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Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements

The Company’s financial assets and liabilities as of September 30, 2022 and December 31, 2021 that are measured at fair value on a recurring basis are as follows (in thousands):

Estimated Fair Value
September 30,Fair Value Measurements Using
2022Level 1Level 2Level 3
Financial liabilities:
Contingent AFF acquisition consideration (1)
$26,760 $— $— $26,760 

(1)The contingent consideration related to the AFF Acquisition is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.

Estimated Fair Value
December 31,Fair Value Measurements Using
2021Level 1Level 2Level 3
Financial liabilities:
Contingent AFF acquisition consideration (1)
$109,549 $— $— $109,549 

(1)The current portion of $95.6 million is included in accounts payable and accrued liabilities and the non-current portion of $14.0 million is included in other liabilities in the accompanying consolidated balance sheets.

The Company revalues the contingent consideration related to the AFF Acquisition to fair value at the end of each reporting period. The estimate of the fair value of contingent consideration related to the AFF Acquisition is determined by applying a Monte Carlo simulation, which includes inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of AFF over the earn-out period, and therefore represents a Level 3 measurement. Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the contingent consideration related to the AFF Acquisition.
The changes in financial assets and liabilities that are measured and recorded at fair value on a recurring basis using Level 3 fair value measurements for the three and nine months ended September 30, 2022 are as follows (in thousands):

Three Months EndedNine Months Ended
September 30, 2022September 30, 2022
Contingent AFF acquisition consideration at beginning of the period$46,560 $109,549 
Change in fair value (1)
(19,800)(82,789)
Contingent AFF acquisition consideration at end of the period$26,760 $26,760 

(1)The Company recognized a gain of $19.8 million and $82.8 million during the three and nine months ended September 30, 2022, respectively, as a result of the change in fair value of the contingent consideration related to the AFF Acquisition, which is included in gain on revaluation of contingent acquisition consideration in the accompanying consolidated statements of income.

There were no transfers in or out of Level 1, 2 or 3 during the three and nine months ended September 30, 2022, and the Company did not have any financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2021.

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired.

Financial Assets and Liabilities Not Measured at Fair Value, But for Which Fair Value is Disclosed

The Company’s financial assets and liabilities as of September 30, 2022, September 30, 2021 and December 31, 2021 that are not measured at fair value in the consolidated balance sheets are as follows (in thousands):

Carrying ValueEstimated Fair Value
September 30,September 30,Fair Value Measurements Using
20222022Level 1Level 2Level 3
Financial assets:
Cash and cash equivalents$100,620 $100,620 $100,620 $— $— 
Accounts receivable, net58,435 58,435 — — 58,435 
Pawn loans404,227 404,227 — — 404,227 
Finance receivables, net (1)
111,945 193,750 — — 193,750 
$675,227 $757,032 $100,620 $— $656,412 
Financial liabilities:
Revolving unsecured credit facilities$338,000 $338,000 $— $338,000 $— 
Senior unsecured notes (outstanding principal)1,050,000 887,000 — 887,000 — 
$1,388,000 $1,225,000 $— $1,225,000 $— 

(1)Finance receivables, gross as of September 30, 2022 was $188.9 million. See Note 6.
Carrying ValueEstimated Fair Value
September 30,September 30,Fair Value Measurements Using
20212021Level 1Level 2Level 3
Financial assets:
Cash and cash equivalents$49,907 $49,907 $49,907 $— $— 
Accounts receivable, net43,492 43,492 — — 43,492 
Pawn loans348,993 348,993 — — 348,993 
$442,392 $442,392 $49,907 $— $392,485 
Financial liabilities:
Revolving unsecured credit facilities$246,000 $246,000 $— $246,000 $— 
Senior unsecured notes (outstanding principal)500,000 516,000 — 516,000 — 
$746,000 $762,000 $— $762,000 $— 

Carrying ValueEstimated Fair Value
December 31,December 31,Fair Value Measurements Using
20212021Level 1Level 2Level 3
Financial assets:
Cash and cash equivalents$120,046 $120,046 $120,046 $— $— 
Accounts receivable, net55,356 55,356 — — 55,356 
Pawn loans347,973 347,973 — — 347,973 
Finance receivables, net (1)
181,021 233,000 — — 233,000 
$704,396 $756,375 $120,046 $— $636,329 
Financial liabilities:
Revolving unsecured credit facilities$259,000 $259,000 $— $259,000 $— 
Senior unsecured notes (outstanding principal)1,050,000 1,058,000 — 1,058,000 — 
$1,309,000 $1,317,000 $— $1,317,000 $— 

(1)Finance receivables, gross as of December 31, 2021 were $220.3 million. See Note 6.

As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value. Due to their short-term maturities, the carrying value of pawn loans and accounts receivable, net approximate fair value.

Finance receivables are measured at amortized cost, net of an allowance for loan losses on the consolidated balance sheets. In estimating fair value for finance receivables, the Company utilized a discounted cash flow methodology. The Company used various unobservable inputs reflecting its own assumptions, such as contractual future principal and interest cash flows, future charge-off rates and discount rates (which consider current interest rates and are adjusted for credit risk, among other factors).

The carrying value of the unsecured credit facilities approximates fair value as of September 30, 2022, September 30, 2021 and December 31, 2021. The fair value of the unsecured credit facilities is estimated based on market values for debt issuances with similar characteristics or rates currently available for debt with similar terms. In addition, the unsecured credit facilities have a variable interest rate based on a fixed spread over the prevailing secured overnight financing rate (“SOFR”) or the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) and reprice with any changes in SOFR or TIIE. The fair value of the senior unsecured notes is estimated based on quoted prices in markets that are not active.