Acquisitions

9 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS

NOTE 2: ACQUISITIONS

On June 9, 2021, we completed the acquisition of 100% of the common shares of PLO del Bajio S. de R.L. de C.V. (“Bajio”) and gained control of the entity, further expanding our geographic footprint within Mexico with the addition of 128 pawn stores. These stores, operating under the name "Cash Apoyo Efectivo," are located principally in the Mexico City metropolitan area and have strong brand recognition in that market. This is our largest acquisition to date in terms of store-count. We now operate a total of 1,143 pawn stores, 627 of which are in Latin America, including 503 in Mexico.

The total consideration paid for Bajio was $23.6 million, consisting of cash of $17.4 million, of which $11.6 million was paid in cash at closing and the remaining $5.8 million is accrued and held as restricted cash to be paid out per the acquisition agreement and 212,870 shares of our Class A Non-Voting Common Stock valued at $1.6 million. In addition, the sellers may be entitled to additional payments of up to $4.6 million over the next two years, contingent on the performance of the acquired stores with growing its loan portfolio. We recorded this earn-out contingency as part of the total consideration as the metrics are considered achievable by Management.

We also repaid $14.9 million of Bajio’s existing debt assumed in the acquisition on June 9, 2021.

The assets acquired and liabilities assumed are based upon the estimated fair values at the date of acquisition. The excess purchase price over the estimated fair market value of the new assets acquired has been recorded as goodwill.

The estimated fair value of the assets acquired and liabilities assumed are provisional as management is still gathering additional information to complete the purchase accounting. The preliminary allocation of the consideration for the net acquired assets from this business combination were as follows, in thousands:

Cash and cash equivalents	$	308
Earning assets	9,462
Lease right-of-use assets	10,826
Property and equipment	4,317
Intangible assets*	3,965
Goodwill	22,957
Other assets	649
Accounts payable, deferred taxes and other liabilities	(3,150)
Lease liability	(10,826)
Assumed debt	(14,931)
Total consideration	$	23,577
*Intangible assets consist of $4.0 million in trade names.

The factors contributing to the recognition of goodwill, which is recorded in our Latin America Pawn segment, were based on several strategic and synergistic benefits we expect to realize from the acquisition, including expansion of our store base as well as the ability to further leverage our pawn expertise, investments in information technology and other back office and support functions of our existing Mexico pawn business. We expect none of the goodwill resulting from this business combination will be deductible for income tax purposes.

The results of Bajio have been included in our condensed consolidated financial statements from June 9, 2021 through June 30, 2021, and are reported in our Latin America Pawn segment. The acquired business contributed revenues of $1.7 million and net income of $0.1 million to us for the period from June 9, 2021 to June 30, 2021.

The following unaudited pro forma summary presents consolidated information for us as if the business combination had occurred on October 1, 2019. The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, nor does it reflect additional revenue opportunities following the acquisition. The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed.

	Three Months Ended June 30,				Nine Months Ended June 30,
(in thousands, except per share amounts)	2021		2020		2021		2020
Revenue	$	180,854	$	216,083	$	558,426	$	681,069
Net (loss) income	(2,475)		(5,354)		6,775		(42,628)
Basic (loss) earnings per common share	(0.04)		(0.10)		0.12		(0.75)
Diluted (loss) earnings per common share	(0.04)		(0.10)		0.12		(0.75)

We did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma net revenue and net income. These pro forma amounts have been calculated after applying the Company's accounting policies and adjusting the results to reflect the additional amortization that would have been incurred assuming the amortization of the trade name had been applied from October 1, 2019.

During the three and nine months ended June 30, 2021, we incurred total acquisition costs of $0.2 million and $0.4 million, respectively. The acquisition costs were primarily related to legal, accounting and consulting services, were expensed as incurred through June 30, 2021 and are included in general and administrative expenses in the consolidated statements of operations.

In May 2021, we acquired substantially all of the assets associated with 11 pawn stores in the Houston, Texas area, providing an immediate market-leading position in the South Houston area and enhancing our already strong position in the strategically important Houston metro market. We have concluded that this acquisition was immaterial to our overall consolidated financial results and, therefore, have omitted information that would otherwise be required.