Q3 2023 EZCORP Inc Earnings Call

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Good morning, ladies and gentlemen, and welcome to T. E C Corp, third quarter fiscal 2023 earnings call.

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

Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, this cool maybe recorded.

I would now like to turn the conference over to Jeff Elliott Investor Relations with three part advisors. Please go ahead Jeff.

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 web site investors Dot easy Corp Dot com.

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

These statements are based on the Companys current expectations.

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

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 Corp's, Chief Executive Officer, Lockheed given Tim judgments Chief Financial Officer.

I'd now like to turn the call over to Lockheed given lucky.

Thanks, Dan and good morning, everyone.

Same statistic pursuit of operational excellence and executing our current three year plan.

<unk> yielded strong financial results for our stakeholders.

Hormones outstanding hit a new all time record of $223 8 million.

Up 10% for the quarter.

<unk>, 7% on a same store basis.

Merchandise sales were up 12% for the quarter, 7% on a same store basis total Q3 revenue hit a record $249 $5 million driven by higher PSC entitled volume across all of our regions.

Merchandise gross margins remained within our targeted range of 36%.

With strong inventory turns of two nine times.

<unk> inventory was one 6% of total GM inventory for the quarter, showing an improvement of 60 basis points over Q2.

Beginning on slide three.

As a global leader in Poland Broking in pre owned and recycled retail.

We operate 212 stores in the U S and Latin America, having added another 13 stores this quarter.

The macroeconomic environment continues to be a challenge for our customer base.

As consumers the cash to satisfy the short term as it.

Well as value for money secondhand products, which also represented more environmentally responsible way to shop.

We strive to provide the best most convenient experience for our consumers. So we continue with innovation, while positively impacting the environment and the communities in which we serve.

Moving on to slide four.

Our engage team draws up et cetera. So we are committed to investing in recruitment retention and incentive <unk> to ensure our team members are engaged.

We promote financial inclusion for underserved communities with a buy sell in pulling offering providing customers instant cash for any item of value.

We provide outstanding customer service.

Even well positioned store footprint differentiated digital platform proprietary system and an innovative loyalty program for our customers.

We have a very strong and liquid balance sheet, enabling us to fund significant growth in our earning assets.

The buildout of new the divest those opportunistic acquisitions from what continues to be a robust pipeline and our share repurchase program.

Slide five shows that progression on our three year strategic goals.

We believe that we've got the most passionate productive tenure and committed team in the industry and we continue to find ways to engage and motivate and retain them.

The results of our rather than the annual company wide engagement survey that scorecard apparel culture is transforming.

Three point jumped from last year, and nine points above the global benchmarks, including being 10 points above the retail industry.

<unk> points above the financial services industry.

The implementation of the workday ERP across HR and finance this quarter will further improved systems and processes.

Driving greater efficiencies for our team members and the organization as a whole.

A points based loyalty program.

And extremely well received and has grown to three 3 million customers up 14% sequentially.

We strive to increase engagement with personalized marketing campaigns and communications to deliver a better customer experience and drive business growth turning to our key financial themes for Q3 on slide six.

The most significant driver of revenue and earnings CLO.

An all time high of $223 8 million up.

Up 10% with an associated 14% increase in PSC.

Merchandise sales were up 12%, resulting in total revenue for the quarter, a $249 5 million up 16%, which was a record for Q3.

Adjusted EBITDA was $27 million for the quarter up 8%.

Inventory turnover remained strong with inventory increasing slightly year over year, but improved sequentially by 60 basis points.

Cash on the balance sheet came down slightly on a sequential basis, primarily due to increases in PLO and inventory.

On slide seven.

EBITDA margin was 12% for the last 12 months ending June 2023.

As discussed last quarter, the EBITDA margin as expected as recently to create due to the inflationary impact on our expenses.

On slide eight we talk about strengthening our core operations investing in people and technology in order to drive earnings.

In Latam, we launched a new intranet that provides enhanced access to information and communications that is driving increased efficiency.

Last quarter, we said that we will focus on better execution in Latam and bringing down inventory to get close to the U S level.

Pleased with that progress on that front.

We've also launched a re imagined U S philanthropic strategy to align better with our pillars of people pulling and passion.

Investing in both people and technology within guys Workday to provide an enterprise cloud application for our team members with enhanced toolkit to help build a modern employee experience.

On slide nine innovation and growth.

Yeah.

We launched personalized marketing campaign to notify members of that point.

Showing a 15% increase.

One line extensions in the U S grew 4% sequentially and now comprised 29% of total extension, giving us those stocks significantly more times.

The customers in store.

Improving the customer experience and growing the customer base.

Key to our strategy.

We increased global transacting customers.

Visits to colon websites grew daily visits to buy online pickup in store test website.

U S online extension and you.

With online layaway payments.

We opened 12 <unk>.

Those in Latin America, with five in Mexico, and seven in Guatemala.

In the Las Vegas area, we opened one luxury day noted on that call.

Slide 10 outlines our ESG highlights for the fiscal third quarter.

We are a neighborhood recycle and a compelling component of the local circular economy and have retailed over one 4 million pre owned items in the quarter.

Including toxic consumer electronics such.

Such as computers televisions and fund as well as total musical instruments household goods and jewelry.

Importantly, we provide an essential simple regulated and transparent financial result for those who are underserved by traditional thoughtfully.

Diversity inclusion are significant targets.

We have introduced.

Entity group whole lot that Hispanic organization for leadership advocacy in the U S.

We have revamped the mission of the <unk> Foundation in the U S and have launched local giving strategies aimed at improving the quality of life in the communities, where we live and operate three supporting financial literacy food security and financial stability.

Tim.

Lucky.

Slide 11 details our consolidated financial results for the third quarter.

Hello ended the period at $223 $8 million up 10% on a year over year basis, 7% on a same store basis, which is the highest in <unk> history.

<unk> revenue was up 14% over last year with growth driven by both increased same store PLO growth and acquisitions.

<unk> sales was up 12% to $143 8 million.

Third quarter sales results.

Merchandise sales gross profit was up 7% due to increased sales offset by 200 basis.

Point margin decrease.

Inventory turnover is strong at two eight times.

HCM inventory was one 6%, which is a 60 basis point improvement over the second quarter.

We have been successful working on improvements in U S and Latam to drive this AGM blowout.

It was another solid quarter with consolidated EBITDA of $27 million.

Percent.

Turning to our U S pawn operations on slide 12.

Hello, Rose, 12%, driving PSC up 16% year over year.

Primarily driven by higher average PLO growth.

On the retail side of the business merchandise sales were up 9% with merchandise sales and gross profit up 3% with an expected 200 basis point drop in sales margin.

Store expenses increased by 14%, primarily due to library in line with our activity.

Store count and to a lesser extent expenses related to our loyalty program.

U S pawn EBITDA for the quarter was.

Okay.

Yes.

Yes.

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