactions and our ability to offer equity awards to management
Our certificate of incorporation currently authorizes us to issue up to 100 million shares of Class A Common Stock Taking into consideration the shares that are issued and outstanding as well as the shares that have been reserved for issuance pursuant to convertible notes
fore our ability to issue shares of Class A Common Stock other than pursuant to the existing reserved for commitments or securities or instruments that are convertible into or exchangeable for shares of Class A Common Stock may be limited until such time additional authorized unissued and unreserved shares become available or unless we determine we are unlikely to issue all of the shares that are currently reserved During this time for example our ability to complete equity or equity linked financings or other transactions including strategic acquisitions that involve the issuance or potential issuance of Class A Common Stock may be limited Further our ability to offer equity based compensation to our management team may also be limited which could adversely affect our ability to align management s incentives with stockholders or attract and retain key management personnel
Our business may be impacted by public health issues such as COVID 19 other pandemics and the spread of contagious diseases Such public health issues and the government and consumer responses thereto may i limit our ability to supply products and services to our customers as a result of store closures reduced access to or foot traffic in our stores or labor shortages ii adversely affect the demand for our products and services or iii cause other unforeseen negative developments Any of these factors may adversely affect our financial condition results of operations or liquidity
We have significant operations in Latin America and changes in the business regulatory political or social climate could impact our operations there which could adversely affect our results of operations and growth plans
We own and operate a significant number of pawn stores in Latin America primarily Mexico but also Guatemala El Salvador and Honduras Further our growth plans include potential expansion in some of those countries as well as potentially other countries in Latin America Doing business in those countries exposes us to risks related to political instability corruption economic volatility drug cartel and gang related violence social unrest including riots and looting tax and foreign investment policies public safety and security concerns and uncertain application of laws and regulations Consequently actions or events in any of those countries that are beyond our control could restrict our ability to operate there or otherwise adversely affect the profitability of those operations Furthermore changes in the business regulatory or political climate in any of those countries or significant fluctuations in currency exchange rates could affect our ability to expand or continue our operations there which could have a material adverse impact on our prospects results of operations and cash flows For a description of the current regulatory environment in the Latin American countries in which we operate see Mexico Regulations and Other Latin America Regulations under Part I Item 1 Business Regulation
We have foreign operations in Latin America primarily Mexico but also Guatemala El Salvador and Honduras and an equity investment in Australia Our assets and investments in and earnings and dividends from each of these countries must be translated to U S dollars from their respective functional currencies A significant weakening of any of these foreign currencies could result in lower assets and earnings in U S dollars resulting in a potentially material adverse impact on our financial position results of operations and cash flows
We are currently subject to various litigation and regulatory actions and additional actions could arise in the future Potential actions range from claims and assertions arising in the ordinary course of business such as contract customer or employment disputes to more significant corporate level matters or shareholder litigation All of these matters are subject to inherent uncertainties and unfavorable rulings could occur which could include monetary damages fines and penalties or other relief Any unfavorable ruling or outcome could have a material adverse effect on our results of operations or could negatively affect our reputation
Under our certificate of incorporation we are generally obligated to indemnify our directors and officers for costs and liabilities they incur in their capacity as directors or officers of the Company Consequently if a proceeding names or involves any of our directors or officers then subject to certain exceptions we are generally obligated to pay or reimburse the cost or liability such director or officer incurs as a result of such proceeding including defense costs judgments and amounts paid in settlement We maintain management liability insurance that protects us from much of this potential indemnification exposure as well as potential costs or liabilities that may be directly incurred by the Company in some cases However our insurance coverage is subject to deductibles and there may be elements of the costs or liabilities that are not covered under the insurance policies In addition to the extent our ultimate liability in any such proceeding or any combination of proceedings that are included in the same policy year exceeds the management liability policy limits our results of operations and financial condition could be adversely affected
In pursuing our business strategy we routinely conduct discussions evaluate opportunities and enter into agreements regarding possible acquisitions investments and other transactions These transactions may involve significant challenges and risks including risks that we may not realize the expected return on an acquisition or investment that we may not be able to retain key personnel of an acquired business or that we may experience difficulty in integrating acquired businesses into our business systems and processes If we do enter into agreements with respect to acquisitions investments or other transactions we may fail to complete them due to inability to obtain required regulatory or other approvals or other factors Furthermore acquisitions investments and other transactions require substantial management resources and have the potential to divert our attention from our existing business and there are inherent risks in integrating and operating any acquired business These factors could harm our business and results of operations
We may be exposed to liabilities under applicable anti bribery anti corruption anti money laundering and other general business laws and regulations and any determination that we violated these laws or regulations could have a material adverse effect on our business
We are subject to various anti bribery and anti corruption laws that prohibit improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business including the Foreign Corrupt Practices Act in the U S and the General Law of Administrative Responsibility in Mexico We are also subject to various laws and regulations designed to prevent money laundering or the financial support of terrorism or other illegal activity including the USA PATRIOT Act and the Bank Secrecy Act in the U S and The Federal Law for the Prevention and Identification of Transactions with Funds From Illegal Sources in Mexico See Part I Item 1 Business Regulation Further our business is expanding in countries and regions that are less developed and are generally recognized as potentially more corrupt business and political environments
While we maintain controls and policies to ensure compliance with applicable laws and regulations these controls and policies may prove to be less than effective If Team Members agents or other persons for whose conduct we are held responsible violate our policies we may be subject to severe criminal or civil sanctions and penalties and we may be subject to other liabilities that could have a material adverse effect on our business results of operations and financial condition
A significant reduction in cash flows from operations or the availability of debt or equity financing could materially and adversely affect our ability to achieve our planned growth and operating results Our ability to obtain debt or equity financing including the possible refinancing of existing indebtedness will depend upon market conditions our financial condition and the willingness of financing sources to make capital available to us at acceptable rates and terms The inability to access capital at acceptable rates and terms could restrict or limit our ability to achieve our growth objectives which could adversely affect our financial condition and results of operations
Our access to transactional banking services as well as international wire services between certain countries is an ongoing business requirement Inability in accessing or maintaining transactional banking or wire services could lead to increased costs or the inability to efficiently manage our cash as we would be required to seek alternative banking services or obtain services from several regional or local retail banks
In the course of conducting our business we collect and store on our information technology systems a variety of information about our customers including sensitive personal identifying and financial information We may not have the resources or technical expertise to anticipate or prevent rapidly evolving types of cyber attacks Attacks may be targeted at us our service providers our customers or others who have entrusted us with information Actual or anticipated attacks may cause us to incur increased costs including costs to hire additional personnel purchase additional protection technologies train Team Members and engage third party experts and consultants Advances in computer capabilities new technological discoveries or other developments may result in the technology we use to protect data being breached or compromised In addition data and security breaches can occur as a result of non technical issues including breach by us or by persons with whom we have commercial relationships that result in the unauthorized release of personal or confidential information We could be subject to fines penalties and liabilities if any such information is misappropriated from our systems or we otherwise fail to maintain the security and confidentiality of such information Further any such data security breach could cause damage to our reputation and a loss of confidence in our data security measures which could adversely affect our business and prospects
Our business and operations could be subject to interruption or damage due to inclement weather natural disaster power loss acts of violence terrorist attacks war civil unrest or similar events Further we may experience information technology or other business systems disruptions Such events could impair our customers access to our business impact our ability to expand or continue our operations or otherwise have an adverse effect on our financial condition
We face various cybersecurity risks including those related to unauthorized access to and misuse of data system interruptions ransomware malicious software and other threats Our cybersecurity program incorporates information technology retail technology and customer products designed to mitigate cyber risks Our security measures are customized to meet our unique business requirements and encompass firewalls intrusion detection and prevention systems encryption and multi factor authentication We also engage external experts to enhance and assess our cybersecurity measures in the form of maturity assessments incident response penetration testing and other advisory services We adhere to the practices and standards outlined by the National Institute of Standards and Technology Cyber Security Framework
We employ continual monitoring of our systems and data managed by an external detection and response firm In the event of a cyber incident we maintain an incident response plan coordinated across multiple departments This strategy is designed for rapid and effective incident management to minimize operational disruption Our response protocol includes steps for detection containment eradication recovery and post incident review including impact on safety data loss operational disruption cost and potential reputational damage
Recognizing our employees as a vital defense mechanism we provide cybersecurity privacy and information handling training Additionally we conduct regular phishing exercises to enhance employee vigilance Our educational programs aim to raise awareness about cyber risks and teach employees to safeguard the Company our customers and themselves against cyber threats These programs inform our workforce about the latest cybersecurity dangers and safe online practices including secure access phishing awareness remote work security and reporting suspicious activities
Our cybersecurity governance framework is structured to promote accountability and ongoing enhancement of cybersecurity measures Management of the cybersecurity program involves cross functional resources our Cyber and Technology Risk Committee an internal multi departmental committee formed to address cyber and data privacy matters The cybersecurity program is led by our Chief Information Security Officer CISO who reports to the Chief Legal Officer The Internal Audit Department monitors and reviews our cybersecurity initiatives
The Board of Directors is responsible for overseeing and monitoring the material risks facing the Company The Audit and Risk Committee of the Board is charged with overseeing our risk management framework including cybersecurity risks The CISO reports directly to the Audit and Risk Committee on cybersecurity risks on a quarterly basis
To date we have not identified any cybersecurity threats or incidents that have had or are likely to have a material impact on our business financial condition or results of operations Nonetheless the escalation of cybersecurity threats poses a risk to our systems networks and products and services which despite our efforts to mitigate these risks may not protect against all incidents For a detailed discussion on how cybersecurity risks could materially impact our business see Part I Item 1A Risk Factors
We lease our pawn store locations which are located throughout our geographic areas of operations See Part I Item 1 Business Segment and Geographic Information Our pawn stores are typically located in a freestanding building or occupy all or part of a retail strip center with contiguous parking A portion of the store interior is designed for retail operations with merchandise displayed for sale by category Distinctive exterior design and attractive in store signage provide an appealing atmosphere to customers W
Leases for our U S locations generally have initial terms ranging from three to ten years and typically allow for renewals in increments of three to five years Our primary corporate office is located in Austin Texas and is leased through March 2029 with escalating rent payments annually and includes two five year extension options at the end of the lease term Our locations in Latin America are generally leased on three to five year terms
Our existing leases expire on various dates through fiscal 2039 with a small number of leases on month to month terms All leases provide for specified periodic rental payments at market rates Most leases require us to maintain the property and pay the cost of insurance and taxes We believe the termination of any one of our leases would not have a material adverse effect on our operations Our strategy generally is to lease rather than own space for our stores On an ongoing basis we may close or consolidate under performing store locations
As of September 30 2024 we had a total of 1 279 stores 542 of which are located in the U S with 46 located in Texas 17 in Florida and the remainder spread across 17 other states We also have 565 locations in Mexico 133 in Guatemala 18 in El Salvador and 21 in Honduras
In addition to our store leases we lease approximately 108 000 square feet of corporate office space in Austin Texas 70 742 square feet of which is being subleased or made available for sublease to other tenants We lease other corporate office space in Mexico 8 600 square feet Guatemala 3 500 square feet El Salvador 4 500 square feet and Honduras 1 200 square feet
Our Class A Non Voting Common Stock Class A Common Stock is traded on the NASDAQ Stock Market under the symbol EZPW As of November 1 2024 there were approximately 69 registered stockholders of record of our Class A Common Stock There is no trading market for our Class B Voting Common Stock Class B Common Stock which was held by one stockholder as of
The following Stock Performance Graph and related information shall not be deemed to be filed with the Securities and Exchange Commission nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934
The following table compares cumulative total stockholder returns for our Class A Common Stock for the last five fiscal years with the cumulative total return on the NASDAQ Composite Index ticker symbol IXIC and the NASDAQ Other Financial Index ticker symbol IXFN over the same period The graph shows the value at the end of each of the last five fiscal years of 100 invested in our Class A Common Stock or the indices on September 30 2019 The graph depicts the change in the value of our Class A Common Stock relative to the indices at the end of each fiscal year and not for any interim period Historical stock price performance is not necessarily indicative of future stock price performance
The table below provides certain information about our repurchase of shares of Class A Non voting Common Stock during the quarter ended September 30 2024 All repurchases during the quarter were made 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
On May 3 2022 the Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to 50 million of our Class A Non Voting Common Stock over a three year period 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
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 or the Company for the two year period ended September 30 2024 The following discussion should be read together with our consolidated financial statements and accompanying notes included in Part II Item 8 Financial Statements and Supplementary Data This discussion and analysis contains forward looking statements and our actual results could differ materially from those anticipated in these forward looking statements See Part I Item 1A Risk Factors and Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results below
On September 11 2024 the Company announced entry into an acquisition agreement with Presta Dinero S A de C V for the purchase of 53 pawn stores in Mexico While at the time we expected to complete the transaction by October 31 2024 the transaction has not yet closed and the parties remain in discussion
To supplement our 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 in the case of constant currency and our store operations in the case of same store results 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 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 fiscal years ended September 30 2024 and 2023 were as follows
Operating expenses increased 52 1 million 10 primarily due to a a 42 5 million increase in store expenses as a result of increased labor driven by inflationary and minimum wage increases and to a lesser extent expenses related to rent and b a 8 0 million increase in general and administrative expenses primarily due to labor incentive compensation and to a lesser extent cost related to the implementation and ongoing support for our Workday ERP system
Total non operating income increased 43 6 million 108 primarily due to recognition in the prior year of our share of losses in Cash Converters net results related to their non cash goodwill impairment charge a reduction of interest expense and an increase in interest income Interest expense decreased 2 9 million primarily driven by the prior year net loss recorded on the partial extinguishments of the 2024 convertible notes and 2025 convertible notes See Note 7 Debt of Notes to Consolidated Financial Statements in Part II Item 8 Financial Statements and Supplemental Data for further discussion The interest income increase is primarily due to our treasury management with increased market interest rates
Income tax expense increased 19 3 million primarily due to the increase in income before income taxes of 64 0 million an increase in non deductible expense in Latin America and accrued withholding taxes on prior earnings that are no longer permanently reinvested 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 Note 9 Income Taxes of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplemental Data for quantification of these items
The following table presents selected summary financial data from our Latin America Pawn segment including constant currency results after translation to U S dollars from functional currencies See Results of Operations Non GAAP Financial Information above
Store expenses increased 16 0 million up 13 11 on a constant currency basis primarily due to increased labor headcount in line with store activity and minimum wage increases and to a lesser extent rent associated with lease renewals Same store expenses increased 12 9 on a constant currency basis
Segment contribution was up 23 to 38 8 million 21 on a constant currency basis due to the changes noted above in addition to the impact of the prior year reversal of contingent consideration liability in connection with a previously completed acquisition which was recorded to Other operating income
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
General and administrative expenses increased 8 0 million 12 primarily due to labor incentive compensation and to a lesser extent costs related to the implementation and ongoing support of our Workday ERP system
Interest expense decreased 2 9 million 17 primarily driven by the prior year net loss recorded on the partial extinguishments of the 2024 convertible notes and 2025 convertible notes See Note 7 Debt of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplemental Data for further discussion
Income tax expense increased 19 3 million primarily due to the increase in income before income taxes of 64 0 million an increase in non deductible expense in Latin America and accrued withholding taxes on prior earnings that are no longer permanently reinvested 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 Note 9 Income Taxes of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplemental Data for quantification of these items
The Results of Operations discussion for fiscal 2023 vs fiscal 2022 is located 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 2023
The 11 8 million increase in cash flows provided by operating activities 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 income taxes prepaid expenses accounts payable and inventory
The 1 0 million increase in cash flows used in investing activities was primarily due to an increase of 51 7 million in net pawn lending outflows offset by a 27 0 million increase in cash inflows from the sale of forfeited collateral and a 23 7 million net decrease in cash flows used to fund strategic investments capital expenditures and acquisitions
The 73 9 million increase in cash flows used in financing activities was primarily related to the December 2022 financing of the 2029 Convertible Notes in which we issued 230 0 million 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 Further on July 1 2024 the 2024 Convertible Notes matured and the remaining 34 4 million aggregate principal amount outstanding plus accrued interest was repaid using cash on hand During 2024 the Company repurchased and retired 1 218 503 shares of our Class A Common Stock for 12 0 million under the Common Stock Repurchase Program
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 Debt of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data 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 September 30 2024 we have repurchased 2 845 548 shares of our Class A Common Stock under the program for 26 0 million which amount was allocated between Additional paid in capital and Retained earnings in our Consolidated Balance Sheets Execution of the program will be responsive to fluctuating market conditions and valuations liquidity needs and the expected return on investment compared to other opportunities
Under the stock repurchase program we may purchase Class A Non Voting common stock from time to time at management s discretion in accordance with applicable securities laws including through open market transactions block or privately negotiated transactions or any combination thereof In addition we may purchase shares pursuant to a trading plan meeting the requirements of Rule 10b5 1 under the Securities Exchange Act of 1934
The amount and timing of purchases will be dependent on a variety of factors including stock price trading volume general market conditions legal and regulatory requirements general business conditions the level of cash flows and corporate considerations determined by management and the Board such as liquidity and capital needs and the availability of attractive alternative investment opportunities The Board has reserved the right to modify suspend or terminate the program at any time
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 2025 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 May 2025 and December 2029 may require us to refinance these obligations through the issuance of new debt securities equity securities convertible securities or through new credit facilities
For a description of the terms of our convertible notes including the associated conversion and other related features and transactions see Note 7 Debt of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data
c No provision for uncertain tax benefits has been reflected in the contractual obligations table as the timing of any such payment is uncertain See Note 9 Income Taxes of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data Additionally no provision for insurance reserves deferred compensation arrangements or other liabilities totaling 8 5 million has been included as the timing of such payments are uncertain
d Total excludes contractual obligations already recorded on our consolidated balance sheets as current liabilities except for current maturities of long term debt which are included in the debt obligations caption above and accrued portions of interest and lease obligations which are included in the interest on long term debt obligations and lease obligations captions above
In addition to the lease obligations in the table above we are responsible for the maintenance property taxes and insurance at most of our locations During the fiscal year ended September 30 2024 these collectively amounted to 17 7 million
The preparation of financial statements in accordance with generally accepted accounting principles in the United States GAAP requires us to make estimates and assumptions that affect the reported amounts of assets liabilities revenues and expenses and related disclosure of contingent assets and liabilities On an on going basis we evaluate our estimates and judgments including those related to revenue recognition inventory loan loss allowances goodwill and indefinite lived intangible assets long lived and other intangible assets income taxes contingencies and litigation We base our estimates on historical experience observable trends and various other assumptions that we believe to be reasonable under the circumstances We use this information to make judgments about the carrying values of assets and liabilities that are not readily apparent from other sources Actual results may differ from the estimates under different assumptions or conditions
The critical accounting policies and estimates that could have a significant impact on our results of operations as well as relevant recent accounting pronouncements are described in Note 1 Organization And Summary Of Significant Accounting Policies of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data Certain accounting policies regarding the quantification of the sensitivity of certain critical estimates are discussed further below
We record PSC using the effective interest method over the life of the loan for all pawn loans we believe to be collectible We base our estimate of collectible loans on several inputs including recent redemption rates historical trends in redemption rates and the amount of loans due in the following months Unexpected variations in any of these factors could change our estimate of collectible loans affecting our earnings and financial condition As of September 30 2024 the balance of our PSC receivable was 44 0 million Assuming the average forfeiture rate increased or decreased by 10 our pawn service charges receivable balance as of September 30 2024 would have increased or decreased by approximately 1 4 million
We consider our estimates of obsolete or slow moving inventory and shrinkage in determining the appropriate overall valuation allowance for inventory We monitor our sales margins for each type of inventory on an ongoing basis and compare to historical margins Significant variances in those margins may require a revision to future inventory reserve estimates We have historically revised our reserve pertaining to jewelry inventory depending on the current price of gold and resulting trends in margins Future declines in gold prices may cause an increase in reserve rates pertaining to jewelry inventory As of September 30 2024 the gross balance of our inventory was 194 7 million for which we have included reserves of 2 7 million Assuming the reserve rates were increased or decreased by 10 our inventory reserve balance as of September 30 2024 would have increased or decreased by approximately 0 3 million
When testing goodwill for impairment we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount If we elect to perform a qualitative assessment and determine an impairment is more likely than not we are then required to perform a quantitative impairment test otherwise no further analysis is required We also may elect not to perform a qualitative assessment and instead proceed directly to a quantitative impairment test When performing a quantitative impairment test we apply a one step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit s carrying amount over its fair value not to exceed the total amount of goodwill allocated to that reporting unit
When we perform a quantitative goodwill impairment test we estimate the fair value of the reporting unit using an income approach based on the present value of expected future cash flows including terminal value utilizing a market based weighted average cost of capital WACC determined separately for each reporting unit The determination of fair value involves the use of estimates and assumptions including revenue growth rates operating margins and terminal growth rates discounted by an estimated WACC derived from other publicly traded companies that are similar but not identical to us from an operational and economic standpoint We use discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in our internally developed forecasts
We test indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test If we believe as a result of the qualitative assessment that it is more likely than not that the fair value of the indefinite lived intangible asset is less than its carrying amount a quantitative impairment test is required Otherwise no further testing is required
We consider the assessment of the occurrence of triggering events or substantive changes in circumstances that may indicate the fair value of goodwill may be impaired to be a critical estimate Furthermore we consider the assumptions discussed above pertaining to the income approach we use in the quantitative testing of impairment to be critical estimates
The results of the impairment analyses for fiscal 2024 and fiscal 2023 are discussed in Note 6 Goodwill And Intangible Assets of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data
Management believes that it is more likely than not that forecasted income including income that may be generated as a result of certain tax planning strategies together with future reversals of existing taxable temporary differences will be sufficient to fully recover the net recorded deferred tax assets In the event we determine all or part of the net deferred tax assets are not realizable in the future we will make an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made We have included valuation allowances against deferred tax assets for net operating losses and tax credits not expected to be utilized based on specific facts and estimates for each jurisdiction
We consider the earnings of certain non U S subsidiaries to be indefinitely invested outside the U S on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings We have not recorded a deferred tax liability related to foreign withholding taxes of our undistributed earnings of foreign subsidiaries indefinitely invested outside the U S
We may be subject to income tax audits by the respective tax authorities in any or all of the jurisdictions in which we operate or have operated within a relevant period Significant judgment is required in determining uncertain tax positions We utilize the required two step approach to recognize and measure uncertain tax positions The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit including resolution of related appeals or litigation processes The second step is to measure the tax benefit as the largest amount that is more than 50 likely to be realized upon ultimate settlement We consider many factors when evaluating and estimating our tax positions and tax benefits which may require periodic adjustments and which may not accurately forecast actual outcomes We adjust these reserves in light of changing facts and circumstances such as the closing of an audit or the refinement of an estimate Changes in recognition or measurement are reflected in the period in which the change in judgment occurs We believe adequate provisions for income taxes have been made for all periods
This Annual Report on Form 10 K 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 The words may can should could will would predict anticipate believe estimate expect intend plan project and similar expressions are intended to identify forward looking statements although not all forward looking statements contain these identifying words Such statements are only predictions of the outcome and timing of future events based on our current expectations and currently available information 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 Accordingly you should not regard any forward looking statement as a representation that the expected results will be achieved When considering forward looking statements you should keep in mind the risk factors and other cautionary statements in this report Such risks and uncertainties include among other things
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 You should not place undue reliance on our forward looking statements Although forward looking statements reflect our good faith beliefs forward looking statements involve known and unknown risks uncertainties and other factors which may cause our actual results performance or achievements to differ materially from anticipated future results performance or achievements expressed or implied by such forward looking statements Accordingly you should not regard any forward looking statements as a representation that the expected results will be achieved
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
Our earnings and financial position are affected by changes in gold values and to a lesser extent silver and precious stone values and the resulting impact on pawn lending jewelry sales and jewelry cost of goods sold The proceeds of scrap sales and our ability to sell jewelry inventory at an acceptable margin depend on gold values The impact on our financial position and results of operations of a hypothetical change in gold values cannot be reasonably estimated due to the timing of scrap sales among other operational considerations
Our earnings and financial position are affected by foreign exchange rate fluctuations related to our equity investments and our operations outside the U S While we generally do not seek to hedge amounts in foreign currencies we consider hedging strategies from time to time to mitigate certain discrete risks of exposure via short term arrangements
The translation adjustment from Cash Converters through June 30 2024 included in our September 30 2024 results on a three month lag was a nominal increase to stockholders equity excluding income tax impacts As of September 30 2024 1 00 Australian dollar strengthened at 0 6944 U S as compared to 0 6452 in the prior year
The translation adjustment from Latin America primarily representing the change of the Mexican peso during the fiscal year ended September 30 2024 was a 20 5 million decrease to stockholders equity As of September 30 2024 the Mexican peso weakened approximately 11 to 1 00 Mexican to 0 0508 U S from 0 0574 U S as of September 30 2023 As of September 30 2024 the Guatemalan quetzal strengthened approximately 2 Q1 00 Guatemalan to 0 1325 U S from 0 1302 U S as of September 30 2023 We have currently assumed indefinite reinvestment of earnings and capital in Latin America in excess of the 20 0 million of prior earnings for which applicable withholding taxes have been accrued as of September 30 2024 Accumulated translation gains or losses related to any future repatriation of earnings or capital would impact our earnings in the period of repatriation
We cannot predict the future valuation of foreign currencies or how further movements in exchange rates could affect our future earnings or financial position due to the interrelationship of operating results and exchange rates
We have audited the accompanying consolidated balance sheets of EZCORP Inc the Company as of September 30 2024 and 2023 the related consolidated statements of operations comprehensive income stockholders equity and cash flows for each of the three years in the period ended September 30 2024 and the related notes collectively referred to as the consolidated financial statements In our opinion the consolidated financial statements present fairly in all material respects the financial position of the Company at September 30 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended September 30 2024 in conformity with accounting principles generally accepted in the United States of America
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of September 30 2024 based on criteria established in
These consolidated financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s consolidated financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the consolidated financial statements and 2 involved our especially challenging subjective or complex judgments The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates
As described in Note 1 to the consolidated financial statements the Company recognizes revenue for merchandise sales at the point in time when merchandise inventory is sold and delivered to the customer The Company recognizes revenue for pawn service charges using the effective interest method over the life of the pawn loans for all pawn loans the Company believes to be collectible As described in Note 12 to the consolidated financial statements for the year ended September 30 2024 the Company s total revenues within the U S and Mexico were 836 1 million and 247 6 million respectively substantially all of which related to merchandise sales and pawn service charges
We identified revenue recognition for merchandise sales and pawn service charges within the U S and Mexico as a critical audit matter as auditing merchandise sales and pawn service charges revenue within these locations required a higher extent of audit effort
Testing U S and Mexico merchandise sales revenue and pawn service charges revenue transactions on a sample basis by tracing the sampled transactions to supporting information such as electronic sales records and electronic evidence of payment
Class A Non Voting Common Stock par value 0 01 per share shares authorized 100 million 51 582 698 issued and outstanding as of September 30 2024 and issued and outstanding of 51 869 569 as of September 30 2023
EZCORP Inc was founded in 1989 and is a provider of pawn services in the United States and Latin America At our pawn stores we advance cash against the value of collateralized personal property We also sell merchandise primarily collateral forfeited from pawn activities and pre owned merchandise purchased from customers We fulfill short term cash needs to consumers with a focus on delivering an industry leading customer experience
We have an equity interest 43 7 as of September 30 2024 in Cash Converters International Limited Cash Converters a publicly traded company ASX CCV headquartered in Perth Western Australia Cash Converters and its controlled companies comprise a diverse group generating revenues from franchising store operations personal finance including pawn transactions and vehicle finance in 669 stores across 17 countries Additionally we own a preferred interest in Founders One LLC Founders that has majority ownership in Simple Management Group Inc SMG
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles and are expressed in U S dollars They include the accounts of EZCORP Inc and its wholly owned subsidiaries We use the equity method of accounting for entities over which we exercise significant influence but in which we have a 50 or less investment We account for equity investments in entities over which we do not exercise significant influence and do not have a readily determinable fair value at cost If we obtain evidence that the fair value of such an investment has declined below its cost we reduce the recorded cost to the lower value through an impairment charge recorded in the Consolidated Statements of Operations All inter company accounts and transactions have been eliminated in consolidation
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets liabilities revenues and expenses and related disclosure of contingent assets and liabilities We regularly evaluate estimates and judgments including those related to revenue recognition inventory loan loss allowances long lived and intangible assets share based compensation income taxes contingencies and litigation We base our estimates on historical experience observable trends and various other assumptions we believe are reasonable the results of which form the basis for making judgements about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources Actual results may differ materially from the estimates under different assumptions or conditions
Our pawn loans are fully collateralized and the carrying values are based on the initial amounts loaned to customers We record pawn service charges using the effective interest method over the life of the pawn loans for all pawn loans we believe to be collectible We base our estimate of collectability on several inputs including recent redemption rates historical trends in redemption rates and the amount of loans due in the following months Unexpected variations in any of these factors could change our estimate of collectability and affect our results of operations and financial condition If a pawn loan is not repaid the forfeited collateral is recorded as inventory at the lower of the principal balance of the pawn loan or the net realizable value of the item As of September 30 2024 consolidated pawn loans outstanding was 274 1 million of which 107 5 million 39 is attributable to stores in Texas and 28 6 million 10 is attributable to stores in Florida As of September 30 2023 consolidated pawn loans outstanding was 245 8 million of which 95 5 million 39 is attributable to stores in Texas and 25 7 million 10 is attributable to stores in Florida
Our performance obligations for merchandise sales primarily relate to point in time retail sales in our stores We recognize the satisfaction of the performance obligations and record merchandise sales revenue and the related costs when merchandise inventory is sold and delivered to the customer or in the case of a layaway sale when we receive the final payment Customer layaway deposits are recorded as liabilities when a customer provides a deposit for merchandise Customer layaway deposits are generally refundable upon cancellation Our customer layaway deposits balance as of September 30 2024 2023 and 2022 was 21 6 million 18 9 million and 16 0 million respectively and are generally recognized as revenue within a one year period Customers have a limited period of time to return merchandise for a refund or exchange and actual returns for refunds are not material Sales taxes collected on sales of inventory are excluded from the amounts recognized as merchandise sales and are recorded as Accounts payable accrued expenses and other current liabilities in our Consolidated Balance Sheets until remitted to the appropriate governmental authorities
For precious metals and stones sold as scrap we recognize the satisfaction of the performance obligations and record the revenues and the related costs when the inventory is legally transferred to the refiner and the refiner obtains control of the inventory The accounts receivable outstanding at the end of a given reporting period from such transactions are not material as payments are generally received within a short period of time after the legal transfer of the inventory
If a pawn loan is not redeemed the forfeited collateral is recorded as inventory at the lower of the principal balance of the pawn loan or the net realizable value of the item We do not record a loan loss allowance or charge off expense on the principal portion of forfeited pawn loans as such loans are fully collateralized Inventory is recorded using the specific identification method of accounting
In order to state inventory at the lower of cost or net realizable value we record an allowance for excess obsolete or slow moving inventory based on the type and age of the underlying merchandise Our inventory consists primarily of general merchandise and jewelry Merchandise cost of goods sold as recorded in our Consolidated Statements of Operations includes the historical cost of inventory sold inventory shrinkage and any change in the allowance for inventory shrinkage and valuation We include the costs of operating our central jewelry processing unit as Jewelry scrapping cost of goods sold in our Consolidated Statements of Operations as such costs relate directly to sales of precious metals and stones to refiners
We consider our estimates of obsolete or slow moving inventory and shrinkage critical to the determination of the appropriate overall valuation allowance for inventory We continually monitor our sales margins for each type of inventory and compare the current margins to historical margins Significant variances in those margins may require a revision to future inventory reserve estimates We determine our reserve pertaining to jewelry inventory based on the current and projected prices of gold Future declines in the value of gold may result in an increase in reserves pertaining to jewelry inventory
With respect to our Mexico pawn operations we do not own the forfeited collateral However we assume the risk of loss on such collateral and are solely responsible for its care and disposition and therefore record such collateral as inventory in our Consolidated Balance Sheets As of September 30 2024 and 2023 inventory related to our Mexico pawn operations was 42 2 million and 31 4 million respectively
Cash and cash equivalents consist primarily of cash on deposit or highly liquid investments with original contractual maturities of three months or less or money market mutual funds We hold cash at major financial institutions in amounts that often exceed FDIC insured limits We manage our credit risk associated with cash and cash equivalents and cash concentrations by maintaining our cash deposits in high quality financial institutions and by periodically evaluating the credit quality of the primary financial institutions issuing investments or holding such deposits Historically we have not experienced any losses due to such cash concentrations
As of September 30 2024 and 2023 restricted cash consists of 0 5 million and 0 3 million respectively related to the acquisition of PLO del Bajio S de R L de C V and 8 8 million and 8 1 million respectively held in escrow pending the resolution of a pre closing tax indemnity claim related to the sale of Grupo Finmart
We account for our investment in Cash Converters under the equity method Because the fiscal year of Cash Converters ends three months before our fiscal year we record our interest from the results of Cash Converters on a three month lag Thus the results of our operations reported for the fiscal years ended September 30 2024 2023 and 2022 include our percentage interest in the results of Cash Converters for the twelve month periods ended June 30 2024 2023 and 2022 respectively
During the first quarter of our fiscal year we record our percentage interest in the results of Cash Converters for the three months ended December 31 based on an estimate of the results of Cash Converters for the three months ended September 30 of that year Similarly during the third quarter of our fiscal year we record our percentage interest in the results of Cash Converters for the three months ended June 30 using the estimated results of Cash Converters for the three months ended March 31 of that year Cash Converters files semi annual financial reports with the Australian Securities Investments Commission and the Australian Stock Exchange as of and for the periods ended June 30 and December 31 We use these publicly available financial reports to adjust the estimated amounts we recorded The actual results of Cash Converters may vary from our estimates Refer to Note 3 Strategic Investments for further details on our investment in Cash Converters
and we have elected to use the measurement alternative to measure this investment at cost less any impairment plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer if any As of September 30 2024 and 2023 the carrying value of our investment in RDC was 6 2 million
We determine if an arrangement contains a lease at inception We have elected not to recognize on the balance sheet leases with terms of one year or less as a practical expedient Operating lease assets are included in Right of use assets net and financing lease assets are included in Other assets net on the Consolidated Balance Sheets We enter into operating lease agreements for real estate related to pawn locations and corporate offices We have entered into financing lease agreements mainly for motor vehicles
Operating and financing lease liabilities are recognized at the lease commencement date based on the present value of fixed lease payments using the Company s incremental borrowing rate As our leases generally do not include an implicit rate we compute our incremental borrowing rate based on information available at the lease commencement date applying the portfolio approach to groups of leases with similar characteristics Our lease terms include options to extend the lease when it is reasonably certain we will exercise its option We used incremental borrowing rates that match the duration of the remaining lease terms of our operating leases on a fully collateralized basis to initially measure our lease liability We evaluate renewal options periodically for any changes in assumptions
We do not account for lease and non lease components separately Lease components generally include rent taxes and insurance and non lease components generally include common area maintenance Right of use assets are tested for impairment in the same manner as long lived assets We recognize lease expense on a straight line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred Our operating lease portfolio consists of pawn locations and corporate offices with lease terms ranging from three to ten years including options to renew Our financing lease terms range from two to five years We generally account for the initial lease term of our pawn locations as up to ten years Our primary corporate office is leased through March 2029 with annual escalating rent payments
Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value We evaluate goodwill for impairment annually on September 30 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired We consider the assessment of the occurrence of triggering events or substantive changes in circumstances that may indicate the fair value of goodwill may be impaired to be a critical estimate
Impairment of goodwill is tested at the reporting unit level A reporting unit is an operating segment or one level below an operating segment referred to as a component A component of an operating segment is required to be identified as a reporting unit if the component is a business for which discrete financial information is available and segment management regularly reviews its operating results
When testing goodwill for impairment we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the estimated fair value of a reporting unit is less than its carrying amount If we elect to perform a qualitative assessment and determine that an impairment is more likely than not we are then required to perform a quantitative impairment test otherwise no further analysis is required We also may elect not to perform a qualitative assessment and instead proceed directly to a quantitative impairment test When performing a quantitative impairment test we apply a one step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit s carrying amount over its fair value not to exceed the total amount of goodwill allocated to that reporting unit
When we perform a quantitative goodwill impairment test we estimate the fair value of the reporting unit using an income approach based on the present value of expected future cash flows including terminal value utilizing a market based weighted average cost of capital WACC determined separately for each reporting unit The determination of fair value involves the use of estimates and assumptions including revenue growth rates operating margins and terminal growth rates discounted by an estimated WACC derived from other publicly traded companies that are similar but not identical to us from an operational and economic standpoint We use discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in our internally developed forecasts
We test indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test If we believe as a result of its qualitative assessment that it is more likely than not the fair value of the indefinite lived intangible asset is less than its carrying amount a quantitative impairment test is required Otherwise no further testing is required
We record property and equipment at cost We depreciate these assets on a straight line basis using estimated useful lives of 30 years for buildings and two to seven years for furniture equipment and software development costs We depreciate leasehold improvements over the shorter of their estimated useful life typically 10 years or the reasonably assured lease term at the inception of the lease
The carrying values of long lived assets inclusive of right of use ROU assets are periodically reviewed whenever events or changes in circumstances indicate the carrying value may not be recoverable such as historical operating losses or plans to close stores before the end of their previously estimated useful lives A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets The estimate of cash flows includes management s assumptions of cash inflows and outflows directly resulting from the use of those assets in operations We consider the assumptions associated with the determination of projected future cash flows to be a critical estimate When a potential impairment has occurred an impairment write down is recorded if the carrying value of the long lived asset exceeds its fair value
We capitalize certain costs incurred in connection with developing or obtaining software for internal use and amortize the costs on a straight line basis over the estimated useful lives of the software typically five years Net capitalized development costs are included in Capital expenditures net in our Consolidated Statements of Cash Flows
In evaluating whether our cloud computing arrangements include a software license we consider whether we have the contractual right to take possession of the software at any time during the hosting period without significant penalty and whether it is feasible for us to either run the software on our own hardware or contract with another party unrelated to the vendor to host the software If a cloud computing arrangement includes a software license we account for the software license element of the arrangement consistent with the acquisition of other software licenses If a cloud computing arrangement does not include a software license we account for the arrangement as a service contract For cloud computing arrangements that meet the definition of a service contract the Company capitalizes implementation costs incurred during the application development stage and until the software is ready for its intended use within Other assets net in our Consolidated Balance Sheets and then amortizes the costs on a straight line basis over the term of the contract The hosting service fees are not considered an implementation cost and are treated as a prepaid expense and then the Company amortizes the costs on a straight line basis over the term of the contract Costs related to data conversion training and other maintenance activities are expensed as incurred
We allocate the total acquisition price to the fair value of assets and liabilities acquired under the acquisition method with goodwill representing the excess of purchase price over the fair value of net assets acquired We expense transaction costs as incurred We recognize any adjustments to provisional amounts and goodwill that are identified during the measurement period in the reporting period in which the adjustment amounts are determined with the effect on current period earnings of changes in depreciation amortization or other income effects if any as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date
ASU 2020 06 on a modified retrospective basis Under ASU 2020 06 we no longer separate the convertible senior notes into liability and equity components We recognized a cumulative effect of initially applying the ASU as an adjustment to the October 1 2021 opening balance of retained earnings The conversion option that was previously accounted for in equity under the cash conversion model was recombined into the convertible debt outstanding and as a result additional paid in capital and the related unamortized debt discount on the convertible senior notes were reduced The removal of the remaining debt discounts recorded for this previous separation has the effect of increasing our net debt balance The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods
Our foreign subsidiaries use the local currency of their respective countries as their functional currency Assets and liabilities of our foreign subsidiaries balance sheet accounts and our equity method investments are translated from their respective functional currencies into United States dollars at the exchange rate at the end of each quarter and their earnings are translated into United States dollars at the average exchange rate each quarter We present resulting translation adjustments as a separate component of stockholders equity The cumulative translation adjustments associated with the net assets of foreign subsidiaries are the only amounts recorded in Accumulated Other Comprehensive Loss in the accompanying Consolidated Statements of Stockholders Equity
Included in Store expenses are costs related to operating our stores and any direct costs of support offices These costs include labor other direct expenses such as utilities supplies and banking fees and indirect expenses such as store rent building repairs and maintenance advertising store property taxes and insurance and regional and area management expenses
Included in General and administrative expense are costs related to our executive and administrative offices This includes executive and administrative salaries wages stock and incentive compensation professional fees license fees costs related to the operation of our administrative offices such as rent property taxes insurance information technology and other corporate costs
Advertising costs are expensed as incurred and included primarily within Store expenses in our Consolidated Statements of Operations These costs were 6 2 million 4 9 million and 2 3 million for fiscal 2024 2023 and 2022 respectively During fiscal 2024 2023 and 2022 we incurred 3 6 million 2 9 million and 0 3 million respectively related to digital advertising The remaining for each year relates to general advertising costs
We measure share based compensation expense at the grant date based on the price of underlying shares at that date and recognize it as expense ratably over the vesting or service period as applicable of the stock award Our policy is to recognize expense on performance based awards where satisfaction of the performance condition is probable ratably over the awards vesting period and recognize expense on awards that only have service requirements on a straight line basis We recognize forfeitures as they occur when calculating share based compensation expense
We account for income taxes using the asset and liability method Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying value of assets and liabilities and their tax basis and for operating loss and tax credit carryforwards Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted
We consider the earnings of certain non U S subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings We have not recorded a deferred tax liability related to the U S federal and state income taxes and foreign withholding taxes of our undistributed earnings of foreign subsidiaries indefinitely invested outside the U S We treat taxes due on future U S inclusions in taxable income related to Global Intangible Low Taxed Income GILTI as a current period expense when incurred
We may be subject to income tax audits by the respective tax authorities in any or all of the jurisdictions in which we operate or have operated within a relevant period Significant judgment is required in determining uncertain tax positions We utilize the required two step approach to recognize and measure uncertain tax positions The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit including resolution of related appeals or litigation processes The second step is to measure the tax benefit as the largest amount that is more than 50 likely to be realized upon ultimate settlement We consider many factors when evaluating and estimating our tax positions and tax benefits which may require periodic adjustments and which may not accurately forecast actual outcomes We adjust these reserves in light of changing facts and circumstances such as the closing of an audit or the refinement of an estimate Changes in recognition or measurement are reflected in the period in which the change in judgment occurs We believe adequate provisions for income taxes have been made for all periods We recognize interest and penalties related to unrecognized tax benefits as Income tax expense in our Consolidated Statements of Operations Our policy is to release income tax effects from accumulated other comprehensive income on a segregated unit of account basis
When treasury shares are retired the Company allocates the excess of the repurchase price over the par value of shares acquired between additional paid in capital and retained earnings The portion allocated to additional paid in capital is limited to the pro rata portion of additional paid in capital for the retired treasury shares Any further excess of the repurchase price is allocated to retained earnings
We compute basic earnings per share based on the weighted average number of shares of common stock outstanding during the period Upon our adoption of ASU 2020 06 on October 1 2021 interest charges on the convertible debt are required to be added to net income and we calculate diluted earnings per share during the period using the if converted method Diluted net income loss and diluted weighted average shares outstanding are adjusted to account for the impact of the assumed issuance of potential common shares that are dilutive subject to dilution sequencing rules Dilutive potential common shares include outstanding restricted stock awards as well as shares issuable on conversion of our outstanding convertible debt securities Potential common shares are required to be excluded from the computation of diluted earnings per share if the assumed proceeds upon exercise or vest are greater than the cost to re acquire the same number of shares at the average market price and therefore the effect would be anti dilutive There were no participating securities outstanding during fiscal 2024 2023 and 2022 requiring the application of the two class method When we are in a loss position for the period dilutive securities are excluded from the calculation of earnings per share as they would have an anti dilutive effect
Our capital stock consists of two classes of common stock designated as Class A Non Voting Common Stock Class A Common Stock and Class B Voting Common Stock Class B Common Stock The rights preferences and privileges of the Class A and Class B Common Stock are similar except that each share of Class B Common Stock has one vote and each share of Class A Common Stock has no voting privileges except as required by law All Class A Common Stock is publicly held Holders of Class B Common Stock may individually or as a class convert some or all of their shares into Class A Common Stock on a one to one basis Class A Common Stock becomes voting common stock upon the conversion of all Class B Common Stock to Class A Common Stock We are required to reserve the number of authorized but unissued shares of Class A Common Stock that would be issuable upon conversion of all outstanding shares of Class B Common Stock
ASU 2023 06 ASU 2023 06 will impact various disclosure areas including the statement of cash flows accounting changes and error corrections earnings per share debt equity derivatives and transfers of financial assets The amendments in this ASU 2023 06 will be effective on the date the related disclosures are removed from Regulation S X or Regulation S K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30 2027 Early adoption is prohibited We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures
ASU 2023 07 ASU 2023 07 requires disclosure of significant segment expenses regularly provided to the chief operating decision maker CODM included within segment operating profit or loss Additionally the ASU requires a description of how the CODM utilizes segment operating profit or loss to assess segment performance The requirements of ASU 2023 07 are effective for the Company for fiscal years beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 Early adoption is permitted and retrospective application is required for all periods presented We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures
ASU 2023 09 ASU 2023 09 requires disclosure of specific categories and disaggregation of information in the rate reconciliation table The ASU also requires disclosure of disaggregated information related to income taxes paid income or loss from continuing operations before income tax expense or benefit and income tax expense or benefit from continuing operations The requirements of this ASU 2023 09 are effective for the Company for fiscal years beginning after December 15 2024 Early adoption is permitted and the amendments should be applied on a prospective basis Retrospective application is permitted We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures
ASU 2024 02 ASU 2024 02 contains amendments to the Codification that remove references to various FASB Concepts Statements The requirements of this ASU 2024 02 are effective for the Company for fiscal years beginning after December 15 2024 and can be applied on a prospective or retrospective basis This standard is not expected to have a significant impact on our consolidated financial statements and related disclosures
ASU 2024 03 ASU 2024 03 requires disclosure in the notes to the financial statements of specified information about certain costs and expenses The requirements of ASU 2024 03 are effective for the Company for fiscal years beginning after December 15 2026 and interim periods within fiscal years beginning after December 15 2027 Early adoption is permitted and should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all period periods presented in the financial statements We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures
Effective January 1 2024 we were required to combination settle the 2024 Convertible Notes Only the first quarter of 2024 interest expense is included for the year ended September 30 2024 The year ended September 30 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 our condensed consolidated statement of operations See Note 7 Debt for additional information
As we were required to combination settle the 2024 Convertible Notes effective January 1 2024 only weighted average shares of 883 283 were included until settlement on July 1 2024 On July 1 2024 the 34 4 million aggregate principal amount outstanding plus accrued interest was repaid using cash on hand and 77 328 shares of Class A Common Stock equal to the accreted value were issued as part of the 2024 Convertible Notes conversion The 2024 Convertible Notes were considered anti dilutive in the sequencing calculation for the fiscal year ended September 30 2023 See Note 7 Debt for conversion price initial conversion rate and additional information on the 2024 Convertible Notes 2025 Convertible Notes and 2029 Convertible Notes
Includes antidilutive share based awards and performance based share based awards that are contingently issuable but for which the condition for issuance has not been met as of the end of the reporting period
As of September 30 2024 we owned 273 939 157 shares or approximately 43 7 of Cash Converters We acquired our original investment in November 2009 and have increased our ownership through the acquisition of additional shares periodically since that time
Our equity in Cash Converters net income was 5 0 million and 2 9 million in fiscal 2024 and 2022 respectively Our equity in Cash Converters net loss was 28 5 million in fiscal 2023 which includes 32 4 million of our share of their non cash goodwill impairment charge Cash Converters accumulated undistributed after tax loss included in our consolidated retained earnings were 14 7 million as of September 30 2024
At September 30 2024 2023 and 2022 the fair value of our investment in Cash Converters as estimated by reference to its quoted market price per share was greater than its carrying value See Note 4 Fair Value Measurements for the fair value and carrying value of our investment in Cash Converters
In fiscal 2022 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 In fiscal 2023 we contributed an additional 15 0 million associated with our preferred interest and loaned Founders 15 0 million in exchange for a Demand Promissory Note secured by the common interest held by the other member In fiscal 2024 we contributed an additional 15 0 million associated with our preferred interest bringing our total preferred equity investment in Founders to 45 0 million
We have an interest in Founders a variable interest entity but because we are 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 ASC 321 Investments Equity Securities As of September 30 2024 our 45 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 As of September 30 2024 our maximum exposure for losses related to our investment in Founders was our 45 0 million equity investment and 15 0 million Demand Promissory Note plus accrued and unpaid interest See Note 4 Fair Value Measurements for the fair value and carrying value of our loan to Founders
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
Based primarily on the short term nature of cash and cash equivalents pawn loans pawn service charges receivable and other liabilities we estimate that their 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 liabilities 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
In fiscal 2023 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 As of September 30 2024 the interest rate on the note was 15 00 per annum and all principal and accrued interest is due on demand Based primarily on the short term nature of the note we estimate that its carrying value approximates fair value as of September 30 2024
We use the equity method of accounting to account for our ownership interest in Cash Converters The inputs used to generate the fair value of the investment in Cash Converters were considered Level 1 inputs These inputs consist of a the quoted stock price on the Australian Stock Exchange multiplied by b the number of shares we owned multiplied by c the applicable foreign currency exchange rate as of the end of our reporting period We included no control premium for owning a large percentage of outstanding shares
We 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
In fiscal 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 interest rate on the note was 2 89 per annum and was secured by certain marketable securities owned by the seller and held in a U S brokerage account All principal and accrued interest on the promissory note was received in April 2024
The depreciation of property and equipment is recorded as depreciation expense and included under Depreciation and amortization recorded in our Consolidated Statements of Operations These amounts were 21 5 million 22 1 million and 20 4 million for fiscal 2024 2023 and 2022 respectively
We evaluate goodwill for impairment annually on September 30 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired
As of September 30 2024 we assessed qualitative and quantitative factors and determined that it was not more likely than not that the fair values of our reporting units were less than their carrying values as of the testing date As a result of our assessment no goodwill impairment charge was recorded during the fiscal year ended September 30 2024 There was no impairment charge recorded during the fiscal years ended September 30 2023 and 2022 Accumulated goodwill impairment losses of 41 3 million were recorded prior to 2022 associated with the U S Pawn 10 0 million and Latin America Pawn 31 3 million segments because of the impact of the COVID 19 pandemic on typical customer behavior which led to a significant decline in pawn loan balances and the mandated closure of stores in our GPMX countries
a Amount represents goodwill recognized in connection with acquisitions within the U S Pawn segment that were immaterial individually and in the aggregate and we have therefore omitted certain disclosures
As of September 30 2024 we assessed qualitative and quantitative factors and determined that it was not more likely than not that the fair values of our indefinite lived intangible assets were less than their carrying values
The amortization of most definite lived intangible assets is recorded as amortization expense and included under Depreciation and amortization expense in our Consolidated Statements of Operations These amounts were 11 6 million 10 0 million and 11 7 million for fiscal 2024 2023 and 2022 respectively
A charge of 2 4 million was recorded during fiscal 2022 to General and administrative expenses in our Consolidated Statements of Operations related to an asset write down associated with an information technology software infrastructure migration
In December 2022 we issued 230 0 million aggregate principal amount of 3 750 Convertible Senior Notes Due 2029 the 2029 Convertible Notes for which 230 0 million remains outstanding as of September 30 2024 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 fiscal 2024 was approximately 4 28 As of September 30 2024 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 2029 Convertible 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
As of September 30 2024 the 2029 Convertible Notes were not convertible as no conditions of conversion had been met Accordingly the net balance of the 2029 Convertible Notes was classified as a non current liability in our Consolidated Balance Sheets as of September 30 2024 The classification of the 2029 Convertible Notes as current or non current in the Consolidated Balance Sheets is evaluated at each balance sheet date and may change from time to time depending on whether any of the conversion conditions has been met
If one of the conversion conditions is met in any future fiscal quarter we will classify our net liability under the 2029 Convertible Notes as a current liability in the Consolidated Balance Sheets as of the end of that fiscal quarter If none of the conversion conditions have been met in a future fiscal quarter prior to the one year period immediately preceding the 2029 Maturity Date we will classify our net liability under the 2029 Convertible Notes as a non current liability in the Consolidated Balance Sheets as of the end of that fiscal quarter If the note holders elect to convert their 2029 Convertible Notes prior to maturity any unamortized debt issuance costs will be recognized as expense at the time of conversion If the entire outstanding principal amount had been converted on September 30 2024 we would have recorded an expense associated with the conversion comprised of 5 7 million of unamortized debt issuance costs As of September 30 2024 none of the note holders had elected to convert their 2029 Convertible Notes
The stock trading price condition and other triggers are measured on a quarter by quarter basis and were not met as of September 30 2024 As of September 30 2024 the if converted value of the 2029 Convertible Notes did not exceed the principal amount
In December 2022 we 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 our Consolidated Statement of Operations
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 September 30 2024 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 fiscal 2024 was approximately 2 88 for the 2025 Convertible Notes As of September 30 2024 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 prior to November 1 2024 we could 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 were convertible at the option of the holders only upon certain conditions none of which were met 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 Conversions occurring on or after November 1 2024 are settled in a combination of cash and shares of Class A Common Stock unless by November 1 2024 we elect another settlement method Pursuant to the terms of the 2018 Indenture we have elected to settle any conversions of the 2025 Convertible Notes using shares of Class A Common Stock physical settlement On October 28 2024 we provided notice of that election to the trustee
Given the 2025 Maturity Date of May 1 2025 the net balance of the 2025 Convertible Notes was classified as a current liability in our Consolidated Balance Sheets as of September 30 2024 If the note holders elect to convert their 2025 Convertible Notes prior to maturity any unamortized debt issuance costs will be recognized as expense at the time of conversion If the entire outstanding principal amount had been converted on September 30 2024 we would have recorded an expense associated with the conversion comprised of 0 3 million of unamortized debt issuance costs The stock trading price condition and other triggers are measured on a quarter by quarter basis and were not met as of September 30 2024 As of September 30 2024 the if converted value of the 2025 Convertible Notes did not exceed the principal amount and none of the note holders had elected to convert their 2025 Convertible Notes
In July 2017 we issued 143 75 million aggregate principal amount of 2 875 Convertible Senior Notes Due 2024 the 2024 Convertible Notes none of which remain outstanding as of September 30 2024 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 paid 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 matured on July 1 2024 the 2024 Maturity Date On July 1 2024 the 34 4 million aggregate principal amount outstanding plus accrued interest was repaid using cash on hand and 77 328 Class A Common Stock shares equal to the accreted value were issued as part of the 2024 Convertible Notes conversion
On May 3 2022 our 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 has reserved the right to modify suspend or terminate the program at any time As of September 30 2024 we had repurchased and retired 2 845 548 shares of our Class A Common Stock for 26 0 million under the Common Stock Repurchase Program of which 1 218 503 and 1 389 102 shares were repurchased and retired for 12 0 million during the fiscal years ended September 30 2024 and 2023 respectively The repurchase amount is allocated between Additional paid in capital and Retained earnings in our Consolidated Balance Sheets
During December 2022 we used approximately 5 0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase for cash 578 703 shares of our 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 Common Stock Repurchase Program discussed above The repurchase amount is allocated between Additional paid in capital and Retained earnings in our consolidated balance sheets
We utilize equity based awards as a long term incentive to attract and retain qualified employees consultants and directors and motivate them to achieve long term goals thereby promoting the long term financial interests of the Company and enhancing long term stockholder return
On March 1 2022 we adopted the 2022 Long Term Incentive Plan the 2022 LTI Plan which gives us the ability to grant equity based incentive compensation awards in the form of restricted stock or restricted stock units to our employees members of the Board of Directors and consultants independent contractors or advisors who are determined to have a direct and significant effect on the Company s performance The total number of shares of Class A Common Stock that may be issued pursuant to awards under the 2022 LTI Plan Authorized Shares is such number that is from time to time approved by the holder of the Company s Class B Voting Common Stock the Voting Stockholder At the time the 2022 LTI Plan was adopted 400 000 shares of our Class A Common Stock were added as Authorized Shares That number was increased to 1 900 000 in October 2022 to 3 300 000 in November 2023 and to 4 150 000 in October 2024 At any time the number of shares that are available for issuance under future awards Available Shares is equal to the number of Authorized Shares reduced by the number of shares previously issued and the number of shares that may be issued under outstanding awards The number of Available Shares is increased for shares covered by awards that are forfeited cancelled or otherwise terminated without the issuance of shares or shares that are withheld at the request of a participant to satisfy such participant s tax withholding obligations
The 2022 LTI Plan is administered by the People and Compensation Committee of the Board of Directors the Committee The Committee generally determines and recommends the type recipient amount and terms for all awards issued under the 2022 LTI Plan but each award issuance requires the approval of the full Board of Directors
Restricted stock awards are generally subject to continued service over a specified period typically one to three years and expensed straight line over the service period Restricted stock units are generally subject to the achievement of performance goals in addition to continued service and they are expensed on a tranche by tranche basis ratably over the service period beginning with the start of the measurement of performance
The 2022 LTI Plan replaced the 2010 Long Term Incentive Plan the 2010 LTI Plan for all long term incentive awards issued from and after January 1 2022 The 2010 LTI Plan remains effective but only with respect to LTI awards issued and outstanding as of December 31 2021 and any authorized but unissued shares remaining in the 2010 LTI Plan are available only to satisfy such awards
Under the 2010 LTI Plan we granted awards of restricted stock or restricted stock units to employees and non employee directors Awards granted to employees were typically subject to performance and service conditions Awards granted to non employee directors were time based awards subject only to service conditions Awards were 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
Immediately after our 2024 Annual Meeting of Stockholders in March 2024 we granted each of the five non employee directors a restricted stock award of 15 037 shares 75 185 shares in total Those shares are scheduled to vest on the day immediately preceding the 2025 Annual Meeting of Stockholders but in no event later than March 31 2025 subject only to service conditions
In March 2023 we granted each of the five non employee directors a restricted stock award of 18 038 shares 90 190 shares in total Those shares vested on the day immediately preceding the 2024 Annual Meeting of Stockholders in March 2024
In March 2022 we granted each of the five non employee directors a restricted stock award of 26 490 shares 132 450 shares in total Those shares vested on the day immediately preceding the 2023 Annual Meeting of Stockholders in March 2023
In February 2021 we granted each of the four non employee directors serving at that time a restricted stock award of 31 936 shares 127 744 shares in total Those shares vested on the day immediately preceding our 2022 Annual Meeting of Stockholders in March 2022
In November 2023 we granted restricted stock unit awards of a total of 995 759 shares to our executive officers and other key employees These awards were issued as part of our annual LTI program for fiscal 2024 The awards have a three year performance period consisting of fiscal 2024 fiscal 2025 and fiscal 2026 For each award 60 of the total number of shares was allocated equally among the three fiscal years in the performance period 20 each with each tranche having separate performance conditions In addition 20 of the total number of shares was allocated to a three year cumulative performance condition applicable to the entire three year performance period and 20 was subject only to continued service The number of shares available to vest from each performance based tranche can range from 0 to 150 and is dependent on the achievement of the performance conditions for that tranche All of the performance based shares that become available to vest based on the achievement of the performance conditions along with the time based tranche will vest on September 30 2026 so long as the participant continues active employment with the Company through that date Performance targets for the fiscal 2024 tranche and the three year cumulative tranche were determined and communicated at the time of grant Grant dates for the fiscal 2025 and fiscal 2026 tranches will be determined when the applicable performance targets are established for those tranches As of September 30 2024 we considered the performance targets for the fiscal 2024 tranche to be probable of achievement at the 133 level and the cumulative performance target for the three year cumulative tranche to be probable of achievement at the 100 level During fiscal 2024 we granted restricted stock unit awards of an additional 17 524 shares to key employees in connection with promotions or new hires These additional awards carry the same terms as those granted in November 2023
In October 2022 we granted restricted stock unit awards of a total of 912 524 shares to our executive officers and other key employees These awards were issued as part of our annual LTI program for fiscal 2023 The awards have a three year performance period consisting of fiscal 2023 fiscal 2024 and fiscal 2025 For each award 60 of the total number of shares was allocated equally among the three fiscal years in the performance period 20 each with each tranche having separate performance conditions In addition 20 of the total number of shares was allocated to a three year cumulative performance condition applicable to the entire three year performance period and 20 was subject only to continued service The number of shares available to vest from each performance based tranche can range from 0 to 150 and is dependent on the achievement of the performance conditions for that tranche All of the performance based shares that become available to vest based on the achievement of the performance conditions along with the time based tranche will vest on September 30 2025 so long as the participant continues active employment with the Company through that date Performance targets for the fiscal 2023 tranche and the three year cumulative tranche were determined and communicated at the time of grant Grant dates for the fiscal 2024 and fiscal 2025 tranches correspond to the establishment and communication of the applicable performance targets for those tranches As of September 30 2023 we considered the performance targets for the fiscal 2023 tranche to be probable of achievement at the 147 level and as of September 30 2024 we considered the performance targets for the fiscal 2024 tranche to be probable of achievement at the 133 level and the cumulative performance target for the three year cumulative tranche to be probable of achievement at the 150 level During fiscal 2023 we granted restricted stock unit awards of an additional 8 036 shares to key employees in connection with promotions or new hires These additional awards carry the same terms as those granted in October 2022
In October and November 2021 we granted restricted stock unit awards of a total of 981 327 shares to our executive officers and other key employees These awards were issued as part of our annual LTI program for fiscal 2022 The awards have a three year performance period consisting of fiscal 2022 fiscal 2023 and fiscal 2024 For each award the total number of shares was allocated equally among the three fiscal years in the performance period with each tranche having separate performance conditions The number of shares available to vest from each tranche can range from 0 to 150 and is dependent on the achievement of the performance condition for that tranche All of the shares that become available to vest based on the achievement of the performance conditions will vest on September 30 2024 so long as the participant continues active employment with the Company through that date Performance targets for the fiscal 2022 tranche were determined and communicated at the time of grant Grant dates for the other two tranches correspond to the establishment and communication of the applicable performance targets for these tranches As of September 30 2022 we considered the performance targets for the fiscal 2022 tranche to be probable of achievement at the 150 level as of September 30 2023 we considered the performance targets for the fiscal 2023 tranche to be probable of achievement at the 147 level and as of September 30 2024 we considered the performance targets for the fiscal 2024 tranche to be probable of achievement at the 133 level During fiscal 2022 we granted restricted stock unit awards of an additional 161 265 shares to executive officers and other key employees in connection with promotions or new hires These additional awards carry the same terms as those granted in October and November 2021
In October 2021 we granted a restricted stock award of 29 722 shares to an executive officer as a special performance and retention award This awards vested ratably over three years fiscal 2022 fiscal 2023 and fiscal 2024
In February 2021 we granted restricted stock units of a total of 1 177 214 shares to our executive officers and other key employees The awards have a three year performance period consisting of fiscal 2021 fiscal 2022 and fiscal 2023 For each award the total number of shares was allocated equally among the three fiscal years in the performance period with each tranche having separate performance conditions The number of shares available to vest from each tranche can range from 0 to 150 and is dependent on the achievement of the performance condition for that tranche All of the shares that became available to vest based on the achievement of the performance conditions vested on September 30 2023 for participants whose active employment with the Company continued through that date Performance targets for the fiscal 2021 tranche were determined and communicated in February 2021 and performance targets for the fiscal 2022 tranche were determined and communicated in October 2021 and performance targets for the fiscal 2023 tranche were determined and communicated in October 2022 As of September 30 2021 we considered the performance targets for the fiscal 2021 tranche to be probable of achievement at the 150 level as of September 30 2022 we considered the performance targets for the fiscal 2022 tranche to be probable of achievement at the 150 level and as of September 30 2023 we considered the performance targets for the fiscal 2023 tranche to be probable of achievement at the 135 level During fiscal 2021 we granted restricted stock unit awards of an additional 4 722 shares of restricted stock to employees in connection with promotions or new hires These additional awards carry the same terms as those granted in February 2021 All of these awards vested in November 2023 after the Committee determined that the performance conditions had been met
FY20 Awards In January 2020 the Committee approved restricted stock unit awards for executive officers and key employees but did not finalize the performance targets at that time In January 2021 the Committee approved the applicable performance targets and we granted restricted stock unit awards of a total of 550 224 shares of restricted stock to employees We consider the awards to have a three year performance period consisting of fiscal 2020 fiscal 2021 and fiscal 2022 with a service condition applicable to fiscal 2020 and then separate performance conditions applicable to fiscal 2021 and 2022 For each award the total number of shares was allocated equally among fiscal 2021 and fiscal 2022 with each tranche having separate performance conditions The number of shares available to vest from each tranche was dependent on the achievement of the performance condition for that tranche and could range from 0 to 100 All of the shares that became available to vest based on the achievement of the performance conditions vested on September 30 2022 for participants whose active employment with the Company continued through that date Performance targets for the fiscal 2021 tranche were communicated in January 2021 and performance targets for the fiscal 2022 tranche were determined and communicated in October 2021 As of September 30 2021 we considered the performance targets for the fiscal 2021 tranche to be probable of achievement at the 100 level and as of September 30 2022 we considered the performance targets for the fiscal 2022 tranche to be probable of achievement at the 100 level All of these awards vested in November 2022 after the Committee determined that the performance conditions had been met
As of September 30 2024 the unamortized fair value of share awards to be amortized over their remaining vesting periods was approximately 11 6 million The weighted average period over which these costs will be amortized is approximately two years
We have not declared or paid any dividends and currently do not anticipate paying any dividends in the immediate future As described in Note 7 Debt payment of a dividend requires an adjustment to the conversion rate of our Convertible Notes
Should we pay dividends in the future our certificate of incorporation provides that cash dividends on common stock when declared must be declared and paid at the same per share amounts on both classes of stock Any future determination to pay cash dividends will be at the discretion of our Board of Directors
As of September 30 2024 we had state net operating loss carryforwards of approximately 5 2 million which begin to expire in 2025 if not utilized We also had foreign net operating loss carryforwards of 47 1 million which will begin to expire in 2030 if not utilized Additionally we have a 1 7 million foreign tax credit that will expire between 2025 to 2026 if not utilized
Deferred tax assets and liabilities are recorded for the estimated tax impact of temporary differences between the tax basis and book basis of assets and liabilities The Company has elected to account for the tax on GILTI as a period cost and therefore has not recorded deferred taxes related to GILTI on its foreign subsidiaries As of September 30 2024 tax in amount of 0 7 million has been accrued for estimated tax on GILTI that will be due A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized Our valuation allowance has been established to offset certain state and foreign net operating loss carryforwards and foreign tax credit carryforwards that are not more likely than not to be utilized prior to expiration The valuation allowance decreased by 1 2 million in fiscal 2024 primarily due to the release of valuation allowance associated with net operating losses no longer available for use We believe our results from future operations will generate sufficient taxable income in the appropriate jurisdictions such that it is more likely than not that the remaining deferred tax assets will be realized
Deferred taxes are not provided for undistributed earnings of foreign subsidiaries of approximately 98 2 million which are intended to be reinvested outside of the U S Accordingly no provision for foreign withholding taxes associated with a distribution of those earnings has been made We estimate that upon distribution of our share of these earnings we would be subject to withholding taxes of approximately 5 0 million as of September 30 2024 We provided deferred income taxes on all undistributed earnings from Cash Converters After extensive search for multi store acquisitions in Guatemala in the fourth quarter of fiscal 2024 we altered our Guatemala growth strategy to a focus on organic growth of existing stores denovos and potentially small acquisitions As a result we provided for applicable foreign withholding taxes on 20 million of undistributed foreign earnings and recorded a liability of 1 0 million
All of the above unrecognized tax benefits if recognized would impact our effective tax rate for the respective period of each ending balance The statute of limitations will expire within the next twelve months with respect to approximately 0 7 million of foreign uncertain tax positions
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense During 2024 we recognized income tax expense of 0 5 million offset by the reversal of previously accrued interest and penalties of 0 4 million due to the lapse of the statute of limitations on the associated tax position and income tax expense of 0 2 million during 2023 and an income tax benefit of 0 8 million during 2022 related to interest and penalties The total amount of accrued interest and penalties was 0 8 million 0 7 million and 1 0 million in 2024 2023 and 2022 respectively
We are subject to U S Mexico Canada Guatemala Honduras El Salvador Peru United Kingdom and the Netherlands income taxes as well as income taxes levied by various state and local jurisdictions With few exceptions we are no longer subject to examinations by tax authorities for years before the tax year ended September 30 2018 We believe that adequate provisions have been made for any adjustments that may result from tax examinations
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 expenses and General and administrative expense based on the underlying lease use Cash paid for operating leases was 79 7 million 76 7 million and 72 3 million for the fiscal years ended September 30 2024 2023 and 2022 respectively Cash paid for principal and interest on finance leases was 0 5 million and 0 2 million respectively for the fiscal year ended September 30 2024 and 0 3 million and 0 1 million respectively for the fiscal year ended September 30 2023 There was no cash paid for finance leases for the fiscal year ended September 30
In December 2014 we entered into a non cancelable 13 year operating lease for our corporate offices with rent payments beginning February 2016 and ending March 2029 Annual rent net of square footage subsequently terminated as a result of negotiations with the landlord escalate from 2 5 million at lease inception to 3 9 million in the terminal year of the lease
The lease includes two five year extension options at the end of the initial lease term The estimated minimum future rental payments under the lease are approximately 15 4 million as of September 30 2024 As of September 30 2024 we have subleases in place for a portion of our corporate operating office lease for estimated minimum future sublease payments of approximately 5 1 million
In fiscal 2023 we assessed the recoverability of the right of use asset for our corporate office primarily due to the termination of a significant sublease We determined the undiscounted cash flows of the relative corporate lease and sublease did not exceed the net book value of the right of use asset We then determined the fair value of the corporate lease and sublease did not exceed the book value of the right of use asset and an impairment charge of 4 3 million was recorded in fiscal 2023 to Impairment of other assets in the Consolidated Statements of Operations
The following table presents our corporate office lease measured at fair value as a result of the aforementioned impairment charges aggregated by the level in the fair value hierarchy within which measurements fall on a non recurring basis at September 30 2023 and the related impairment charge recorded in thousands
We recorded 55 3 million 66 5 million and 69 4 million in non cash additions to our operating right of use assets and lease liabilities for the fiscal year ended September 30 2024 2023 and 2022 respectively We recorded 0 2 million and 2 5 million in non cash additions to our finance right of use assets and lease liabilities for the year ended September 30 2024 and 2023 respectively
Currently and from time to time we are involved in various claims disputes lawsuits investigations and legal and regulatory proceedings 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
Our operations are primarily managed on a geographical basis and consist 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
The following income loss before income taxes tables present revenue for each reportable segment disaggregated revenue within our reportable segments and Corporate segment profits and segment contribution
Disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Exchange Act are designed to ensure that information required to be disclosed in the reports we file or submit under the 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
In connection with the preparation of this Annual Report on Form 10 K our management under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30 2024 Based on that evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30 2024 We believe the consolidated financial statements included in this Annual Report on Form 10 K fairly present in all material respects our financial position results of operations stockholders equity and cash flows as of the dates and for the periods presented in conformity with GAAP
Management under the supervision of the Chief Executive Officer and the Chief Financial Officer is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of our internal control over financial reporting Internal control over financial reporting as defined in Rules 13a 15 f and 15d f under the Exchange Act is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U S GAAP Internal control over financial reporting includes those policies and procedures that a pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets b provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U S GAAP c provide reasonable assurance that receipts and expenditures are being made only in accordance with appropriate authorization of management and the Board of Directors and d provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of assets that could have a material effect on the financial statements
In connection with the preparation of this Annual Report on Form 10 K our management under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer conducted an assessment of the effectiveness of our internal control over financial reporting as of September 30 2024 based on the criteria established in
issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO Based on that assessment our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was effective as of September 30 2024
During the fourth quarter of fiscal 2024 there were no changes in our internal control over financial reporting as defined in Rule 13a 15 f under the Securities Exchange Act of 1934 that in the aggregate have materially affected or are reasonably likely to materially affect our internal control over financial reporting
Notwithstanding the foregoing management does not expect that our disclosure controls and procedures or our internal control over financial reporting 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 objectives of the control system will be met Limitations inherent in any control system include the following
The design of any system of controls is based in part on 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
issued by the Committee of Sponsoring Organizations of the Treadway Commission the COSO criteria In our opinion the Company maintained in all material respects effective internal control over financial reporting as of September 30 2024 based on the COSO criteria
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated balance sheets of the Company as of September 30 2024 and 2023 the related consolidated statements of operations comprehensive income stockholders equity and cash flows for each of the three years in the period ended September 30 2024 and the related notes and our report dated November 13 2024 expressed an unqualified opinion thereon
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Item 9A Management s Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audit also included performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed 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 A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
No director or executive officer adopted modified or terminated any contract instruction written plan or other trading arrangement relating to the purchase or sale of Company securities during the fourth quarter of fiscal 2024
The Board believes that individuals who serve on the Board of Directors should have demonstrated notable or significant achievements in business education or public service should possess the requisite intelligence education and experience to make a significant contribution to the Board and bring a range of skills diverse perspectives and backgrounds to its deliberations and should have the highest ethical standards a strong sense of professionalism and intense dedication to serving the interests of our stockholders The following are qualifications experience and skills for Board members which are important to our business and its future
Our directors should demonstrate extraordinary leadership qualities Strong leaders bring vision strategic agility diverse and global perspectives and broad business insight to the company They demonstrate practical management experience skills for managing change and deep knowledge of industries geographies and risk management strategies relevant to our business They have experience in identifying and developing the current and future leaders of the company
Our directors should have business experience that is relevant to our strategic goals and objectives including geographical and product expansion We value experience in our high priority growth areas including new or expanding geographies or customer segments and existing and new technologies understanding of our business environments and experience with exposure to or reputation among a broad subset of our customer base
Mr Appel joined EZCORP as a director in January 2015 He is the Lead Independent Director and as such serves as Chair of the Nominating Committee and is a member of the Audit and Risk Committee and the People and Compensation Committee Mr Appel spent 37 years in finance administration and operations roles with a variety of companies most recently Zale Corporation an NYSE listed jewelry retailer where he served as Chief Financial Officer from May 2009 to May 2011 and Chief Administrative Officer from May 2011 to July 2014 and co led the successful turnaround of the company Prior to joining Zale Mr Appel was Chief Financial Officer of EXL Service Holdings Inc a NASDAQ listed business process solutions company February 2007 to May 2009 spent four years February 2003 to February 2007 at Electronic Data Systems Corporation serving as Vice President Finance and Administration BPO and Vice President BPO Management and held a variety of finance and operations roles from 1984 to 2003 at Tenneco Inc Affiliated Computer Services Inc and PricewaterhouseCoopers Mr Appel began his professional career with Arthur Andersen Company working there from 1977 to 1984 He received an MBA in Accounting from the Rutgers University Graduate School of Business in 1977 and a Business Administration degree from Rutgers College in 1976 Mr Appel is a Certified Public Accountant and a Certified Management Accountant
Director qualifications leadership chief financial officer and executive management experience broad business and strategically relevant experience retail management experience financial experience including accounting tax and financial reporting experience in developing growth strategies personnel development
Ms Arnold has been a director since May 2019 She is a member of the Audit and Risk Committee the People and Compensation Committee and the Nominating Committee Ms Arnold has over 20 years of experience in marketing brand management strategy development and business operations She serves as Chief Marketing Officer at Sephora one of the world s largest luxury cosmetic brands that is part of the Moet Hennessy Louis Vuitton conglomerate Prior to joining Sephora in May 2023 she was Senior Vice President Carbonated Soft Drinks at PepsiCo Inc where she oversaw the brand and business for the Carbonated Soft Drink portfolio in North America including some of the company s largest brands such as Pepsi and Mountain Dew Prior to joining PepsiCo in March 2022 she was the Chief Digital and Marketing Officer of Kimberly Clark Corporation a global personal care and consumer products company April 2020 to March 2022 and spent six years with Google serving as Global Head of Growth for Chromebook May 2019 to March 2020 General Manager US Chromebooks March 2018 to May 2019 Global Head of Marketing Chromebooks and IoT November 2016 to March 2018 Head of Americas Marketing Google Play April 2015 to October 2016 and Head of NA Marketing Google Play October 2013 to April 2015 Prior to joining Google Ms Arnold spent over nine years in various brand management positions with Kellogg Company August 2010 to October 2013 and Procter Gamble April 2004 to August 2010 Ms Arnold began her professional career at General Electric Corporation where she served as Product Manager Server Solutions for GE Capital IT Solutions April 2002 to April 2004 Ms Arnold received a Bachelor of Science degree in Computer Science with a minor in Business Marketing from The Ohio State University She was recognized in 2014 as one of Brand Innovators 40 Under 40 and has received numerous other professional awards and recognitions Ms Arnold also serves on the board of directors of Lancaster Colony Corporation NASDAQ LANC
Mr Cohen has been a member of the Board of Directors and the Executive Chairman since September 2019 He has been an owner of and advisor to the Company for over 30 years He acquired the Company in 1989 and took it public in 1991 with an initial public offering of Class A Non Voting Common Stock Mr Cohen has 50 years of investment banking and financial advisory experience with a variety of firms including Kuhn Loeb Co Incorporated 1973 1977 Lehman Brothers Kuhn Loeb Incorporated 1977 1979 The First Boston Corporation 1980 Oppenheimer Co Inc 1980 1984 Morgan Schiff Co Inc 1984 Present and Madison Park LLC 2004 to Present Mr Cohen received a Bachelor of Commerce degree from the University of Melbourne and a Masters of Business Administration from Harvard University Mr Cohen is the sole stockholder of MS Pawn Corporation which is the general partner of MS Pawn Limited Partnership the owner of 100 of the outstanding shares of our Class B Voting Common Stock
Director qualifications leadership broad business and strategically relevant experience retail management experience financial experience international experience and global perspective industry knowledge experience in developing growth strategies Further Mr Cohen has deep knowledge of the Company and its opportunities and challenges spanning multiple economic cycles
Mr Given is our Chief Executive Officer and a director having been appointed to that role and elected to the Board of Directors in March 2022 after serving as Co Interim Chief Executive Officer since January 2022 From September 2020 to January 2022 he was Chief Strategy M A and Funding Officer with responsibility for overseeing the Company s strategic planning mergers acquisitions and strategic investments and capital market and institutional funding activities From September 2019 to September 2020 he was the Chief M A and Strategic Funding Officer He previously served on the Board of Directors from July 2014 to September 2019 holding the position of Non Executive Chairman July 2014 to August 2014 Executive Vice Chairman August 2014 to February 2015 and Executive Chairman February 2015 to September 2019 Before joining the Company as an executive Mr Given provided financial and advisory services to the Company through his own business and financial advisory firm and as a consultant to Madison Park LLC which is wholly owned by Phillip E Cohen who is the beneficial owner of all of our Class B Voting Common Stock Mr Given is also a director of The Farm Journal Corporation a 135 year old pre eminent U S agricultural media company Senetas Corporation Limited ASX SEN a developer and manufacturer of certified defense grade encryption solutions CANSTAR Pty Ltd an Australian financial services ratings and research firm and Cash Converters International Limited ASX CCV Mr Given began his career working in the investment banking and equity capital markets divisions of Merrill Lynch in Hong Kong and Sydney Australia where he specialized in the origination and execution of a variety of M A equity equity linked and fixed income transactions
Mr Kulas is a member of the Board of Directors and holds the position of Vice Chairman and Chief Financial Officer of Exeter Finance LLC a leading indirect auto finance company He is a former EZCORP executive having served as Chief Executive Officer from July 2020 to January 2022 when he left to join Exeter Finance and President and Chief Financial Officer from February 2020 to July 2020 He first became associated with EZCORP in April 2019 when he was appointed as an independent member of the Board of Directors While an independent director he served on the Audit and Risk Committee and the Nominating Committee Mr Kulas resigned from the Board of Directors when he joined the Company as an executive in February 2020 and was reappointed to the Board in connection with his appointment as Chief Executive Officer Prior to joining the Company as an executive Mr Kulas spent over 25 years in financial analysis investment banking and executive level finance and operations roles with a variety of companies most recently Santander Consumer USA Inc a NYSE listed auto finance company where he served as Chief Executive Officer and a director from 2015 to 2017 President from 2013 to 2015 Chief Financial Officer from 2007 to 2015 and a director from 2007 to 2012 Prior to joining Santander Consumer USA Mr Kulas was a Managing Director in Investment Banking with J P Morgan Chase Co 1995 to 2007 where he managed JPMorgan s South Region investment banking office He has also served as an Adjunct Professor of Marketing at Texas Christian University 1997 to 1999 Securities Analyst at William C Connor Foundation TCU Educational Investment Fund 1994 to 1995 and an intern and Financial Analyst at Dun Bradstreet 1993 to 1995 Mr Kulas received an MBA with a concentration in Finance and Marketing from Texas Christian University in 1995 and a Bachelor of Arts degree from Southern Methodist University in 1993 He formerly served as an advisor to Warburg Pincus International LLC He has been involved in a variety of civic and philanthropic activities including the Salesmanship Club of Dallas Momentous Institute Exchange Club of East Dallas Dallas Citizens Council Baylor Scott White Dallas Foundation and Art House Dallas
Director qualifications leadership chief executive officer chief financial officer and executive management experience broad business and strategically relevant experience financial experience experience in developing growth strategies personnel development
Mr Lagos joined EZCORP as a director in October 2010 He is Chair of the People and Compensation Committee and a member of the Audit and Risk Committee and Nominating Committee Mr Lagos served as President and Chief Executive Officer of Pepsi Bottling Group Mexico from 2006 to 2008 and as its Chief Operating Officer from 2003 to 2006 He previously held various executive management positions with Pepsi Bottling Group PepsiCo Inc Unilever Mexico and PepsiCola International Inc concentrating exclusively in Latin America Since his retirement in December 2008 Mr Lagos has been an investor and consultant in various private business ventures and has served as a keynote speaker on organizational leadership and management He currently serves as Chairman of the board of Casa del Parque a privately held enterprise focused on developing senior living residences in Mexico He is also a member of the Mexican Advisory Board for Niagara Waters a leading manufacturer of bottled water in the U S and Mexico He received a Bachelor of Science degree in Industrial Systems Engineering from Instituto Technológico de Monterrey Master of Science degrees in Industrial Engineering and Operations Research and an MBA from Stanford University
Director qualifications leadership chief executive officer and executive management experience in significant multi national environments deep understanding of strategically important geographies and international markets risk management experience financial experience experience in developing implementing and managing strategic plans including international expansion personnel development legislative and government relations experience
Mr Tillett has been a director since April 2019 and serves as Chair of the Audit and Risk Committee and a member of the People and Compensation Committee and the Nominating Committee He has more than 40 years of experience in public accounting and business management He spent 31 years at PricewaterhouseCoopers where he progressed from entry level staff to senior partner serving a variety of businesses in the Insurance Practice the Transaction Services Practice and the U S Financial Services Practice From 2005 to 2010 he was the Transactions Services Leader of the firm s U S Financial Services Practice leading a newly assembled team of professionals providing service to clients pursuing transactions in the financial services sector At the time of his retirement from PwC in 2014 he was the Transaction Services Leader of the firm s New York Metro Practice where he led teams advising clients on complex transactions including structuring due diligence valuation and financial reporting Mr Tillett left PwC in 2014 to take the role of Executive Vice President and Chief Financial Officer of Walter Investment Management Corp then a publicly traded independent originator and servicer of residential mortgage loans Walter Investment Management Corp initiated Chapter 11 bankruptcy proceedings in November 2017 and successfully completed a financial restructuring plan in February 2018 and changed its name to Ditech Holding Corp Mr Tillett retired from his position in February 2018 after assisting with the development and execution of the financial restructuring plan From January 2020 through June 2022 Mr Tillett assisted a private mortgage servicing company in a financial consulting role Mr Tillett received an MBA from the Manchester Business School at the University of Manchester and a Bachelor of Science degree with an emphasis in Accounting from the University of Texas at Dallas He is a Certified Public Accountant
Director qualifications leadership chief financial officer and executive management experience broad business and strategically relevant experience financial experience including accounting tax and financial reporting personnel development
Ms Bryant serves as Chief Legal Officer and Secretary having been promoted to that position in January 2023 after having served as Vice President and Deputy General Counsel Ms Bryant joined the Company in January 2004 as Associate General Counsel and has held legal roles of increasing responsibility through August 2015 when she was promoted to Deputy General Counsel During her tenure with the Company Ms Bryant has been primarily responsible for legal support of the Company s pawn segments with experience in the U S and Mexico mergers and acquisitions financial services compliance and general corporate matters Prior to joining the Company Ms Bryant was a Staff Attorney with the Texas Automobile Dealers Association She received a Bachelor of Arts degree from the University of Texas at Austin and a J D degree from the University of Houston Law Center and has been a member of the Texas State Bar since November 1998
served as Interim Chief Financial Officer from September 2020 to May 2021 Prior to that he served as Vice President Treasury and M A since December 2016 and as a consultant to EZCORP performing similar duties since March 2015 From January 2015 to December 2016 Mr Jugmans was a principal of Selene Partners Inc a financial consulting firm providing strategic advice and other business services to a variety of clients including the Company and Morgan Schiff Co Inc He served as the Chief Financial Officer of Morgan Schiff from April 2013 to December 2014 and was Chief Financial Officer of ShippingEasy Inc from July 2011 to April 2013 From April 2005 to June 2012 Mr Jugmans was a Corporate Advisor at Lexicon Partners Pty Limited an independent corporate advisory and consulting firm based in Sydney Australia He served in various analyst and senior analyst positions at boutique investment banks for seven years prior to that Mr Jugmans received a Bachelor of Business degree with a major in Finance and a minor in Mathematics from the University of Technology in Sydney He serves as non executive Chairman of the Board of Cash Converters International Limited ASX CCV having been appointed to that position in April 2022 From April 2015 to April 2021 he served as a non executive board member and Chairman of Ratecity Pty Ltd which operates one of Australia s leading financial comparison sites
Mr Powell serves as Chief Operating Officer and has responsibility for store level operations for all of the Company s locations worldwide He joined EZCORP in 1989 as a pawnbroker in Houston Texas and during his 30 year tenure at EZCORP has held all field level positions from store level to multi unit management positions including Regional Director of Operations He moved into Operations at the Corporate Support Center in 2000 and was our top Operations Administration executive for the 13 years most recently serving as Chief Customer Service Officer for Global Pawn Mr Powell was named President US Pawn in September 2020 and was promoted to President Global Pawn in October 2021 He served as Co Interim Chief Executive Officer from January 2022 to March 2022 when he was appointed Chief Operating Officer
Mr Robertson is our Chief Information Officer He joined the Company in October 2018 as Senior Vice President Global IT and New Ventures and was promoted to his current position in November 2019 Prior to joining the Company he spent seven years at AIG working on a global transformation of the IT systems facilities and workforce From 1989 until 2011 Mr Robertson worked at EDS HP last serving as the Chief Operating Officer for the Financial Services division where he led IT programs supporting Bank of America American Express State Farm and others Mr Robertson grew up in Scotland and attended Heriot Watt University in Edinburgh where he graduated with an Honors degree in Electrical and Electronic Engineering
Mr Sajnani joined the Company in April 2020 and serves as Chief Audit and Loss Prevention Executive Prior to joining the Company he spent six years at Santander Consumer USA in multiple leadership roles initially as Chief Audit Executive and most recently as Executive Vice President Head of Digital Direct to Consumer and Service for Others Prior to Santander Consumer Mr Sajnani held a variety of management positions at Conn s Inc most recently serving as the Head of Internal Audit Enterprise Risk Management and Regulatory Compliance He began his career with PricewaterhouseCoopers in Transaction Advisory Services mainly serving large banks and specialty finance institutions Mr Sajnani received a bachelor s degree in Financial Economics from the University of Michigan at Ann Arbor and a master s degree in accounting from Eastern Michigan University He is a Certified Public Accountant and a Certified Regulatory Compliance Manager
Ms Swies is our Chief Revenue Officer responsible for global operations administration and earning assets Ms Swies joined EZCORP in November 2002 as a Financial Analyst and has worked in various finance and analytics positions primarily supporting operations in the U S and Latin America pawn segments and the legacy Financial Services businesses She served as Chief Revenue and Operations Officer with additional responsibility for digital initiatives and marketing from September 2020 to March 2022 when her title was changed to Chief Revenue Officer Ms Swies is a member of the Community Advisory Council for the Ronald McDonald House Charities of Central Texas and serves on the finance committee of ConnectHer a global non profit organization dedicated to improving the lives of women and girls through projects stories and film She earned her Bachelor of Business Administration in finance from the University of Texas at Austin
Ms VanRoekel is the Chief Human Resources Officer having joined the Company in January 2021 In March 2022 she was assigned the additional responsibility of overseeing the Company s Real Estate and Facilities team Prior to joining the Company Ms VanRoekel spent 19 years in expanding roles with Grupo Santander one of the world s largest international banks serving over 100 million customers with 187 000 employees As an expert leading cultural change and innovative large scale organizational transformation Ms VanRoekel led the Human Resources functions at Santander Digital USA Spain and UK Santander Consumer USA and Santander Bank N A Her most recent role with Grupo Santander was Group Vice President Human Resources at Santander Digital where she was responsible for successfully building digital and innovation talent across the U S Europe and Latin America Prior to joining Grupo Santander she was Director of Human Resources at Allied Riser Communications Ms VanRoekel holds B S and M S degrees in Journalism from Texas A M Commerce formerly East Texas State University
Based on written representations and a review of the relevant Forms 3 4 and 5 during fiscal 2024 all persons subject to Section 16 of the Securities Exchange Act of 1934 with respect to EZCORP timely filed all reports required by Section 16 a of the Securities Exchange Act
We maintain a Code of Conduct that is applicable to all of our Team Members including our Chief Executive Officer Chief Financial Officer and Chief Accounting Officer That Code of Conduct which satisfies the requirements of a code of ethics under applicable SEC rules contains written standards that are designed to deter wrongdoing and to promote honest and ethical conduct including the ethical handling of actual or apparent conflicts of interest full fair accurate timely and understandable public disclosures and communications including financial reporting compliance with applicable laws rules and regulations prompt internal reporting of violations of the code and accountability for adherence to the code A copy of the Code of Conduct is posted in the Investor Relations section of on our website at www ezcorp com
We will post any waivers of the Code of Conduct or amendments thereto that are applicable to our Chief Executive Officer Chief Financial Officer or Chief Accounting Officer in the Investor Relations section of our website at www ezcorp com To date there have been no such waivers
We maintain an insider trading policy addressing the purchase sale and other disposition of the Company s securities by its officers directors and employees that is reasonably designed to promote compliance with U S federal insider trading laws rules and regulations and the Nasdaq Listing Rules That policy is filed as an exhibit to this report
The Nasdaq Listing Rules contain several corporate governance requirements for Nasdaq listed companies These requirements generally relate to the composition of the board and its committees For example the rules require the following
Executive officer compensation must be determined or recommended to the board of directors for determination by either 1 a majority of the independent directors or 2 a compensation committee comprised solely of independent directors Rule 5605 d and
Director nominations must be selected or recommended for the board s selection by either 1 a majority of the independent directors or 2 a nominations committee comprised solely of independent directors Rule 5605 e
Rule 5615 c 2 however provides that a Controlled Company is exempt from the requirement to have a majority of independent directors and from the requirements to have independent director oversight over executive compensation and director nominations The Listing Rules define a Controlled Company as a company of which more than 50 of the voting power for the election of directors is held by an individual a group or another company EZCORP is a Controlled Company within this meaning by virtue of the fact that 100 of the outstanding Class B Voting Common Stock the only class of voting securities outstanding is held of record solely by MS Pawn Limited Partnership and beneficially by Phillip E Cohen
The Company has relied on the Controlled Company exemptions in the past but is not currently relying on such exemptions The controlling shareholder or the Board may implement changes in the future that would again require the Company to rely on the Controlled Company exemptions under the Nasdaq Listing Rules
The Board of Directors maintains the following committees to assist it in its oversight responsibilities The current membership of each committee is indicated in the list of directors set forth under Board of Directors above
The Audit and Risk Committee assists the Board in fulfilling its responsibility to provide oversight with respect to our financial statements and reports and other disclosures provided to stockholders the system of internal controls the audit process and legal and ethical compliance Its duties include reviewing the scope and adequacy of our internal and financial controls and procedures reviewing the scope and results of the audit plans of our independent and internal auditors reviewing the objectivity effectiveness and resources of the internal audit function and appraising our financial reporting activities and the accounting standards and principles followed The Audit and Risk Committee also selects engages compensates and oversees our independent auditor and pre approves all services to be performed by the independent auditing firm
The Audit and Risk Committee has further responsibility for overseeing our risk management and compliance processes In carrying out that responsibility the Audit and Risk Committee ensures that adequate policies and procedures have been designed and implemented to a manage and monitor significant risks the Company faces including financial operational security IT and cybersecurity legal compliance and regulatory risks and b assure compliance with all applicable laws and regulations including data privacy requirements
The Audit and Risk Committee is comprised entirely of directors who satisfy the standards of independence described under Part III Item 13 Certain Relationships and Related Transactions and Director Independence Director Independence as well as additional or supplemental independence standards applicable to audit committee members established under applicable law and Nasdaq listing requirements The Board has determined that each Audit and Risk Committee member meets the Nasdaq financial literacy requirement and that Mr Tillett Chair of the committee and Mr Appel are financial experts within the meaning of the current rules of the SEC
The People and Compensation Committee has the primary responsibility of reviewing analyzing and as appropriate approving on behalf of the Board executive compensation and organizational development matters and otherwise assisting the Board in its overall responsibility to enable the Company to attract retain develop and motivate qualified executives and employees who will contribute to our long term success Specific responsibilities and duties include assisting management and the Board in identifying developing and evaluating potential candidates for senior executive positions overseeing the development of succession plans for senior executive positions reviewing and approving or recommending as appropriate amounts and types of compensation to be paid to our executive officers reviewing and recommending to the full Board the amount and type of compensation to be paid to our non employee directors reviewing and recommending to the full Board all equity compensation to be paid to our Team Members including the executive officers and advising management with respect to the quality of the workforce to carry out our strategic goals The People and Compensation Committee is comprised entirely of directors who satisfy the standards of independence described under Part III Item 13 Certain Relationships and Related Transactions and Director Independence Director Independence
The Nominating Committee assists the Board with respect to the selection and nomination of candidates for election or appointment to the Board including making recommendations to the Board regarding the size and composition of the Board and its committees recommending to the Board the qualifications needed or required of Board members identifying and evaluating qualified individuals to become Board members making recommendations to the full Board regarding the nomination of appropriate candidates and assessing and monitoring each continuing and prospective director s independence and qualification to serve on the Board and its committees The Nominating Committee is comprised entirely of directors who satisfy the standards of independence described under Part III Item 13 Certain Relationships and Related Transactions and Director Independence Director Independence
The following table sets forth the number of meetings held during fiscal 2024 by the Board of Directors and each committee thereof as well as the number of times during the year that action was taken by unanimous written consent Our bylaws currently require the unanimous attendance of all directors in order for a quorum to be present at a meeting of the Board of Directors In addition to the number of official Board meetings noted below the Board of Directors also held five other meetings that were not considered official meetings of the Board due to the absence of a quorum
In addition during fiscal 2022 the Board of Directors formed and commissioned a Share Buyback Committee consisting of Mr Appel Mr Given Mr Kulas and Mr Tillett for the purpose of reviewing and approving the Company s share repurchase plans That committee met a total of four times during fiscal 2024
This Compensation Discussion and Analysis describes our compensation practices and the executive compensation policies decisions and actions of the People and Compensation Committee of our Board of Directors the Committee It focuses specifically on compensation earned during fiscal 2024 by the following individuals referred to as our Named Executive Officers
The Committee reviews the executive pay mix on an annual basis The Committee does not target a fixed percentage allocation among the compensation components but rather aims to provide the majority of executive officer compensation opportunities in the form of at risk incentive compensation
To attract and retain the best executives for key management positions we provide compensation opportunities that are competitive based on peer group and survey data We do not target any specific pay percentile for our executive officers It is important to note however that the majority of pay opportunities for our top executives are incentive based and that actual realizable compensation is heavily dependent upon actual business results See Executive Compensation Philosophy and Program Design above Failure to achieve targeted results could result in realized compensation being below the competitive benchmarks Conversely our incentive compensation programs provide opportunities for compensation to exceed the competitive benchmarks if specified objectives are achieved at targeted levels or higher The Committee believes that actual realizable compensation for our top executives is well aligned with our performance
The Committee asks its independent compensation consultant to conduct an annual competitive compensation review to benchmark compensation for executive officers Mercer US Inc Mercer the Committee s independent compensation consultant delivered its Fiscal 2024 Executive Compensation Competitive Market Assessment the FY24 Mercer Executive Compensation Report to the Committee in August 2023 in connection with the Committee s review and evaluation of the executive compensation program and pay levels for fiscal 2024 For that report Mercer collected competitive pay data for a peer group of 14 publicly traded companies that were reviewed and approved by the Committee in May 2023
There is only one publicly traded company in the marketplace with which we directly compete FirstCash Holdings Inc As a result the Committee uses a set of similarly sized companies from relevant industries that serve similar customer bases
operate in the retail or consumer finance industries and typically have similar operating dynamics as the Company The Committee believes this approach appropriately reflects the diverse labor market for executive talent in which we compete and presents a reasonable reference for evaluating the competitiveness of our executive compensation levels and practices
In comparison to the peer group used in fiscal 2023 in fiscal 2024 two companies were removed and three were added Atlanticus Holdings Corporation was removed due to its revenue size being outside the range of reasonable comparability and Elevate Credit Inc was removed due to it no longer being public The three companies added Green Dot Corporation LendingTree Inc and PRA Group Inc maintain focus on the Consumer Finance industry When the peer group was approved by the Committee Mercer noted that the Company was at the 38th percentile of the peer group in terms of revenue size and at the 49th percentile in terms of market capitalization
To benchmark our executive compensation Mercer used peer group data from the most recently available proxy filings CEO and CFO positions and other executive positions where available and its own executive compensation survey data for all executive officer positions Additional data from other published surveys was used as secondary reference points
The FY24 Mercer Executive Compensation Report contained the following general observations which the Committee took into consideration in evaluating and approving executive compensation for fiscal 2024
As a whole total direct compensation cash compensation plus long term incentive for our executive officers is at the 45th percentile with half of our executive officers approximating or exceeding the 50th percentile
Our executive compensation program consists of four main elements base salaries short term cash incentive opportunities long term incentive opportunities generally paid in the form of equity awards and other benefits including healthcare and retirement Each of these components is discussed in more detail below along with the compensation actions that were taken during fiscal 2024
Our primary objective with respect to base salary levels is to provide sufficient fixed cash income to attract and retain experienced leaders in a competitive market The base salaries of our executive officers are reviewed and adjusted if appropriate annually to reflect among other things individual performance review of market data experience in role macro economic conditions and internal equity
Our executive officers as well as other key Team Members are eligible to participate in our annual short term incentive STI plan The plan is designed to provide financial reward contingent on achievement of annual corporate and business unit financial results as well as personal objectives tied to our strategic goals
The fiscal 2024 STI plan provides cash bonus opportunities based on achievement of specified performance goals The bonus opportunity for each participant was determined based on a designated target amount a business performance modifier based on the achievement of specified EBITDA based performance goals for the Company as a whole consolidated and each business unit and an assessment of individual performance
Participants were assigned to one of two STI Incentive Pools Consolidated Executive Officer and Consolidated and the total target amount for each pool equaled the aggregate designated target amount for the participants in that pool The Consolidated Pool also includes three sub pools based on individual business unit performance
If the Company Performance Gate was achieved then each pool was funded in a range from 0 to 150 of the total target amount assigned to that pool based on the level of achievement of the applicable performance goal for that pool
The performance goal for both the Consolidated Executive Officer pool and the Consolidated pool was based on the consolidated Adjusted EBITDA shown in the Board approved budget for fiscal 2024 excluding any impact of our investment in Cash Converters The threshold level for each pool i e the performance needed to achieve 50 funding was set at 85 of the designated performance goal for that pool and the maximum level i e the performance needed to achieve 150 funding was set at 115 of the designated performance goal The Company Performance Gate was set at 85 of the consolidated performance goal
The Committee retained discretionary authority to make adjustments to the reported EBITDA as it in its sole discretion determined to be necessary appropriate or desirable to take into consideration special events or other circumstances reasonably beyond management s control referred to as Adjusted EBITDA
Each participant s bonus amount was funded out of their assigned pool based on an evaluation of their individual performance against objectives specified at the beginning of the year For all participants other than the executive officers the final bonus amounts were determined by management For the executive officers other than the CEO the final bonus amounts were recommended by the CEO and approved by the Committee The final bonus amount for the CEO was determined by the Committee
1 Mr Cohen in his role as Executive Chairman is not a participant in the STI plan but is subject to a separate incentive opportunity specified in the terms of his employment Pursuant to those terms he had the opportunity to earn an incentive award of up to 1 750 000 See Executive Chairman Incentive Award below
The amount of each Named Executive Officer s STI bonus opportunity at the Threshold Target and Maximum levels is set forth in the Grants of Plan Based Awards table under Incentive Plan Based Awards below
or the Consolidated Executive Officer pool which included all of the Named Executive Officers The specific bonus amount approved for each Named Executive Officer is indicated in the Non Equity Incentive Plan Compensation column in the Summary Compensation Table below Those amounts were calculated as follows
In November 2024 the Committee approved the STI plan for fiscal 2025 The fiscal 2025 STI plan contains the same design elements as the fiscal 2024 plan however the individual business unit sub pools were removed from the Consolidated Pool For fiscal 2025 the Target Amounts for each of the Named Executive Officers will be as follows Mr Given 1 125 000 Mr Jugmans 500 000 Mr Powell 600 000 and Ms VanRoekel 246 000
Long term incentive LTI compensation in the form of equity awards is a key component in our executive compensation program helping to encourage long term commitment shareholder alignment and long term performance orientation The value of equity awards over time bears a direct relationship to the price of our stock and the gain or loss experienced by our stockholders
All of our executive officers are eligible to receive LTI awards We structure our LTI compensation program to place greater emphasis on long term performance that enhances stockholder value Many of our peers have a significant time based vesting component to their long term awards while 80 of our LTI awards are subject to performance based vesting To further emphasize the long term nature of these awards 100 of the LTI awards vest at the end of a three year performance period rather than a prorated vesting each year during the performance period The Committee believes this structure incentivizes and rewards longer term vision and strategies and provides a balance to our short term programs which are focused on annual performance
We are currently issuing LTI awards under the 2022 Long Term Incentive Plan the 2022 LTI Plan Under the terms of the 2022 LTI Plan all awards must be approved by the full Board of Directors following recommendation by the Committee
Although LTI awards may be made at any time as determined by the Committee and approved by the Board the Committee generally considers new LTI grants for executive officers and other key employees on an annual basis Given that these annual LTI awards are intended to incentivize performance over the full designated performance period the Committee considers it appropriate to use the stock price at the beginning of the performance period in determining the number of shares or units to be granted In the Committee s view this methodology consistently applied neutralizes the stock price as a factor impacting the timing of awards
In May 2023 the Committee approved the design and structure of the fiscal 2024 LTI awards In October 2023 the Committee authorized the issuance of awards to the executive officers and other key employees which awards were granted in October 2023 following approval by the Board The number of units awarded to each participant was determined by dividing the participant s designated LTI target amount by 8 25 the closing trading price of our Class A Non Voting Common Stock on September 29 2023 The following table shows the fiscal 2024 LTI awards for the Named Executive Officers other than Mr Cohen who is subject to a separate incentive program and is not eligible for LTI awards
Vesting for 80 of the units awarded is subject to performance measured against specified net income targets 20 of the units are allocated to each of the three years in the performance period with each year measured separately based on an annual Adjusted Net Income performance goal and 20 of the units are subject to a cumulative performance goal based on Adjusted Net Income growth over the three year performance period
The Committee continues to consider net income to be the long term shareholder value metric against which management should be measured as it reflects the scaling of profitability in a fiscally robust way Net income takes into account the full bottom line performance and growth of the Company including a prudent capital structure it is the metric that primarily drives our stock price closely aligning management s interests with those of our shareholders it is one of the three primary financial goals in the Company s Strategic Goals and Measures framework and it is less susceptible to manipulation as EPS often is with debt financed share buybacks that potentially put financial position at risk
The number of performance based units whether annual or cumulative that will be available to vest at the end of the performance period will range from 50 assuming minimum threshold performance is achieved and 150 depending on the level of performance target achievement There is no bonus unit opportunity for the time based units and they will vest at 100 only if the continuous active employment condition is met otherwise they will be forfeited
The Committee believes this structure aligns with the Company s business strategy by maintaining executive focus on each year s results but also driving long term multi year performance Additionally the Committee determined with the advice of its independent consultant that the inclusion of a relatively small time based element aligns the Company s equity awards with market comparables
As described in our Annual Report on Form 10 K for the year ended September 30 2022 the 2022 Annual Report the fiscal 2022 LTI awards were approved in October 2021 The basic design of the fiscal 2022 awards is similar to the fiscal 2024 awards discussed above except that 100 of the units awarded are subject to performance based vesting divided equally among the three years in the performance period fiscal 2022 fiscal 2023 and fiscal 2024
As reported in our Annual Report on Form 10 K for the year ended September 30 2023 the 2023 Annual Report the Committee previously determined that 150 of the units allocated to fiscal 2022 and 147 of the units allocated to fiscal 2023 were available for vesting for those participants whose employment continued through fiscal 2024
exceeded the specified performance goal at the target level and in November 2024 the Committee determined that 133 of the units allocated to fiscal 2024 along with the units allocated to fiscal 2022 and fiscal 2023 as described above were vested for those participants whose employment continued through the end of fiscal 2024
The resulting vesting for the Named Executive Officers was as follows this includes 235 925 units for Mr Given including 71 325 bonus units 83 599 units for Mr Jugmans including 25 273 bonus units 136 168 units for Mr Powell including 41 165 bonus units and 59 535 units for Ms VanRoekel including 17 996 bonus units
As described in our 2023 Annual Report the fiscal 2023 LTI awards were approved in October 2022 The basic design of the fiscal 2023 awards is substantially similar to the fiscal 2024 awards discussed above except that the three year performance period consists of fiscal 2023 fiscal 2024 and fiscal 2025 As reported in the 2023 Annual Report the Committee determined in November 2023 that 147 of the units allocated to fiscal 2023 were available for vesting for those participants whose employment continues through fiscal 2024
exceeded the specified performance goal at the target level and in November 2024 the Committee determined that 133 of the units allocated to fiscal 2024 were available for vesting for those participants whose employment continues through the end of fiscal 2025 For the Named Executive Officers this includes 69 001
units for Mr Given including 17 120 bonus units 17 250 units for Mr Jugmans including 4 280 bonus units 28 463 units for Mr Powell including 7 062 bonus units and 11 316 units for Ms VanRoekel including 2 807 bonus units
exceeded the specified performance goal at the target level and in November 2024 the Committee determined that 133 of the units allocated to fiscal 2024 are available for vesting for those participants whose employment continues through the end of fiscal 2026 For
the Named Executive Officers this includes 83 829 units for Mr Given including 20 799 bonus units 22 568 units for Mr Jugmans including 5 599 bonus units 38 689 units for Mr Powell including 9 599 bonus units and 11 283 units for Ms VanRoekel including 2 799 bonus units
In October 2024 the Committee approved the plan design for the fiscal 2025 LTI awards The approved design is substantially identical to the fiscal 2024 awards described above except that the three year performance period covers fiscal 2025 fiscal 2026 and fiscal 2027 The fiscal 2025 LTI awards were granted in November 2024 following approval by the Board The number of units awarded to each participant was determined by dividing the participant s designated LTI target amount by 11 21 the closing trading price of our Class A Non Voting Common Stock on September 30 2024 The following table shows the fiscal 2025 LTI awards for the Named Executive Officers other than Mr Cohen who is subject to a separate incentive program and is not eligible for LTI awards
1 In October 2024 the Committee approved increases in the LTI target amounts for Mr Given from 2 600 000 to 3 000 000 Mr Jugmans from 700 000 to 900 000 and Ms VanRoekel from 350 000 to 400 000 These changes better align the executives long term incentive compensation and total direct compensation with peer group executives in comparable positions at the 41st percentile and 43rd percentile respectively for Mr Given at the 43rd percentile and 45th percentile respectively for Mr Jugmans and at the 43rd percentile and 63rd percentile respectively for Ms VanRoekel and is consistent with the Company s pay for performance philosophy and emphasis on long term compensation
As Executive Chairman Mr Cohen has an incentive compensation opportunity of 1 750 000 per year awarded in the form of cash settled phantom stock units Units tied to the trading price of the Company s Class A Common Stock as follows
The awarded Units vest at the end of the Performance Year so long as the Company Performance Gate under the Company s STI plan for the Performance Year has been achieved The Company Performance Gate is the level of performance generally measured in terms of Adjusted EBITDA needed to achieve any payout under the STI plan Even if the Company Performance Gate is achieved the Committee in its discretion may reduce the number of Units that vest based upon the Committee s evaluation of Mr Cohen s achievement of individual performance objectives Conversely if the Company Performance Gate is not achieved the Committee in its discretion may choose to vest some or all of the Units based an evaluation of Mr Cohen s achievement of individual performance objectives
The vested Units will be paid out in two installments The first installment will be paid as soon as practicable after the end of the Performance Year and will be an amount of cash equal to 50 of the vested Units multiplied by the stock price at the end of the Performance Year The second installment will be paid out at the end of the next fiscal year and will be an amount of cash equal to 50 of the vested Units multiplied by the stock price at that time
At the beginning of fiscal 2024 Mr Cohen received 212 121 Units the FY24 Units which was calculated by dividing the bonus opportunity 1 750 000 by 8 25 the closing trading price of our Class A Non Voting Common Stock on September 29 2023 In September 2024 the Committee reviewed and evaluated Mr Cohen s individual performance during fiscal 2024 noting Mr Cohen s valuable contributions in key strategic areas including the following
As noted above the Committee has determined that the Company Performance Gate under the fiscal 2024 STI plan has been achieved See Annual Short Term Incentive above Consequently and taking into consideration the Committee s evaluation of Mr Cohen s individual performance the Committee approved the vesting of 100 of the FY24 Units Under the terms of Mr Cohen s incentive opportunity 50 of those Units or 106 060 Units will be paid out on a per Unit value of 11 21 the closing trading price of our Class A Common Stock on September 30 2024 translating to a cash payout of 1 188 933 The remaining 50 of the FY24 Units 106 061 Units will be paid at the end of fiscal 2025 based on the closing trading price of our Class A Non Voting Common Stock at that time
In September 2024 the Committee maintained Mr Cohen s incentive compensation opportunity at 1 750 000 and for fiscal 2025 Mr Cohen received 156 110 Units the FY25 Units which was calculated by dividing the bonus opportunity 1 750 000 by 11 21 the closing trading price of our Class A Non Voting Common Stock on September 30 2024 The FY25 Units will be subject to the vesting and payout terms described above
We provide selected executives with a non qualified Supplemental Executive Retirement Plan SERP to offer a competitive benefit and to assist in offsetting potential impacts of contribution limitations applicable to our 401 k retirement savings plan For fiscal 2024 the Committee approved SERP contributions for each of the executive officers equal to 10 of base salary This resulted in the following SERP contributions for each of the Named Executive Officers other than Mr Cohen who is not eligible for SERP contributions
10 of base salary for each of the executive officers other than Mr Cohen For the Named Executive Officers those contributions were 75 000 for Mr Given 50 000 for Mr Jugmans 60 000 for Mr Powell and 41 000 for Ms VanRoekel
The executive officers participate in other benefit plans on the same terms as other Team Members These plans include medical dental life insurance and our 401 k retirement savings plan In addition we provide supplemental healthcare benefits to our executive officers The amount of that benefit for the Named Executive Officers is included in the All Other Compensation column of the Summary Compensation Table below
The People and Compensation Committee is comprised of four members Mr Lagos Chair Mr Appel Ms Arnold and Mr Tillett each of whom is an independent director See Part III Item 10 Directors Executive Officers and Corporate Governance Board of Directors
The Board of Directors has authorized the Committee to establish the compensation programs for all executive officers and to provide oversight for compliance with our compensation philosophy The Committee delegates the day to day administration of the compensation plans to management and retains responsibility for ensuring that the plan administration is consistent with our policies
Annually the Committee sets the compensation for our executive officers including objectives and awards under incentive plans subject to approval of LTI awards by the Board of Directors The Committee also reviews all other proposed LTI awards and makes recommendations to the Board of Directors on proposed LTI awards and the appropriate compensation for the non employee directors
The Committee also oversees the Company s human capital management HCM strategy policies and activities including succession planning and corresponding individual development in order to maintain the talent necessary to fulfill our operational and strategic objectives diversity and inclusion initiatives Team Member engagement and assessing the overall effectiveness of our HCM programs For more information on the Committee s role see Part III Item 10 Directors Executive Officers and Corporate Governance Corporate Governance Committees of the Board People and Compensation Committee as well as the Committee s charter which can be found in the Investor Relations section of our website at www ezcorp com
The Committee receives data regarding compensation trends succession plans issues and recommendations from management Members of management including the Chief Executive Officer Chief Human Resources Officer and Chief Legal Officer attend Committee meetings at the invitation of the Committee In addition our Chief Executive Officer provides input on individual performance and recommendations regarding compensation adjustments to the Committee for executive officer positions other than his own
Under its charter the Committee has sole authority to retain terminate obtain advice from oversee and compensate its outside advisors including its compensation consultant We have provided appropriate funding to the Committee to do so
Since March 2020 the Committee has retained Mercer as its independent compensation consultant The Committee s independent compensation consultant reports directly to the Committee and the Committee may replace its independent compensation consultant or hire additional consultants at any time The Committee s independent compensation consultant communicates with and attends meetings of the Committee as requested
During fiscal 2024 Mercer among other things advised the Committee on the principal aspects of our executive compensation program updated the Committee on evolving best practices and provided market information and analysis regarding the competitiveness of our program design and award values
The Committee continually monitors our general compensation practices specifically the design administration and assessment of our incentive plans to identify any components measurement factors or potential outcomes that might create an incentive for excessive risk
Meaningful long term equity incentive opportunities that are substantially performance based and provide an incentive to deliver long term growth in stockholder value as a result of sustained earnings growth
The Board of Directors has adopted a Compensation Recovery Policy that complies with the requirements of the Nasdaq Listing Rules Under the policy the Company generally is required to take reasonably prompt action to recover Erroneously Awarded Compensation from the persons subject to the policy including the executive officers if the Company is required to prepare an accounting restatement due to the Company s material noncompliance with financial reporting requirements Erroneously Awarded Compensation is the amount of incentive compensation received by a covered person in excess of the amount that would have been received had it been determined based on the restated amounts A copy of the Compensation Recovery Policy which became effective on August 1 2023 is filed as an exhibit to this Report
We maintain a policy prohibiting the trading of derivative securities related to or engaging in short sales of our stock by members of the Board of Directors executive officers or any other persons associated or affiliated with the Company through employment contractual relationship or otherwise who are designated from time to time by the Board of Directors For purposes of the policy a derivative security is any option warrant convertible security stock appreciation right or similar right with an exercise or conversion privilege at a price related to our stock or similar securities with a value derived from the value of our stock and a short sale is any sale of stock that the seller does not own or any sale that is consummated by the delivery of stock borrowed by or for the account of the seller The Board believes that this policy by preventing the shifting of the risks of ownership of Company stock helps to align the interests of management with the interests of the other Company stockholders
The Board of Directors has adopted stock ownership requirements applicable to the members of the Board of Directors and the executive officers Pursuant to those requirements each non executive member of the Board of Directors and each executive officer is required to hold a number of shares of Class A Non Voting Common Stock having a market value equal to the applicable Required Multiple of the annual retainer fee in the case of the non executive directors or base salary in the case of the executive officers The Required Multiple is 4X for the non executive directors and the CEO 2X for the Executive Chairman and 1X for the other executive officers Each person subject to the stock ownership requirements is required to hold at least 50 in the case of the non executive directors or 30 in the case of the executive officers of each vesting of restricted stock or restricted stock units until the required stock ownership amount is satisfied Thereafter such person can sell shares subject to our trading window policy as long as the required stock ownership amount is maintained Because each share of Class B Voting Common Stock is convertible into a share of Class A Non Voting Common Stock the shares of Class B Voting Common Stock held by Mr Cohen are treated as the equivalent number of shares of Class A Non Voting Common Stock for purposes of applying the stock ownership requirements
The executive officers other than Mr Cohen are participants in the EZCORP Inc Change in Control Severance Plan the CIC Severance Plan which was approved and adopted by the Board of Directors in November 2022 A participant in the CIC Severance Plan is entitled to receive certain severance benefits if both of the following events occur a double trigger The Company experiences a change in control
the executive s employment is terminated within two years thereafter The severance benefits include a cash payment equal to 1 a multiple of the participant s annual base salary and target STI bonus plus 2 the participant s prorated target bonus for the year in which the termination occurs In addition the Company will provide continued healthcare benefits for a number of years equal to the applicable multiple The multiple referred to varies by executive officer with the CEO COO and CFO having multiples of 2 0 and the remaining executive officer participants having multiples of 1 5
The Board of Directors has also approved amendments to the 2022 Long Term Incentive Plan and all outstanding LTI awards to provide for the acceleration of vesting at target levels in the case of performance based awards upon the occurrence of a qualifying termination following a change in control This acceleration of vesting benefit applies to the CIC Severance Plan participants as well as all other holders of outstanding LTI awards
Generally for purposes of the CIC Severance Plan a change in control will be deemed to have occurred if a person or group acquires beneficial ownership of 50 or more of the combined voting power of the outstanding Company securities either directly or through consummation of a business combination provided however that any acquisition or beneficial ownership of voting securities by or a transfer of voting securities to Mr Cohen any of his heirs or any entity that is owned or controlled by Mr Cohen or any of his heirs shall not constitute a change in control
The foregoing is a summary description of the principal terms of the CIC Severance Plan and is qualified in its entirety by reference to the full terms and provisions set forth in the plan document which is filed as an exhibit to this Report
Unless severance benefits under the CIC Severance Plan are triggered each of our executive officers will receive one year s base salary as a lump sum or in the form of salary continuation if their employment is terminated by the Company without cause
Generally restricted stock and restricted stock unit awards including those granted to the executive officers provide for accelerated vesting of some or all of the unvested shares or units in the event of the holder s death or disability
Certain Termination Benefits below The Committee believes that these benefits provide important protection to the executive officers are consistent with practice of the peer companies and are appropriate for attraction and retention of executive talent
Each of our executive officers other than Mr Cohen along with other key Team Members has entered into a Restrictive Covenant Agreement under which the executive is subject to confidentiality and non disclosure obligations with respect to various categories of proprietary competitively sensitive and confidential information In addition each such executive has agreed that for a period of one year following the termination of employment with the Company they will not compete with the Compan
On November 14 2023 we entered into an Employment Contract with Mr Given our Chief Executive Officer who resides in London England The Employment Contract was entered into to comply with U K employment laws and is not intended to alter the fundamental elements of Mr Given s employment relationship including the compensatory arrangement as reflected in this Compensation Discussion and Analysis The terms of the Employment Contract mirror as close as possible the terms of Mr Given s pre existing U S employment although certain modifications were necessary to adapt to a U K employment environment particularly with regards to healthcare and other benefits All compensation received by Mr Given under the Employment Contract is reflected in the Summary Compensation Table below including the All Other Compensation column which includes healthcare and other benefits
The Compensation Committee has reviewed the foregoing Compensation Discussion and Analysis and has discussed it with management Based on that review and those discussions the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10 K for the fiscal year ended
None of the persons who served as members of the Compensation Committee during fiscal 2024 are or have ever been an officer of or employed by the Company nor do they have any relationship that requires disclosure under Item 404 of Regulation S K the SEC s rules requiring disclosure of certain relationships and related party transactions
Mr Given served as Chief Strategy M A and Strategic Funding Officer during fiscal 2021 and the first quarter of fiscal 2022 He was named Co Interim Chief Executive Officer effective January 12 2022 and appointed Chief Executive Officer on March 3 2022
Mr Powell was promoted to the position of President Global Pawn in October 2021 and held that position until he was named Co Interim Chief Executive Officer effective January 12 2022 and appointed Chief Operating Officer on March 3 2022
Amounts represent the aggregate grant date fair value of restricted stock or restricted stock unit awards computed in accordance with FASB ASC 718 10 25 See Note 8 Common Stock And Stock Compensation of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data The actual value realized by the Named Executive Officer with respect to stock awards will depend on whether the award vests and if it vests the market value of our stock on the date the stock is sold
For a description of these awards see the Grant of Plan Based Awards table under Incentive Plan Based Awards below See also Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Executive Compensation Actions Long Term Incentives above
For Named Executive Officers other than Mr Cohen amounts represent the incentive bonuses paid pursuant to the Short Term Incentive Compensation Plan See Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Executive Compensation Actions Annual Incentive Bonuses above For Mr Cohen amounts represent the incentive bonuses paid pursuant to the special incentive compensation arrangement described under Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Executive Compensation Actions Executive Chairman Incentive Award
Amounts include the cost of providing various perquisites and personal benefits as well as the value of our contributions to the company sponsored 401 k plan and Supplemental Executive Retirement Plan For detail of the amounts shown for each Named Executive Officer see the table under Other Benefits and Perquisites All Other Compensation below
Mr Given and Mr Jugmans serve on the board of directors of Cash Converters International Limited with Mr Jugmans serving as non executive chairman The director fees paid to each of them during fiscal 2024 by Cash Converters International Limited were as follows Mr Given AUD 97 500 and Mr Jugmans AUD 172 500 These amounts are not included in the Summary Compensation Table as they were paid by Cash Converters International Limited which is not controlled by EZCORP
llowing information sets forth our calculation of the ratio between the annual total compensation of Lachlan P Given our Chief Executive Officer and the annual total compensation of our median Team Member CEO Pay Ratio
When we identified our median Team Member we selected gross wages paid during fiscal 2024 as the most appropriate measure of compensation and applied that measure consistently across our global population Gross wages generally include salary and wages regular hourly and overtime commissions and bonuses We annualized the compensation of all permanent full time and part time Team Members as of September 30 2024
Using this methodology we determined that our median Team Member was a full time certified store manager located in Mexico where Team Member wages and cost of living are significantly lower than the U S
In calculating CEO pay ratios companies are permitted to adopt a variety of methodologies apply certain exclusions and make reasonable estimates and assumptions reflecting their unique employee populations Therefore our CEO Pay Ratio as described above may not be comparable to CEO pay ratios reported by other companies due to differences in industries and geographical dispersion of employees as well as the different estimates assumptions and meth
The following table sets forth certain information about plan based awards that we made to the Named Executive Officers during fiscal 2024 For information about the plans under which these awards were granted see Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Compensation Actions Annual Incentive Bonus and Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Executive Compensation Actions Long Term Incentives above
These amounts represent the potential payouts under the fiscal 2024 Short Term Incentive Compensation Plan See Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Executive Compensation Actions Annual Incentive Bonuses above The Target amount is the amount that would be paid if the specified performance goals are achieved at the target level although the People and Compensation Committee may reduce any award if it chooses to do so The Threshold reflects the amount that would be paid if the minimum performance goals are achieved while the Maximum amount represents the maximum amount that would be paid if the maximum performance goals are achieved or exceeded See the Non Equity Incentive Plan Compensation column in the Summary Compensation Table above for the amount of the actual payout for each of the Named Executive Officers
The amounts shown represent long term incentive LTI awards stated in number of units under our Long Term Incentive Plans See Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Executive Compensation Actions Long Term Incentives
Represents the estimated grant date fair value of the fiscal 2024 LTI awards assuming payout at Target level This is the estimated amount of aggregate compensation cost we expect to recognize over the performance period determined as of the grant date Because of the structure of the fiscal 2024 awards as described under Compensation Discussion and Analysis Components of Compensation and Fiscal 2024 Executive Compensation Actions Long Term Incentives Fiscal 2024 Actions Grant of Fiscal 2024 Awards above each annual tranche of the awards is treated as a separate award for accounting purposes Consequently the amount shown represents the grant date fair value of the first annual tranche 20 of the award plus the grant date fair value of the cumulative three year performance tranche 20 of the award plus the grant date fair value of the time based tranche 20 of the award The grant date fair value of the second and third annual tranches will be reflected in future years when the performance conditions for those tranches are established and they are deemed to be granted for accounting purposes
Represents the grant date fair value of the bonus units awarded with respect to the third tranche of the fiscal 2021 LTI awards based on Adjusted Net Income performance during fiscal 2023 as discussed in our 2023 Annual Report under Compensation Discussion and Analysis Components of Compensation and Fiscal 2023 Executive Compensation Actions Long Term Incentives Fiscal 2023 Actions Third Year Performance of Fiscal 2021 Awards
Represents the grant date fair value of the bonus units awarded with respect to the second tranche of the fiscal 2022 LTI awards based on Adjusted Net Income performance during fiscal 2023 as discussed in our 2023 Annual Report under Compensation Discussion and Analysis Components of Compensation and Fiscal 2023 Executive Compensation Actions Long Term Incentives Fiscal 2023 Actions Second Year Performance of Fiscal 2022 Awards
Represents the grant date fair value of the bonus units awarded with respect to the first tranche of the fiscal 2023 LTI awards based on Adjusted Net Income performance during fiscal 2023 as discussed in our 2023 Annual Report under Compensation Discussion and Analysis Components of Compensation and Fiscal 2023 Executive Compensation Actions Long Term Incentives Fiscal 2023 Actions First Year Performance of Fiscal 2023 Awards
Represents the aggregate grant date fair value of the third tranche of the fiscal 2022 LTI awards and the second tranche of the fiscal 2023 LTI awards Because of the structure of those awards these tranches were treated as separate awards for accounting purposes granted at the beginning of fiscal 2024 even though the full number of units associated with the awards was included in the Grants of Plan Based Awards table in the 2022 Annual Report and the 2023 Annual Report respectively
The following table sets forth certain information about outstanding stock awards held by the Named Executive Officers as of the end of fiscal 2024 None of the Named Executive Officers holds any stock options
These units vested in November 2024 following approval by the People and Compensation Committee See Compensation Discussion and Analysis Components of Compensation and Fiscal 2023 Executive Compensation Actions Long Term Incentives above
All U S Team Members are given an opportunity to participate in our 401 k retirement savings plan following a new hire waiting period Subject to statutory limits of the IRS this plan allows participants to have pre tax amounts withheld from their pay and provides for a discretionary employer matching contribution historically 25 up to 6 of salary Matching contributions are made in the form of cas
cipant vests in the matching contributions over the first three years of service provided the hours worked requirement is met A participant s matching contributions vest 100 in the event of death disability or termination of the plan due to a change in control
We provide U S executive officers with a non qualified Supplemental Executive Retirement Plan SERP to offer a competitive benefit and to assist in offsetting potential impacts of contribution limitations applicable to our 401 k retirement savings plan The SERP has similar investment options as are available under the 401 k retirement savings plan Company contributions to the SERP are formula based reviewed and approved by the People and Compensation Committee each year For fiscal 2024 our annual contributions to the SERP were calculated as 10 of base salary For fiscal 2025 the Company contributions to the SERP will continue at the same rates for executive officers Under the terms of the SERP participants are also allowed to voluntarily defer all or a portion of their salary and bonus payments into the SERP There were eight participants during fiscal 2024
All Company contributed SERP funds have a vesting schedule as an additional retention tool Generally the funds vest over three years from the contribution date with one third vesting each year All of a participant s Company contributed SERP funds vest 100 in the event of the participant s death or disability or the termination of the plan due to a change in control In addition all Company contributed SERP funds are 100 vested when a participant attains age 50 and five years of active service All Company contributed SERP funds are forfeited regardless of vesting status if the participant s employment is terminated for cause
A participant may not withdraw any portion of his or her SERP account while still employed by the Company unless in the sole opinion of management the participant has an unforeseeable emergency which is defined as a severe financial hardship resulting from an illness or accident of the participant the participant s spouse or a dependent the loss of the participant s property due to casualty or other similar extraordinary and unforeseeable circumstance arising as a result of events beyond the participant s control
Of the Aggregate Balance at September 30 2024 the following amounts were previously reported as compensation in the Summary Compensation Tables for prior years 573 395 for Mr Given 102 943 for Mr Jugmans 127 463 for Mr Powell and 82 841 for Ms VanRoekel
We provide a fully insured supplemental executive medical plan to certain executives including all of the Named Executive Officers to cover most healthcare costs in excess of amounts covered by our health insurance plans The amounts shown other than the fiscal 2024 and fiscal 2023 amounts for Mr Given represent the total premiums paid for the supplemental executive medical plan for each of the Named Executive Officers during each of the years presented The fiscal 2024 and fiscal 2023 amounts for Mr Given represent the amount we reimbursed Mr Given for a supplemental health policy and other medical services in the U K that along with his U K National Health Service coverage provides Mr Given with healthcare benefits that are comparable to the benefits provided to the other executive officers
Represents group life insurance premiums paid on behalf of the Named Executive Officers The benefit provides life and accidental death and dismemberment coverage for the Named Executive Officers at three times annual salary up to a maximum of 1 million The fiscal 2024 and fiscal 2023 amounts for Mr Given represent the amount we paid for a rider to the group term policy to provide Mr Given with comparable benefits in the U K
The standard restricted stock award agreement pursuant to which we grant restricted stock or restricted stock units to our Team Members generally provides that vesting is accelerated in the event of the holder s death or disability
For all executives who participate in the SERP including the Named Executive Officers any unvested Company contributions to the SERP will vest in the case of death or disability of the participant or a change in control
We currently provide each of our executive officers other than Mr Cohen with one year salary continuation if his or her employment is terminated by the Company without cause This severance benefit is reflected in the terms of Mr Given s U K Employment Contract See Compensation Discussion and Analysis Other Executive Compensation Matters Employment Contract for Mr Given
The executive officers other than Mr Cohen are subject to the Change in Control Severance Plan which provides them with certain severance benefits in the form cash payments and continued healthcare benefits in the event that their employment is terminated in connection with or within two years following a change in control of the Company See Compensation Discussion and Analysis Other Executive Compensation Matters Change in Control Severance Plan In addition
all outstanding LTI awards provide for the acceleration of vesting at target levels in the case of performance based awards upon the occurrence of a qualifying termination following a change in control
The following table sets forth the amounts of severance or termination benefits that would have been payable to each of the Named Executive Officers upon the occurrence of various events assuming each of the events occurred on September 30 2024
Each non employee director receives a basic annual retainer fee with the Lead Independent Director the chair of the Audit and Risk Committee and the chair of the People and Compensation Committee each receiving an additional amount During fiscal 2023 the basic annual retainer fee was 80 000 and additional amounts paid to the Lead Independent Director the chair of the Audit and Risk Committee and the chair of the People and Compensation Committee were 40 000 27 500 and 15 000 respectively Annual retainer fees are paid in cash on a quarterly basis
The non employee directors are also eligible for stock option and restricted stock awards The number of options or shares of restricted stock awarded as well as the other terms and conditions of the awards such as vesting and exercisability schedules and termination provisions are determined by the Board of Directors upon the recommendation of the People and Compensation Committee Historically the directors have each received an annual restricted stock award with a grant date value equal to 2X the annual retainer fee The annual award cycle is based on our Annual Meeting of Stockholders which is generally held in February or March of each year with the awards being granted on the date of the Annual Meeting of Stockholders and vesting on the day immediately preceding the date of the Annual Meeting of Stockholders held in the following year but no later than March 31
The following table sets forth the compensation paid to our non employee directors for fiscal 2024 Mr Cohen and Mr Given are executive officers of the Company and do not receive any additional compensation for serving on the Board of Directors
Amounts represent the aggregate grant date fair value of restricted stock awards computed in accordance with FASB ASC 718 10 25 See Note 8 Common Stock And Stock Compensation of Notes to Consolidated Financial Statements included in Part II Item 8 Financial Statements and Supplementary Data The actual value realized by the director with respect to stock awards will depend on the market value of our stock on the date the stock is sold
Each of the non employee directors received a grant of 15 037 shares of restricted stock on March 21 2024 That amount was determined by dividing 160 000 2X the annual director fee by 10 64 the trading price of the Class A Common Stock at the time of grant These shares are scheduled to vest immediately before the 2025 Annual Meeting of Stockholders but no later than March 31 2025
We have two equity compensation plans that have been approved by stockholders the 2010 Long Term Incentive Plan applicable to outstanding long term incentive awards issued on or before December 31 2021 and the 2022 Long Term Incentive Plan applicable to all long term incentive awards issued on or after January 1 2022 New awards can be in the form of stock options stock appreciation rights stock bonuses restricted stock restricted stock units performance units or performance shares although generally we issue only restricted stock and restricted stock unit awards We do not have any equity compensation plans that were not approved by
1 Amount represents the number of shares available for issuance in the 2022 Long Term Incentive Plan as of September 30 2024 An additional 850 000 shares were added to the plan on October 30 2024 to cover the fiscal 2025 LTI awards to be issued in November 2024 which will leave 280 927 shares for future issuances The 2010 Long Term Incentive Plan remains effective only to cover currently outstanding awards issued on or prior to December 31 2021 as that plan was replaced by the 2022 Long Term Incentive Plan
Phillip E Cohen controls EZCORP through his ownership of all of the issued and outstanding stock of MS Pawn Corporation the sole general partner of MS Pawn Limited Partnership which owns 100 of our Class B Voting Common Stock The following table presents information regarding the beneficial ownership of our Common Stock as
outstanding ii each of our directors iii each of the Named Executive Officers and iv all directors and executive officers as a group Unless otherwise indicated each person named below holds sole voting and investment power over the shares shown subject to community property laws where applicable
MS Pawn Corporation is the general partner of MS Pawn Limited Partnership and has the sole right to vote its shares of Class B Common Stock and to direct their disposition Mr Cohen is the sole stockholder of MS Pawn Corporation
Group includes those persons who were serving as directors and executive officers on November 1 2024 Number shown includes 663 305 unvested restricted stock units expected to vest within 60 days of November 1 2024
The Board of Directors has adopted a written comprehensive policy for the review and evaluation of all related party transactions Under that policy the Audit and Risk Committee is charged with the responsibility of a reviewing and evaluating all transactions or proposed transactions between the Company and a related person and b approving ratifying rescinding or taking other action with respect to each such transaction With respect to any specific transaction the Audit and Risk Committee may in its discretion transfer its responsibilities to either the full Board of Directors or to any special committee of the Board of Directors designated and created for the purpose of reviewing evaluating approving or ratifying such transaction
Nicholas Cohen the son of Phillip E Cohen the beneficial owner of all of our Class B Voting Common Stock and our Executive Chairman has been an employee of the Company since May 2018 currently serving in the position of Vice President Business Development The Company considers the employment relationship with Nicholas Cohen to be a related party transaction that is subject to the Company s Policy for Review and Evaluation of Related Party Transactions Accordingly the Audit and Risk Committee reviews and approves all promotion opportunities and compensation changes for Nicholas Cohen
The Board of Directors believes that the interests of the stockholders are best served by having a substantial number of objective independent representatives on the Board For this purpose a director is considered to be independent if the Board determines that the director does not have any direct or indirect material relationship with the Company that may impair or appear to impair the director s ability to make independent judgments
The Board has evaluated all relationships between the Company and each of the persons who served as a director during any portion of fiscal 2024 and has made the following determinations with respect to each director s independence
The Board s determination that a director is independent was made on the basis of the standards for independence set forth in the Nasdaq Listing Rules Under those standards a person generally will not be considered independent if he or she has a relationship that in the opinion of the Board of Directors would interfere with the exercise of independent judgment in carrying out the responsibilities of a director The Nasdaq rules also describe specific relationships that will prevent a person from being considered independent
Mr Cohen and Mr Given were executive officers of the Company during all of fiscal 2024 and Mr Kulas was an executive officer of the Company from February 2020 until January 2022 Therefore they are not independent in accordance with the standards set forth in the Nasdaq Listing Rules
Financial statement schedules are omitted because they are not required or are not applicable or the required information is provided in the consolidated financial statements or notes described in Item 15 a 1 above
The certifications furnished in Exhibit 32 1 hereto are deemed to accompany this Annual Report on Form 10 K 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
Pursuant to the requirements of Section 13 or 15 d 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
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated

Company Name	EZCORP INC Vist SEC web-site
Category	RETAIL-MISCELLANEOUS RETAIL
Trading Symbol	EZPW