EZCORP(EZPW) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved record Q2 revenue of $318.9 million, marking a 12% year-on-year increase [4] - PLO (Pawn Loan Outstanding) grew 15% to a Q2 record of $271.8 million [4] - EBITDA increased by 23% to $45.1 million, with diluted EPS growth of 21% to $0.34 [4][9] - Cash balance increased to $505.2 million from $174.5 million last quarter, primarily due to $300 million debt financing [7] Business Line Data and Key Metrics Changes - Merchandise sales grew by 8% to $177.4 million, with gross profit reflecting a 10% increase to $185 million [9][16] - U.S. Pawn segment revenue increased by 7% to $221.4 million, with earning assets growing by 21% [17] - Latin American segment total revenues increased by 25% to $97.5 million, driven by strong PLO growth of 17% [23] Market Data and Key Metrics Changes - The U.S. accounted for 72% of gross profit during the quarter [10] - Average loan size in the U.S. increased by 15%, driven by higher jewelry prices [18] - Latin America experienced a 19% increase in PSC (Pawn Service Charges) [24] Company Strategy and Development Direction - The company continues to strengthen core pawn operations through investments in technology and customer experience [11] - The Easy Plus Rewards program saw membership grow by 34% to 6.2 million, accounting for 77% of all transactions [11] - The company is focused on disciplined M&A strategies in both existing and new markets [28] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic pressures are leading consumers to seek short-term cash solutions [5] - The company remains committed to maintaining high levels of cash liquidity amid economic uncertainty [8] - Future growth is expected to be driven by PLO growth, disciplined inventory management, and exceptional customer service [28] Other Important Information - The company opened nine de novo stores in Latin America and acquired one store in Guatemala [6] - The introduction of a long-term layaway option resulted in a 15% increase in new layaways made during the quarter [12] - The company received a first-time credit rating of BA1 from Moody's, reflecting its strong financial position [25] Q&A Session Summary Question: Impact of tax season on U.S. PLO - Management indicated that the 9% sequential decline in U.S. PLO appears to be a new normal, reflecting increased consumer costs [33] Question: Effects of tariffs on pricing and customer demographics - Management noted inflationary effects on general merchandise and an increase in average loan size due to higher jewelry prices [35][36] Question: Merchandise margin performance - Management emphasized prioritizing gross profit over merchandise margin, which has been impacted by customer needs for cash [39] Question: Plans for excess cash post-debt offering - Management reiterated a balanced approach to scaling the business while maintaining a conservative balance sheet [42][44] Question: Latin American acquisition strategy - Management highlighted strong momentum in Latin America and a disciplined approach to acquisitions in the region [52][53] Question: Performance of MaxPawn and expansion plans - Management expressed satisfaction with MaxPawn's growth and indicated plans for future expansion in suitable markets [71][72]