XML 39 R15.htm IDEA: XBRL DOCUMENT v3.24.0.1
Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2023
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 did not have any financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023. The Company’s financial assets and liabilities as of December 31, 2022 that are measured at fair value on a recurring basis are as follows (in thousands):

Estimated Fair Value
Fair Value Measurements Using
Level 1Level 2Level 3
Financial liabilities:
Contingent consideration as of December 31, 2022 (1)
$— $— $— 

(1)Under the AFF purchase agreement, the seller parties had the right to receive up to $50.0 million of additional consideration if AFF achieved certain adjusted EBITDA targets for the first half of 2023. AFF did not achieve the threshold adjusted EBITDA target for the first half of 2023 and, therefore, the $50.0 million of additional consideration was not earned by the seller parties. As of June 30, 2023, there was no remaining contingent consideration available to the seller parties.

The Company estimated the preliminary fair value of the AFF Acquisition contingent consideration to be $127.4 million, as of the AFF Acquisition date. The Company revalued the contingent consideration to fair value at the end of each reporting period. The estimate of the fair value of contingent consideration 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.

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 year ended December 31, 2023 and 2022 is as follows (in thousands):

Year Ended December 31,
20232022
Contingent consideration at beginning of period
$— $109,549 
Change in fair value (1)
— (109,549)
Contingent consideration at end of period
$— $— 

(1)The Company recognized a gain of $109.5 million during the year ended December 31, 2022 as a result of the change in fair value of the contingent consideration, 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 years ended December 31, 2023, 2022 and 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 December 31, 2023 and 2022 that are not measured at fair value in the consolidated balance sheets are as follows (in thousands):

Carrying ValueEstimated Fair Value
December 31,December 31,Fair Value Measurements Using
20232023Level 1Level 2Level 3
Financial assets:
Cash and cash equivalents$127,018 $127,018 $127,018 $— $— 
Accounts receivable, net71,922 71,922 — — 71,922 
Pawn loans471,846 471,846 — — 471,846 
Finance receivables, net (1)
113,901 227,732 — — 227,732 
$784,687 $898,518 $127,018 $— $771,500 
Financial liabilities:
Revolving unsecured credit facilities$568,000 $568,000 $— $568,000 $— 
Senior unsecured notes (outstanding principal)1,050,000 987,000 — 987,000 — 
$1,618,000 $1,555,000 $— $1,555,000 $— 

(1)Finance receivables, gross as of December 31, 2023 was $227.5 million. See Note 7.

Carrying ValueEstimated Fair Value
December 31,December 31,Fair Value Measurements Using
20222022Level 1Level 2Level 3
Financial assets:
Cash and cash equivalents$117,330 $117,330 $117,330 $— $— 
Accounts receivable, net57,792 57,792 — — 57,792 
Pawn loans390,617 390,617 — — 390,617 
Finance receivables, net (1)
103,494 201,895 — — 201,895 
$669,233 $767,634 $117,330 $— $650,304 
Financial liabilities:
Revolving unsecured credit facilities
$339,000 $339,000 $— $339,000 $— 
Senior unsecured notes (outstanding principal)1,050,000 932,000 — 932,000 — 
$1,389,000 $1,271,000 $— $1,271,000 $— 

(1)Finance receivables, gross as of December 31, 2022 was $196.0 million. See Note 7.

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 approximate fair value as of December 31, 2023 and 2022. 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 SOFR or 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.