EZPW - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to the EZCORP, First Quarter of Fiscal 2020 Earnings Conference 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 would now like to turn the conference over to Michael Kim, Investor Relations. Michael. ahead, go Please

Michael Kim

good and afternoon, you, everyone. Thank

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

conference like contain based slides forward-looking on statements expectations. performance statements expected current everyone Before for the company’s certain to the the and begin, well as company’s I’d that we are this operating call, regarding future as presentation These remind financial periods.

to by these results factors those implied And Actual and currency our future expressed number foreign the other and a differ with periods that the results and effect filed other on reports identified, fluctuations Commission. in discrete in basis the other statements from presented as unless materially Exchange forward-looking of for remove may discussed annual, and otherwise presentation materials, to quarterly Securities due of are or and items. risks are adjusted noted an

turn Mr. to to the over like I’d Now, call Stuart. Grimshaw. Stuart

Stuart Grimshaw

good and to Michael everyone. afternoon Thanks

briefly turn financial year. we first XXXX summarize the to on of for quarter little Now coming I'll out are the the positioning page four, the

Our we a this wavered customers meeting over clear intent haven’t years. many in for cash, has focus always need been and our

we remains basis. up with saw While the basis Latin adjusted an monthly XX on highlighted good across relatively yield in PLO by pawn PSC improvement flat X%, a charges year, America service improvement up

our customers. XX% up were in Latin position America sales of strong Merchandise the reflecting cash

little which impacted by will margins were of a inventory the However, movement later. Danny merchandise aged across touch on a quarter,

of and the on all cash After the the operating infantry, of and system. our uninterrupted this to aged continue moving now Mexico balances a negative U.S. and pleasingly the stores, quarter performance, building focus are at had will in point in We IT new service company. stores sale and particularly few quarters on aging efforts

further novo in the nine to first quarter, continue also on four a opened business with approximately focus construction. to XX We the America, plan Latin our the with expansion open de currency year. of under We in for

for the by the maintain opportunities will see to this merit continue acquisitive continue being do sought we in discipline not prices execution, regard. our While vendors, and to we capital

Lana the anticipate apple and have XXXX customers currently we in pawn we extend have integrated around average integrated debit with XXX on their and into stores this offering. store. currently Florida three in view to and with in Lana have pilot went the first end having running the without in loans quarter and Lana quarter, The this of live We stores to by be accounts AWScustomers Lana of X.X sign-up digitally minutes. having up

the subsequent Finally, to in we of position, continued of XXX,XXX activity shares the shares a as February and repurchased XXXX X. on December with XXX,XXX total repurchased have that capital now management

for Danny across pass to now it I’ll comments. further

Danny Chism

start want Stuart. in afternoon to year. approved I board Thanks share the Good update an by December last providing on program the everyone. repurchase of

the established investment to allows behalf shorten in even repurchase predetermined when First, be possession periods prior material prior closing period weeks our information. bank the a two on blackout to to XXbX-X may quarter month of we blackout using plan December, in window end non-public we and the from the in we a to shares which criteria

count. through December. XXX,XXX for us Class allowed in mentioned, million to approximately of shares outstanding repurchased we’ve share As stock common inception $X quarters three a From percent Stuart today, these actions of retiring of $X.X approximately program approximately million A our now of repurchase the

I XXbX-X a activity we’ll report plan only through reporting to But the the periods repurchase in provide this time program initiated quarter. end period. wanted December, update repurchase the of future as real just and In we

shareholder focused we will returns. believe highest we capital the deliver what remain to on allocating back Stepping

meet deliver and buybacks our on must capital While to to strategic new potential of an manner. development, Coupled to as we with criteria. see tax a efficient shareholders use continue to strict return store continue attractive evaluate and financial investment transactions opportunities, in we our capital acquisition return

Looking generation strength remain pawn positioned investment combined and new ahead, free loan fund the cash a balance store development, our spending reflecting of to growth strong with well we business. sheet the of flow

that to cash of trajectory activities with and be $XXX we point, total operating strong. To long hand, ended in the continues from term million quarter cash on the

operating reduced of fiscal the continue sales by management, For payables XXXX, we by bonuses the and discounts activities of to maximize certain was first prepayment working taxes capital as states. provided from net of quarter to payment cash refine impacted year-end

In adopted current Topic standards quarter, XXX. ASC as known also we accounting the the lease new

to While this $XXX million, mostly and had offset relates related the over no recognition, our Right just lease actual is terms. to us rent Asset $X.X statement, expense sooner to flows lease to The doesn't on rent sheet, almost leases totaling companies our million. change it the on impact did causes lease a generally flows, straight balance over Of any expense of than record material require liabilities Use the of evenly which recognized cash million recognize the Lease that line income difference cash so $XXX by

payable rent accounts balance the of Lease as re-classified Upon adoption of arising accrued recognition difference Asset. million of the and was from ASC-XXX, the the accumulated removed and line Right-Of-Use reduction expenses, $X.X a straight from

earnings results, on $XX.X at of $X.XX first to financial look the of of as a quarter XXXX diluted a fiscal reported for million a GAAP Taking loss prior quarter. more the basis per EBITDA doubled $X.XX in share versus we the than year

cash reached we $XX equity a mentioned I investee method in October. If our class charge settlement of portion a converters by you recording action anticipated will our that pretax million for recall, quarter last

and supporting amounted and technology will $X.X better of this related to a insights. under analysis loss $XXX,XXX results system quarter write of GAAP recorded also efficient, more in business business Net and affiliates. be intelligence related better down replacing tax to the current unconsolidated of benefit, our million we're costs net a equity that with include data

was non-cash figures. it tax as expense convertible continue foreign from relates to fluctuations, interest rate the to related for which taxes, of debt finally include our excluded quarter GAAP the currency And effective related converters $X the our are skewed Income effects From GAAP reported the to results Affiliates accordance and adjusted charge benefit the than equity Net in the cash Unconsolidated tax tax income or accounting with line. million by benefit in on the item, with the line settlement method rather provision

mid $X.XX share the to tax for XX% quarter adjusted last this diluted reported On XX% the basis, quarter’s rate reflective year, the an expect The I $X.XX converters excluding current first the range of remainder charge. compared low-to- for cash we fiscal more to continue the is adjusted of quarter earnings per of year.

a digital corporate in to separate revenues. Lana, previously platform, broken was segment our now as produce but is begins it our discreet out included as expense,

our results prior year adjusted on year-over-year. comparable no As longer current same for year basis they're so earnings, recast adjust we’ve the the Lana,

While best. doing experience, service to our segment, customers via loan make Lana don't we by remote Lana the rates subjective mobile enabling at charge receive anticipate device, would will any extensions redemption as Pawn we communications customers so revenues be improve loan and plan overall incremental pawn to allocate and yields to

discrete pawn segment, segment benefits Lana expenses. revenues all to any Lana related the we’ll report revenues in pawn the the in and remain While U.S. will Lana

stores late introduced quarter As fiscal of the the Florida to as shown the number release, quarter. was of select XXXX earnings revenue Lana was a in in the impact first in minimal in

discreet will expect in Looking fiscal revenues this loss to ahead, U.S. be show platforms of and to segment to Lana we the volume. take continue most pawn year a included the throughout as will for time build some benefit

beyond in mentioned Early existing been continue base it's as results as as introduced. to the locations and and customer adoption as have customer we Stuart states, throughout continue roll the additional well to been We'll encouraging stores year. this our where

adjusted X% in related Total slide record highlights in five, we the sales, merchandise to in X% increase X% high growth produced scrap uptick year-over-year, sales Turning a a grew reflecting on revenues and revenues. PSC. pawn X%

in strong, of in portfolio. the the PSC XX% pawn particularly and in growth sales loan higher loan an Revenues yields overall America Latin with merchandise up growth quality outpacing reflecting XX% with PLO, increase were

what few higher last Mexico social quarter, loan demand, cash. continue somewhat quarter suppress as as discussed in balance Latin Similar the loan flush we've our customers rapid the growth the we sales experienced years was below by offset welfare programs to seen the last the with to last growth America over more

merchandise cash and flows. seen the on Latin the pressure efforts U.S. margins cash-to-cash continued increasing reduce optimize sales in and cycle, aged America As inventory overall to expected, free accelerate the both reflect our levels inventory

on the from stores new On EBITDA impact America the and slide margins Latin basis. in higher you a drag down can see expenses consolidated of corporate margins, six, with and lower

the revenues, a down expense from expanded While U.S. management. effective net pawn was bit slightly EBITDA EBITDA reflecting margin lower

stores EPS five to to we pressure breakeven one six to continues capital. continue while America I invested term EBITDA short earnings, America, Latin returns would growth more expect those on in ramp. their in stores openings term which and novo Latin margins some full-ramp store in in to at XX new de those short this reach mirror EBITDA of Latin Typically on point years, margins mature reach possible America stores, at EBITDA, accelerate we in and represent new the store three highest months As expect pressure to until

balances. yield a modest acquisitions stores about lower consolidated as the year-over-year outstanding to same-store was mostly loans new decline loan now loan quality year-over-year, were despite the PSE portfolio. a growth or offset flat That of financial said, quarter, a average Pending function reflecting the PLO seven. PLO slide on pawn Turning essentially in with highlights up the of from by consolidated was growth revenues the for higher and

up to Ongoing XX% enhance basis growth in merchandise year merchandise sales were X%. sequential down basis, efforts year-over-year. quarter, X% in XX% a quarter. On the from the XXX current improved margins sales impacted approximately same-store inventory prior to Merchandise fourth of margins XXXX fiscal points from quarter management with the of

to the loan is reduced loan Notably, yields and merchandise Optimizing system point tuning general we've time. of States aged inventory year-over-year. to sales XX% by in decisions drive sale United pawn gross higher fine the through expected over value and profits successfully

ago. profits scrapping prices a a scrap sales, in on XX% sales. approached to a quarter year margins increased and Turning in the are than XX% prior compared diamond lower reduction in quarter, sales, higher X% in far XX% jewelry Consolidated reflecting which current increase scrap gold fetching year scrap prices the the gross

broader prior remain operations increase prices elevated, X% general store year investors’ managed; X% front, the count. favorable uncertainty to reflecting despite expenses were the regarding well One in gold total market. Prevailing expense a the

new These service point-of-sale and in scalability The availability, efforts primarily a to resulted sale cloud resulted new to the U.S. $X.X the and support million system transition corporate implementation of of the point improvements provider. POSX significant spike and the performance in successful expense in from across Mexico. investments

new enhancements staff environment, quarter, lower corporate fees severance and expenses Latin some future reflects lease in increase reflect services Corporate expense we periods labor as would since as year Both well also an the America adoption strengthen the expect of prior the that the and accounting expense to costs to through control to made IT auto-related in operations the benefit costs. quarter standard. ongoing professional related

December in to million it $X.X million to its While Digital Ventures. XXXX, began platform the depreciation the was quarters just professional on discrete year year future of that prior Boston December remain increase Lana prior conducted segment expenses minimal and in amortization from Group's in the fees $X.X day platform digital work Lana the as related improved segment quarter exploratory introduced and will introduced in the quarter. only revenues the The Consulting current initial included was as in XXXX. with loss Depreciation

excited to provide platform our We're a about offerings. from the product and platform pleased remain year. to customer conception in can a this We also the to fully digital enhancements functional have initial taken service only

a the U.S the and were pawn the unchanged quarter for at Pawn also $XX basis both balances slide relatively of Turning eight, on with essentially on PSC first for year-over-year average to fiscal loan XXXX. million flat ending highlights quarter

this stands at basis last soften Merchandise down discounting the sales aged to XX% in point the XXX merchandise incremental general aged while year. given to X% throughout continue merchandise. this reduce I of margins at move of Aged related to inventory, efforts X% points from to X% inventory now meaningfully U.S. much year. year-over-year, expect were up

pawn, While in well period. down most was them were the U.S. reflecting year to segment sales flat margins, expenses of year-over-year, EBITDA managed prior operating essentially lower

America Latin was strong. performance on nine, on financial Focusing slide

social a yields. While the welfare ending year the significantly was of PLO with in headwind, remaining a essentially higher an the X% Mexico was PSC up for compared quarter average flat, to period bit programs on prior

points a into collateral, up value likelihood XX.X% year. the of on the based from XX monthly For The customer. impact the fiscal the take of basis lending the the includes generated with designed prior yield POSX to segment redemptions account of not of quarter guidance, improvement XX.X% this first but also only quarter loan last the loan experience

The amounts loans. loan to result enhanced lending and not necessarily increase to lower risk but is in in loans rather to customers overall more more generous loan to their guidance customers the expected redeem an balance, likely higher

profit sales quarter. inventory were year versus XXX up ago on loan-to-value and we margins gross related the focused meaningfully as XX%, optimize merchandise sales profits. up adjusting higher the sales, to and merchandise Scrap same sales were margins remain XX%, year-over-year decline Further, with store the basis points gross all ratios

in and requirements inflation year-over-year, new driven drag. slightly well by For wages was rent new growth from and store as store higher the segment licensing storefront as quarter, primarily EBITDA down

improving forward, term in in focused EBITDA operating we we Going on pressure store as expect and on remain Latin short margins accelerate efficiencies, openings fiscal oversight continued XXXX. we while new America some

We've prior year year. in quarter opened since stores in of a XX about and recent those opened stores quarter, open total fiscal closed new plan new one four full We to most XX store. the the with the of

over Finally, through likely flow on will while to management PLO inventory on we an term, near provide ongoing PSE trends free to said, returns on efforts Mexico term That optimize and move we continue and our I focused update earning driving the impact assets margins. programs sales time. year. on merchandise growing welfare higher financial to social The cash remain want in weigh as trajectories in short the

growth More higher and lending loan believe lending system PSC revenues, our point-of-sale enhance customer shareholder This, to improve to technology, with service the a rates, returns. of on combined enhance and history business prospects. guidance, continuing we to are specifically, and redemption customer fully new rollout we invest term the based system share more buybacks leverage our in continue net will and yields, decisions driving to specific distribution long expected

the With open we’ll that, call questions. for up

Operator

Your Instructions] question John [Operator first Jefferies. from you. Thank comes Hecht from

Your open. line is

John Hecht

talking for questions. guys Thanks my

forward. guess I talked you Danny, cost about basic savings First, modeling labor some questions. going

quarter So a you like a aspect can know on kind give you about, the I’m of say wondering, quarterly us of of basis. details

increase there's can quantify Second, lease the you of lease on to be expense in maybe the change D&A will account then going any Lana, mentioned quarterly accruals, you an and that?

Danny Chism

savings quantified want not going some particularly savings put the change, little Yeah, well some number America. I of so to a in in that wouldn't as I’ve the expected in severance. but store from a in forward, would or huge the on factor wouldn’t bit corporate, I expect both expense, Latin on as a

up about would we a million, or On quarter. what, year that into on XX,XXX further now. so only the depreciation, change had development in on putting expect year. that obviously Lana X as quarter about put through based ended $X.X per and I’d of what we We Over million, think $X I term right this there if we’re well come million about capital million to having that last that – $X.X a be depreciation $X.X do

the the primarily I be on up asset wouldn't expect balance that's sheet. pattern bit, to That's the an then impact a the costs, sheet liability. that for on forward. really And change just will but income the more going There balance grossing little lease and

payable of asset that the other, million see and was and out also right of in accrued at – was a – liabilities, I think when movement Hey, there you a about mentioned account the use a the leases. there will the into look I of reduction accounts you $X.X

John Hecht

– U.S. in questions. if had What the – handy is me Again, Okay, you. both that's you initially, I Latin but so helpful, know you America? presentation PLO same and store forgive it a the couple very you of thank do and have in

Stuart Grimshaw

That Yeah, bit constant GAAP, down currency to same was was a a was Latin X% also – the down up and U.S. store down was in but PLO PLO X%. in adjusted bit. store same America was in

John Hecht

up – you few know sounds about have your we when but a know know What of to aged inventory, gross parts forth. so so of you stores focused One then reducing pace thank year like based rid do your margins. or there's it you with on margin we so think some bottomed? LatAm on you of of already focus bottom perspective and okay moving in aged inventory it and and talking then of very you're on the might this your Yeah, ramping much. is you And the forth, know also about, respect getting

Stuart Grimshaw

margin and moving We to indicated reduction, as buckets got that was try best got we'd we with and the balance yet. as the We selling much as inventory, to as quickly which a XX% moment the as of the bit get move the of but comfortable, we the to we recycle mix. fresh we've think real approach cash want to the focus fresh Mexico haven’t the balanced a we ratio. always can which can. bottomed to – buckets too buckets we're the maintain as a and XX%, where the U.S. we as giving to were like probably balance both back first removing that the as we will we've inventory in management, as soon view we aged not simple can, into well is we towards margin back a At the inventory but and It's

John Hecht

last question is Okay, and then back. your buy

shareholders any is back good. buy of your think amount think I would

change the of which amount, greater a and or but a about component a of portion periods [ph] focus as that? usage greater and bit the small I that very still it's do require rules you think the initiated or buyback, guys prioritization should how the lot expect a know You your in we a overall, of of little of

Stuart Grimshaw

said pretty coming anything would, and sort doing where mean pretty per market annum linear we’re a know track committed we’d we on thought on Well, than basis. much with a you – be to we of $XX over million we've fortunate else year up, but much million thought the get subject a would. into pattern earlier I to we on $XX years we we’re the to three to it

John Hecht

thank alright you guys. Okay,

Operator

next Your Greg Instructions] Sidoti. [Operator comes Pendy question from from

opened. is line Your

Greg Pendy

my Hey guys, question. thanks for taking

went inventory, on you I it to aged through I portion or guess you from from mainly color us us just any you give is? X%. breakdown where bit working of of little a basis you electronics the what aged a said the on X% are Just know think year-over-year can highest give Can on you the categories inventory know of we a

Stuart Grimshaw

of we Yes, where the LCDs area – of actually its while, quite right to the have the category highest for where obsolescence at in those price but taking looking sort that on that see the move to a that highest, and plasmas, we particularly is seen at we is obsolescence few a it’s product points it eligible inventory. have liquidated I a finally had in actually and haven’t which we’re technological the basis

Greg Pendy

hours Okay, that’s buy window blackout of the from I a on guess then it the to Is is I weeks. on you a changes, after it – of hours mentioned just, month two Danny XX period XX reporting? think went it I helpful. And back sort

Danny Chism

put open, it in the would still we're plan December. that to under in window for trading although the we place officially be So XXbX-X

that. under up we're So parameters currently. in within be it hits purchasing assuming market that the we plan, the could still still We set

Greg Pendy

Thank helpful. very Okay, you.

Stuart Grimshaw

Greg. Thanks

Operator

remarks. over call closing questions turn further at time. the I’d to Stuart There like this are no to for Grimshaw back

Stuart Grimshaw

next we Thanks around Thanks questions tuning of conversations. in. be the and very forward again. everyone thanks obviously days the couple and to once look those over much, for to answer We’ll

Operator

you this participating, Ladies call. concludes and today's Thank gentlemen, disconnect. may conference now you for

EZCORP (EZPW) 3 Feb 202020 Q1 Earnings call transcript