EZCORP(US:EZPW)2023-08-06 18:21Financial Data and Key Metrics Changes - Pawn loans outstanding reached a record $223.8 million, up 10% for the quarter and 7% on a same-store basis [5][24] - Total Q3 revenue hit a record $249.5 million, up 16% year-over-year, driven by higher PSC and sales volumes across all regions [5][12] - Adjusted EBITDA for the quarter was $27 million, an increase of 8% [12][18] - EBITDA margin decreased to 12% for the last 12 months ending June 2023, down from 13% in the previous year due to inflationary pressures [13] Business Line Data and Key Metrics Changes - U.S. Pawn operations saw PLO rise 12%, driving PSC up 16% year-over-year [18] - Merchandise sales in the U.S. were up 9%, with merchandise sales gross profit increasing by 3% [18] - Latin American Pawn EBITDA improved by 10% to $8.6 million, primarily due to higher gross profit [19] Market Data and Key Metrics Changes - The macroeconomic environment remains challenging, with consumers seeking cash and value for secondhand products [6] - The company operates 1,212 stores in the U.S. and Latin America, having added 13 stores in the quarter [6] Company Strategy and Development Direction - The company is focused on operational excellence and executing its 3-year strategic plan, which has yielded strong financial results [5] - Investment in recruitment, retention, and technology is prioritized to enhance team engagement and customer experience [7][14] - The company aims to improve customer experience and grow its customer base through personalized marketing and enhanced digital platforms [15][22] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment continues to be tough, but they are seeing growth in both store and online customers [32] - The company expects continued growth in PLO and PSC, with record numbers anticipated by the end of Q4 [34][26] - Inflationary pressures are expected to persist, impacting expenses, but the company is focused on driving revenue growth to maintain profitability [48] Other Important Information - The company has a strong and liquid balance sheet, allowing for significant growth in earning assets and share repurchase programs [9] - The EZ+ Loyalty Program has grown to 3.3 million customers, up 14% sequentially [11][22] - The company has launched a reimagined philanthropic strategy to support financial literacy and community well-being [16] Q&A Session Summary Question: Insights on new customer trends and drivers - Management observed strong website activity and growth in new customers due to the challenging macroeconomic environment [32] Question: Expectations for PLO and inventory ratio - Management expects continued growth in PLO, with the inventory ratio remaining around 1.3x to 1.5x [34][36] Question: Discussion on merchandising margin pressures - Management indicated that increased inventory and customer choice are putting pressure on margins, with macroeconomic conditions also affecting pricing [41][42] Question: Views on share price valuation - Management expressed frustration with the current share price, stating it is undervalued relative to the company's strong financial results [46][47] Question: Future expectations for inflationary impacts on expenses - Management anticipates some inflationary pressures will continue into fiscal 2024, particularly in Latin America [48]