EZCORP (EZPW) 2 May 242024 Q2 Earnings call transcript

Good morning, ladies and gentlemen. Welcome to the EZCORP's Second Fiscal Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this call may be recorded. I'd now like to turn the conference over to Jean Marie Young, Investor Relations with Three Part Advisors. Please go ahead, Jean.

morning, good and you, everyone. Thank

remarks, During slides, website be to will are our at available our prepared which from for referring download we viewing investors.ezcorp.com. or

materially number factors call of remind we on an and a certain contain the those materials are to Actual other for regarding that from discussed operating expectations. basis adjusted that currency in Before as future like Securities of foreign with expected statements and as And the other and results fluctuations to company's company's on periods financial presentation filed I'd our unless and this presentation current begin, forward-looking may to conference due for remove quarterly otherwise discrete are based and noted risks as the or in items. Commission. slides periods. Exchange well the statements differ everyone identified, other our expressed results future performance effect reports the presented annual, are These

Joining us Tim Officer. EZCORP's Financial Chief Jugmans, Chief the Given; are Officer, Lachie Executive and call on today

turn like Lachie Now Given. to I'd over call Lachie? the to

Thanks, Jean, everyone. good and morning,

From for our $XXX second of PLO EZCORP For very was up Total set another fiscal bottom the the results million was perspective, operating a $XXX history. shareholders. of XX%. line were million of for highest the quarter and both XXXX, has revenue was the strong up financial adjusted and second net of quarter produced X% company's XX%, income up in

services costs, and satisfy our their U.S. remains operate cash we broking stores rising added and With and availability X,XXX X, this consumer having quarter. in are needs. short-term pawn increasingly economic global environment broking the challenging another of customer base. preowned macroeconomic Latin America, on in retail. customers credit, are leader a and X The Slide to uncertainty We pawn stores using less for recycled Beginning living

and to We seeking customers innovation so merchandise, better the experience retail of friendly. our value industry-leading also and are an has benefit customers for options additional customer strive pre-owned which provide money continuous excellent environmentally these service. addition, are through In for purchasing more being

Moving during stores and quarter. PLO U.S., We X. stores QX the X. and de million In When Latin the first comparing XX%. X we consolidated This the Slide quarter, due quarter decreased U.S. on in similar A to novo opened season record a up the year. paydown we typically year, was America during acquired in $XXX balances earning mild with the tax stores second to balance to X last paydown X assets consolidated refund of of setting saw

debt of near-term substantial cash balance $XXX if provides fund additional growth repurchase liquidity organic capitalize shares upon arise, to and earning million to inorganic us opportunities with asset they as Our fund required. to maturities

continuous improvement and consumer merchandise PLO continues up metrics, the and shows gross profit Strong financial and X%, service revenues X%. up consistent adjusted in our sales XX%. to XX% both up X are with total EBITDA customer PSC propel Slide up excellent demand X%, up

QX for X. highlights on our strategy to Turning Slide business key

and Latin by and We our core business continue focusing improved In in best America, reinforcing our investing to model strengthen in stores the on people operations, practices. pawn fundamentals we growth by PLO technology.

at Team between members America. U.S. are customers evenly million transacting the increased X%. all our Latin balance. back X.X globally as well in Across point-of-sale We and continue X.X to QX, to operating team million grew Rewards' efficiency to enhance theme as geographies, passion. people, of Scheduling modernize core launched EZ+ both and our with work-life productivity end and almost unique of the pawn split members Workday member and

opportunities for annual Workday recruitment, retention engaged. second We and career team on Talent members our members of the team hosted remain that incentivization committed are all and investing growth ensure tools. across variety our We to highly launched in week organization to a focused

to Mexico. early the store $X.X initiative the the has luxury in Las pick online grew payments buy million $XX.X expanded in U.S., in to and Vegas, up all this stores the side, we XXX e-commerce in in The are stores growth for U.S., category. pilot in innovation online success online drive helping and is where and channel in seeing On business pawn activities our million sales payments we to expanded

sold we Slide EZCORP, sustainability for At diversity, to and of inclusive and X.X initiatives services some values encouraging critical hundreds serve. the items jewelry and enhancing in awareness, communities across conversations merchandise diversity provides million and X general our important many during inclusion highlights the local pre-owned that we we financial customers organization, We of are which quarter. provided need foster driving an development more. environment in and all, the in

our members, also group affinity culture We their LatAm EZ Internal the we is and is launched Pride an grew EZCORP. new to to are groups, EX engagement passionate, Conversations. ways and team tenured affinity of the continue to and productive, enhance Conversations Community existing critical find U.S. committed company and all backbone at The Inclusive experience. we and building

achieve U.S. working with work eradicating success closely and aligns X are literacy, financial charities, our insecurity, young food of supporting empowering this people poverty We stated with goals to intervention.

to to Tim? provide financial call like to Jugmans, over details our results. turn more on our now would CFO, I Tim the

expenses. strong XX% consolidated aged with increased turnover $XX.X X% Inventory of by Motors up was year, driven million. in X.X%. at up and XX% to merchandise turnover growth in million, growth also both PLO $XXX.X the Lachie. due quarter. on EZCORP's quarter with which financial second keeping inventory results by Thanks, increased sales growth X%, basis, higher quarter PC increase is the revenue with another ended year-over-year new was merchandise million, focused we increased on second margins profit our same-store XX% at aged It by Merchandise sales details history. solid a offset over for Merchandise and driven were at General general X PSC up sales low. consolidated up X% highest as EBITDA was to the $XXX flat Slide X.Xx a was up PLO period last and stores.

Pawn U.S. segment increase our the history. over XX% service customer PLO Total to PLO, our million, in XX. which Strong XX% up turn revenues drive were Earning in Inventory quarter driven to $XXX.X and increased assets highest by X% drives in to Slide excellent growth. a second and was of demand Turning XX%, on pawn inventory. continues which

Slide we XX provides the U.S. a which states showing in operate. map

operational store X the count increase due in also size. points loan acquired drove basis U.S. an on stores is up up XXX average and points, has consolidated XXX handbags, PLO merchandise composition continued by X composition jewelry Inventory in general basis tools. which store to focus stores Our quarter. and X% increase this in XXX the grown with to shoes is category, driven

XX% Slide growth increase year-over-year. XX provides a the of financials. segment of XX% of drove snapshot PSC PLO the U.S.

the increase of to merchandise in a side Pawn up X% retail with quarter with profit the by offset EBITDA basis growth higher margin. On for expenses. point up business, merchandise XX% were the U.S. decrease merchandise in PSC, sales X% sales was sales due X% partially million, XXX up $XX.X

million, XX. Turning which to inventory history. increased were Total XX% and revenues XX%, $XX.X segment American by our to Earning our X% Slide PLO increase in on of second assets increase driven was X%. a quarter Latin the highest of up

up X PLO size points full has the composition XXX basis. up our category, in driven in Latin average to X% countries. quarter especially a constant stores America on count also XXX increased jewelry store loan operational jewelry is growing with in increase Mexico. Our focus currency This this in basis composition on

by XX%. Our PLO balance region LatAm increased the significantly in

driven same-store as new operational driven PLO markets. This growth and these primarily continued stores. pawn performance by was both by PSC our team demand as improved strong by in up XX%, was well

retail improvement sales the gross with increasing up expenses for merchandise was $X.X side merchandise XX% in XXX X% in a of in sales offset quarter grew sales basis by strongly to due expenses prior a EBITDA This on very same-store increase year. to the with the to PSC partially On X% margin. X%. was higher up million, the profit point X%, addition a up business,

PSC Looking forward basis, see grow consolidation seasonal a a on continue suit. basis should following PLO to with we on

and We general inventory aged continue turnover to focus on limited merchandise. strong

to to primarily due increase our growth. ongoing filling a to inflationary vacancy basis store pressures, expenses remain see sequential While in committed on expect we we management, count stores expense and year-over-year

PLO, growing inventory drive strong improving on processes excellent focus customer our optimizing quality and delivering continue management, should Our business. in and financial systems to service results

turn to closing I for it remarks. will now a Lachie few over

want thank stakeholders PLO. delivering I total for quarter EZCORP of to our record In for Tim. our financial and team and revenues results QX closing, operating another with Thanks, outstanding

metrics. to of driving see in of It teams, first our all our with forward pleased LatAm has real We operating by our that model the with an enhanced building stronger operating for business execution growth of all remainder can momentum producing XXXX, almost the across of are for segment. results this the value year. excellent strong been financial look and quarter shareholders and very enhanced we improving half our in We

Operator? that, we the with call And will open questions. for

first from John of [Operator comes of Hecht Instructions] question Our line Jefferies. the

expansion? sounds be? You've where give added geographies been characteristics consolidation and are a focused few of of I'm you wondering small any and then like in what -- then on organic opportunities noting, there in acquisitions that U.S., and you some kind there's the too. pipeline? LatAm if Is build-out, are organic stores it each could the worth us some those are would And quarter

we've see as think Look, in you can John. consistent that pretty you Thanks, been I say. stores, adding

pipeline particularly been I is the Latin -- strong, pretty always America. think it's in

the acquisitions big big we're consistent this there of Latin the I chains much in about But pipeline, out that It's those sort think pretty is America, to we're there do do. U.S. we do showing of in in countries. some potentially don't think U.S., got there's In can more I stores small think what still that it. many are whereas disciplined to I a we lots more added acquisitions quarter. you've

Whereas While there's steady things U.S., on but there, more much think goes, still the a I pretty disciplined being of do price. in she consistent. small it's big out we're as to

Okay.

margin is retail or question patterns. been to very, the that gross -- over in of margin quarters. Is the There's tied different there. I'm buying been curious LATAM mix U.S. increase trends just has past about on just very margin consistent. an the Second couple

to Thanks, mix. is with John. do Yes, of some it

America the months, XX Latin in pricing better that's pricing. the for much had last have in and to X coming also through We

better, and it We that. of business model also Mexico the in some driving a are executing lot is especially

those the of result So is a really from all a combination great team.

and customer Okay. that think versus And interested recurring of customers about Is in a trends. on new kind kind just I'm customers front? there we're of worried changing last whether any way question, to behavior

any if think behavior. don't changing there's I

the we're think I with demand. pleased customer in organic growth

growth seeing We're coming both people goods. it's from in growth seeing think in customers. We're I buying sides. secondhand loan

So I as we we're think all in seeing it's been across businesses some nice But just growth that X our core well doing, in regions, growth the we're customer the of that pretty consistent goods. things luxury in X run.

So luxury there. jewelry, growth watches, we're seeing nice handbags,

growth, in Latin I and picture So a in America. a think consistent U.S. on both it's pretty the customer

question comes of Our McNamara next line of Canaccord. from the Brian

Congrats on results. strong the

PLO timing? that just through, loans? we tax you typical really despite coming strong, record normal pay running obviously, driving So of observed, that is in paydown Is have you still refunds Or May? loan Or seen are again, PLO more seasonal downs.

that of the typically end end of the finishes -- at at So the March.

seeing so in build start loan balances And from March. you the

I in rewards those builds excellent share. service year, quarter. are -- turnaround paydowns did bit very through it's are numbers. program, we stop. probably think gaining where this do we market think do we the a it customer and normal, Last the slowly definitely see So year, little But we the quick This more with a

assuming Great. in to me I'm the that wrong. online Okay. did guys as to your And see I'm of then out pick total Florida. would gave that's stores stores? XXX you U.S. kind well San some to your or buy guess, in expanding in if Antonio, it out you're Texas of and I'm to whatever all point? roll expect or I this confidence And in going you out up I that stores you test, more think to of what assuming all roll started store correct pilot you test that kind at or stores this

it's Brian. Look, I think still early,

well in I point now. test where at X trained. We've got we're across we've teams going -- the XXX it. where stores we're pilot It's we think now markets. got place want got a a in We've photography

So is is -- where pilot the I now think happening. actually it's

stores. we quarter So can it. would early I seeming Customers quarter, end think I into early this think success. to this we've by successful think if really we'll where having roll we'll But the got is out of on the know more like to it test. like a We're some I are know.

Max in going the business. said we materials well that is e-commerce the So pretty Pawn in also

strong relatively still small, there. that's While we're early seeing some results

I roll out. the we'll where in look, quarter this to we're this see is So going real business a quarter think if that

we're it's confident time But So going. good. I on, pretty how looks think that much we'll next have it early of quarter, better idea a this

Got rewards program. incremental on detail the it. I appreciate the all

that's for physical I surprised think very a you at at guys business. really you have Are kind helpful digitizing how been investors. successful historically of

out. to continue date, store, you things it's of initiatives to a like digitization? Obviously, how be got You business it overall the very and got rolled to is acknowledging to that? into that physical you negotiate come given the very -- of a will And kind kind

surprised truthfully nearly rewards We've how million customers. I was be to am yes, it's well I X going. If quite at honest, got

it's we thought. lot I think truthfully, a better have it gone would think -- has So I than

So large it's a program. very

it's think I successful. very

out the engaging them, we strong. bunch customer in think it's really time of really them I the times, shareholders of work we best that to how now drive. said best But this giving our looks can use you to terms a and base benefits engagement we've as

So has would than have better question, digitization, think got lot look, answer the a we believed. your I to

us. industry. I drive work to the and think engage and now out we're base time leading growth customer to that for really them best for real how But it's

we than driving And What's that? were Got about year? Tim. the we back it. costs the Costs higher and one for bit QX how in should half expected. And think of a then perhaps

causing also Yes, costs, being the we A some on we instituting Well, bit continue also through. see to well, of advertising renewals to obviously, rewards rent driving costs successful the government invest cost successful. that in increased our there's teams, of minimum the is is as Latin in that little the with America, some come wages. program

also increasing. So the is cost

So there's QX. quarter, and These costs the still play driving the the a as we've in with effects We the to still through out U.S. costs. keeping expect there. couple inflation those do government QX rates of sequentially steady rise seen those still inflationary things through are

important you the for Got what something in the absent question it. pay capital then And finally, most would to to of kind What that? do of Would convertible straight that? notes principal cash? options probably relating repeating the consider And like XXXX to decision the our amount other would expect drove And you allocation. same you consider your or XXXX? debt

think the Thank we've capital. I you, mean, think we in I Brian. been really way look, about consistent

I think look at We equity, stack. capital always all debt, a as we're alternatives. a in Board, equity the looking team, as linked at

I message. think look, really So consistent it's a

at potential to the way liquid do in We've balance conservative are can be price. we're the growing right very because We we back about like lots think quickly. got of We shares. the buying that sheet. We're we acquisitions

and look, with on our and been excellent those to we've table. trying been our always I has all very we're strategy competing alternatives financing shareholders the that investors all an our initiatives are one. But of look, So think balance clear

got We're really I think and what go think has we conservative, global the after alternatives on think strong big very liquid. we is opportunity plenty a quarter one. and a I capital table. And of are are all been truly this very we've to

strong fantastic driving, obviously, growth the sales strong think growth. really highlight see continuing loan in Mexico and who real think great And this team are in some we're America. but think I having to that's sustained I seeing results quarter you're the particularly Guatemala, growth now pleasingly, we're been really I are and where seeing growth, for a U.S., Latin

a U.S. been businesses, think both it's inorganically. for the right think the and capital America. great the I your on we've Latin really showing question on quarter amount that the grow business is to I strategy both organically balance of And the got So sheet, and

Latin the highlights America. we're big So one of And with really the is quarter. happy

So the team even able stronger we're and down there, looking we're coming in achieve what at has really the with been quarters. driving to growth pleased

Given remarks. now to back closing conference turn would Sir? Lachie like to for the I

joining, all of for really in one-on-ones for we everyone, to particularly day. you, team very quarter, Latin look strong and Thank for thank for forward the joining to down at thank the much a you and the call, delivering EZCORP, you America, our our rest

So thanks, guys.

conference today's Thank concludes participating. call. This you for

You may now disconnect.