EZPW - Earnings call transcript Q3 2021

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

Operator

Good morning, ladies and gentlemen. Welcome to the EZCORP Third Quarter Fiscal 2021 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 maybe recorded. turn over to Mr. like now the to conference I'd Michael Relations. Keim, Investor Michael. ahead, go Please

Michael Keim

morning, Thank you, everyone. and good

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

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

I'd the to over to like Chief Officer, Mr. Kulas. Jason? Now Executive call Jason EZCORP's turn

Jason Kulas

morning, enjoy start their and to lives. stating and everyone. it Michael, appropriate customers' thought short-term to our serve good Thanks, EZCORP purpose. be them helping this live to would by call exist morning's We our We cash needs,

motivated purpose, who message we customers, stakeholders our talk driven resonates and with be our lot ties by One in message. externally. pawn with team And one of strategy one which environment having passion that that of are best importance and to the communities and it. live, all in our communicates are because internally about We a to We both team constituents. investors customers' the diverse members, internally their a for deserve our families, a message

business meaningful out another coming to a quarter of up north of for the on period position revenue highest July. our third marked key in since PLO, ago. the is pawn basis and $XXX laid earnings pandemic. key ending have of our the core to initiatives power out and the the end further year through million, that pandemic. of to progress we the saw The at durable sequential balance mid-April June against quarter in of The reached driver strategic growth XX% growth the beginning XX% compared and PLO continued the and quarter, began we At growth a

service coming last the pawn that of higher volumes the Looking sales point pawn sales on stimulus quarters, bodes positive in peak year pandemic revenue PLO Merchandise to year. in due levels the starting from ahead, natural given the fees. and for related the business payments charges for last below lag originations impact growth between well are in exists

expense gross was and improved remain management the sales inventory merchandise including continued levels as versus gross this liquid ratios sheet. cost store accelerating optimizing balance the volumes rebuild conjunction transaction meaningful we levels at fiscal year metrics, We quarter, inventory profit turnover essentially Furthermore, focused are increasingly flat inventory on operating savings in declining on realize our and aged year ago to strong our are rates, margins. in track leveraging cost However, reflecting with private expanding sharply strength level.

acquired Houston, We the operate the locations Latin Latin in in count completed quarter. our and Mexico, XX Beyond stores across in stores Texas terms funding market opened and of during de novo acquisition XXX store we acquisition stores, America accelerating with XX% now pawn X,XXX of demand, of stores those America. date largest four the in to

profitable of operations the in to close XX areas drive business we to America, our Latin decision our reflecting focus where finalized on ongoing can recently also stores, Peru consisting We our efforts growth.

We we done, strengthening remain particularly there have While be core we've the our is in and across the through progress the and trajectory strategic the and focused encouraged ongoing pawn America, confident needs our work our remain on differentiated of U.S. the made meeting merchandise enhance and affordable platform built pandemic. further going recycled our initiatives will by Latin and we in for much forward. business, pace are still customers' cash to and growth preowned

a members more relationships of over go At Slide performance shown As next quarter our presentations, long-term high into components and few customers, underlying the slides. I the some will value. Tim together greater our financial our shareholder deliver or team and strategic sustainable a all our road growth of drive prior detail in of and recent with is enhance X the level, milestones strong graphical work to pieces And map. on puzzle representation of and

may have highlighting in can our pawn of our metrics. that is the is core be posts are, noticed to our saved of and economy role media the You when we social buy component This to we in are financial instead continue who natural our and we new. that the will along resources something with item customer a highlight, it an which in proposition buying shop value circular business, rest of our you

for taxes On Slide to X. reported a $X.XX a third offset to sales on $X.XX with an of per adjusted prior improved consistent strong profit fiscal up quarter Turning included compared the financial negative higher service charges higher year Key by modestly sales. was for year-over-year, was XXXX, X% the loss Net basis, quarter for driven before themes margins making the of as and EPS, income loss revenue of lower share quarter. up we by taxes.

transitory from of XXXX, totaled the customers the XXX% XX% of basis fiscal ended $XXX at EBITDA on Credit growth in a XX% year-over-year Child within Tax million PLO $XX and quarter result PSC. quarter, for higher liquidity million, expansion payments. up with due the to up adjusted forward July, despite the further $X.X as pull a and step-up million of in While for

business. the of side retail the to Turning

temporarily gross profit on year sales merchandise flat high were essentially year-over-year While payments basis. from was down propped were and volumes by a sales inventories, levels stimulus that prior up

the and ratios reached aged to higher XX management continues inventory rates remain realize For we to related $XX merchandise cost to expenses, are more ago. transaction as XXXX, remains key our XX%, margins compared G&A on and trend mostly on to sales merchandise than now reflecting double-digit lower ratios operating negligible general differentiating just fiscal track months efforts. expense rebuilds. we quarter, turnover finally, continued for And On reductions a store factor. spend, of million balance sheet remain focused optimizing activity Inventory

a and a productivity year on of fund at no quarter flexibility G&A X two XX% As at optimization novo ample prior X% a savings ongoing a growth the X%. expenses on or X% quarter, basis cost costs On and basis. maturities, liquidity near-term openings. $XXX we on end year-to-date efforts. in $X.X mentioned closed down PLO operating still on decreased by million store Slide were focuses compared de quarter with over costs. cash acquisitions debt hand during store further sequential year-over-year and XX% declined enhance resulting earlier, quarter looking for growth. by quarter, we to continue our when to million Store the and for fiscal accelerating we to the maintain year-to-date And and costs third the basis,

rebound. our to trend as related So quarter we fourth in higher, continues anticipate transactional starting do expenses to fiscal demand

productivity. enhancing benchmarking and implemented improving initiatives launching surveys, member technology campaigns Slide X. continued to talent for enhance Team through recently walk plans, and introducing quarter, focus efficiency, initiatives. specific And operations and the included on recruitment IT succession under highlights process inclusion and Next a on we modernization

do Turning for X. than X% of efforts payments more through made growth to in Slide Innovation quarter. our customers. sustainable our a extensions with Online XXX,XXX online driver key total the payments, pawn Lana accounted digital to of is our extension channel initiatives and more for

Mexico. payments In capabilities online we addition, early last are of online the quarter, layaway were and stages payment bringing over in X,XXX processed to

previously Officer. quarter, like With new and XX% including remain driven program finally, focused quarters to and by online launching also to Tim on mentioned. loyalty two opening store Financial Tim? Jugmans, acquisition retention our stores. over next grew initiatives, the I'd our four that, turn select searchable footprint a of and we Chief for And several inventories service, the the customer locations, adding the in call and acquisitions our as by We

Tim Jugmans

Thanks, Jason.

quarter year-over-year related to of currency to quarters two of quarter we fiscal $X.XX on basis third prior our Consistent PLO $X.XX prior financial per the per and third for third adding XX% Starting fiscal results debt year adjusted the the loss diluted and third $XXX noncash practice up interest ended period for on pre-pandemic convertible X. diluted share we to with back GAAP $X.XX at of of for our expense a the XXXX, limited to reported standard a the only quarter. a fiscal impacts. of the basis, a $X.XX loss million, compared with basis were share reported adjustments year's fiscal loss XXXX. to level for in -- share On consolidated loss of the diluted our down a For constant quarter quarter quarter. of Slide diluted year XXXX, compared the compared on a XX% an for mostly per

the their aged Steady gross volumes, a Following stronger profit about XX% to said, a of the Merchandise ago. X% XXXX. decline end earning by with offset and reduced merchandise return prior at continued and sales sales That by the driven inventory on quarter quarter up Xx, peak XXX was a ago of third growth improved lower expanded at from for quarter down sales and prior ratio just the basis levels with of to from gross XX% ago average versus velocity. sales pandemic by profit XX% general to profit turnover higher revenue of aged the ratio year. levels for the higher from primarily flat, XXX% fiscal versus inventory year GM XXX% was contributed the Merchandise total higher asset sales sales year third the suit, were fiscal merchandise points Inventory quarter, of inventory PLO. PSC gross margins. year year the inventory levels driven by essentially quarter, lower much to

EBITDA $XX ongoing quarter our of consolidated revenues focus more million PSC than Finally, in and million on the XXXX controls. third $X.X from of higher fiscal expense a as doubled result of

driven and U.S. by year-over-year operating Turning focused mostly a rose to absence our pawn on Pawn payments. stimulus model on Slide PLO of the basis, our government Segment XX. XX% operations

levels, PLO only Importantly, to the trend closer PLO end to in XXXX. levels point quarter compared same XX% to U.S. continue pre-COVID down with

the For PSC X% higher by PLO. average was up quarter, third driven year-over-year,

margins. merchandise quarter profit sales The down was gross On the a payments. of down higher were fiscal retail XXX versus to More basis lower as by the of expanded when sales X% year inflated business, margin lesser prior volumes XXXX XX% gross points were sales by sales stimulus side were the merchandise the third offset favorably, levels by year-over-year quarter.

inventory a just of and Aged effective decline for of continues total management. merchandise U.S. the X% a merchandise more X% year at of end inventory general quarter total ago. the general Lastly, in versus function inventory to accounted

prior the lower lower X% bottom U.S. XX down acquisition Mexico. Pawn compared year-over-year, our lower the Efectivo pawn of to focuses well mostly Slide Segment partially line. stronger revenue, expenses by in same-store recent Store ago operations. down level, year costs. X% the grew was labor EBITDA offset compared PLO Apoyo growth Turning to American XX% were with net Latin quarter, to a as reflecting the expenses. year Cash to on as related

a the general XX% on related sharp improved higher quarter, a prior versus specifically, quarter PLO entire XX% year's aged inventory. up were up GM year with year expenses PSC gross average merchandise the accelerating much above increased improved Merchandise than high ago. was year-over-year, As being for redemption increase year merchandise to for COVID reflecting inventory EBITDA a X% combined stores expenses. PSC end, sales margins, with quarter from and higher Store sales of rate. just an function was profit, to total quarter, million favorable yield sales partially and profit the at up inventory turnover the a X% inventory More less represent $X.X PLO aged gross up a were breakeven GM from for ago XX% to compared offset on opened more of quarter tricking result, merchandise impact. last XX%, the while decline by of

fourth I XXXX. the on wanted quarter some provide of Finally, perspective fiscal to

demand levels. pawn down PLO volumes mentioned XXXX increase and PLO have now earlier, As trends, favorable July, mid-April, team. to only focused continued from we continued since levels have In more to and transaction accelerating see XX% it reflecting a is rise,

transitory The nature. America additional line be lower rises. accelerating in for recently continue the However, and headwinds PSC though stores Child near-term to lag credits as tempered due to macroeconomic we enacted backdrops margins Also, in Latin tax levels. the increased in activity the to Tax lending related rising be more cases activity, the to the and normalizing of these across light merchandise likely represent will in as pawn and COVID in costs U.S. inventory expect transaction near-term PLO Credits impact bottom we would somewhat as well expect store with growth operating challenging

step-up with for equal. back the will of gross power of in all as fourth range. consistent to we over discounting be levels adjusted EPS the for expect a standard at it high turn together, a XXXX, quarter While few profit profitability, we sales remain all else the end do closing Jason resumption ahead the anticipate margin and quarter meaningful will net impact to now comments. fiscal Putting practice in and I historical earnings third will income the of it

Jason Kulas

core In metrics, Thank generating progress growth, results third long-term Tim. we sustainable path across reinforcing quarter operating with are you, progress. the pleased that made summary, of down with we've the

dedication far directly thus attributable our for enthusiasm accomplishments the to our success. for of team and Their be service execution of all as the members. backbone ongoing customer Our and serves can passion

this and opportunity thank contributions. hard them take to again work like for I'd all So of to their

the We will continue translate past taken steps into financial year stronger expect have performance. that to plus the over we

in should And recent continue to We PLO that, better in forward drive with the and optimization and to increase. in as open said transaction results we'll our continues growth for questions. pawn to management activity call have expense progress and our Operator? we efforts future to inventory ongoing As continuing up related PSC quarters. quarters, the look discuss

Operator

John Instructions] first from Hecht question We'll [Operator Jefferies. our with take

John Hecht

is speaking, wondering at be of to just this comment transitory generally sense trying the I'm very [indiscernible] a nature guys recovery near-term on it model? there the is point? You linear did [indiscernible] kind a but Or PLO the in get to going of

Jason Kulas

absolutely. Yes, Thanks, John.

faster. believe give last seeing talked things do we it's one that quarter is been we the is So we've the transitory. we'll of about balance example is the And

the that and see growth forward And we're So coming, the quick stores more of to will on it. the saw we that recovery temporary a expect be of of headwinds there. demand however expect going time. with forward. the linear. impact expect transitory, and to when round fairly be to of delta Credits, through new incremental that a of But continue have to first want going Obviously, little on we that a to the then that, back say With we kind watching all through, Tax closely that round pawn we stimulus you bit of some do -- that we bounce. or And the in each in saw comes Child checks came quicker pullback of comes where pull and with pretty expansion a our variant is

growth at mid-April That really low we and from that quarter, continued hitting May, June. the April, July part as it's look of now, through there. in then point we saw Tim well. throughout continued latter the in you the talked growth the through to starting If through about said, And as build

that how fairly here that the a The we do follow see we going to PLO. happy pretty of little we're in going there. service know charges story short expect in a be of PSC, and linear lag pawn the that know We forward. there, But what's on bit stop to So ends. growth

John Hecht

levels, think you that where toward behavior me, will they've level the sustaining been balances than been you normalize there margins yes, pre-COVID customer do toward of -- excuse back Or that has sustained? margins, end high. ranges, well? go talked your you very your as levels pre-COVID high will -- as in -- about then of Do long-term higher think be or a And high to kind them at you change and Okay. back

Jason Kulas

clear been of the will, the up, at We kinds day up help way you of we'll reflective it a that zero has without to the we of that us but margins we feel place place going to those age, inventory place we it's range. we've way store -- we're see end and of the now to right end that business think end that high going things, end we like the think Because going into in they positive operating really that maintaining of letting that that acknowledge historical important that we been sustain on kind we'll we now. margins relative at we in up sales that our a the are that XX industry turning aren't because velocity, level, roll operate that's higher have the inventory, focused is to still historically really, forward. where The metrics but where historically we're

John Hecht

then pipeline pretty give And you and have geographical can stands as comments just us Okay. the on active you acquisition it of some acquiring. the Maybe guys been that? today disposition

Jason Kulas

is obviously, M&A a innovation timing, transactions we're own life -- have all never hit. strong that pleased closing long success with own, some some you period to team is as our core on would the hard to and their time exactly and and growth thing progress. of of see that been. work going able they strategy know their It's pieces M&A and of when really they I that the our is The it's and say acquisitions, for Yes. pipeline by had ever take they're these of to a to after one see we've be the

have those sure to to on want the we XX is focused the Right we're we're integrate U.S., acquisition But well. that stores very hope on make would there. time, and on it. now, we continue XXX strong we but some stays Mexico our we and and continue that, to project, make that of over successfully, team as able focused make sure to announced in sure to in to and pipeline success difficult to they're M&A just top we'll So of continuing be

Operator

Pendy [Operator Instructions] We'll go next Sidoti. with to Greg

Greg Pendy

with quick, Just Tax moving -- the a to lot real of the guidance Child understand parts Credit. Care XQ trying just and the

but refund bit to a what say? trying know I -- out bit, that understand trying near-term of in that. pain, just And to little little Are are seasonality decline that bit see we're maybe might happens looking think that but PLO So March I less tax lower in a quarter you fair? but maybe by season, a tax sales. the offset little Is you during refund, merchandise

Jason Kulas

fair season. a definitely Credits definitely statement. tax We Tax Child obviously, going come the would during come -- not early, that they they're see as to That's

think we So bit that would little there's a of And say. transitionary that's to a nature there. a fair be why statement

Greg Pendy

maintain seems Okay. -- high of this, to I be then to position. trying you I Great. want that million as know $XXX question the But on mean, believe, And And just I in loans PLO company, up, million understand, to supported pawn biggest the about to one fiscal cash around pick of with $XXX this XXXX, maybe a liquidity. book trying just cash. in

this levels And know about even given you are cash acquisitions, done how thinking moderate buybacks maybe Your some amount, just a the at I you've but double that. I cash position? mean, level? stock

Jason Kulas

like would is part to of that discussions way that sheet. a had is maximize when At value. we like dollar impacts pandemic. about that level, we about to address sure maintain to And we fact really we put very we We're questions. making strong regarding sort also, We've work Board we've put incremental the cleared continue set the those work committed to to making We're in really in we that what foundation. engage a the those looks once discussions of every bullish sure XXXX business. the And again balance for shareholder kinds a very we'll strong of feel of talk the

when We've opportunities. produces those come the to some of is levels a ahead business growth that we like and flow, need we time, gets liquidity year cash seen going we through, PLO that to up But seen before a it performance feel the to get strong the some rebuild need of At the take that acquisition We've seeing free pawn book. we forward. really discussions. particularly set we our we're us. for business have same there expect we up lot that the of of Now

interesting time. there be discussions quite at that just will have We're those yet. So not to

Greg Pendy

some Okay. that think store. stores And I'm some If that, then just you correct, the counters if one into to that now? Any you're putting the one. in I'm not mistaken, final counters in stores out I right at testing were the insights monitor traffic? Is

Jason Kulas

talk helpful real collect be us, the and business. monitor before to We've across seeing about counters going It's we're those those and campaigns to us. Yes. it. traffic what comparisons in in we bringing side we'll days sequentially, certain the be marketing for and the not Yes. to completely we're of incrementally, to traffic able measure early very have be us, of and the doing guess, excited kinds process most of on able that helpful but doing U.S. that's be data. some we the that That's social the comparisons. things to And we're be that still America. business to year-over-year the what efforts the already data will out was excited to for able will for digital where about after about advantage And and that But and of rolled a these think, we're Latin to we're media start see

Operator

It right. time. have questions no like this All at looks further we

over So it turn any back let remarks. our closing to speakers additional me for or

Jason Kulas

forward We future great about progress a everyone has morning. thanks, look to Hope talk to you, your and quarters. time in our interest everyone, Thank continuing and this for day.

Operator

for thank their participation. call. today's We conclude does That everyone

may now You disconnect.

EZCORP (EZPW) 8 Aug 212021 Q3 Earnings call transcript