ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to inform the reader about matters affecting the financial condition and results of operations of EZCORP, Inc. and its subsidiaries (collectively, “we,” “us”, “our” or the “Company”) for the two-year period ended September 30, 2025. 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.
Business Development
2032 Senior Notes
In March 2025, we issued $300.0 million aggregate principal amount of the Company’s 7.375% senior notes due 2032 (the “2032 Senior Notes”), for which $300.0 million remains outstanding as of September 30, 2025. See Note 8 of Notes to the Consolidated Financial Statements included in “Part II, Item 8 - Financial Statements and Supplementary Data” of this Report for further discussion.
2025 Convertible Notes
During April 2025, holders converted approximately $97.0 million in principal amount of the 2025 Convertible Notes into approximately 6.1 million shares of our Class A common stock, with payments of cash in lieu of any fractional shares. On May 1, 2025, we repaid the remaining principal balance of $6.4 million with cash. See Note 8 of Notes to the Consolidated Financial Statements included in “Part II, Item 8 - Financial Statements and Supplementary Data” of this Report for further discussion.
Acquisitions
In fiscal 2025, we closed on the acquisition of 47 stores across 13 states in Mexico. The stores, operating under the names “Monte Providencia” and “Tu Empeño Efectivo” offer traditional pawn loans, as well as auto pawn transactions, some of which are in standalone auto pawn stores. Additionally, we acquired 4 stores located in the U.S. during fiscal 2025. See Note 3 of Notes to Consolidated Financial Statements included in “Part II, Item 8 - Financial Statements and Supplementary Data” for further discussion of the Mexico acquisition.
Share Repurchase Program
On November 11, 2025, the Board of Directors (“Board”) approved a new share repurchase program which will replace the previous program that expired on May 3, 2025. See Note 9: Common Stock And Stock Compensation of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data”. Under the new program, we are authorized to repurchase up to $50 million of our Class A Non-Voting common shares over the next three years. Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.
The amount and timing of purchases will be dependent on a variety of factors, including stock price, trading volume, general market conditions, legal and regulatory requirements, general business conditions, the level of cash flows, and corporate considerations determined by management and the Board, such as liquidity and capital needs and the availability of attractive alternative investment opportunities. The Board of Directors has reserved the right to modify, suspend or terminate the program at any time.
Results of Operations
Non-GAAP Financial Information
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
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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, 2025 and 2024 were as follows:
September 30,
Twelve Months Ended
September 30,
Mexican peso
Guatemalan quetzal
Honduran lempira
Australian dollar
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Operating Results
Fiscal 2025 vs. Fiscal 2024
These tables, as well as the discussion that follows, should be read in conjunction with the accompanying consolidated financial statements and related notes.
Summary Financial Data
The following table presents selected summary consolidated financial data for fiscal 2025 and fiscal 2024.
Fiscal Year Ended
September 30,
Change
(in thousands)
Gross profit:
Pawn service charges
Merchandise sales
Merchandise sales gross profit
Gross margin on merchandise sales
(60) bps
Jewelry scrap sales
Jewelry scrap gross profit
Gross margin on jewelry scrap sales
1,160 bps
Other revenues
Gross profit
Operating expenses:
Store expenses
General and administrative
Impairment of other assets
Depreciation and amortization
Loss (gain) on sale or disposal of assets and other
Other operating income
Total operating expenses
Interest expense
Interest income
Equity in net income of unconsolidated affiliates
Other (income) expense
Total non-operating expenses (income)
Income before income taxes
Income tax expense
Net income
Net pawn earning assets:
Pawn loans
Inventory, net
Total net pawn earning assets
Represents a percentage computation that is not mathematically meaningful.
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PLO increased $33.4 million (12%) to $307.5 million due to higher average loan size, continued strong pawn demand, improved operational performance and additional stores.
Total revenues increased $112.7 million (10%) and gross profit increased 9%, reflecting improved PSC revenue, merchandise sales and jewelry scrap gross profit.
PSC increased $37.7 million (9%) as a result of higher average PLO. Merchandise sales increased $37.3 million (6%). Merchandise sales gross margin remains within our targeted range at 35.0%. Jewelry scrap sales increased 62%, and jewelry scrap sales gross margin increased by 1,160 bps to 26.6% due to an increase in gold price and jewelry purchases.
Operating expenses increased $27.2 million (5%) primarily due to a $20.1 million increase in store expenses as a result of increased labor driven by increased headcount from acquired and de novo stores, and inflationary wage increases. General and administrative expenses increased $7.9 million primarily due to labor and incentive compensation expense.
Total non-operating expense changed by $5.5 million (178%), primarily due to the increase in interest expense of $9.4 million, which is a result of the issuance of the 2032 Senior Notes. This increase was partially offset by the $4.1 million increase in interest income, which is primarily due to the increase in Cash and cash equivalents held during the second half of fiscal 2025.
Income tax expense increased $4.6 million, primarily due to the increase in income before income taxes of $31.2 million, offset by accrued withholding taxes recorded in prior year for 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 10: Income Taxes of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for quantification of these items.
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U.S. Pawn
The following table presents selected summary financial data from our U.S. Pawn segment:
Fiscal Year Ended
September 30,
Change
(in thousands)
Gross profit:
Pawn service charges
Merchandise sales
Merchandise sales gross profit
Gross margin on merchandise sales
— bps
Jewelry scrap sales
Jewelry scrap sales gross profit
Gross margin on jewelry scrap sales
1,120 bps
Other revenues
Gross profit
Segment operating expenses:
Store expenses
Impairment of goodwill, intangible and other assets
Depreciation and amortization
Loss on sale or disposal of assets and other
Segment operating contribution
Other segment income
Segment contribution
Other data:
Average monthly ending pawn loan balance per store (a)
Monthly average yield on pawn loans outstanding
— bps
Pawn collateral - general merchandise
(200) bps
Pawn collateral - jewelry
200 bps
Represents a percentage computation that is not mathematically meaningful.
Balance is calculated based on the average of the monthly ending balance averages during the applicable period.
PLO ended the year at $233.8 million, up 9% on a total and same-store basis due to increase in average loan size, strong loan demand and improved operational performance.
Total revenues increased 9% and gross profit increased 10%, primarily due to increased PSC, merchandise sales, and jewelry scrap sales.
PSC increased 9% as a result of higher average PLO.
Merchandise sales increased 3%, and merchandise sales gross margin remained consistent at 37.1%.
Jewelry scrap sales increased 58%, and jewelry scrap sales gross margin increased to 26.7% due to increase in gold price and jewelry purchases.
Store expenses increased 4% (4% on a same-store basis), primarily due to labor costs driven by inflation.
Segment contribution increased $34.9 million due to the changes described above.
During fiscal 2025, segment net store count in our U.S. pawn segment increased by 3 due to the acquisition of 4 stores and the consolidation of 1 store.
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Latin America Pawn
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.
Fiscal Year Ended September 30,
(in thousands)
(GAAP)
(GAAP)
Change
(GAAP)
(Constant Currency)
Change (Constant Currency)
Gross profit:
Pawn service charges
Merchandise sales
Merchandise sales gross profit
Gross margin on merchandise sales
(170) bps
(160) bps
Jewelry scrap sales
Jewelry scrap sales gross profit
Gross margin on jewelry scrap sales
1,500 bps
1,510 bps
Other revenues, net
Gross profit
Segment operating expenses:
Store expenses
Depreciation and amortization
Segment operating contribution
Other segment income (a)
Segment contribution
Other data:
Average monthly ending pawn loan balance per store (b)
Monthly average yield on pawn loans outstanding
— bps
— bps
Pawn collateral - general merchandise
(500) bps
(500) bps
Pawn collateral - jewelry
500 bps
500 bps
Represents a percentage computation that is not mathematically meaningful.
Fiscal 2025 and 2024 constant currency amounts exclude net GAAP basis foreign currency transaction loss of $0.1 million and $0.1 million, respectively, resulting from movement in exchange rates.
Balance is calculated based on the average of the monthly ending balance averages during the applicable period.
2025 Change
(GAAP)
2025 Change
(Constant Currency)
Same-Store data: (a)
PLO
PSC
Merchandise Sales
Merchandise Sales Gross Profit
Store Expenses
Stores open at the end of the period included in the same-store calculation were 727.
PLO improved to $73.7 million, an increase of 23% (17% on constant currency basis). On a same-store basis, PLO increased 14% (9% on a constant currency basis) due to strong loan demand and improved operational performance.
Total revenues were up 11% (20% on a constant currency basis), and gross profit increased by 8% (17% on a constant currency basis), reflecting increased PSC, merchandise sales and jewelry scrap sales.
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PSC increased 8% (16% on constant currency basis) as a result of higher average PLO.
Merchandise sales increased 10% (20% on a constant currency basis) and 8% on a same-store basis (18% on a constant currency basis). Merchandise sales gross margin slightly decreased to 30.6%.
Jewelry scrap sales increased 96%, and jewelry scrap sales gross margin increased to 26.0% due to increase in gold price and jewelry purchases.
Store expenses increased $6.5 million, up 5% (14% on a constant currency basis), primarily due to increased labor headcount, in line with store activity and minimum wage increases. Same-store expenses increased 3% (12% on a constant currency basis).
Segment contribution was up 20% to $46.6 million (28% on a constant currency basis), due to the changes noted above.
During fiscal 2025, net store count in our Latin America pawn segment increased by 78 due to the acquisition of 48 stores, the opening of 40 de novo stores and the consolidation of 10 stores.
Other Investments
The following table presents selected summary financial data for our Other Investments segment after translation to U.S. dollars from its functional currency of primarily Australian dollars:
Fiscal Year Ended
September 30,
Change
(in thousands)
Gross profit:
Consumer loan fees, interest and other
Gross profit
Segment operating expenses:
Interest income
Equity in net (income) loss of unconsolidated affiliates
Segment operating contribution (loss)
Other segment (income) loss
Segment contribution (loss)
Other Investments income was $9.6 million, an increase of $2.1 million, primarily due to Cash Converters’ increased net profit for the year.
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Other Items
The following table reconciles our consolidated segment contribution discussed above to net income attributable to EZCORP, Inc., including items that affect our consolidated financial results but are not allocated among segments:
Fiscal Year Ended
September 30,
Change
(in thousands)
Segment contribution
Corporate expenses (income):
General and administrative
Impairment of other assets
Depreciation and amortization
Loss on sale or disposal of assets and other
Other operating income
Interest expense
Interest income
Equity in net loss of unconsolidated affiliates
Other (income) expense
Income before income taxes
Income tax expense
Net income
Segment contribution increased $44.8 million or 21%, primarily due to the improved operating results of the segments, as discussed above.
General and administrative expenses increased $7.9 million (11%), primarily due to payroll related expenses, including incentive compensation.
Interest expense increased $9.4 million (70%), primarily driven by the issuance of 2032 Senior Notes in the second quarter fiscal 2025. See Note 8: Debt of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for further discussion.
Interest income increased $4.3 million (65%), primarily due to the increase in Cash and cash equivalents held during the second half of fiscal 2025.
Income tax expense increased $4.6 million primarily due to the increase in income before income taxes of $31.2 million, offset by accrued withholding taxes recorded in prior year for 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 10: Income Taxes of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for quantification of these items.
Fiscal 2024 vs. Fiscal 2023
The Results of Operations discussion for fiscal 2024 vs. fiscal 2023 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, 2024.
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Liquidity and Capital Resources
Cash and Cash Equivalents
Our cash and equivalents balance was $469.5 million at September 30, 2025 compared to $170.5 million at September 30, 2024. Our cash and equivalents are primarily held in cash depository accounts with banks in geographies we operate or invested in high quality, short-term liquid investments.
Cash Flows
The table and discussion below present a summary of the sources and uses of our cash:
Fiscal Year Ended
September 30,
Change
(in thousands)
Cash flows provided by operating activities
Cash flows used in investing activities
Cash flows provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents and restricted cash
Net increase (decrease) in cash and cash equivalents and restricted cash
Represents a percentage computation that is not mathematically meaningful.
The $35.4 million increase in cash flows provided by operating activities was due primarily to an increase in net income as well as changes in working capital primarily related to the timing of payments of accounts payable and inventory.
The $6.0 million increase in cash flows used in investing activities was due primarily to an increase of $34.2 million in net pawn lending outflows and a $1.7 million net increase in cash flows used to fund other investing activities including strategic investments, capital expenditures and acquisitions, partially offset by a $29.8 million increase in cash inflows from the sale of forfeited collateral.
The $324.6 million increase in cash flows provided by financing activities was related primarily to the net $292.4 million received from the issuance of the 2032 Senior Notes in March 2025, decreased repurchase activity for our Class A Common Stock in the current year (fiscal 2025 $7.0 million and fiscal 2024 $12.0 million), and a current year decrease in payments on debt (fiscal 2025 $6.4 million and fiscal 2024 $34.4 million).
The net effect of these changes was a $304.9 million increase in cash on hand during the current year, resulting in a $484.7 million ending cash and restricted cash balance.
Sources and Uses of Cash
Our primary sources of funds includes cash generated from operations and borrowings from the issuance of debt. In March 2025, we issued the 2032 Senior Notes, all of which remains outstanding as of September 30, 2025. On May 1, 2025, we repaid the remaining balance of the 2025 Convertible Notes. See Note 8 of Notes to Consolidated Financial Statements included in Part II, Item 8 - Financial Statement and Supplementary Data”.
Our uses of cash have been for business acquisitions, capital expenditures, payments of principal and interest on outstanding debt obligations and share repurchases. 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, 2025, we have repurchased 3,178,147 shares of our Class A Common Stock under the program for $30.0 million. The program expired on May 3, 2025. On November 11, 2025, the Board approved a new share repurchase program. See Note 15: Subsequent Events of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data”. The Company also repurchased 220,435 of its Class A common stock for $3.0 million in privately negotiated transactions. Such transactions were authorized separately from, and not considered a part of the Common Stock Repurchase Program. See Note 9 of Notes to Consolidated Financial Statements included in Part II, Item 8 - Financial and Supplementary Data.
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 2026. 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 December 2029 and the senior notes due April 2032, may require us to refinance these obligations through the issuance of new debt securities, equity securities, convertible securities or through new credit facilities.
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Convertible Notes
For a description of the terms of our convertible notes, including the associated conversion and other related features and transactions, see Note 8: Debt of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplementary Data.”
Contractual Obligations
Below is a summary of our cash needs to meet future aggregate contractual obligations as of September 30, 2025:
Payments due by Period
(in thousands)
Total
Less than
1 year
1-3 years
3-5 years
More than
5 years
Debt obligations (a)
Interest on long-term debt obligations
Lease obligations (b)
Total (c) (d)
(a) Excludes deferred financing costs as well as convertible features.
(b) Excludes $6.4 million in sublease payments expected to be received.
(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 10: 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 have 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.
Critical Accounting Estimates
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.
Pawn Loan Revenue Recognition
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, 2025, the balance of our PSC receivable was $48.7 million. Assuming the average forfeiture rate increased or decreased by 10%, our pawn service charges receivable balance as of September 30, 2025 would have increased or decreased by approximately $1.5 million.
Inventory and Cost of Goods Sold
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, 2025, the gross balance of our inventory was $252.0 million, for which we have included reserves of $3.6 million. Assuming the reserve rates were increased or decreased by 10%, our inventory reserve balance as of September 30, 2025 would have increased or decreased by approximately $0.4 million.
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Goodwill and Indefinite-Lived Intangible Assets
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 2025 and fiscal 2024 are discussed in Note 7: Goodwill And Intangible Assets of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplementary Data.”
Income Taxes
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.
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Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results
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:
• Changes in laws and regulations;
• Negative characterizations of our industry;
• Concentration of business in Texas and Florida;
• Changes in gold prices or volumes;
• Changes in sales, pawn loan balances, sales margins, pawn redemption rates or other important operating metrics;
• Our ability to continue growing our store count through acquisitions and de novo openings;
• Continuing indemnification obligations for pre-closing taxes related to our sale of Grupo Finmart;
• Our controlled ownership structure;
• Potential regulatory fines and penalties, lawsuits and related liabilities related to firearms business;
• Potential robberies, burglaries and other crimes at our stores;
• Changes in the competitive landscape;
• Our ability to design or acquire, deploy and maintain adequate information technology and other business systems;
• Failure to achieve adequate return on investments;
• Potential uninsured property, casualty or other losses;
• Potential natural disasters;
• Financial statement impact of potential impairment of goodwill or other intangible assets such as trade names;
• Potential conversion of convertible notes into cash (which could adversely affect liquidity) or stock (which will cause dilution of existing stockholders);
• Limited number of unreserved shares available for future issuance;
• Debt in the form of the 2032 Senior Notes, which could have a material adverse effect on our financial condition and results of operations;
• Public health issues that could adversely affect our financial condition or results of operations;
• Changes in the business, regulatory, political or social climate in Latin America;
• Changes in foreign currency exchange rates;
• The outcome of future litigation and regulatory proceedings;
• Potential disruptive effect of acquisitions, investments and new businesses;
• Potential exposure under anti-corruption, anti-bribery, anti-money laundering and other general business laws and regulations;
• Changes in liquidity, capital requirements or access to debt and capital markets;
• Potential data security breaches or other cyber-attacks; and
• Potential civil unrest or government overthrow and other events beyond our control.
For a discussion of these important risk factors, see “Part I, Item 1A — Risk Factors.”
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
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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.
