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Operator: Good morning, ladies and gentlemen, and welcome to the EZCORP First Quarter Fiscal 2025 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call may be recorded. I’d now like to turn the conference over to Sean Mansouri, the company’s Investor Relations Advisor with Elevate IR. Please go ahead, Sean.

Sean Mansouri: Thank you, and good morning, everyone. During our prepared remarks, we will refer to slides which are available for viewing or download from our website at investors.ezcorp.com. Before we begin, I’d like to remind everyone that this conference call as well as the presentation slides contain certain forward-looking statements regarding the company’s expected operating and financial performance for future periods. These statements are based on the company’s current expectations. Actual results for future periods may differ materially from those expressed due to a number of risks, or other factors that are discussed in our annual, quarterly, and other reports filed with the Securities and Exchange Commission. And as noted in our presentation materials, and unless otherwise identified, results are presented on an adjusted basis to remove the effect of foreign currency fluctuations, and other discrete items.

Joining us on the call today are EZCORP’s Chief Executive Officer, Lachie Given, and Tim Jugmans, Chief Financial Officer. Now I’ll turn the call over to Lachie.

Lachie Given: Thanks, Sean, and good morning, everyone. We kicked off fiscal 2025 with another strong set of operating and financial results, driven by sustained demand for fast cash solutions and affordable high-quality secondhand goods. Building on our momentum from last year, we generated another quarter of record revenue in PLO. In Q1, we achieved total revenue of $329.7 million, marking a 10% year-over-year increase, while PLO grew 16% to $282.9 million. Our strong bottom-line performance included a 12% increase in EBITDA of $53 million and diluted EPS up 17% to $0.42. These results highlight our continued commitment to delivering enhanced value for our stakeholders through relentless operational execution. Beginning on slide three, we continue to be a global leader in pawnbroking and pre-owned retail.

We operate 1,283 stores in the U.S. and Latin America, including four de novo stores added this quarter. With the rising cost of living and limited access to credit options for many consumers, the demand for our pawnbroking services continues to grow significantly. At the same time, more consumers are seeking affordable, sustainable pre-owned goods, driven by a heightened focus on value-conscious shopping. Our commitment to innovation and exceptional service ensures we can effectively meet these evolving customer needs. Moving on to slide four. As I mentioned, we opened four de novo stores in Latin America this quarter. Our earning assets grew 20% year over year, supporting a record PLO balance and leading to a 13% increase in PSC. Our cash balance increased to $174.5 million, up $4 million from last quarter, driven primarily by cash from operating activities.

This was partially offset by higher earning assets, capital expenditures, tax payments for net share settlements of equity awards, and share repurchases. We maintain strong liquidity to support PLO growth, de novo store expansion, strategic acquisition, near-term debt maturities, and ongoing share repurchases. Slide five highlights the strong financial performance in the quarter, showcasing the continued growth of our business across key metrics. Q1 revenues and gross profit grew 10% year over year, merchandise sales increased 8%, and our EBITDA was up double digits for the third consecutive quarter. As noted earlier, strong consumer demand, operational execution, and exceptional customer service continue to fuel our growth. Now turning to our key business strategy highlights for the quarter on slide six.

I’m pleased to highlight the significant progress we have made in strengthening our core pawn operation. This achievement is a testament to the dedication and expertise of our team, whose efforts have driven meaningful improvements across the business. As a result, we have delivered strong loan growth fueled by larger average loan sizes, operational improvements, and robust customer demand. To enhance the customer experience by providing accessible and flexible financing solutions for our customers, we have expanded the third-party buy now pay later program into all of our U.S. stores. Additionally, in July, we launched the longer-term layaway option, which drove a 13% increase in new layaways during the quarter. If layaway sales are recognized upon final payment, and customers now have more time to complete their payment, this adjustment has shifted from sales into future quarters.

Reflecting the flexibility we’ve provided to better meet our customers’ financing needs, especially for the jewelry category. To complement these efforts, we’ve seen strong engagement with our Easy Plus rewards program, which continues to drive customer loyalty and enhance our overall performance. In fact, our Easy Plus rewards members accounted for 77% of all transactions for the quarter. We also captured a 5% increase in traffic to our core pawn website. These metrics reflect deepening connections with our customer base and engagement across multiple platforms. We are equally focused on investing in our team members, who are the backbone of our success. We enhanced fuel compensation plans to more effectively drive expected behaviors, reward performance, and increase retention.

Additionally, we announced an assistant manager certification program for the U.S. stores to grow internal talent and strengthen operations support. To celebrate excellence across the business, we held Easy Elite celebrations in each of our regions, recognizing our top store managers with a consistent global message centered on growth mindset and exceeding expectations. Turning to innovation and growth, U.S. online payment collections increased more than 30% to $27.2 million for the quarter. Similarly, in Mexico, digital adoption continues to rise. Fifteen percent of extensions and layaways are now handled through online payment. Demand for affordable luxury remains strong, with MaxPawn’s luxury e-commerce sales increasing 50%, largely fueled by eBay sales.

As we continue to test buy online, pick up in store, we also launched a new pilot program for view online, buy in store. Additionally, we are testing new SMS marketing campaigns in the U.S. to increase engagement with Easy Plus members. Slide seven highlights our continued dedication to sustainability and community impact. In Q1, we sold over 1.5 million pre-owned items to extend their useful life and provide critical financial services to customers in the communities we serve. We also advanced inclusivity through affinity groups and belonging initiatives, enhanced team operations, and supported communities with charity donations and 461 hours of company-paid volunteer time going toward nonprofit and community organizations. With that, I’ll hand the call over to Tim Jugmans, our CFO, who will provide a deeper look at our financial results.

Tim?

Tim Jugmans: Thanks, Lachie. Slide nine provides a detailed look at our consolidated financial results for the first fiscal quarter. As Lachie mentioned, we closed the quarter with record PLO of $282.9 million, a 16% increase year over year and up 15% on the same store basis. PSC revenues rose 13% year over year, primarily fueled by same store PLO growth. Our inventory turnover rate was 2.7 times compared to 3 times with HGN inventory excluding our three luxury stores at 1.2%. Some of the lower inventory can be attributed to the expansion of our layaway program in the U.S. as well as a greater composition of jewelry inventory in Latin America, which typically has a longer while these factors contribute to the trend, we are focused on improving inventory turns and are prioritizing efforts to optimize sales velocity and inventory management.

Merchandise sales increased by 8% to $192.9 million while merchandise gross profit grew by 4% from the prior year. We also posted another strong quarter of EBITDA margin expansion, which increased 35 basis points to 16.1%, we continue to drive operating leverage in our business. Moving to our U.S. pawn segment on slide ten, U.S. revenue for the quarter was up 7% to a record $232.2 million. Earning assets grew by 16% driven by an increase in PLO and inventory. Slide eleven includes a map of the U.S. states in which we operate, highlighting our robust footprint of 542 stores across 19 states. Our first quarter average U.S. loan size increased by 14% supported by a 60 basis points rise in PLO jewelry composition as well as growing gold and GM prices.

Slide twelve offers an in-depth look at U.S. financial performance, highlighting a 15% increase in PLO both on total and thanks to bias. This was driven by high average loan size, enhanced operational performance, and sustained growing demand for pawn services. On the U.S. retail side, merchandise sales increased by 3% and were up 1% on a same store basis. Our merchandise gross margin decreased 61 basis points. The decrease in sales margin reflects an increase in promotional activity and customer negotiation at the counter. U.S. pawn EBITDA for the quarter was $55.6 million, up 11% primarily due to high PSC with EBITDA margin once again expanding to 24% underscoring our focus on profitability. Turning to our Latin American segment on slide thirteen.

Total revenues increased 18% to $97.5 million, which was a record high for the fiscal first quarter. Earning assets increased 35% driven by a very strong PLO increase of 19% and inventory increase of 57% from the prior year, which was a historically low level. As PLO has grown significantly in recent quarters, we continue to focus on driving more sales at comparable. We are implementing actions both systemically and operationally that were successful in the U.S., that aim to drive improvements going forward. On slide fourteen, you can see that we have expanded our presence in Latin America. And now have 741 stores opening one store in Mexico and three stores in Guatemala during the quarter. PLO jewelry composition increased by 400 basis points reflecting our continued focus on growing this category, particularly in Mexico.

As mentioned, our Latin American region saw significant PLO growth of 19% as highlighted on slide fifteen, primarily fueled by our team’s strong operational performance and increased pawn demand in the area. PSC rose by 17% driven by same store PLO growth. On the retail side, merchandise sales grew by 19% and up 16% on a same store basis. Merchandise gross profit increased by 11%, which is partially offset by a decrease in margin of 223 basis points. EBITDA climbed an impressive 20% to $14.6 million with EBITDA margin increasing by 14 basis points to 15%. A quick word on our balance sheet and allocation priorities. We continue to have a robust liquidity position with $175 million of cash and $333 million of gross convertible notes on our balance sheet as of December 31, 2024.

We believe the most effective use of cash to drive shareholder value is to use a balanced approach, which includes reinvestment in our business to drive organic growth, acquisitions, share buybacks, and debt repayments. We have $103 million of convertible notes that come due in May 2025, and we’ll continue to explore several options to retire or refinance that note, including the use of existing cash, traditional debt, high yield debt, or other equity-linked instruments. Looking ahead, we remain focused on driving organic growth across both revenue and earnings through a combination of higher PLO, PSC, and merchandise sales growth. On a consolidated basis, margin is expected to remain at the low end of our target range of 35% to 38%, reflecting our commitment to optimizing inventory turnover and minimizing aged general merchandise.

As stated last quarter, with inflation rates declining comparable to a year ago, we anticipate a moderation in some same store expense growth. However, in January, we saw minimum wage increases of 6.5% to 12% enacted across Latin America. These adjustments along with compression effects, FedEx, and standard wage increases beyond minimum wage earners resulted in salary increases to 63% of our team members in the region. That said, we will continue investing in our team, technology, and store network to enhance operational efficiencies. From a strategic standpoint, our M&A pipeline remains strong, and we have consistently executed on our inorganic growth strategy. We expect to continue expanding both within our existing markets and internationally.

Collectively, these initiatives will be key drivers of our financial and operational performance in the years ahead. Regarding our Auto De Niro acquisition, and our flat year, the transaction remains pending as we continue through the due diligence process. Now I would like to turn it over to Lachie for a few closing remarks.

Lachie Given: Thanks, Tim. I want to thank our EZCORP team for delivering an outstanding quarter of operating and financial results for our shareholders. We achieved another record quarter for total revenue and PLO, while continuing to drive operating leverage to expand the bottom line. Our strong foundation rooted in core values of people, tone, and passion positions us for continued growth, both organically and through strategic M&A. With that, we will open the call to questions.

Operator: Thank you. As a reminder, to ask a question, please press.

Brian McNamara: And our first question comes from Brian McNamara with Canaccord Genuity. You may proceed.

Brian McNamara: Hey, good morning guys. Thanks for taking the questions. Congrats on the strong results. A few for me. So first off on the merchandise margin, I think it dipped below 35% for the first time in a few years, I think, since 2020. Our, you know, pre-quarter work suggested loans would be stronger than retail sales, and I think that appears to have played out. Is it just that? Is there anything else to read into there, particularly in LatAm given the 200 basis point drop year over year?

Tim Jugmans: That that’s correct. It’s definitely a very strong loan growth quarter. We’re definitely seeing the demand for cash in our stores from our consumers. And we did have to negotiate a lot more in the stores and obviously and provide further discounts because and we do see this customer having less cash to spend.

Brian McNamara: Got it. Second or question we’ve gotten a lot recently is the company’s exposure to undocumented immigrants and how, you know, potential deportations could impact their business. Is there any way to measure that? I know that anything pawn needs to be kinda ID’d and checked by local police and things like that given regulations to ensure it’s not stolen? Just any color there would be helpful.

Lachie Given: Look, I think good morning, Brian, and thanks for the questions. I think look, we certainly had these these similar questions too. We haven’t seen any impact to this point certainly. I think you’ve seen in this quarter’s results as Tim mentioned, some incredibly strong lending results and, you know, across many regions, some strong sales results. So so look, we haven’t seen any impact yet. We can’t comment on policy or what we think is gonna happen with the new administration. You know, I think what we’re focused on is what we can do what we can do to maximize the earnings in the business. And look, I think we’re very, very well set up to do that in the future. You know, I think the best way to to to sort of to deal with it is to concentrate on what we can do, as I said, in the stores, and to this point, we’ve we’ve seen no impact as yet.

Brian McNamara: Great. And then maybe one for Tim. How is the company planning for tax refund season this year? And how should investors think a PLO seasonality? I mean, obviously, you have a really great PLO balance to finish off the the calendar 24. We haven’t had obviously, we haven’t had a normal tax season in while, so I’m curious if there’s any puts or takes there that investors should be aware.

Tim Jugmans: Yeah. If we look back in the last two years, even though that hadn’t been normal compared to the prior years. They may be the new normal. Which is a shorter a shorter period of time where people are receiving tax refunds and the the dollars of refund has not have not moved. Those are what I’ve been reading. From analysts is that is what people are assuming it’s gonna happen. Especially in the states we operate.

Brian McNamara: Got it. And then you guys announced an acquisition think, in September. It doesn’t look like it is closed yet, Auto De Niro. Any anything to read into there?

Lachie Given: No. I think I mean, Tim said it said it in his remarks. I think we are it’s an acquisition in Mexico. It’s in the auto pawn business, which is a relatively new thing for EZCORP. We’ve got a very, very small amount of auto loans in our booked out in Mexico. So it’s looking the leading platform down there, and we are just in diligence making sure that we completely understand the business and then it’s the right path forward. But you know, we’re we’re doing the work, and and as soon as we’re finished, we’ll come back to the market and let you know.

Brian McNamara: Got it. And then fine. Appreciate all the taking all the questions here. Finally, I know you guys mentioned in your prepared remarks the refinancing options for your converts in May. It remains a key topic for most investors we speak with. Are are you leaning in a certain direction Any color on maybe when you’ll make a decision on this?

Tim Jugmans: Look. I think the color is the the color hasn’t changed. It’s very good news in that we certainly are under no pressure to do anything. We have liquidity to to pay it with cash in in May. You know, we can take our time here in in really weighing the pros and the cons of of each alternative. I know people have different views on those. But know, we are we are highly focused on it. We may go before May. We go up may go after May, but you know, I think given the amount of growth potential in our business, both organically and inorganically, we will likely do another financing in the future to to to fuel that growth. But as I said, we are, you know, we we are under no pressure to do it in any hurry, the terms continue to improve for us with our operating performance improving.

So I think we are very, you know, very comfortable with where we are at in terms of potential financing, but the board is, as I said, very focused on it. Spending the time with our various advisers to to hopefully pick the right path forward.

Brian McNamara: Got it. Appreciate all the color, guys. Thanks very much.

Lachie Given: Thanks, Brian.

Operator: Thank you. Our next question comes from John Hecht with Jefferies. You may proceed.

John Hecht: Good morning, guys. Thanks very much for taking my questions. First one on on the recent wage increases in in Mexico. Number one is, you know, there’s been a series of these. Do you guys have any insight as to, you know, that that, you know, we’re probably reaching the end of this cycle of of wage increases, number one. And number two is other than the increasing of expenses down there from wage increases, does the wage increases affect any other aspects of your business on the lending side?

Lachie Given: Look, I think good morning, John, and thank you for the questions as well. Look, I think, yes, we are seeing, you know, various programs from the Mexican government on wage increases. This one this one was a pretty significant one again. We we don’t know, to be honest with you, what what the future holds on that front. But what I can tell you is that our Mexican and and Latin American business are, you know, gaining real momentum. You can see the growth phenomenal sales growth. So I think that, you know, the Ashford’s being put into his pockets is clearly helping on the sales side. But in in terms of the loan side, we are not seeing any slowdown given the money that’s been been through the minimum wage rises. So look, it has impacted our expenses, obviously.

And answering your question, we don’t know where where it’s going to go, but the very good news is that that that segment is is growing incredibly well in a balanced way with a great team. So I’m super excited about the growth prospects down there.

John Hecht: Okay. That’s great. Thanks. And then you you guys have invested in you know, in in infrastructure to develop new services like, you know, like, the online sales, the customer rewards, which, you know, I think are pretty unique in the industry. Maybe can you give us a sense for how you measure the impact of that Any customer trends that you’re seeing as a result of those activities?

Lachie Given: Yeah. Look, I it’s a good question. And, yes, we are investing across all of our digital assets our core infrastructure, our point of sale system. And look, I think if you start up at every level, you know, you’ll get a little bit more in growth. You know, I think you can say that whatever we are doing here is in part due to the investment we’re making in driving more customers throughout through our digital business because we are trending very, very well comparatively. We look at when we look at acquisitions, we compare the way we’re growing both from loans and from sales as to other companies are growing and we’re obviously growing very strongly. We think we’re winning market share in the neighborhoods in which we operate.

So I think we, you know, we start with the high level numbers, and and we think that we compare quite favorably to the competition. And in part that we believe that that’s due to the digital investments we’re making. When you go into our stores, which I know you do, and you speak to a store manager, and you talk about you know, our Easy Plus program or you know, our our Google ratings or our social media presence. And you said it was still manager. Well, you know, we’re thinking about winding that back. Know, they immediately jump jump down at you and say, no. No. No. Don’t do that. You know? That’s know, we we really, you know, we really, we find it important an important way to engage our customer. So I think, look, from a from a customer centric point of view and from a high level numbers point of view, I think we’re confident in what we’re doing.

I think you look at other sectors, and you know that you know, you have to meet the customer in all sorts of places. You can’t just choose to meet them in the store because you know, they wanna they wanna meet you online or on the telephone. So I think you know, we are just building building various distribution platforms in order to give our customer the you know, the best experience. So look. We’ve done in a pretty disciplined way. We haven’t gone and spent a huge amount of money on this stuff. We we keep it lean. We test. We look at it on our ROI basis. But look, I think when you run a customer and people centric business, these investments are important.

John Hecht: Okay. And then my my final question is, you’ve been adding stores, you’ve been making acquisitions. I mean, maybe can you give us your sense for this fiscal year, where the store whether it’s acquisition or growth opportunities and where you focus there?

Lachie Given: Look, that it’s that’s a it’s a good question. I think look, we’re trying to run a balanced growth strategy around stores. So you’ve obviously got the de novo program, then you’ve got your M&A program. And I think with de novo’s, you can be know, a little bit better planned. And I think, you know, we’ve building been building roughly forty stores per year over the last couple of years. And, look, I think that’s a that’s a that’s a good way to think about at least the short term future. We’d like to, you know, be somewhere in that kind of vicinity. The only, you know, the only caveat to that is if you do a large a medium to large size acquisition, maybe you maybe you slow down that de novo program a little. But look, it’s de novo’s are a very important part of our growth strategy.

We’ve got a fantastic team in Latin America that are solely focused on that and and are getting very good at it. So I think that’s an important part of the growth story. And then on M&A, as you know, it’s it takes a willing buyer and a willing seller to come up with a mutually acceptable price, and and that can that can take time. And and I think you’ve seen in our recent acquisitions over the years that our our sort of price and structure disciplines are are very real. So, look, we think the pipeline is strong. I don’t think there’s been much change in the last few years in pipeline. I just think know, we’re we’re gonna do it in a disciplined way. We’re gonna do it where we think we’re buying good people. In in our often in areas that we can you know, fold pretty easily into our field team.

But I think it’s you know, Latin America particularly is still very exciting in terms of the M&A platform. In the U.S., it’s know, as you know, there are still definitely targets out there. I think the biggest is Simple Management Group, which we obviously have a significant investment in, so that’s that’s an exciting one for us. That’s now a hundred stores across Florida, the Caribbean, and and Central America. So I think that one’s very interesting, and and then beyond, know, I think I think, you know, the the world of pawnbroking is a very large world. It’s of incredible scale. And so I think long term, this is super exciting global scale opportunity. But for now, think, you know, we’re concentrated on our on our core markets and I think there’s plenty to do there both organically and inorganically.

John Hecht: Great. Thanks very much for that color.

Lachie Given: Thanks, John.

Operator: Thank you. Our next question comes from Kyle Joseph with Stephens. You may proceed.

Kyle Joseph: Hey. Good morning. Thanks for taking my questions. Just wanted to get a sense for domestic growth. I know you guys talked about, you know, as inflation wanes, you would expect that that growth to come down a bit, but you did we did see it accelerate in the December quarter. So just kinda, you know, give us any sort of sense of what what drove the acceleration in the quarter and and kinda how, you know, how quickly you expect that to normalize.

Lachie Given: Good morning, Kyle. Look look, as you point out, it was a it was a super strong result in the U.S. on the lending side. I think I think it was as Tim said in his remarks, I think it was driven by both you know, really strong engagement by our people in store, Now Blair and his team are, you know, are phenomenal in teaching our our our team members, our pawn brokers in store to engage every customer. And I think that engagement and that core expertise is is really driving stronger loans. And then you’ve got, you know, you got higher average loan sizes Tim Tim mentioned and and just you know, I I do think that the consumer out there is still challenged at our end. And so yes, inflation is coming down, but it’s still it’s still up there interest rates, the high gas prices.

You’ve got other forms of of finance know, tightening. So I think know, our our customer is showing that, you know, there is still a strong need for cash. So know, our view is that, you know, with strong execution in the stores, we should continue to to grow up grow up pretty strong growth here in in loans.

Kyle Joseph: Got it. And then, you know, just high level talk about competitive trends between the call it the two segments, the U.S. and LATAM and and and where you’re seeing trends in each segment?

Tim Jugmans: I think competitive for trends, I don’t think that changed quarter over quarter. I think obviously, there are the two major competitors us in first cash and then and then a very fragmented industry beyond that. So I think, I mean, the competitive trends, I think, have been pretty stable. And then segment by segment, what was the what was the second part of the question? Segment by segment competitive trends?

Kyle Joseph: Oh, yeah. Just where you’re seeing LTVs.

Tim Jugmans: Tim, you wanna comment on that? Segment by segment?

Tim Jugmans: Yeah. So from a from an LTV perspective, we those are in constant movement based on where we’re seeing the sales occurring in our stores, and across the market. And so those we are adjusting all the time. But from an a consolidated perspective, they really remained very consistent year after year.

Kyle Joseph: Got it. That’s it for me. Thanks for answering my questions.

Tim Jugmans: Thanks, Kyle.

Operator: Thank you. I would now like to turn the call back over to Lachie Given for any closing remarks.

Lachie Given: Thank you, operator, and thank you everyone for joining today. We very much appreciate your time, and we are looking forward to talking a lot of you over the next couple of days. And and just one last time, a very big thank you to the EZCORP team for another very, very strong set of operating results. Thanks, guys. We look forward to chatting a bit later on.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.