EZPW - Earnings call 2 2023

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Operator

Good morning, ladies and gentlemen. Welcome to the EZCORP Second Quarter Fiscal 2023 Earnings Call. [Operator Instructions] As a reminder, this call may be recorded. I'd now like to turn the conference over to Jean Marie Young, Investor Relations with Three Part Advisors. Please go ahead, Jean.

Jean Young

morning, good and you, everyone. Thank

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

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

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

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

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

Lachlan Given

Thanks, Jean, morning, and everyone. good

team's loans were $XXX.X on plan results was quarter same-store of XX%, execution business, second again merchandise sales. and record with yielded X% strong pawn financial our Our our and the has key of up PLO, up driver merchandise XX%, million, sales outstanding strategic a consistent basis.

to more way sustainable to The for our core with a environmentally continues increased macroeconomic products environment providing demand shop. support consumers and services, conscious including

and continues excel respect and Our team's to results. operating to relentless strong we serving commitment our financial and to passion in with drive all customers operationally our that do

Beginning on Slide X.

inflationary with continues a the worldwide. and our We economic leader U.S. and The adjacent businesses, footprint with the operate convenient responsible experience in expanding pressures stores be customer challenge recycled and strategic macroeconomic global driving increased for and in most pawnbroking retail. pawn customers We a environment through continuous serve. strive base the alternatives, our for be in investments goods. positively are and for We to to are impacting Latin in demand America geographic environmentally X,XXX loans. seeking secondhand uncertainty money environment which best, innovation, increased while communities for we and driving Consumers value our demand the pre-owned

Moving on to X. Slide

Our team proprietary an investing our recruitment, committed footprint, that and POS incentivization. a well-positioned so We in customer and retention we offer so outstanding options to success, are provide for system, drives program, attractive a loyalty platform, best the differentiated engaged a and our service, we can store market-leading customers. digital

X operate sheet and ample loans and tenured provide economic various strong cycles. Slide goals. gives we've most to the progressed We continue the on X-year our find through to us them. retain to we liquidity shows pawn which in in the productive, across industry, ways we and Our passionate, how we motivate balance regions team have believe committed strategic

points-based and million our to intense team less drives which across success at Our continue that to Customers all We training team do. our employee and across focus both all program, our as and than X% a on we up loyalty in-store recognition continuously result of to our sign experience improve grown vacancies for strive customer X.X member has geographies. level customers.

are In an we experience. shopping Mexico, the to even retail showrooms better improving offer

quarter, record revenue an QX driver the themes was significant to second up in than paydown which Turning and this the year-over-year, expected X%. increase for Total XX% the for XX%. the most $XX EBITDA with in revenue on million, was for $XXX.X was PSC. was a financial X. Taxes was million XX% less key Slide our year. associated and of quarter up up PLO, earnings, quarter,

and due the and the levels closer Cash the the balance during increased quarter tax the to of down to bring expected on get increased inventory are paydown on over better sheet sales merchandise season. United first focused LatAm We in execution PLO seen in aged States. to

Slide On margins by about last Recently, March versus ultimately the Slide X, months and months XX strengthening we XX% was inflationary to XXXX, focusing March our ending earnings. talk XXXX last flattened margin technology due drive On XX% in growth. the driving on to XX EBITDA the ending pressures. for with X, EBITDA people the U.S. core

of efficiency. focused X%, inclusion strategies believe of on that engaged, I We our improve we are improving mentioned as recruiting team that vacancy industry earlier. and leading recruitment, technology processes incentivization bench that is and ensure process in to a team strength in field to implementing and highly less retention, rate than our are the We resulted the

stability are upgrades system and improving our network digital complete are supporting and store and Our initiatives.

are We and capabilities. continue e-commerce our to technology invest out building in

X-year Slide X, execute our strategy, On to and growth of our pillar the we continue is plans. third innovation and

Program EZ+ X.X over enrolled customers Our Loyalty of last million an has versus X.X quarter, over million XX%. increase

$X.X collected up quarter, also in We million from XXXX. payments $XX.X million quarter this of online second fiscal the

entries at XX,XXX X saw Improving XXX base in acquiring customer customer Loyalty engaging to key and promotion the Our strategy. members and our Point the EZ+ aimed Million the growing and remain experience winners. U.S. Giveaway

in visits Pawn Pawn, website, core America XX% an X increase saw store. by luxury previous XX% in daily Las Pawn and Latin our We de X Max opened Mexico website brands the de the the have quarter. visitors area, pawn XX We to store in increased novo previous opened In EZ X X website over Vegas X in our quarter. Guatemala. over with we stores, novo stores and Max

for the second outlines fiscal ESG our XX Slide quarter. highlights

us and component a Our the makes economy. business of compelling very a local circular by neighborhood nature recycler

saving X.X We toxic hundreds such as the electronic tools, them all facilities, and quarter, the items a or of use including and recycling are heavy not as from factories, neighborhoods. resold secondhand household phones, jewelry, computers, in as processing do goods trucking. musical TVs We and sound We U.S. goods We instruments, consumer significant use recycler items in landfills. over million well in e-waste distribution pre-owned of local

Women's are financial transparent and traditional regulated and a have excellent resource focus, Empowerment and to in Empowerment simple, our are in engagement significant Group Affinity in for continue Affinity essential, and we inclusion an those the Group Diversity Latin U.S. both provide underserved our the Black America. by and who we Importantly, U.S. sources.

a addition, America Affinity quarter. launched Group Parents during In the in we Working Latin

turn We Foundation. financial appreciation core to Tim? Tim day financial and security the improve we Financial over we of in Building on revamped through globally, celebrated our life would provide results. supporting financial on Passion, communities have and and to of food where live to Jugmans, is call our like of our People, now Officer, operate mission Chief details our mission stability. I more the literacy, to the EZCORP tenets employee and our Pawn quality the

Timothy Jugmans

Thanks, Lachie.

consolidated PLO primarily up XX%, average results driven XX. Slide financial improved our driving to on and higher Turning PSC yields. by rose growth XX% PLO year-over-year,

merchandise of the sales profit sales with up were up side in gross On sales XX% with an X%, margin. drop merchandise points the retail basis expected business, XXX

of was accrued primarily the due activity, and year, increased to to G&A last expenses with extent, store reversal incentive quarter incentive the in-line up increase our CEO store million, Store for the due loyalty a expenses compensation labor previous to the X%. XX%, in program. extent EBITDA for $XX.X to and compensation. lesser a lesser increased higher XX%, expenses primarily count related to

Turning year-over-year. a led in to increase rose XX%, U.S. to on XX% XX. which PSC our Slide Pawn PLO operations

merchandise points. On XX% in extent, up drop due due primarily business, basis to profit activity, increased the the EBITDA to on with sales count, of store lesser million, to was for program. the expenses retail with and the the in-line of sales by up to loyalty gross X% labor year. merchandise quarter store XXX Store $XX.X down side our margin sales higher were XX%, related prior a X% expenses Pawn U.S.

on and a XX% a to sales margins activity up resulting Slide XX the was expenses higher basis, were PSC our basis up points. with XX%, on on XXX Pawn same-store mainly store count. increased Latin grew and operations. for gross Segment basis. with to up up focuses XX%. Store due XX% quarter second labor XX% store sales were in-line XX% up same-store and same-store basis profit a XX% American sales XX% due Merchandise or a on PLO Merchandise increased

at remained turnover Inventory X.Xx. strong

is aged opportunity However, improve up Latin which in GM reflects America. an to to X.X%, execution

Latin For American EBITDA XX% improved $X.X the million. quarter, second to

we as season, traditionally are traditionally on we the low out tax for also means a the QX should basis, numbers profit continue year. of PLO lowest seasonally levels Looking move hit year. to This the that for see and record consolidated for forward, PSC

turns and pressures have as business. expenses we As remain inventory in our focused increased this quarters, Also, continue prior to as have basis strong will margin on merchandise. to seen XX% limited end aged lower see gross communicated so we inflationary continue the quarter, as the sequential and on are remain XX% to range of likely store do of affect we to general at

to expenses for G&A expect also We sequentially reason. same the increase

improved investing gain on customer continue focus results. own, efficiency and what Our drive selling to we PLO, and our technology financial enhance growing service in to

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

Lachlan Given

Thanks, quarter. closing, our team to another want Tim. In excellent EZCORP I yet for thank

Vegas; and returning support We X stakeholders. back record continue are bench buy center; our levels important our which Las to new and results sales in stores XX enhanced operating of PLO to opened strength delivering consistently merchandise capital quarter; financial the grew the strong were the for We to of and for shares, our market and second we the in stores, shareholders.

X platform we for to balance robust the and products which call increasing beyond. capitalize milestones across an core pipeline pawn providing with will that, these for sheet a and we on for liquidity, with store operate demand Operator? in achieved regions our the We acquisitions questions. And strong open the exciting and

Operator

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

John Hecht

we're of seeing stores. or a kind I'm proposition like had but have mix in seeking climate, of economic of customers But wondering just considered good year the luxury, offer? mix your that types now the merchandise obviously a you, considering a the guys different you secondary terms you in X, shoes been remember, are ago from of retail kind luxury. value what of value might different I that even you're of

Lachlan Given

that's think in mix. don't Look, the I anything from materially the different customer seeing we're

relatively we're but been really material in there's on but I generally in concentrating obviously seeing luxury nice now, a the numbers. are speaking, and they're items, the no handbags bit strategy exciting. small, changes think, growth We exciting And is growth But the mix. more super luxury shoes, which still

John Hecht

you're Okay. And the I margins, mean, then retail range. in

end comments range. we're now function of or set given to the of a more guys The is settled there? circumstances? selective have and you kind under normal? maybe of again back they're range normal things the of more maybe historical lower the outlook just mix context. But Is think a to it kind the being the again, that's then back just because of bargaining pressure? normal, relative is consumers I to that mentioned Any Or

Lachlan Given

think I the of it's latter. more

couple last of is the Our to over far enhanced years kind of turn. on focused be operating strategy more

rid can. So as that inventory the making quickly we're of margin falls sure out that getting as we think I And strategy. of

years, first. past get it problem. clearly margin do in you you maybe when But that, more So an was aged

So margin. at an dispose can at as our pawn concentrated the on now loans strategy operating quickly of counter inventory and we to as is appropriate

So It's that look, remains sure of I that we think make end remain the range the same. to low the at outlook turns continue the as strong.

John Hecht

about last think stores Okay. added year. And you've I the then in XX-ish

any to mature stores with a they ago? how or Just out what call to done there relative respect few would years season have these

Lachlan Given

excited America, exciting strategy in that's is market a because The Latin the really Mexico de really and large. we're about so been novos Look, that Guatemala, strategy. both

of that more So us. from see I you'll think

quicker on the I because less they expenses putting think you're are come lower. stores and do these than capital U.S. in

profitability you move so quite And quickly U.S. the versus to

think I them. yes, think it's and of I plan, see So The on been have plan. results you'll very us much do more on

Operator

line question Oppenheimer. Brian The the of Nagel next from comes of

William Dossett

Congrats This nice for Brian quarter. is Dossett William on Nagel. on a

has is So your like my backdrop. the around the recession early but of how discussion also question fiscal here holding also of Can pawn nature been QX, in the a in year. just customer up you and lot through months there's the been bigger first spring. overall later And in describe a on picture core then

shift shift demand just pawn notable to any general we -- buying changes if patterns consumer wondered So or been lately? or traffic new to there's loans for

Lachlan Given

Look, Thank positive you a for it's pawn. I the outlook think question. very for

X You goods. products, pawn can and loans growth secondhand see our for obviously is our which core

for core You continues can these again. we're quarter really see strongly pretty products this grow. demand that The to up

tougher. year, In usually more and pawn a the growth mean terms that later in loans would get recession in of sales historically,

is are seeing secondhand as remain so we're what looking customers strong But are more fact, value sales that, think for money for goods. environmentally in and looking we conscious, for

it's a question. So look, good

to going saw we strong the that, in in continue general, a think itself, good we for environments In broking growth, time businesses. quarter terms and pawn recessionary both of that's And products. are

Timothy Jugmans

during we of that, did a adding less tax X, quarter definitely But paydown season. in see, to

a a season, think in are of of I of perspective, meant the a tax less really lot loan the and stead end during year. customers their which quarter, us balance balance we loan seeing much reported higher-than-expected companies the with money good on for at really that from rest that puts the

William Dossett

that color. appreciate I

in here X.X strong on million adoption respect was program. QX. last quarter. Congrats the question next Our X.X It's the to members in versus million loyalty

so we to connect early, consumers. this better financial any how core And the have far? And opinion you get you while seen also, just your it's benefits is wanted on with helping program still thus

Lachlan Given

again. question And is Look, certainly it a it's early. good

base possible the them. is customer that and So first has out for here been our up phase there as sign many benefit customers to message get to as

is back engaged, their more the step lots to points. into using they the to are anecdotally, When always about success consumers maximize about points. their coming of of talking it, to Next come often But want store, customers it. more talk they get

that generally better much a So we customer base way. it in is engaging think our just

an hope clearly forward. it. to you it's speaking, share I our engaged up win it. strategies financially is But think, around outside more But The customers still early. with We've can very, us I it innovative loves that help helps see very come agency base going think to that just

pretty think early it you'll But I drive do think still now, quarters, and us for in it's coming more the financially. revenue. more see I around

William Dossett

invest in last And if here squeeze you've I staff lot question, your this is stores year. to that done in, can and past a well our the

your infrastructure you but largely that related. that And we And also, think recognize way updates haven't really place, new expense so our inflation we to in the or margin of we stores as business? question guidance, wage was, any is then SG&A current should long-term excluding should considering operating about about long-term so any acquisitions, think your this, given the and profile incremental

Lachlan Given

store basis. think bit comments activity. stores you in the But based here. on I X%. current pretty said that I And much will base have I Tim just is fully staffed vacancy the a question, on think remarks we to in would a that our we on are the less consolidated that's some think than now the U.S., I in now say

very last get in where progress to stores really of people year into against it's So strong members. the terms the period very, staff it was tough

look, now. feeling staffing really So we're good the about level

add I So yes, it know will want be about inflationary impact of on that or if the store base. to don't margin question. to just Tim, that operating kind on anything move you longer-term

Timothy Jugmans

got will diminishing the on still the some big expenses And to network on Yes. go. to we've in, expense line, across movement rise really sequential inflationary room definitely still the next sequential quarter the inflationary only our there we But the to hitting move a more we room slowly more on store set line, bit that Definitely, is little is basis bottom see on pressures on a all a bit as and G&A. line revenue pressures up. little margin total in a almost are but perspective see move

up, And that so the next start stable. it's year. revenue year, as of But will this stage think probably we margins at relatively improving this goes

Operator

McNamara of The from Brian next Canaccord Genuity. question comes

Brian McNamara

Congrats on results. strong the

customer benefit tangible high-profile lending from is of bank new folks customer on curious your fringes? underbanked, I'm to this seeing and While perhaps or regional of the failures tightening likely leading if the the off, you are acquisition unbanked is any first core guys So recent some standards?

Lachlan Given

increasing. demand you can Perhaps, that it's our Look, a core is see good thought.

whether of seeing say a whole that interest reasons, incremental store and pressure, I of think, to it's the it's installment driver got macro the First credit Silicon definitely store are be I Republic variety the the all. it's probably think is our different customer Bank, inflationary service, some factors tightening of strategies the don't lending of prices, the is our Usually, gas And know. customer loan like see base, environment, And our up. significantly can title, including balance not You would a products Valley not of growth. from and rewards rates, I've I there's probably our that failures and competitive or truthfully, think But probably biggest it. and in but our driving program I other people really those it's out question we that payday our

Brian McNamara

for minus result is is secondly, our would a from which is sequentially an underlying that? kind double-digit typical X% seasonality given of tax today look PLO standpoint? your strength that And refund to timing? So down Or incredible on guess, I less Is in opinion. that there example, top just seasonality, of than how compared

Lachlan Given

Yes.

tax the largest reason think issue is I at play.

have lot the other of same a see You thing. announced companies

So But I operating customers, of the taking a our is think from yes, strategies, our hold. it's paydown tax our I think, strategies, all initiatives retain usually, season. at get much reason. largest that is bigger But to the definitely to loan counter

for us So this that a was benefit quarter. definitely

Brian McNamara

And improvement the QX acquired you then stores of aged Mexico where you cited are inventory in finally, terms weakness in some seeing in any merchandise and in margins?

Lachlan Given

got Yes, definitely thanks for you, there. thank man. in the the seeing Brian, we're acquisitions. questions leadership Definitely -- progress new down Mexico We've and

the people to and are firstly, that usually improved in our seeing retention better is leading results. We stores of indicator financial

traction. bench down on really and So on store see retaining concentrating the to so strength, is starting managers significant of members team or much there promotability managers, assistant some

last inventory, it at better counter. year, confident that then aged lending we're selling the U.S. the that, transfers So into better did as in of

seeing there. in we're acquisitions metrics, down most on those So improvement

we're it. excited about pretty So

Operator

over like now And any to Q&A. Lachie time will with we the that, would pass you. our for remarks. back conference Given Thank of to I closing conclude

Lachlan Given

good quarter forward you call. thank today all very joining and look all. obviously to in to Bye-bye. the talking and It's on tomorrow. all we again, for one-on-ones later operator, you a and Thanks the Thanks,

Operator

for we that, with today's participating. you Thank will conclude And call.

lines. disconnect You may now your

EZCORP (EZPW) 4 May 232023 Q2 Earnings call transcript