Leases

9 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

NOTE 4: LEASES

We determine if a contract contains a lease at inception. Our lease portfolio consists primarily of operating leases for pawn store locations and corporate offices with lease terms ranging from three to ten years and finance leases for vehicles with lease terms of five years.

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

(in thousands)	Balance Sheet Location	June 30, 2023		June 30, 2022		September 30, 2022
Lease assets:
Operating lease right-of-use assets	Right-of-use assets, net	$	243,100	$	217,506	$	221,405
Financing lease assets	Other assets	2,076		—		181
Total lease assets		$	245,176	$	217,506	$	221,586
Lease liabilities:
Current:
Operating lease liabilities	Operating lease liabilities, current	$	56,919	$	53,358	$	52,334
Financing lease liabilities	Accounts payable, accrued expenses and other current liabilities	472		—		37
Total current lease liabilities		$	57,391	$	53,358	$	52,371
Non-current:
Operating lease liabilities	Operating lease liabilities	$	197,499	$	175,489	$	180,756
Financing lease liabilities	Other long-term liabilities	1,645		—		148
Total non-current lease liabilities		$	199,144	$	175,489	$	180,904
Total lease liabilities		$	256,535	$	228,847	$	233,275

The table below provides major components of our lease costs:

	Three Months Ended June 30,				Nine Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost:
Operating lease cost *	$	18,701	$	17,264	$	54,219	$	50,415
Variable lease cost	4,188		3,824		12,068		11,200
Total operating lease cost	$	22,889	$	21,088	$	66,287	$	61,615
Financing lease cost:
Amortization of financing lease assets	$	106	$	—	$	180	$	—
Interest on financing lease liabilities	47		—		82		—
Total financing lease cost	$	153	$	—	$	262	$	—
Total lease cost	$	23,042	$	21,088	$	66,549	$	61,615

* Includes a reduction for sublease rental income of $1.0 million and $0.9 million for the three months ended June 30, 2023 and 2022, respectively, and $2.8 million and $2.6 million for the nine months ended June 30, 2023 and 2022, respectively.

Lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense are included in “Store” and “General and Administrative” expense, based on the underlying lease use. Cash paid for operating leases was $19.5 million and $18.4 million for the three months ended June 30, 2023 and 2022, respectively, and $56.9 million and $54.0 million for the nine months ended June 30, 2023 and 2022, respectively.

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

	Nine Months Ended June 30,
	2023		2022
Weighted-average remaining lease term (years):
Operating leases	5.11		5.14
Financing leases	3.88		N/A
Weighted-average discount rate:
Operating leases	8.52	%	8.20	%
Financing leases	11.14	%	N/A

As of June 30, 2023, maturities of lease liabilities under ASC 842 by fiscal year were as follows:

(in thousands)	Operating Leases		Financing Leases
Remaining 2023	$	19,064	$	171
Fiscal 2024	74,063		685
Fiscal 2025	64,559		685
Fiscal 2026	53,543		685
Fiscal 2027	39,921		384
Thereafter	61,874		—
Total lease liabilities	$	313,024	$	2,610
Less: portion representing imputed interest	58,606		493
Total net lease liabilities	$	254,418	$	2,117
Less: current portion	56,919		472
Total long term net lease liabilities	$	197,499	$	1,645

We recorded $55.2 million and $55.3 million in non-cash additions to our operating right-of-use assets and lease liabilities for the nine months ended June 30, 2023 and June 30, 2022, respectively. We recorded $2.1 million in non-cash additions to our finance right-of-use assets and leases liabilities for the nine months ended June 30, 2023.

Leases

NOTE 4: LEASES

We determine if a contract contains a lease at inception. Our lease portfolio consists primarily of operating leases for pawn store locations and corporate offices with lease terms ranging from three to ten years and finance leases for vehicles with lease terms of five years.

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

(in thousands)	Balance Sheet Location	June 30, 2023		June 30, 2022		September 30, 2022
Lease assets:
Operating lease right-of-use assets	Right-of-use assets, net	$	243,100	$	217,506	$	221,405
Financing lease assets	Other assets	2,076		—		181
Total lease assets		$	245,176	$	217,506	$	221,586
Lease liabilities:
Current:
Operating lease liabilities	Operating lease liabilities, current	$	56,919	$	53,358	$	52,334
Financing lease liabilities	Accounts payable, accrued expenses and other current liabilities	472		—		37
Total current lease liabilities		$	57,391	$	53,358	$	52,371
Non-current:
Operating lease liabilities	Operating lease liabilities	$	197,499	$	175,489	$	180,756
Financing lease liabilities	Other long-term liabilities	1,645		—		148
Total non-current lease liabilities		$	199,144	$	175,489	$	180,904
Total lease liabilities		$	256,535	$	228,847	$	233,275

The table below provides major components of our lease costs:

	Three Months Ended June 30,				Nine Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost:
Operating lease cost *	$	18,701	$	17,264	$	54,219	$	50,415
Variable lease cost	4,188		3,824		12,068		11,200
Total operating lease cost	$	22,889	$	21,088	$	66,287	$	61,615
Financing lease cost:
Amortization of financing lease assets	$	106	$	—	$	180	$	—
Interest on financing lease liabilities	47		—		82		—
Total financing lease cost	$	153	$	—	$	262	$	—
Total lease cost	$	23,042	$	21,088	$	66,549	$	61,615

* Includes a reduction for sublease rental income of $1.0 million and $0.9 million for the three months ended June 30, 2023 and 2022, respectively, and $2.8 million and $2.6 million for the nine months ended June 30, 2023 and 2022, respectively.

Lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense are included in “Store” and “General and Administrative” expense, based on the underlying lease use. Cash paid for operating leases was $19.5 million and $18.4 million for the three months ended June 30, 2023 and 2022, respectively, and $56.9 million and $54.0 million for the nine months ended June 30, 2023 and 2022, respectively.

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

	Nine Months Ended June 30,
	2023		2022
Weighted-average remaining lease term (years):
Operating leases	5.11		5.14
Financing leases	3.88		N/A
Weighted-average discount rate:
Operating leases	8.52	%	8.20	%
Financing leases	11.14	%	N/A

As of June 30, 2023, maturities of lease liabilities under ASC 842 by fiscal year were as follows:

(in thousands)	Operating Leases		Financing Leases
Remaining 2023	$	19,064	$	171
Fiscal 2024	74,063		685
Fiscal 2025	64,559		685
Fiscal 2026	53,543		685
Fiscal 2027	39,921		384
Thereafter	61,874		—
Total lease liabilities	$	313,024	$	2,610
Less: portion representing imputed interest	58,606		493
Total net lease liabilities	$	254,418	$	2,117
Less: current portion	56,919		472
Total long term net lease liabilities	$	197,499	$	1,645

We recorded $55.2 million and $55.3 million in non-cash additions to our operating right-of-use assets and lease liabilities for the nine months ended June 30, 2023 and June 30, 2022, respectively. We recorded $2.1 million in non-cash additions to our finance right-of-use assets and leases liabilities for the nine months ended June 30, 2023.