v3.26.1
Acquisitions
 9 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions
NOTE 2: ACQUISITIONS
Founders One Acquisition
On January 2, 2026, we acquired an 87.7% controlling interest in Founders by exchanging our existing $45.0 million preferred equity investment and $15.0 million demand promissory note into common equity and contributing an additional $4.4 million in cash. At the time of acquisition, Founders, through its subsidiary SMG, operated 105 pawn stores in the United States and 11 additional countries, primarily under the names "La Familia Pawn and Jewelry" and "CashWiz." Founders held 85.1% ownership interest in SMG as of January 2, 2026. The acquisition advances our strategy to expand our global pawn operations by consolidating our interest in an established multi-country platform and existing operational infrastructure. Following the departure of the SMG CEO in April, we have assumed direct operational management of SMG.
This transaction was accounted for as a business combination achieved in stages. Immediately prior to the acquisition date, we remeasured our previously held preferred equity investment to its acquisition-date fair value of $46.6 million, resulting in a pre-tax gain of $1.6 million recognized in Other (income) expense in our Condensed Consolidated Statements of Operations during the nine months ended June 30, 2026. The acquisition-date fair value of the previously held preferred equity interest was determined using the income approach (discounted cash flow method) and the market approach (guideline public company method). The value attributable to the preferred equity class was determined using an option pricing model, with significant inputs including expected volatility, a risk-free rate, and an estimated time to liquidity.
Our previously held demand promissory note was remeasured to its acquisition-date fair value of $15.0 million, with no gain or loss recognized. In connection with the acquisition, a demand promissory note with a principal balance of $15.0 million and accrued interest of $3.9 million previously held by us at the Founders level was repaid through proceeds of a new debt facility entered into by SMG. This repayment represented the settlement of a pre-existing creditor relationship and was accounted for separately from the business combination. The settlement amount was determined based on the carrying value of the note, which approximated fair value due to its demand nature and market interest rate. No gain or loss resulted from the settlement, and no amount was recognized in our Condensed Consolidated Statements of Operations.
This transaction qualifies as a business combination under ASC 805 due to the acquisition of an integrated set of inputs and processes that are capable of generating outputs. The acquisition included an organized workforce, established pawn operations, and the intellectual property and operational systems across 105 stores. The assets acquired and liabilities assumed are based upon the fair values at the date of acquisition. The excess of the aggregate of consideration transferred, the acquisition-date fair value of previously held interests, and the fair values of non-controlling interests over the estimated fair value of net identifiable liabilities assumed has been recorded as goodwill.
The purchase price allocation is as follows (in thousands):
Assets acquired:
Cash and cash equivalents$14,345 
Pawn loans33,982 
Pawn service charges receivable4,843 
Inventory22,535 
Prepaid expenses and other current assets5,619 
Property and equipment10,814 
Right-of-use assets26,465 
Tradenames60,900 
Total assets acquired179,503 
Liabilities assumed:
Accounts payable, accrued expenses and other current liabilities$22,494 
Long-term debt150,339 
Operating lease liabilities26,465 
Deferred tax liability16,260 
Total liabilities assumed215,558 
Net liabilities assumed$(36,055)

Goodwill was calculated as follows (in thousands):
Consideration transferred$4,350 
Fair value of previously held preferred equity interest46,595 
Fair value of previously held demand promissory note15,000 
Fair value of non-controlling interest in Founders8,849 
Fair value of non-controlling interest in SMG12,586 
Total87,380 
Less: net identifiable liabilities assumed(36,055)
Goodwill $123,435 
The fair values of the non-controlling interests in Founders and SMG were determined using a combination of the income approach (discounted cash flow method) and the market approach (guideline public company method), with significant inputs including projected cash flows, a discount rate, and market multiples.
In connection with the acquisition, we entered into a three-year senior secured intercompany debt facility with SMG providing $156.4 million in funding at 13% per annum. SMG used the facility proceeds to retire its pre-existing third-party debt, which is reflected as assumed debt in the purchase price allocation above. The cash outflow is presented within “Payments of debt” on the Condensed Consolidated Statements of Cash Flows. This intercompany facility eliminates upon consolidation.
The factors contributing to the recognition of goodwill, which is recorded in our SMG segment, include the value of SMG's assembled workforce, established multi-country store network, and expected synergies with our existing U.S. and Latin America pawn operations. None of the goodwill resulting from this business combination is expected to be deductible for income tax purposes.
The tradenames acquired have been assigned indefinite useful lives and will not be amortized. They will be tested for impairment at least annually in accordance with ASC 350.
The purchase price allocation presented above is preliminary. The fair values of tradenames, certain payroll related liabilities, and deferred taxes have not been finalized. All other amounts are also subject to adjustment during the measurement period as additional information is obtained about facts and circumstances that existed as of the acquisition date. No measurement period adjustments were recorded to date.
The results of this acquisition have been included in our Condensed Consolidated Financial Statements from January 2, 2026 and are reported in our SMG segment. The acquired business contributed revenues of $43.1 million and income before income tax of $5.9 million for the three months ended June 30, 2026, and revenues of $94.4 million and income before income tax of $14.7 million for the period from January 2, 2026 through June 30, 2026.
During the nine months ended June 30, 2026, we incurred total acquisition costs of approximately $0.6 million related to the Founders acquisition. Cumulative acquisition-related costs incurred through June 30, 2026 were approximately $1.5 million. The acquisition costs were primarily related to legal, accounting and consulting services, were expensed as incurred and are included in general and administrative expenses in the Condensed Consolidated Statements of Operations.
Acquisition of Non-controlling Interests
During the third quarter of fiscal 2026, we acquired the remaining 12.3% membership interest in Founders held by its third-party member, and Founders became a wholly owned subsidiary. Also during the third quarter, we acquired additional shares of SMG's common stock from third-party shareholders, increasing our ownership interest in SMG from 85.1% to 97.4% as of June 30, 2026. Because we retained our controlling financial interests, these transactions were accounted for as equity transactions, and the excess of the consideration over the carrying amount of the non-controlling interests acquired was recognized as a reduction of additional paid-in capital. No gain or loss was recognized in our Condensed Consolidated Statements of Operations.
Subsequent to the balance sheet date, in July 2026, we acquired the remaining outstanding 2.6% of SMG common stock, and SMG became a wholly owned subsidiary. This transaction will be accounted for as an equity transaction in the fourth quarter of fiscal 2026.
Variable Interest Entities
Founders and SMG are variable interest entities, as neither entity has sufficient equity at risk to finance its activities without additional subordinated financial support. We are now the primary beneficiary of both entities and directly or indirectly hold a majority voting interest in each. We determined that we are the primary beneficiary based on our role as sole Manager of Founders, which controls SMG's board of directors, and our obligation to absorb losses or receive benefits through our 100% equity interest in Founders and related lending arrangements. Founders is a holding entity whose sole asset is its equity interest in SMG, which eliminates upon consolidation. SMG is the operating entity whose assets and liabilities are included in our Condensed Consolidated Financial Statements. As SMG meets the definition of a business, we indirectly hold a majority voting interest through Founders, which owns 97.4% of SMG's outstanding common stock, and SMG's assets can be used for purposes other than the settlement of its obligations, certain incremental VIE disclosures are not required in accordance with ASC 810-10-50-5B. Founders is a wholly owned subsidiary. Third-party shareholders hold 2.6% of SMG's outstanding common stock. This non-controlling interest is presented separately within Stockholders’ equity on our Condensed Consolidated Balance Sheets.
El Bufalo Pawn Acquisition
On January 12, 2026, we acquired the business operations of 12 pawn stores in Texas, primarily in the Laredo area, operating under the name "El Bufalo Pawn," from LBP, L.P. and certain individual sellers. The total consideration was approximately $27.8 million in cash, of which approximately $1.4 million was retained for standard indemnification purposes and is expected to be paid within twelve months of the acquisition date. The retained payment is included in Accounts payable, accrued expenses and other current liabilities on our Condensed Consolidated Balance Sheets as of June 30, 2026.
This transaction qualifies as a business combination under ASC 805 due to the acquisition of an integrated set of inputs and processes that are capable of generating outputs. Although the transaction includes tangible assets such as loans and inventory, the inclusion of operating infrastructure, licenses, and a functioning workforce supports the conclusion that a business, rather than a group of assets, was acquired.
The assets acquired and liabilities assumed are based upon the fair values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill.
The final purchase price allocation is as follows (in thousands):
Assets acquired:
Cash and cash equivalents$146 
Pawn loans3,421 
Pawn service charges receivable617 
Inventory
3,173 
Property and equipment
60 
Intangible assets - Trade names4,100 
Right-of-use assets
7,122 
Other assets62 
Goodwill19,153 
Total assets acquired37,854 
Liabilities assumed:
Customer layaway deposits$733 
Operating lease liabilities9,302 
Total liabilities assumed10,035 
Total consideration27,819 
Retained Payment(1,375)
Cash Paid$26,444
The factors contributing to the recognition of goodwill, which is recorded in our U.S. Pawn segment, were based on several strategic benefits we expect to realize from the acquisition, including expansion of our store base in the Laredo market and the ability to further leverage our pawn expertise. We expect all of the goodwill resulting from this business combination will be deductible for income tax purposes.
The results of this acquisition have been included in our Condensed Consolidated Financial Statements from January 12, 2026 and are reported in our U.S. Pawn segment. The acquired business contributed revenues of $5.9 million and income before income tax of $1.4 million for the period from January 12, 2026 through June 30, 2026, and contributed revenues of $3.2 million and income before income tax of $0.8 million during the three months ended June 30, 2026.
During the nine months ended June 30, 2026, total acquisition costs were immaterial. The acquisition costs were primarily related to legal, accounting and consulting services, were expensed as incurred and are included in general and administrative expenses in the Condensed Consolidated Statements of Operations.
Unaudited Supplementary Pro Forma Financial Information
The following unaudited pro forma summary presents consolidated information for us as if both business combinations described in this note had occurred on October 1, 2024. 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 acquisitions.
Three Months Ended
June 30,		Nine Months Ended
June 30,
(in thousands)2026202520262025
Total revenues$418,748 $359,458 $1,302,105 $1,078,819 
Consolidated net income$38,494 $23,084 $126,707 $68,824 
Pro forma net income for the nine months ended June 30, 2026 was adjusted to exclude the $1.6 million gain on remeasurement of the previously held equity interest in Founders and approximately $0.7 million of acquisition-related costs directly attributable to the acquisitions. Pro forma net income for the three and nine months ended June 30, 2025 was adjusted to include these amounts. These pro forma amounts have been calculated after applying the Company's accounting policies.