Earnings call transcript: EZCORP’s Q3 2025 earnings beat expectations, stock rises

EZCORP Inc (EZPW) reported a strong fiscal third quarter of 2025, with earnings surpassing analyst forecasts. The company delivered an earnings per share (EPS) of $0.33, exceeding the expected $0.25, marking a 32% surprise. Revenue reached $319.9 million, a record high and above the forecast of $302.51 million. Following the announcement, EZCORP’s stock price surged by 7.77% to $14.27 in premarket trading. According to InvestingPro analysis, EZCORP currently appears undervalued, with the company maintaining a "GREAT" financial health score of 3.03 out of 5.

Key Takeaways

- EPS of $0.33, beating the forecast of $0.25.

- Record Q3 revenue of $319.9 million, up 14% year-over-year.

- Stock price increased by 7.77% in premarket trading.

- Strong growth in digital engagement and expansion in Latin America.

Company Performance

EZCORP demonstrated robust performance in Q3 2025, driven by significant growth in its pawn operations and digital platforms. The company expanded its footprint with new store openings in the U.S. and Latin America, and reported a 28% increase in sales through its MaxPawn e-commerce platform. The U.S. Pawn segment remains a key revenue driver, contributing 69% of total revenue. InvestingPro data shows the company maintains strong liquidity with a current ratio of 4.04, while achieving an impressive 8.14% revenue growth over the last twelve months.

Financial Highlights

- Revenue: $319.9 million, up 14% year-over-year.

- Earnings per share: $0.33, a 38% increase from the previous year.

- Adjusted EBITDA: $45.2 million, up 42%.

- Gross profit: $188.4 million, a 13% rise.

Earnings vs. Forecast

EZCORP outperformed expectations with a 32% EPS surprise, reporting $0.33 against a forecast of $0.25. Revenue also surpassed the anticipated $302.51 million, reaching $319.9 million, a 2.81% surprise.

Market Reaction

Following the earnings release, EZCORP’s stock climbed 7.77% to $14.27 in premarket trading. This positive movement places the stock closer to its 52-week high of $16.6, reflecting investor confidence in the company’s growth trajectory and strategic initiatives. The stock has delivered a strong 27.83% return over the past year, while trading at an attractive P/E ratio of 8.82. InvestingPro subscribers have access to over 30 additional financial metrics and 7 exclusive ProTips that provide deeper insights into EZCORP’s valuation and growth potential.

Outlook & Guidance

EZCORP projects continued growth, with future EPS forecasts for upcoming quarters ranging from $0.43 to $0.56. The company plans to focus on scaling its business and enhancing its digital platforms to capitalize on untapped markets in Latin America and beyond.

Executive Commentary

CEO Lachlan Given highlighted the company’s strategic focus, stating, "Scale is the main game," emphasizing the importance of expanding EZCORP’s market presence. He also noted, "We are actually undercapitalized for our mission," pointing to potential future capital initiatives.

Risks and Challenges

- Inflation and tighter credit access may impact consumer spending.

- Currency fluctuations could affect international operations.

- Competition in the pawnbroking sector remains intense.

- Regulatory changes in key markets may pose challenges.

Q&A

During the earnings call, analysts inquired about potential stock buybacks and the company’s inventory growth strategy. Management addressed the impact of gold price fluctuations and highlighted the growth opportunities in Latin America.

This comprehensive performance and strategic focus position EZCORP well for future growth, as reflected in the positive market response and upbeat earnings results.

Full transcript - EZCORP Inc (EZPW) Q3 2025:

Conference Operator: Good morning, ladies and gentlemen. Welcome to the EC Corp Third Quarter Fiscal twenty twenty five 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.

Now like to turn the conference over to Sean Mansory, the company’s Investor Relations Advisor with Elevate IR. Please go ahead, Sean.

Sean Mansory, Investor Relations Advisor, Elevate IR: 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 @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 EZ Corp’s Chief Executive Officer, Lachlan Given and Tim Jugmans, Chief Financial Officer. Now I’d like to turn the call over to Lachlan Gibbon. Lachlan?

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks, and good morning, everyone. This quarter showcased the continued strong financial and operating momentum across the business, disciplined execution by our team and the growing operating leverage in our platform, which drove exceptional earnings growth for our shareholders. We delivered record third quarter revenue of $319,900,000 up 14% year over year, and an all time high PLO of $293,200,000 reflecting sustained demand for immediate cash and affordable pre owned merchandise across our geographies. Earnings for the quarter were up significantly. Adjusted EBITDA rose 42% to $45,200,000 and diluted EPS increased 38% to $0.33 driven by operating leverage embedded in our model.

As we scale, we’re capturing more margin and deeper customer engagement across both new and existing markets. Turning to slide three. EZ Corp now operates thirteen thirty six pawn stores across The United States and Latin America, including six zero four in Mexico. We remain a global leader in short term collateralized lending and pre owned retail. Persistent inflation and tighter access to credit continue to drive customers towards pawn as a trusted and transparent alternative for instant cash.

Our value proposition is fast and accessible with no credit checks, no collections, and no long term obligations. This ongoing demand is translating into strong lending activity and deeper customer engagement across the business. Our 8,000 plus team members’ commitment to customer service and innovation allows us to scale with discipline, remain highly engaged with the customer, and deliver valuable financial solutions when people need them most. Moving on to slide four. This was a meaningful quarter for both expansion of our store footprint and earning asset base, a clear demonstration of how we’re deploying capital to grow the business in ways that support long term earnings growth.

During the quarter, we acquired 40 stores under the Monte Providencia and two Impeno Efectivo brands across 13 Mexico states. The business offers traditional pawn loans as well as auto pawn transactions, some of which are through standalone auto pawn stores. These stores not only expand our geographic footprint, they also meaningfully broaden our addressable market through secured auto lending. Autocorn is a growing category of collateral in Mexico, with higher ticket sizes and stronger appeal to customers who may not qualify for traditional credit. It also allows us to reach a broader demographic and participate in a segment where we’ve historically been underpenetrated.

In The US, we added three new stores, including a Max Pawn luxury format location in Miami Beach and opened 10 de novo locations across Latin America, focusing on Mexico, Guatemala and El Salvador. All of this helped drive earning assets to $520,000,000 including a record PLO of $293,200,000 up 12% year over year. We saw continued strength in same store lending and rising average loan sizes, particularly given increased jewelry volume. The PLO to inventory ratio also remains healthy at 1.3 times. We ended the quarter with $472,100,000 in cash, down from $505,200,000 last quarter, reflecting capital deployed into store acquisitions and growth in earning assets, partially offset by strong operating cash flow.

In the three month period ending July 31, we repurchased $3,000,000 worth of shares. In July, we also provided an additional $3,000,000 in secured loan to Founders One, a growth platform through which we invest in Simple Management Group, which currently operates 99 pawn stores. The acquisition pipeline remains robust, and we believe that with our highly liquid balance sheet, we can continue to deploy capital opportunistically to significantly scale the platform for our shareholders. Turning to slide five. Although you can only see the past four quarters of performance here, it’s worth noting that we’ve delivered more than two years of consecutive growth across all four of our key performance metrics: revenue, PLO, adjusted EBITDA, and adjusted EPS a testament to the durability of our model and the execution across our store network.

Additionally, our earnings growth has accelerated for three quarters in a row, further demonstrating the momentum in our business. Total revenue increased 14% year over year to $319,900,000 driven by growth in PSC, merchandise sales, and a significant increase in scrap. Merchandise sales grew 10%, with same store sales up 9%, supported by strong customer demand and effective retail execution. Gross profit rose 13% to $188,400,000 in line with revenue growth. EBITDA increased 42% to 45,200,000 with EBITDA margin expanding two eighty basis points to 14.1%, and adjusted EPS rose 38% to $0.33 It’s worth noting that EBITDA margin has now expanded five quarters in a row on a year over year basis.

These results reflect the operating leverage we’re capturing as we scale, both in terms of loan demand and retail productivity. Slide six provides a closer look at our consolidated revenue and gross profit performance for the quarter. In Q3, total revenue grew 14% to $319,900,000 and gross profit increased 13% to $188,400,000 supported by growth across all major revenue streams. As always, our focus is on driving both gross profit dollars and margin, whether from PSC, merchandise sales, or scrap. PSC increased 10% year over year to $118,200,000 and remains our most consistent and high margin earnings engine.

Merchandise and sales gross profit rose 19% to $70,200,000 reflecting both higher gold prices and improved execution at the counter. Gross margin held steady at 59% even as we scaled, a reflection of the consistency embedded in our model. While PLO increased 12% year over year, inventory grew at a faster pace, up 32%, driven by greater purchasing activity this quarter, higher layaways, as well as lower inventory turns. It’s worth noting that outright purchases generally yield higher margin than pawn sourced goods. From a mix perspective, US Pawn continues to drive the majority of our business, contributing 69% of revenue and 71% of gross profit this quarter.

As we continue to grow in Latin America, we’re applying the same operating model that’s delivered consistent results in The US, from pricing and inventory systems to training and in store execution. The opportunity ahead is clear, to improve performance, strengthen unit economics, and drive higher margin contribution as the platform scales. Turning to slide seven, our business strategy highlights for the quarter. We continue to strengthen our core pawn operations while advancing the initiatives that position us for long term growth across customer experience, digital engagement, and field execution. Our EZ plus rewards program continued to grow as we added 300,000 new members during the third quarter, reaching 6,500,000 globally and accounting for over 70% of our known customer transactions in Q3.

Website traffic grew 9% to 1,900,000 visits, supported by continued improvements in our SEO programs. We also saw increased digital traction with 30,000,000 in US online payments. In Mexico, 20% of layaways and extensions were completed digitally, more than double from this time last year. Our View Online Purchase in Store experience now covers nearly 80% of US stores, making our inventory more accessible and convenient to browse. We also began testing Instant Quote, a new tool that gives customers a preliminary loan estimate before visiting the store.

While still early, we believe it has the potential to drive stronger conversion and improve in store efficiency. Max Pawn e commerce platform sales increased 28%, reflecting sustained demand for affordable luxury and reinforcing our position in the high quality resale category. From a team perspective, we completed the FY ’twenty five team member engagement survey during the quarter with 89% participation and an engagement score of 85, both well above industry benchmarks. This speaks to our unique culture of pride to work at EZCORP, serving our customers with passion and respect and genuine alignment to our company wide mantra of people, pawn and passion. Having a highly engaged tenured workforce is a unique competitive advantage for EZCORP and continues to be a strong focus for our leadership team.

Our strategy remains focused on investing in the platform, empowering our people, and delivering consistent, high quality service at scale. With that, I’ll hand the call over to Tim Jagmans, our CFO, who will provide a deeper look at our financial results. Tim?

Tim Jagmans, Chief Financial Officer, EZ Corp: Thanks, Lachie. Slide nine provides a detailed look at our consolidated financial results for the third fiscal quarter. We ended Q3 with record pawn loans outstanding of $293,200,000 up 12% year over year and 9% on a same store basis. Growth was driven by sustained demand, improved operational execution and high average loan size supported by both organic expansion and new store contributions. Pawn service charges revenue increased 10%, generally in line with PLO growth and reflecting strong lending activity across our footprint.

Merchandise sales rose 10% with 9% same store growth as customer demand continues to support strong retail performance. Inventory increased 32% year over year, driven by higher PLO, elevated purchase activity and growth in our U. S. Layaway program. Turnover declined to 2.4 times from 2.7 times last year, some of which is due to greater mix of jewelry, which naturally carries a longer sales cycle.

Despite lower inventory turns, aged general merchandise declined 83 basis points to 2.3% or 2% excluding luxury, reflecting disciplined pricing and markdown execution. Merchandise margin came in at 35.7%, while down 30 basis points year over year, it improved 166 basis points sequentially from Q2. As Lachlan mentioned earlier, we continue to grow with discipline and deliver meaningful operating leverage. Adjusted EBITDA increased 42% to $45,200,000 and EBITDA margin expanded two eighty basis points to 14%. Moving to our U.

S. Pawn segment on Slide 10. Revenue increased 11% year over year to $220,000,000 of which approximately half came from scrap sales. Earning assets increased 21% to 387,400,000 which includes an 11% increase in PLO to $221,100,000 and a 36% increase in inventory to $166,400,000 The inventory increase is a function of high PLO, greater purchasing activity and the customer layaway program introduced in July. We remain focused on optimizing our merchandise mix and improving turnover.

In the current quarter, we are increasing incentives for our team members, increasing marketing activities, including the use of reward points as well as targeted price reductions and category specific promotions to drive further improvements. Slide 11 provides a geographic view of our U. S. Operations, where we now have five forty five stores across 19 states. As Lachlan mentioned earlier, this quarter we added three stores, including a luxury format location in Miami Beach.

Our platform continues to be anchored in Texas, Florida and other major urban markets where we benefit from scale advantages, local pricing intelligence and strong brand equity. Lending dynamics remain healthy. U. S. Average loan size rose 13% to $2.00 $7 supported by increased values in both jewellery and general merchandise.

Roughly 80% of that growth came from high jewellery pricing, particularly gold. Jewelry now accounts for 67% of PLO and 65% of inventory, both up from prior year given our emphasis on the category and current gold prices. Slide 12 provides a deeper look at our U. S. Segment financial performance for the quarter.

All loans outstanding rose 11% year over year, supported by higher loan values, improved store level execution and steady demand for short term liquidity. On service charge revenue rose 8%, primarily driven by same store PLO growth. While the growth in PSE trial PLO, the overall performance reflects a strong lending environment across the store base. On the retail side, merchandise sales rose 4% year over year and 4% on a same store basis. Merchandise margin expanded 80 basis points to 38.5, supported by better pricing execution and improved product mix.

Inventory increased 36%, driven by growth in PLO, purchases and value ways as well as a decline in turnover to 2.1 times from 2.6 times. Despite this, aged general merchandise improved two sixty basis points to 2.5% or 1.8% excluding lottery, a testament to active inventory management. Running a balanced business in The U. S. Pawn segment through a combination of growth in PSC, merchandise sales and scrap revenue with expense management led to an EBITDA increase of 31% to $50,300,000 and margin expansion of three sixty basis points to 23%.

Turning to our Latin American segment on Slide 13. Revenue increased 21% to $99,900,000 in Q3, reflecting continued strength across the region. Earning assets rose 18%, with PLO up 16% or 4% on a same store basis, driven by improved operational performance and increased loan demand. Inventory increased 2113% on a same store basis, with aged general merchandise increasing modestly to 2.2 of total GM inventory, which equates to a total of $800,000 The increase in PLO and inventory was also largely driven by our recent acquisition in Mexico. Importantly, we remain focused on embedding best practice from our U.

S. Operations to drive consistent execution and profitably growth across Latin America. As shown on Slide 14, we ended the quarter with seven ninety one stores across four countries. During the period, we acquired 40 stores in Mexico and opened 10 de novo stores across Mexico, Guatemala and El Salvador and consolidated one store in Mexico. Jewelry PLO increased five ten basis points year over year to 40%, supported by focused operational initiatives in Mexico and higher gold price.

Jewelry inventory composition also increased 150 basis points to 35%. Turning to Slide 15 for more detail on our LatAm operations. Merchandise sales grew 23% with 90% same store growth. Merchandise sales gross profit increased 17%, partially offset by 170 basis point decline in margin due to more frequent counter based price negotiation, a reflection of higher transaction volumes. PSC grew 13% year over year, supported by the growth in PLO.

EBITDA rose 28% to $15,500,000 driven by higher gross profit and offset in part by a 12% increase in expenses, with 7% same store expense growth, primarily driven by labor expense. EBITDA margin expanded 90 basis points to 15%, reflected continued operating leverage. From a balance sheet perspective, our robust position of $472,100,000 and a low net leverage will enable us to continue funding organic growth, excellent, compelling acquisition opportunities and thoughtfully return capital to shareholders over time. This quarter’s acquisition of 40 pawn stores in Mexico is a strong example of how we’re deploying capital with a discipline to capitalize on the global scale opportunity. Looking ahead, we remain focused on growing PLO, improving inventory efficiency and scaling operational best practice across all geographies.

Based on the current gold price remaining steady, we expect similar scrap sales gross profit in quarter four and then for scrap margins to decline sequentially during FY 2026. We are very pleased with the expense management to date. However, we do expect a sequential increase in total expenses. Our M and I op pipeline is very attractive in both The U. S.

And Latin America, and we continue to approach this opportunity with rigorous financial discipline. We believe this focused execution will continue to drive long term compounding value for our shareholders. Now I would like to turn it over to Laki for a few closing remarks.

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks, Tim. I’d like to extend my sincere appreciation to our entire team for delivering an exceptionally strong quarter of earnings growth. It reflects our rigorous focus on operational excellence, increasing scale, robust core business model, and an extremely strong balance sheet. As we look ahead, we remain confident in our ability to scale with discipline, invest with purpose, and deliver sustained long term value for our shareholders. And with that, we’ll open the call to questions.

Operator?

Conference Operator: Thank Our first question comes from John Hecht with Jefferies. Your line is open.

John Hecht, Analyst, Jefferies: Hey, guys. Thanks for taking my questions and congrats on a good quarter. First question is just The U. S. Retail margins have been stronger than we expected and there’s some sustained momentum there.

I’m wondering if you look at the mix of retail activity with gold jewelry and other products as well as like aged inventory, what do you attribute the strong margin performance to? Is it that the consumers negotiating less or is it just that the value of jewelry is going up with gold or how do we think about the trends there?

Lachlan Given, Chief Executive Officer, EZ Corp: Good morning, gentlemen. Thank you for the question. Tim, do you want to take that one?

Tim Jagmans, Chief Financial Officer, EZ Corp: It’s two things there, John. One is the gold price increase has helped, but it’s also that we are lending improve I mean, improve lending. So that has both both of those have helped increase that margin. Better lending means that we’re pricing it correctly when we lend it. So if it does drop into inventory, that it’s at the right price to be able to sell at the right margin.

John Hecht, Analyst, Jefferies: Okay. And then you guys have been pretty active in acquisitions and consolidation. Maybe talk about the pipeline now and the pricing in the market and maybe geographically where you guys are looking.

Lachlan Given, Chief Executive Officer, EZ Corp: Sure. So so we’ve obviously did our financing a few months back and and now have a a really strong balance sheet from which to to pretty opportunistically execute on acquisitions. And so we’re really excited about the pipeline. I think we’ve got plenty of opportunities across our existing markets, we’re starting to look at new markets as well. But I think, you know, the the the pipeline’s always been quite robust.

It’s just that now we are, you know, we are really well capitalized. And I think we’ve been very consistent in our message to our shareholders and to the market that this is a business that’s capable of truly scaling up from here. We think we’re actually undercapitalized for our mission because the global opportunity is so large in pawnbroking. And just even in our own existing markets, it’s a very, very large scale opportunity. So we’re trying to match our capital base with the size of that opportunity.

And clearly, we’ve got a good amount of cash in the bank at the moment. But as I said, even just in our existing markets in The US, Mexico, and the rest of Latin America, we see a really large opportunity. We’re doing a pretty robust de novo store network store growth strategy as well. Those are proving to be outstanding uses of capital. And then to our capital allocation strategy, we’ve been pretty clear on our message there as well.

Our core strategy is scale. We think that earnings and cash flow can be scaled significantly from here, but we’re trying to balance that with returning some capital to shareholders as well. We think the stock price is materially undervalued, as I know all the analysts do as well. We’re looking to balance our capital allocation. But again, our core strategy here is scale in terms of the store base, in terms of profit, and in terms of cash flow.

And I hope over the next twelve to eighteen months, we’re going to be announcing more and more of these acquisitions that are done with discipline but match our strategy of scale.

John Hecht, Analyst, Jefferies: I appreciate that. Thanks very much.

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks, bud.

Conference Operator: One moment for our next question. Our next question comes from Brian McNamara with Canaccord Genuity. Your line is open.

Brian McNamara, Analyst, Canaccord Genuity: Good morning, guys. Thanks for taking the question. Congrats on another great quarter. So one question I have is a pretty simple one. Why aren’t you guys buying back more stock?

I don’t want to take away from all the strong execution, but this is by far the number one question we received recently from investors and number two isn’t particularly close. So your recent acquisition of Exo, I think was $20,000,000 but given the unexpected dilution from the May 2025 convert, I think you still have roughly $80,000,000 more in cash than you would have expected previously, even including that acquisition. And I think your prior repurchase authorization expired May 3. So why doesn’t the Board at least authorize another repurchase program? I understand you’re prioritizing growth and scale here, but can’t you do both simultaneously?

I think $2,000,000 to $3,000,000 a quarter just feels like a rounding error given the huge valuation discount you guys trade at relative to both your larger peer in the market as a whole.

Lachlan Given, Chief Executive Officer, EZ Corp: Great. Thanks, Brian. Yeah. Look. I’ve I’ve touched on this already, but you let’s start with this quarter.

We’re up 42% in EBITDA growth. I mean, it it’s you know, it is an enormous quarter. I don’t know how many companies you cover that are delivering 42% earnings growth. But the reason I say that is that you can see what this platform is capable of doing as we scale. It’s growing phenomenally strongly with a really conservative balance sheet, which gives stability for our shareholders in the long term.

And so I’ve been really consistent on what we’re trying to do here. And you can see it this quarter in our earnings numbers. Our priority is scale. And I actually think we are completely undercapitalized for our mission because that is the size of the acquisition opportunities and the de novo opportunities that are out there. Our real estate team would love to build 1,000 more stores in Mexico.

Our issue is we’ve got to actually staff those stores. But it gives you, just on the de novo side, the size of the scale opportunity. In terms of acquisitions, we’re not even touching other areas of the world where you look at India and The Philippines and stuff that we’re not even close these are multiple billion dollar opportunities. And so while I’m really happy with our cash on the balance sheet, it’s not enough to give our shareholders a chance at genuine scale. So I think in buying EZ Corp shares, you should know that our number one strategy here is scaling up profit and cash flow.

And so while I think it’s a great return on capital buying back shares because the shares are so materially undervalued, I think it’s probably less than five times this year’s EBITDA consensus number or somewhere close to that. So, I genuinely do understand the buyback strategy, and that’s why we’re doing it. And we’re looking for balance. I do understand your comment that you think it’s too low, but I think our cash at bank is too low because Tim and I and our team are out there in the market looking at acquisitions that could materially change things for our shareholders. So I think this has been a very consistent message from us.

Look for balance, but we are erring on the side of scale. But as you say, we have bought back shares. We have bought the back $3,000,000 I don’t think that’s a rounding error at all. I think it’s a good return on capital. But our priority and as I said, in the next twelve months, twelve to eighteen months, I hope you will see us announcing some putting our money to work and putting our money where our mouths are into these scale opportunities.

But I don’t think this is a new message. I think we’ve been very consistent on it.

Brian McNamara, Analyst, Canaccord Genuity: Fair enough. So is it fair to assume I think last year you did $12,000,000 in cash paid for acquisitions. The year before, about 15,000,016 million dollars This year, year to date, you’re at 17,000,000 Is it fair to assume that number increases over the next twelve to eighteen months, to your point?

Lachlan Given, Chief Executive Officer, EZ Corp: I’d love to say yes. But as you know, acquisitions are unfortunately you a willing buyer and a willing seller. I would love to say yes. Hope that that is the case. We now have the firepower to do it.

As I said, the pipeline is robust, but it’s still opportunistic, and we’ve got to land these deals. But that is why we’ve raised this capital because we think we can deploy it into scale. So look, I can’t obviously commit to the market that it’s going to be more than $15,000,000 but my intention is absolutely to be deploying significantly more capital than we have in the last year or two now that we’ve got this financing behind us.

Brian McNamara, Analyst, Canaccord Genuity: Fair enough. So second question, you guys loaned an additional 3,000,000 to Founders, which was invested in Simple. I think your that takes your investment there north of 60,000,000, correct me if I’m wrong, between preferred equity and loans. Why is that the preferred investment route, and kind of what’s the end game there?

Lachlan Given, Chief Executive Officer, EZ Corp: Yeah. Look. It’s a good question. That management team is doing a terrific job in building out their platform. They’re now the third largest pawnbroker in our region behind First Cash and us.

So I think that represents a fantastic opportunity for EZCORP and its shareholders. We’re currently assessing exactly the question you’ve asked. So we’re assessing what is the best structure going forward because they’ve now demonstrated over the last three years since we invested that they are capable of growing really well in their markets. They’re in Florida, Puerto Rico, and then I think about 10 other smaller countries across The Caribbean plus Panama and Costa Rica. So while we are in Florida, most of those markets we’re not in.

So we’re very excited that we’ve deployed capital there, I think, in a really conservative way over the last three years while they prove up their ability to scale in markets that we’re not in. But I think it’s very high on our board’s agenda as to what that looks like going forward because I think the management team there has proven they can do it. They built Value Pawn and Jewelry, which is obviously the best acquisition we ever did for over $100,000,000 in 02/2008. So, we know they can do it. The last three years, they’ve proved they can do it again.

And as you know, we’re not recognizing the preferred equity side of that investment in our income statement. So I think it’s high on the board’s agenda over the next twelve months or so now that we’re very well capitalized what we do with that investment. But as I said, the hypothesis three years ago was let’s provide some early capital here and see what this team can do and we’re very happy with their plan. They’ve now got 99 stores and doing really, really well as the third force in pawnbroking. I think we’ve got the key seat at the table there.

And I think you’ll hear more from us over the next twelve months or so on what we’re going to do.

Brian McNamara, Analyst, Canaccord Genuity: Great. Maybe a couple for Tim. This is probably nitpicky, but worth asking nonetheless. In The US, I think your PLO was up 11%, similar to last year. Your larger peer just reported a plus 12 on top of a plus 22.

Anything to call out competitively there?

Tim Jagmans, Chief Financial Officer, EZ Corp: No. I think if you look at quarter by quarter, there’s different wins for different companies as we go along. But, you know, on average, our stores do have more PLO than other competitors, and we are focused on maximizing net revenue per store. And I think our numbers continue to prove that out.

Lachlan Given, Chief Executive Officer, EZ Corp: Great. That’s fine. Think to call it out, I think it was a truly phenomenal quarter across the business. And I think one thing to call out for everyone is the sustained momentum in Latin America in that business. It was Blair and his team.

When we came together as a management team four years ago, Blair and the team obviously concentrated on The US to begin with, given it’s roughly 70% of our business. And you can see the incredible growth in that business. But once the team was able to really truly focus Mexico and the Latin American business, you can see now that we’re kind of I think it’s probably about three quarters straight now of really, really exceptional performance. And so I think that leadership team, starting with Blair and then into the Latin American leadership team, has just done a fantastic job. And it’s not just the earnings performance that you see in the income statement.

You can see the balance that’s come back to that business of revenue, PLO, EBITDA, inventory. So we’re really excited about the prospects there as well. But I think it was just a fantastic quarter. As I said, looking at 42% EBITDA growth and 38% EPS growth, it just shows the quality of the operating leverage in this business when you get it right. Yes, we’ve had some tailwinds from gold and from scrap, but that is the leverage that’s available in this platform.

And I think it was just a truly phenomenal quarter.

Brian McNamara, Analyst, Canaccord Genuity: Great. And just the last one is on merch margins in LatAm. I think they’ve declined three quarters in a row despite obviously EBITDA has grown really nicely there after good progress on this line last year. Aged inventory is increasing in LatAm also. So what’s driving that?

And how much of that is just simply the impact from some of these new acquired stores?

Lachlan Given, Chief Executive Officer, EZ Corp: Tim will have a view on aged. Let’s really qualify how much aged inventory in GM we’ve got. We’ve just we’ve just printed $45,000,000 of EBITDA, and the entire aged inventory in GM is $2,000,000. So in terms of materiality, it is such a small number, and that includes lux age. So, we’re talking about a $45,000,000 quarter.

I think consensus is that we make 170,000,000 or $180,000,000 of EBITDA a year. Our aged GM over three sixty five days is $2,000,000 So, it is a very, very small number. Are we focused on it? Yes, of course. This business used to operate at 6% or 7% AGM.

It’s now two So it’s well down. The number’s small. Are we focused on it? Yes, of course. But it’s a pretty small number.

Tim, I don’t know if you’d add anything to that.

Tim Jagmans, Chief Financial Officer, EZ Corp: Yeah. I think the other thing to look at is not just to look at inventory by itself, but look at ratios. Our inventory continues to be the above one, which is what you want to see prior times when age was very high. We had more inventory than filler. That was not the way to run the business.

And we found that the sustainably over the last four, five years, we’ve done very well at running the business the way we are, and we continue to do that. So very excited about the future as we continue to improve sales. I talked about a little bit in the call about other things that we focused on for the next quarter about we’re going to increase some promotions, You’re gonna increase some incentives to team members to drive more sales because we we do wanna do that. But, you know, we don’t see we don’t see this as a a major issue in the business right now.

Brian McNamara, Analyst, Canaccord Genuity: Fair enough. Thank you very much, guys. Best of luck.

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks. Thanks, Brock. One

Conference Operator: moment for our next question. Our next question comes from Kyle Joseph with Stephens. Your line is open.

Kyle Joseph, Analyst, Stephens: Hey, good morning guys. Nice quarter. Thanks for taking my questions. Just piggyback off that last one, but just focusing on U. S.

On the margin. Obviously, it’s been strong. But just weighing inventory was obviously up, but it sounds like a portion of that is attributable to purchases, which obviously support your margin. So just kind of how do you expect that playing out over time? Not not asking you to predict gold prices, but just more on the on the general merchandise side of things.

Lachlan Given, Chief Executive Officer, EZ Corp: Yeah. Look. Look. Inventory is clearly up,

Lachlan Given, Chief Executive Officer, EZ Corp: but there are reasons for that. First is PLO growth, which is exactly what we wanna see. So inventory clearly grows when PLO grows. As you said, in Tim’s comments, we also make the points that we are purchasing more. And then you’ve also got layaway growth.

So for very good reasons, our inventory is up. Turns are down, however. And so, as Tim said, we want more sales and more turns. And so we’ve got incentives, and we’re going to spend more in marketing dollars on driving those sales. But I think in terms of, as Tim just said, in terms of whether inventory is an issue, you know, I I do not think that this is a major strategic issue for EZCORP.

It is growing, for good reason, yet, you know, it is an opportunity to sell more. In terms of margin, Tim, do you want to comment on that?

Tim Jagmans, Chief Financial Officer, EZ Corp: Yeah. I think just going back to purchases as well, the majority of purchases of the increase is really coming from jewelry and gold. People are coming into our store and not necessarily getting a loan on that gold, but actually selling that gold based on where the gold prices are. So, you know, you ask questions about not gonna guess where gold is, but gold is some of the reason that this is occurring. So that that plays into this margin as we go forward.

But we continue to improve pricing at the counter on how much we lend on both going back to the GM, on the GM items. And as we get as that improves, we loan better. And that as that happens, we also be able to sell better, which helps which does help margins.

Kyle Joseph, Analyst, Stephens: Got it. Very helpful. Thanks. And then just shifting over to Latin America, just kind of hoping for a little bit of a market update there. Last year or in recent years, you’ve seen impacts of minimum wage increases, particularly in Mexico.

In this quarter, it sounds like the redemption rate was really high and it’s never a bad thing to get paid back for a loan. But just talk about any sort of trends you’ve been seeing in those markets. And obviously, there’s more than one market in that segment.

Tim Jagmans, Chief Financial Officer, EZ Corp: That market has substantially increased in profitability, as you can see. So very excited about and continue to see more opportunities to improve the stores. We definitely focused when this team came together about four years ago, four and a half years ago, we did focus on The US driving where the dollars are, and we continue to try and put best practices across all geographies. We continue to see those improvements coming through in Latin America. I think the big focus that we’ve been talking to about is in Mexico on the gold.

You can see that we continue to increase the gold PLO, which continues to be a great driver of the business, including, obviously, the gold price increasing at the same time, has definitely helped us.

Lachlan Given, Chief Executive Officer, EZ Corp: Well, I think, Kyle, you can see on the inventory side, I think one of the analysts raised an issue last quarter that inventory was growing too quickly in Latin America. You can see this quarter how quickly you can fix that. You can see 19% sales growth on a same store basis in Latin America and inventory coming right back into balance. So I think they’re demonstrating down there that their operating practices have improved significantly, and you can see how quickly you can bring the business back into balance. So I think it’s a super exciting region.

As you say, we’re in a bunch of different countries, but we’re obviously the market leader in Guatemala by far, and that business is doing very well. But I’m particularly excited about the Mexican opportunity as well.

Kyle Joseph, Analyst, Stephens: Got it. Very helpful. Thanks for taking my questions.

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks, Matt.

Conference Operator: One moment for our next question. Our next question comes from Raj Charmu with Texas Capital Bank. Your line is open.

Raj Charmu, Analyst, Texas Capital Bank: Hi, thank you for taking my question. Solid results, congratulations. I just wanted to understand, I know you’ve already addressed this. The pipeline of acquisitions you say stays robust. Is it fair to assume you’re focused more on LatAm or international rather than The U.

S? And then any size you’re likely to do or one you wouldn’t do? So related questions on capital return would be to shareholders would be a priority and are dividends more in the cards or not? Could you give some color on that, please? Clarify.

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks. Yeah, of course, Raj. So let me start on the acquisition side. In terms of which region we’ve spoken about SMG already. That’s clearly a large opportunity for us that straddles both The US and Latin America.

So that’s the third largest pawnbroker in the region in which we operate, which I’ve already discussed. So that’s clearly an opportunity. And then in terms of size, look, we look at everything. Right? So this quarter, we did three one store acquisitions in The US.

So we’re looking at everything from one store to much bigger chains in Mexico. We’ve got the Max Pawn business too. We bought a pawn shop in Miami Beach this quarter. It’s the only pawn shop in Miami Beach. It’s relatively small in terms of size, but we’re really, really excited about that opportunity.

It’s the first time we’ve done anything in the luxury category outside of outside of Las Vegas. So we’re gonna, you know, we’re gonna see how that one goes, but we’re excited by that. But, you know, in Latin America, you’ve got everything from one store to, know, many chains that are over a 100 stores. So I think it’s it’s a pretty balanced pretty balanced view of the markets that we’re already in. We’re looking absolutely, we look at new markets, of course.

But I think there’s just so much to do in our existing markets. So I think it’s pretty balanced between The US and Latin America. In terms of your last question on dividends, look, obviously, would never say never because I think a board of directors has to consistently look at its capital allocation alternatives. But in terms of the dividend, I think it’s back to that same thing I said earlier, which is the size of our opportunity is so large. That I think we’re actually under the naked eye sees how much cash we’ve got.

But I think we’re actually undercapitalized for our mission. So I wouldn’t expect to see any dividends, notwithstanding that the board is always considering that. But I think we’re going to put our capital into high return scale opportunities across the world in pawnbroking because I think scale, as our competitor has shown, is the main game because, you your corporate costs don’t have to materially change as you scale. And so more stores means more EBITDA and more EBITDA margin. And with the opportunity set that we’ve got, I think that’s where we’re gonna put our capital.

Raj Charmu, Analyst, Texas Capital Bank: Got it. Thank you. Thank you for that. And just a follow on, the retail gross margins are up nicely in The US, down in LatAm. Any color there as to the reason, does it and also are your LTVs getting impacted in the business where the retail margins are up?

Lachlan Given, Chief Executive Officer, EZ Corp: Tim, you wanna take that?

Tim Jagmans, Chief Financial Officer, EZ Corp: Yeah. So we definitely yeah. We’re definitely moving LTVs all the time. You know, we’re looking at how much things are selling for, how much consumers are negotiating. And so we continually move we have a whole team that continually monitors every category and moves the prices and therefore the LTVs on what we lend.

So that you know, because we have thirty to ninety day loans, we can affect what we do very quickly. So that has helped that’s some of the reasons that’s helped the the margins in in the But obviously, gold and gold prices is also affecting things. Mexico, yeah, it does move around a little bit as we go along some quarters. Consumers are pushing a lot harder on negotiating, and other quarters are a little bit easier. But no, still running at relatively the same kind of margins as we’ve run before.

So I think nothing unusual.

Raj Charmu, Analyst, Texas Capital Bank: Got it. Thank you. And then just lastly, obviously a lot of the performance seems to be driven by the rise in gold prices. Is there any can you comment on any thoughts on the sensitivity of the scrapping revenues of to changes in gold prices, given gold has such a climb. If gold was to stabilize or go down, would do you think it seems to impact your operations?

Tim Jagmans, Chief Financial Officer, EZ Corp: Gold price is so it depends on when we increase the how much we lend on gold is really the the the effect that really has on the short term, and that’s really on and scrap is really the only the real short term number there. So margins on scrap, you know, if if gold stays steady in FY ’26, we’re not gonna see the margins that we’re making on on scrap as we have in the last quarter. But, you know, consumers do have a need for cash. And Right. You know, if they need $200 of cash today and they can bring in one gold chain, and next week, they still need $200 of cash, but the gold chain is only worth $100, they’re going to find another item in their house to get the $200.

So there’s you you can’t just take gold by itself and apply it across the business because there is a demand for cash that needs to be met. It doesn’t matter what the gold price is.

Raj Charmu, Analyst, Texas Capital Bank: Got it. Got it. So that’s very helpful. Thank you. Thank you for pointing that out.

And just lastly, LATAM is growing really nicely, but your competitors can’t seem to grow that segment that much. Any comments on the gap?

Lachlan Given, Chief Executive Officer, EZ Corp: I think everyone’s growing pretty well in Mexico and the rest of Latin America. I think it’s a very, very attractive market. Very large proportion of consumers don’t have access to a bank, and so bond broking is part of the financial fabric of society. So it’s a very well accepted form of consumer credit in Mexico and beyond. Look, I think it’s as I said earlier, we think that the size of the de novo opportunity is very large.

There is a huge acquisition pipeline in that region. And I think as our training and development programs improve, we’re teaching our teams in particularly in Mexico how to be better negotiators at the counter and how to do better on jewelry. And I think, you know, even this you know, the organic growth opportunity is still very significant as well. So look, we look at acquisitions down there a lot, obviously, and most of them are growing pretty well. So I think it’s an industry that’s growing.

It is a large part of society, particularly in Mexico and Guatemala. You’ve seen three quarters in a row of pretty phenomenal growth, and we’re excited about what we can still do. Perfect.

Raj Charmu, Analyst, Texas Capital Bank: Thank you so much. Again, great results, solid results, and I’ll take it offline. Thank you for answering my questions.

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks, Matt. We’ll talk to you later on. One

Conference Operator: moment for our next question. Our next question comes from Andrew Schutt with ROTH Capital Partners. Your line is open.

Andrew Schutt, Analyst, ROTH Capital Partners: Hey, good morning, guys. Congrats on the strong results and thanks for taking my questions. Lot of my questions have been answered, so kind of a high level one for me here. You guys posted another strong quarter across kind of growth metrics for your digitization efforts. Kind of where in the journey would you say you are for digitizing your storefronts?

And then secondly, maybe more importantly, how is that kind of allowing in store management to increase their operational efficiencies across the stores?

Lachlan Given, Chief Executive Officer, EZ Corp: Andrew, it’s a good question. I would say in terms of where we’re at on digitization is that we are still, notwithstanding two or three years of work on the rewards program, I still think we’re early. We’re only just now rolling out our browse online pick up in store program to all of our US stores, so that’s only sort of just happened where you can look at all of our inventory online. You still have to go into a store to buy it. That’s only just happened.

And that’s just The US only. And then we’ve got this instant quote tool that I mentioned earlier, where you can get an initial quote online for a product that you want to pawn. And that’s only being tested in San Antonio. So while we’ve got the easy app that’s been out there for a while, I would say to you it’s still quite early. The good news for Easy Corp shareholders is that pawnbroking is still fundamentally a store based business.

I think online pawnbroking is hard because you really do need that physical product to be stored in the store in order to be paid back. So I think we are fundamentally a physical business with digital channels that support that. So I think to your question on how does it support the team, look, we’ve got online extensions and online payments that absolutely help our store team so that they get off the phone and can help customers with a loan or can help them with a sale. So I think those digital alternatives are growing so fast and are really helpful for our store teams. I think the rewards program is digital, and that gives our store teams a great conversation tool to talk about their rewards points.

So look, I think the digital program is absolutely helping our store staff, but I would say it’s still quite early.

Tim Jagmans, Chief Financial Officer, EZ Corp: And if we look at it from a global perspective, we started quite a lot in The US, and The US is early, but in Latin America, we’ve rolled out extension layaways in Mexico, but it’s not in the rest of the countries yet. So this is really, really infancy in other countries that we operate. And so we’re very excited about that opportunity. I would say that some we think some of the reason that the layaway programs have been so successful for us and continue to grow is because we give the customers the ability to just pay that online. They don’t have to come into a store.

And so if you’re paying something over ten months and it’s your decision whether or not to pay, you can just do it online at a press of a button. We don’t have to come to a store, and I think that’s really helped our LiveWide program grow.

Andrew Schutt, Analyst, ROTH Capital Partners: Great. Well, really appreciate the color, and congrats again on the results.

Lachlan Given, Chief Executive Officer, EZ Corp: Thanks, Matt.

Conference Operator: I’m not showing any further questions at time. I’d like to turn the call back over to Lucky for any further remarks.

Lachlan Given, Chief Executive Officer, EZ Corp: Look, thank you, everyone, for joining the call. Again, I think this is it’s been a phenomenal quarter, which showcases what this platform can achieve. So I’m very grateful to our team for delivering such a strong quarter, and we’re excited about where we go from here. So thanks, everyone, for joining, and I’m sure we’re going to talk to a lot of you through the course of today, tomorrow, and the next few days. So thanks for joining, and we’ll talk soon.

Conference Operator: Thank you, ladies and gentlemen. This does conclude today’s presentation. You may now disconnect, and have a wonderful day.

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