Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EZCORP Inc (EZPW, Financial) reported a record total revenue of $280 million for Q3, marking a 9% increase year-over-year.
- The company achieved a record PLO (Pawn Loan Outstanding) of $265 million, up 15% from the previous year.
- Adjusted net income increased by 14%, reflecting strong bottom-line growth.
- The company expanded its store count by adding 12 new stores, enhancing its presence in the U.S. and Latin America.
- EZCORP Inc (EZPW) saw a 51% growth in EZ+ Rewards members, reaching 5 million members globally, indicating strong customer engagement.
Negative Points
- The company's cash balance decreased to $218 million due to increased PLO and inventory, as well as share repurchases.
- Operating expenses increased by 10%, which partially offset the higher PSC (Pawn Service Charges) revenue.
- The U.S. Pawn segment experienced an 8% increase in expenses, impacting EBITDA margins.
- Latin American segment expenses increased by 16%, with same-store expenses rising by 12%, affecting profitability.
- The company faces ongoing inflationary pressures, which could impact future expense management and profitability.
Q & A Highlights
Q: Can you elaborate on the decision to settle the $34 million in 2024 convertible notes in cash and your approach to the $100 million due next year?
A: Lachlan Given, CEO: We haven't changed our tone on financing. Our operational performance has strengthened, providing us with more options and better terms. We have a strong liquidity position, with cash available, and we're considering all options, including cash, debt instruments, or equity-linked products, to address the 2025 notes.
Q: The 30% PLO growth in Latin America is impressive. Is this a result of Blair's influence and experience in pawn broking?
A: Lachlan Given, CEO: Blair's leadership has been pivotal, but it's also about the strong team we've built in Latin America. The focus on training and operational improvements, similar to what was done in the U.S., is driving this growth. Tim Jugmans, CFO, added that improved pricing and focus on jewelry, especially in Mexico, are contributing factors.
Q: PLO hitting an all-time high in Q3 is unusual. Can you explain this trend and its sustainability?
A: Lachlan Given, CEO: The trend seems to be that customers prioritize other payments over pawn loans. Inflation has increased costs, reducing the dollars available for loan redemptions. This trend has persisted for the last two years.
Q: Are you seeing new customers due to low-income pressure and trade-down trends?
A: Lachlan Given, CEO: Yes, we are seeing new faces, but our strong sales results are driven by excellent customer service. Our people are doing a better job engaging with customers, which is reflected in our sales growth across all geographies.
Q: Last quarter, costs were a surprise. Can you provide guidance for Q4 and 2025?
A: Timothy Jugmans, CFO: We are experiencing inflationary pressures, but we expect the growth in expenses to slow down in the next few quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.