Q1 2022 EZCORP Inc Earnings Call

Speaker 1: Good morning ladies and gentlemen.

Good morning, ladies and gentlemen, welcome.

Speaker 1: Welcome to the EZ Corp First Quarter Fiscal 2022 Earnings

Welcome to the easy Corp, first quarter fiscal 2022 earnings call.

Speaker 1: At this time, all participants are in a listen-only mode.

At this time all participants are in a listen only mode.

Speaker 2: Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, the...

Later, we will conduct a question and answer session and instructions will follow at that time.

As a reminder, this call may be recorded.

Speaker 2: I would now like to turn the conference over to Jean Marie Young, Investor Relations with 3 Part Advisors.

I would now like turn over the conference over to Jean Marie Investor Relations with three part advisors. Please go ahead Jim.

Thank you and good morning, everyone. During our prepared remarks, we are little Beaver shrink to slides, which are available for viewing or download from our website at investors that easy quick dot com before we begin I'd like to remind everyone that this conference call as far as the presentation slides contain certain forward looking.

Speaker 3: Thank you and good morning everyone. During our prepared remarks, we will be referring to slides, which are available for viewing or download from our website at investors.easycorp.com. Before we begin, I'd like to remind everyone that this conference call, as well as the presentation slides, contains certain forward-looking statements regarding the companies expected, operating, and financial performance for future periods. These statements are based on the company's current expectations.

<unk> regarding the company's expected operating and financial performance for future periods. These statements are based on the company's current expectations.

Speaker 3: Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements.

Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks or other factors that are discussed in our annual quarterly and other reports filed with the Securities and Exchange Commission.

Speaker 3: due to a number of risks or other factors that are discussed in our annual, quarterly, and other reports filed with the Securities and Exchange Commission.

Speaker 3: and is noted in our presentation materials. And unless otherwise identified, results are presented on an adjusted basis to remove the effect of foreign currency fluctuations and other discrete items. Joining us on the call today are easy courts, co-intram chief executive officers, locky-given and Blair Powell, as well as Tim Judman's CFO . Now I'd like to turn the call over to locky-given. Locky?

And as noted in our presentation materials and unless otherwise identified results are presented on an adjusted basis to remove the effect of foreign currency fluctuations and other discrete items joining us on the call today are easy course, co interim Chief Executive Officer.

Lockheed given and Blair Cao as well as some judgment CFO now I'd like to turn the call over to Lockheed given lucky.

Speaker 4: Thanks, Jean. And good morning, everyone. We are delighted to have started fiscal 2022 with a strong quarter. Our team has continued to successfully execute on the strategic plan put in place at the end of fiscal 2020. And it's significantly exceeded expectations for the quarter.

Thanks, Jane and good morning, everyone. We had a lot of it will start in fiscal 2022 with a strong quarter.

China has continued to successfully execute on our strategic plan put in place at the end of fiscal 2020 and had significantly exceeded expectations for the quarter.

Speaker 4: Beginning on slide three, we're at Global Leader in Polon Broking and pre-owned and recycled retail. We operate 1149 stores in the US and Latin America and have strategic investments in adjacent businesses that expand our presence across the globe.

Beginning on slide three we are a global leader in Poland, Broking, and pre owned and recycled retail we all provide a 149 stores in the U S and Latin America.

Strategic investments in adjacent businesses that expand our presence across the globe.

Speaker 4: On this slide we talk about building shareholder value by satisfying the short-term cash needs of our customers with an industry leading customer experience that is fueled by continuous innovation.

On this slide we talk about building shareholder value, while satisfying the short term cash needs of our customers with an industry, leading customer experience that is fueled by continuous innovation.

Speaker 4: We take pride in every one of our stores and have an intense focus on our people and the service they provide to our customers.

We take pride in every one of our stores and have an intense focus on our people and the service they provide to our customers.

Speaker 4: During fiscal 2021 we added 139 stores in Mexico and the US.

During fiscal 2021, we added 139 stores in Mexico, and the U S.

Speaker 4: And we commence this year with an investment in a business that owns 20 pawnstores in the Caribbean. And we will continue with our discipline approach to pawnstore acquisitions, both in the markets in which we currently operate and other advantageous regions that allow us to expand our geographic footprint.

We commenced this year with an investment in our business at all in 'twenty pawn stores in the Caribbean and we will continue with our disciplined approach to pull in store acquisitions, both in the markets in which we currently operate in other advantageous regions that allow us to expand our geographic footprint.

Moving to slide four.

Speaker 4: People, Pawn and Passion is our overriding theme in all that we do. My colleague Blair Powell is responsible for devising this theme and it has been an inspiration to watch our six and a half thousand team members rally so strongly behind it over the last eighteen months.

People pulling and passion is our overriding theme in all that we do.

My colleague Blair Paul is responsible for devising this thing and it has been an inspiration to watch a six and a half thousand team members rally so strongly behind that of the last 18 months.

Speaker 4: I think that this refocused on what we do best, which is simply to develop our people, serve our customers, base-porn loans, and sell-second hand goods, has been critical in driving the operating and financial momentum. We are now seeing from up towards.

Well I think that this refocus on what we do best which is simply to develop our people so that customers buy foreign loans and sell secondhand goods has been critical in driving the operating and financial momentum. We are seeing we are now seeing from our stores.

Speaker 4: Our team drives all of our success and so we continue to invest in training, incentives and cultural alignment to motivate and retain our best talent.

Our team drives all of our success and so we continue to invest in training incentives and cultural alignment to motivate and retain our best talent.

We have an exceptionally strong balance sheet, because we've maintained liquidity that is essential for growing up hole in books across all of our regions pursue substantial opportunities coupon store expansion across the globe.

Speaker 4: We have an exceptionally strong balance sheet as we maintain liquidity that is essential for growing our pawn books across all of our regions, pursue substantial opportunities, perform store expansion across the globe in a disciplined and focused way.

Disciplined in a focused way.

Speaker 4: We are a compelling ESG platform given the very nature of our core business. We extend the life of millions of second-hand items that are sold in our stores and as a result promote re-commerce at the neighbourhood level.

We are a compelling ESG platform given the very nature of our coal business we.

We extend the losses millions of secondhand items that are sold in our stores and as a result promote recall, Matt at the neighborhood level.

Speaker 4: We believe that ESG is core to who we are and what we do, and Blair will go into it in more detail in a few minutes.

We believe that ESG is core to who we are and what we do and Blair will go into it in more detail in a few minutes.

Speaker 4: To slide five, this outlines the key components of our corporate strategy, which we announced to the market almost 18 months ago. I'm pleased to say that it continues to gain traction with our people and to drive strong financial results for our shareholders.

To slide five this outlines the key components of our corporate strategy, which we announced to the market almost 18 months ago.

I'm pleased to say that it continues to gain traction with our people and to drive strong financial results for our shareholders.

Speaker 4: We have invested time and resource into developing our team members. And I believe we have the most passionate and productive team in the industry.

We have invested time and resources into developing our team members and I believe we have the most passionate and productive team in the industry.

Speaker 4: Our fundamental business model enhancements driven by Glare and his team have realised improved metrics on all fronts, including operational efficiencies, bottom line growth and stronger return on capital.

Our fundamental business model enhancements driven by glare and his team have realized improved metrics on all fronts, including operational efficiencies bottomline growth and stronger return on capital.

Speaker 4: Improving the customer experience remains a core priority. And we have implemented a new point-based loyalty program and online payment options for <expletive> loans that are seeing strong early success with our customers.

Improving the customer experience remains a core priority and we have implemented a new points based loyalty program and online payment options for pole lines that are seeing strong early success with our customers.

Speaker 4: As I've said, we continue to focus on growing both organically and inorganically and have increased the geographic diversification of our pawn business this quarter.

As I've said, we continue to focus on growing both organically and Inorganically that have increased the geographic diversification of our pawn business this quarter.

Speaker 4: On to slide six, turning to our key financial themes for the quarter.

On to slide six turning to our key financial themes for the quarter.

Speaker 4: PLO, the most significant driver for revenue and earnings, was up 20% year over year, leading to a 20% increase in PSC.

PLO the most significant driver for revenue and earnings was up 20% year over year, leading to a 20% increase in PSC.

Speaker 4: Net revenue was up 22% year over year and EBITDA was up 81%.

Net revenue was up 22% year over year, and EBITDA was up 81%.

Speaker 4: Bottom line performance is particularly pleasing with diluted EPS up 69% from 13 cents to 22 cents.

Bottom line performance is particularly pleasing with diluted EPS up 69% from 13 to 22.

Speaker 4: This Court of Deluted EPS was affected by a change in the accounting standards related to convertible death, which Tim will discuss in a few minutes.

This quarter diluted EPS was affected by a change in the accounting standards related to convertible debt, which Tim will discuss in a few minutes.

Speaker 4: On slide seven, you see that as expected, total expenses, store expenses, and GNA, we're all up as we increase labor cost in line with the increase in transaction volume and store growth.

On slide seven you see that as expected total expenses store expenses and G&A were all up as we increased labor cost in line with the increase in transaction volume and store growth.

Speaker 4: But these metrics compare favorably when viewed as a percentage of net revenue when looked at on a trailing 12-month basis.

But these metrics compare favorably when viewed as a percentage of net revenue when looked at it on a trial trailing 12 months basis.

Speaker 4: Total expenses is at the FANTAGE net revenue decrease to 84% in the last 12 months. This is 92% from a year ago.

Total expenses as a percentage of net revenue decreased to 84% in the last 12 months versus 92% from a year ago.

Speaker 4: Similarly, DOR expenses are 71% compared to 77% a year ago and G&A expenses are 12% compared to 15% a year ago. With that, I will turn it up to play.

Similarly door expenses of 71% compared to 77% a year ago, and G&A expenses of 12% compared to 15% a year ago.

With that I will turn it to Brian .

Speaker 5: Thanks, Lockheed. On slide eight, we talked about strengthening our core with the focus on people and systems.

Thanks locking on slide eight we talked about strengthening our core with a focus on people and systems. We have invested a tremendous amount of time transitioning to an operating culture of people <expletive> and passion and surely conceptualize is who we are what we do and how we do it.

Speaker 5: We have invested for a minister amount of time transitioning to an operating cost for a people, pawn, and passion, and totally conceptualizes who we are, what we do, and how we do it.

Speaker 5: Having been with EDC for over 30 years, I can honestly say that the teams from the field to sports center have really embraced this transition with a great amount of pride.

Having been with Bally Corp. Over 30 years I can honestly say that the teams on the field of sports Center have really embraced this transition with a great amount of pride.

Speaker 5: We've implemented a robust talent and succession plan to identify and develop our high performers and have identified opportunities for a clear career path with steps and checkpoints along the way.

We've implemented a robust talent and succession plan to identify and develop our high performers and have identified opportunities for a clear career path with steps and checkpoints along the way.

Speaker 5: We remain committed to inclusion initiatives and cultural transformation to ensure team members alignment with our guiding principles of leadership, customer service, accountability, respect diversity and sustainability.

We remain committed to inclusion initiatives and cultural transformation to ensure team members alignment with our guiding principles of leadership customer service accountability respect diversity and sustainability.

Speaker 5: We have strengthened our core pawn strategy by better managing our inventory, focusing on more streamlined and accurate pricing, and allowing managers more flexibility and discounting, which has resulted in reduced edge inventory and increased margins. Customer focus is essential and we continuously strive to improve their experience. Our points-based loyalty system will roll out earlier this quarter and has successfully incentivized customers to transact with us.

We have strengthened our core pas strategy by better managing our inventory folks Chanel, more streamline and accurate pricing and allowing managers more flexibility and discounting which has resulted in reduced aged inventory and increase margins customer a bullish is essential and we continuously strive to improve their experience a points based loyalty system.

What was rolled out earlier this quarter and has successfully incentivized customers to transact with us.

Speaker 5: We have completed the updates to offer a planetary <expletive> and cell system to fully support our integrated EZ Plus loyalty program. And I've been continuing to modernize IT throughout the organization.

We have completed updates to offer a powered Terry point of sale system to fully support our integrated easy plus loyalty program and have been continuing to modernize it throughout the organization.

Speaker 5: Innovation and growth are essential to our strategy. We are providing customers with convenient options for pawn and layaway services.

Innovation and growth are essential to our strategy, we are providing customers with convenient options for pawn and language servicing.

Speaker 5: Online payment extension is included 13% of tele extensions paid, which is up another 200 basis points for the third consecutive quarter. And over 9,000 layway payments were made online at Q1, up 50% from their previous quarter.

All on payment extensions grew at 13% of total extension is paid which is up another 200 basis points for the third consecutive quarter and over 9000 layaway payments were made online in Q1 up 50% from the previous quarter our.

Speaker 5: Our AG Plus loyalty plan was launched in the US in Mexico during Q1 and already has over 500,000 customers enrolled. This increases the propensity of our customers to return with us, which is particularly important for customers who use multiple pawnstores as we look to drive an increase of share of wallet.

Our Asia plus royalty play and it was launched in the U S and Mexico during Q1 and already has over 500000 customers enrolled this increases the propensity of our customers to return with US, which is particularly important for customers who use multiple Pos doors as we look to drive an increase of share of wallet.

Speaker 5: We've received our 12,000 Google reviews this quarter, Averty 4.9 stars. And finally, the EG Plus branding will replace Launa next quarter, if we streamline the digital customer experience.

We've received over 12000, Google reviews, this quarter, averaging four nine stars following the easy Plaza branding or replace Lana next quarter, as we streamline and digital customer experience.

Speaker 5: After launching our inventory showcase test in May, this quarter we have over 33,000 items in 140 stores listed online, nearly doubling last quarter. We believe that this is helping us capture new customers as the search for certain items more than any in the periphery of the country.

After launching our inventory showcase test in May this quarter, we have over 33000 items and a 140 stores listed all on nearly doubling last quarter.

We believe that this is helping us capture new customers as they start for certain out of Africa more convenient.

Speaker 5: Both organic and inorganic growth is an important element of our strategy.

Both organic and inorganic growth as an important element of our strategy.

Speaker 5: In October , as Lachey mentioned, we invested $15 million in a company that owns more than 20 pawnshops, primarily in a Caribbean.

October is Lockheed mentioned, we've invested $15 million and a company that owns more than 20 pawnshops primarily in the Caribbean.

Speaker 5: We also increased our stake in CCV and invested $3 million in leading Artisan repair platform.

We also increased our stake in CTV and invested $3 million in leading artisan repair platform the.

Speaker 5: The integration of our FY21 acquisitions in Mexico and the US are going well, and the acquisition pipeline remains robust.

The integration of our FY 'twenty, one acquisitions in Mexico, and the U S are going well and the acquisition pipeline remains robust.

Speaker 5: To look at the ESG, we contribute to the circular economy exceedingly useful life, and we stock up millions of items. According to EPA, the US had nearly 300 million tons of waste in 2018. That's nearly 5 pounds of waste per person per day. This quarter, we procured over 1.7 million pre-owned items and sold over 1.4 million items, ranging from consumer electronics, cameras, tools, household goods, and jewelry items, saving those items from the landfill.

So listen to ESG, we contribute to the circular economy, extending the useful life recycling of millions of items. Accordingly, EPA. The U S had nearly 300 million tons of waste in 2018, that's nearly five pounds of waste per person per day.

This quarter, we procured over one 7 million pre owned items and sold over one 4 million items, ranging from consumer electronics cameras tools household goods and jewelry items saving those out from a landfill.

Speaker 5: We promote health and safety, including providing vaccine awareness, communications, and pay time off for team emergency vaccinations. We continue to execute on our emergency and inclusion strategic plan. We provide an essential, simple, regulated, and transparent financial resource for those who are underserved by traditional resource.

We promote health and safety, including providing vaccine awareness communications and paid time off for team members vaccinations, we've continued to execute on our diversity and inclusion and strategic plan.

It provided an essential simple regulated and transparent financial resource for those who are underserved by traditional resources.

Speaker 5: I would now like to turn a call over to Tim Jugbos, our chief financial officer, to provide more details of our financial results. Tim.

I would now like to turn the call over to Tim judgments, our Chief financial officer to provide more details on our financial results Tim.

Speaker 6: Thanks, Blair. Before discussing the results, I would like to point out that we have adopted the new accounting standards for convertible notes.

Play.

Discussing the results I would like to point out that we have adopted the new accounting standard for convertible notes.

Speaker 6: The new guidance simplifies the accounting for convertibles by removing the requirement to bicyclecate the embedded equity conversion and debt components.

The new guidance implies the accounting for convertible by removing the requirement to bifurcate the embedded equity conversion in debt components.

Speaker 6: As a result, our reported gas interest expense has decreased in the quarter by approximately 3.4 million by removing the non-cash interest related to the equity conversion feature.

As a result, our reported GAAP interest expense has decreased in the quarter by approximately $3 4 million by.

By removing the non cash interest related to the equity conversion feature.

Speaker 6: We note that in prior periods we were eliminating all non-cash interest related to the convertibles from our adjusted account.

We note that in prior periods, we will eliminating all noncash interest related to the convertible from Io adjusted accounts.

Speaker 6: The new standard also requires the application of the IF Converted Method for calculating diluted earnings per share and the Treasury stock method will no longer be available.

The new standard also requires the application of the if converted method for calculating diluted earnings per share and the treasury stock method will no longer be viable.

Speaker 6: This method repies us as the after tax interest related to the convertible back to net income, which in the quarter was 1.9 million.

This method requires us to add the after tax interest related to the convertible back to net income, which in the quarter was $1 9 million.

Speaker 6: The calculation also assumes the notes are converted at the beginning of the period, resulting in an additional 25.2 million shares being included in the weighted shares outstanding.

Calculation also assumes the notes are converted at the beginning of the period, resulting in an additional $25 2 million shares being included in the weighted shares outstanding.

Speaker 6: The application of this converted method only applies if the impact is diluted and is not affected by whether the convertible is within or out of the money.

The application of the if converted method only apply if the impact is dilutive and is not affected by weather as the convertible is within or out of the money.

Speaker 6: We have adopted this standard from a perspective basis only, and as such, historical results have not changed.

We have adopted the standard from a prospective basis, only and as such historical results have not changed.

Speaker 6: The adoption of these rules on the first quarter lowers the gap and adjust the diluted EPS by 2 cents and 7 cents respectively.

The adoption of these rules on the first quarter lowered the GAAP and adjusted diluted EPS by <unk>, <unk> and <unk>, respectively.

Moving to our consolidated financial results on slide 12.

Speaker 6: Moving to our Consulate A financial results on slideshow.

Speaker 6: PLO ended the period at $177 million, up 20% on a year-over-year basis.

PLO ended the period at $177 million.

Up 20% on a year over year basis.

Speaker 6: We are now within 14% of FY19, same-store PLO balance compared to 16% at the end of FY21.

We are now within 14% of FY 19, same store PLO balance compared to 16% at the end of FY 'twenty one.

Speaker 6: Following suit, PSE revenue was up 20% over last year, with growth driven by both increased store count and high average PLO.

Following suit.

Revenue was up 20% over last year with growth driven by both increased store count and high average PLO.

Merchandise sales gross profit margin remained high at 40%.

Speaker 6: merchandise sales growth profit margin remains higher 40%

Speaker 6: Our focus on selling imagery in the first 90 days has kept imagery turnover strong at three times. And HGM imagery improved to 0.4% from 5% of total GM imagery a year ago.

Our focus on selling inventory in the first 90 days is kept inventory turnover strong at three times and HTM inventory improved to <unk>, 4% from 5% of total channel inventory a year ago.

Speaker 6: Consolidated EBITDA was 31.2 million, up 81% year-over-year, resulting from IFSE, an increased merchandise sales growth profit offset by increased expenses.

Consolidated EBITDA was $31 2 million up 81% year over year, resulting from higher PSC and increased merchandise sales gross profit offset by increased expenses.

Turning to our U S pawn operations on slide 13.

Speaker 6: PLO rose 16% year over year driven by the focus on our and heart-porn operating model and serving our customers needs.

PLO rose, 16% year over year, driven by the focus on on hotspot operating model and serving our customers needs.

Speaker 6: On a same saw basis, PLO increased 15% year-over-year and 4% sequentially.

On a same store basis, PLO increase 15% year over year and 4% sequentially.

PSC was up 13% year over year, driven by higher average PLO.

Speaker 6: TSC was up 13th St. Year of the Year, driven by high average PLO.

Speaker 6: On the retail side of the business, merchandise sales was up 24% with much guy sales growth profit up 29% year over year with related margins expanding by 177 basis points due to effective inventory management.

On the retail side of the business merchandise sales was up 24% with merchandise gross profit up 29% year over year with related margins expanding by 177 basis points due to effective inventory management.

Speaker 6: HGM imagery continues to decline and the counter for just 0.4% of total GM imagery in the U.S. at the end of the quarter, but it's a 3% a year ago.

HTM inventory continues to decline and accounted for just 4% of title JM inventory in the U S. At the end of the quarter.

3% a year ago.

Speaker 6: Storage ventors will help 4% in the year over year, mostly related to increased labour costs associated with eye transaction volume.

Store expenses were up 4% year over year, mostly related to increased labor costs associated with our transaction volume.

Turning to the bottom line U S pawn EBITDA was up 58% compared to the prior year quarter, primarily due to higher PSC and increased merchandise sales gross profit, partially offset by increased expenses.

Speaker 6: Turning to the bottom line, US-4 and EBITDA was up 58% compared to the prior U-quarter, for a roomally due to high FSE and increased merchandise sales growth profit, partially offset by increased expense.

Slide four thing focuses on a Latin American point operations.

Speaker 6: 514 focuses on our Latin American <expletive> operation.

Speaker 6: Feel low in this segment grew 40% compared to the year ago level, with 20% growth on the same stall base.

Hello, and this segment grew 40% compared to the year ago level with 20% growth on a same store basis.

Speaker 6: As a result, PFC was up 27% driven by an increase in stall count of 26% and high average PLO.

As a result, PSC was up 47% driven by an increase in store count of 26% and high average PLO.

Speaker 6: merchandise sales is up 41% and 16% on the same store base.

Merchandise sales was up 41% and 16% on a same store basis.

Speaker 6: Mochidized sales growth profit was up 17% due to increased sales offset by margins down to 29%. In line with our longer term margin expectations for this segment.

Merchandise sales gross profit was up 17% due to increased sales offset by margins down to 29% in line with our longer term margin expectations for the segment.

Speaker 6: EBITDA improved $2.5 million on higher PSC and merchandise sales gross profit, actually adopted by increased expenses.

EBITDA improved to $5 million on high PSC and merchandise gross profit.

Ted by increased expenses.

Speaker 6: Historic Census were up 20 and I'm sent year over year with 131 additional stores and increased labor costs in line with higher transaction volumes. Thanks.

Store expenses were up 29% year over year with 131 additional stores and increased labor costs in line with higher transaction volume.

Same store expenses were up 6%.

Speaker 6: In conclusion, easy cost PLO levels have continued to increase reflecting more favorable poor and demand trends. Accelerating transaction volume.

In conclusion, <unk> PLO levels have continued to increase reflecting more favorable pull in demand trends.

Accelerating transaction volumes and a focused team.

Speaker 6: In Q2 we expect to see a pay down of the PLO with the normal seasonality of taxis.

In Q2, we expect to say a paydown of the PLO with the normal seasonality of tax season.

Speaker 6: In late December and through January , stores have been affected with the spike of COVID-19.

In late December and through January still a has been affected with the spike of COVID-19.

Speaker 6: We had approximately 10% of stores reduced our due to staff shortage due to COVID.

We had approximately 10% of stores reduced hours due to staff shortages due to COVID-19 .

Speaker 6: With fewer team members in stores, we are seeing a negative effect on sales.

With fewer team members in stores, we are seeing a negative effect on SaaS.

Speaker 6: As we have seen in quarter one, PC continues to play catch up as PLO increases.

As we have seen in quarter, one phase III continues to play catch up is PLO increases.

As we have previously said, we expect to continue to see some sales margin contraction as inventory levels increased and sales discounting practices rise to standard levels.

Speaker 6: As we have previously said, we expect to continue to see some styles, Martin contraction, as inventory levels increase and sales discounting practices rise to standard levels.

Speaker 6: Also, with transaction volume increasing and increasing inflation new pressures, we will see expenses continue to rise.

Also with transaction volume, increasing and in creating inflationary pressures, we will see expenses continue to rise.

Speaker 6: We've formed well through a difficult economic cycle for the industry and will continue to execute on our two-ticket initiatives throughout fiscal 2022.

With full well through a difficult economic cycle for the industry and we will continue to execute on our strategic initiatives throughout fiscal 2022.

Speaker 6: I will now turn it back over to Lofi for a few closing comments.

I will now turn it back over to the Lucky for a few closing comments.

Thank you Tim.

Speaker 4: We began in 5th 2020 with X1 results, driven by our dedicated team members who have a deep passion for <expletive> and for customer service. We believe that our differentiated platform for prior three point of sale system and commitment to enhancing digital capabilities are leading the industry.

We began fiscal 2022 with excellent results driven by our dedicated team members, who have a deep passion for Poland and for customer service, we believe that our differentiated platform proprietary point of sale system and commitment to enhancing digital capabilities are leading the industry.

Speaker 4: Blair and I are honored to be serving as interim co-CEOs for a company that we both care very deeply for. We have been partners here a long time and are excited to continue to serve our team members, customers and shareholders, to drive strong results for us all.

Blair and I are honored to be serving as interim co Ceos for a company that we both created very deeply pool.

We have been partners here, a long time and are excited to continue to serve our team members customers and shareholders to drive strong results for us.

Speaker 4: We are planning an investor day in Dallas at the end of March and look forward to hosting a store tour as part of that program. We'll be providing further details on that shortly.

We are planning an investor day in Dallas at the end of March and look forward to hosting a store tour as part of that program, we will be providing further details on that shortly.

Speaker 4: We remain focused on meeting our customers needs for cash and affordable pre-owned and disvacled merchandise across the US and Latin America.

We remain focused on meeting our customers' needs for cash and affordable pre owned and recycled merchandise across the U S and Latin America.

Speaker 4: People pawn passion is our overriding theme. And we will continue to execute on our strategic initiatives to further strengthen our core pawn business and drive shareholder returns. And with that, we will open the call for questions. Operator.

Poland Passion is our overriding theme and we will continue to execute on our strategic initiatives to further strengthen our core business and drive shareholder returns.

And with that we will open the call for questions operator.

Speaker 2: Thank you, sir. And as a reminder, if you wish to ask questions, simply press star then the number one on your telephone keypad. Once again, that is star one on your telephone keypad. Your first question is from the line of John Hedge from Jeffries. Your line is below.

Thank you Sir and as a reminder, if you wish to ask a question simply press Star then the number one on your telephone keypad once again that a star one on your telephone keypad. Your first question is from the line of.

John <unk> from Jefferies. Your line is now open.

Yeah.

Speaker 7: uh... more than guys lack a player and i said that that's the year for you guys uh... and thanks for taking my questions in more than ten to uh... so tim just so i'm clear on the accounting change going forward uh... you the recurring quarterly interest expense should be it sounds like about one point nine and that eighty one point nine million shares is that pretty consistent or does that depend on the share price just want to make sure i get that modeling accurate

Morning, guys Lucky Blur nice too.

From you guys.

Thanks for taking my question and Martin attempt to so Tim just so I'm clear on the accounting change going forward.

The recurring quarterly interest expense should be it sounds like about one nine and that 81 9 million shares is that pretty consistent or does that depend on the share price I just want to make sure I get that modeling accurate.

Yes.

<unk>.

Speaker 6: That number of shares does not change based on the share price. So that's just assuming that all the shares are converted, all the convertibles are converted. So that 25.2 million stays constant. And then adding back the interest expense, yeah, that's a pretty consistent number going quarter to quarter as well. OK.

That number of shares does not change based on the share price. So that's just.

Assuming that all the shares converted.

Well the convertibles I converted so that $25 2 million stays constant.

And then adding adding back the <unk>.

Interest expense, yes, that's a pretty consistent number going quarter to quarter as well.

Okay.

Then so a couple of other questions.

Speaker 7: you know, you're clearly you're growing nicely with the PLO and the revenues and the same store sales. How much of that is tied to kind of recovery from COVID in your opinion, just got to reestablishing a normal demand set.

The Youre clearly you're growing nicely with the COO and the revenues in the same store sales.

How much of that is tied to kind of recovery from COVID-19 in your opinion, just get it reestablishing a normal demand set.

Speaker 7: and how much do you guys think is just secular growth like what you'd see in a normal era and then how much is from acquisition?

And how much do you guys think is just secular growth like what you'd see in a normal era.

And then how much is from acquisitions.

Speaker 6: So the, from an acquisition point of view, we're definitely going to look at, you know, same store sales growth. And if you look at the Latin portion for the quarter, probably half that growth is coming from acquisitions.

So the.

The.

From an acquisition point of view, we definitely need to look at.

Same store.

Sales growth and if you look at.

The Latam portion.

For the quarter would probably half.

That growth is coming from.

Acquisitions.

Speaker 4: In the US, we haven't had that many acquisitions, so a lot of that growth is the organic stores.

In the U S.

Haven't had that many acquisition so a lot of that growth is the.

The organic stores.

Speaker 6: a year on year. The, from the point of view of, you know, what's, or what's a catch up and what's organic. On the retail side, a lot of that growth is, because of the change that we've made to the business model with a lot more focus on that retail side of the business, with much better turnover results, and much more consistent.

Year on year.

From the point.

Point of view of what's what's the catch up and what's what's organic.

On the on the retail side.

A lot of that growth is.

Because of the change that we've made to the business model with a lot more focus on that retail side of the business.

With much but our turnover results and much more consistent.

Speaker 6: margins even though we do say margins will come down over time, but that's one of the business as significantly improved over time. On the PLO, it's a little bit of both. That's a much harder one to consider, the side knots.

Margins, even though we do say margins will come down over time.

But that side of the business is significantly improved over time.

On the PLO.

It's a little bit about that.

So much not a one to two.

Cycle.

Okay.

Then.

Speaker 7: you said you'd invested in the Caribbean stores recently. Did you buy a minority stake or a controlling stake and how will that be kind of forward? And then maybe just touch on the overall opportunity set in terms of the pipeline and is it competitive in the acquisition market or is it pretty stable? Or price is favorable, maybe just some comments on that.

You said you'd vested in the Caribbean stores.

Did you buy a minority stake or a controlling stake and how will that be kind of Florida and then maybe just touch on the overall opportunity set in terms of the pipeline.

Is it competitive in the acquisition market or is it pretty stable prices favorable maybe just some comments on that.

Speaker 4: Sure, Lockheed, do you want to take that one? Yeah, sure. On the Caribbean question, we brought a minority position there. We're excited about that, given we're not in the Caribbean and it's a very strong local management team that we're backing there. So we're excited about things to come from there. On the pipeline itself, look, it remains strong. You know, I think the global opportunity...

Sure do you want to take that one.

Yeah sure. So on the Caribbean question, we bought a minority position.

We're excited about that given we're not in the Caribbean and it's a very strong local management team that weren't backing there. So we're excited about things to come from that.

On the pipeline itself.

It remained strong.

I think the global opportunity remains.

Speaker 4: Very, very large in Poland. And in our market.

A very very large.

In Poland.

Our markets.

Speaker 8: Look, we're seeing the Latin American markets pretty stable from a pipeline perspective.

Look with thing, but Latin American markets.

Pretty stable from a pipeline perspective and in the U S look at.

Speaker 8: It's pretty similar to the way I've always been. We're working hard on that pipeline. We feel us for a bus.

It's pretty similar to the wise what was the.

We're working hard on that path and we feel it's robust.

Speaker 8: and looking forward to getting more deals done, but as we've said before, and a very focused, disciplined wife.

And looking forward to getting more deals done, but as we've said before in a very focused disciplined way.

Great I appreciate that guys. Thanks very much.

Speaker 9: Once again, if you wish to ask a question, simply press star then the number 1 on your telephone keypad. Your next question is from the line of Brian Nagel of Oppenheimer. Your lines now open. Good morning gentlemen.

Once again, if you wish to ask a question simply press Star then the number one on your telephone keypad.

Question is from the line of Brian Nagel Oppenheimer.

<unk> Your line is now open.

Good morning, gentlemen, nice quarter congratulations.

Thanks, Brian .

Thank you.

Speaker 10: question i have you know what's looking at the results and and taken into consideration your comments we step back how should we think about uh...

Christian I have was looking at the results and taking into consideration your comments, if we step back.

How should we think about.

The internal drivers all the improvements you've made.

The business is a factor here.

Speaker 10: versus an improving economic backdrop, particularly as the economy now begins to pull away from the COVID crisis. Now, how would?

Versus an improving economic backdrop, particularly as the economy now begins to pull away from.

From from the Covid crisis, or how would you think about the split and with what we're seeing the results today, and then I guess as a follow up to that.

Speaker 10: How much is left? What are we playing for here in this continued rebound?

How much how much is left I mean kind of what are we playing for here is in this continued rebound in results.

Speaker 8: Lucky you want to make that an awesome. My perspective here is, my perspective is here, and it's a very much a means of both, Brian .

Lucky one Martin I think you hear us lots of flexibility here is it's very much based on both fronts.

Speaker 8: You know, glaring teams set out with a new operating model 18 months ago.

Glare and his team set out with a <unk>.

New operating model, either a month ago and you're seeing this quarterly.

Speaker 8: seeing this quarterly, we're starting to see real improvements in almost all the operating metrics. I think we've got further to go there.

And to see real improvements in almost all the operating metrics. So I think.

I think we've got further to go there.

And I think.

Speaker 8: Look equally, I think we've got a large opportunity in driving more customers to our stores as we invest in digital. So I think look from a runway perspective, I think we've got more runway in both areas, both in what we do within our stores and the external environment and how many customers we can attract.

Look equally I think we've got a.

A large opportunity and driving more customers to our stores.

As we invest in digital.

<unk> work from from rough from a runway perspective, I think we've got more runway.

Both areas, but in what we do within our schools and the external environment and how many customers. We can we can attract.

Yes.

Speaker 6: And from a recovery point of view, obviously we're still on a same store basis, still a little bit below FY19 on a PLO basis, so there's still recovery mode going on on top of that growth that we are creating by better processes in store as well.

And from a.

From a recovery point of view, obviously, we still.

On a same store basis still a little bit below.

<unk> 19 on a PLO basis, there is still recovery mode.

Going on on top of that.

Growth that we are creating by better processes in store as well.

Speaker 10: So that's helpful. This is follow up then. So as we're watching the business and really gauging the recovery against what you described there, is PLO really the metric we should be watching, as far as the best indication of the underlying.

Yes.

That's helpful. Just as a follow up then so as we're watching the business and really gauge in the recovery against what you described is PLO really the metric we should be watching as far as.

Probably the best indication of the underlying improvement.

Speaker 6: Yeah, PLO has always been a good leading indicator for us to look at what's going to happen at the business for the business. You know, the earnings do come a little bit later than that PLO number, so we track that very closely.

Yes, PLO has always been a good leading indicator for us to look at what's going to happen at the business for the business. The earnings do come a little bit lighter than that would be a lower number.

So we track that very.

Very closely.

Okay.

Alright, guys well, thank you very much congrats again.

Thanks, Brian .

Speaker 9: Your next question is from the line off. Moila Bakker from C.DOTE. Your line is no longer...

Your next question is from the line of Mila Backer from Sidoti. Your line is now open.

Speaker 11: A couple of follow-up questions. First of all, the Caribbean acquisition is interesting from the perspective that it's outside of the core markets. And I'm wondering, you know, if you have any color there as to like what characteristics are there that made that an attractive, you know, opportunity for you and if we should expect to see additional M&A potentially moving outside of your core.

Thank you.

I'll follow up questions first of all the the Korea Caribbean acquisition.

Is interesting from the perspective that it's outside of our core markets and I'm wondering if you have any color there as to like what characteristics are there that made that an attractive opportunity for you and if we should expect to see additional Emma.

M&A potentially moving outside of your core.

Speaker 8: Look, good morning, Marlough. I think on the Caribbean first and foremost.

Good morning.

Think on the Caribbean first and foremost.

Speaker 8: I think that we're very focused on that as a primary driver of our M&A. So first off was the strong management team second. As you said, we are diversifying geographically. And in a relatively stable environment in that region, so that's that there. The second, yeah, expect to see more M&A. We're looking at geographic expansion importance.

Strong local management team I think.

We're very focused on that as a primary driver of our M&A.

So first off with the strong management team second as you said we are.

Diversifying geographically.

Regulatory relatively stable environment in that region.

That's the.

The second.

Expect to see more of it.

We're looking at geographic expansion and growth.

Speaker 11: Thank you. And then one other question, which is about the online showcase. So as I understand it at the moment, the online showcase is basically a place for people to do a bit of window shopping and see what merchandise is available in store, but not actually to purchase. Is that correct? And is that how you intend to maintain that platform or at some point are you thinking you might have evolved into an e-commerce platform?

Okay. Thank you and then one other question, which is about the online showcase so.

I understand and at the moment the online showcases basically in place for.

People to do.

Still a bit of window shopping and see what merchandise available in store, but not actually to purchase is that correct and is that how you intend to maintain that platform or at some point are you thinking about it and evolve.

Evolve into an e-commerce platform.

Yes, I can take that in the morning.

Speaker 5: You know, I think that this is very much still in the test phase. You know, we're really addressing some of the baseline capabilities there in terms of the product searches and making really the process efficient for industry or posting them for the customer. So right now I would say that we're in a test and learn environment with that.

Sure.

I think that this is very much still in the test phase.

We're really addressing some.

Some of the baseline capabilities there in terms of the product searches and making really the.

Process efficient for in store posting them for the customers. So right now I'd say that we're in a test and learn.

Environment with that but ideally, yes, we do want to try to advance that assuming we can.

Speaker 12: But ideally, yes, we do want to try to advance that assuming we can, you know, that the results are favorable. But to answer your original question, yes. Right now it is just a browsing kind of showcase. There's no ability to purchase online directly. Okay, thank you.

The results are favorable but to answer your original question, Yes, right now it is just a browsing kind of showcased.

No ability to purchase online directly.

Okay. Thank you.

Well.

There are no further questions presenters. Please continue.

Speaker 8: Thank you, everyone, for your time this morning and look forward to speaking to you all either later today or again.

We thank you. Thank you everyone for your time this morning.

Look forward to speaking to you all be delighted today again thanks.

Yeah.

Speaker 9: And with that, this concludes today's conference call. Thank you for attending QMENO.

And with that this concludes today's conference call. Thank you for attending you may now disconnect.

Okay.

Speaker 13: The the.

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