Q3 2024 EZCORP Inc Earnings Call

I'd now like to turn the conference over to Sean Mansoury, the company's Investor Relations Advisor with Elevate IR. Please go ahead, Sean. Thank you.

Unknown Attendee: With Elevate IR, please go ahead, Sean.

Operator: with Elevate IR, please go ahead, Sean.

Sean: Thank you, and good morning everyone. During our prepared remarks, we will refer to slides which are available for viewing or download from our website at investors.eZCORP.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 company's expected operating and financial performance for future periods. These statements are based on the company's 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 and Exchange Commission.

Sean: Thank you, and good morning, everyone. During our prepared remarks, we will refer to slides which are available for viewing or download from our website at investors.ezcorp.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. The statements are based on the company's 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 and 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.

Speaker Change: These statements are based on the company's current expectations.

Sean: 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 discreet items. Joining us on the call today are EZCORP's Chief Executive Officer, Lachlan Given, and Tim Jugmans, Chief Financial Officer.

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

Sean: I'll now turn the call over to Lachy Given. Okay, Lachy?

Lachlan Given: I'll now turn the call over to Lachlan Given.

Lachlan P. Given: Thanks, Sean, and good morning, everyone. We're pleased to report that EZCORP continued to generate impressive operating and financial results for the third quarter of fiscal 2024. Total revenue increased 9% to $280 million, which was a record for Q3. PLO revenue increased 15% to $265 million, the highest level in company history. Beginning on slide three, we continue to be a global leader in pollen broking and pre-owned and recycled retail. We operate 1,258 stores in the U.S. and Latin America, having added another 12 stores this quarter.

Lachlan Given: Thanks, Sean, and good morning, everyone. We're pleased to report that EZCORP continued to generate impressive operating and financial results for the third quarter of fiscal 2024. Total revenue increased 9% to 280 million, which was a record for Q3, and PLO increased 15% to 265 million, the highest level in company history.

Lachlan P. Given: Additionally, consumers are increasingly value-conscious, turning to pre-owned merchandise for its affordability and eco-friendly benefits. With total revenues up 9% year over year, merchandise sales up 6%, gross profit up 11%, and adjusted EBITDA up 15%. As I mentioned earlier, strong consumer demand and excellent customer service continue to propel PLO and PFC. Turning to our key business strategy highlights for Q3, on slide 6. In addition, we have continued to modernize our back-end POS, enhancing the scalability across our systems and processes. In the US, we have expanded the availability of third-party payment programs, driving higher retail sales and reinforcing our commitment to servicing customers.

Speaker Change: Total revenue increased 9% to $280 million, which was a record for Q3. And PLO increased 15% to $265 million, the highest level in company history.

Lachlan Given: Adjusted net income was up 14% from a bottom line defective. Beginning on slide 3, we continued to be a global leader in Poland-broken, pre-owned, and recycled retail. We operate 1,258 stores in the US and Latin America, having added another 12 stores this quarter. We're seeing growing demand for our Poland-broken services to meet short-term cash needs as economic headwinds, like rising living costs and limited credit options, that are impacting our customers. Additionally, consumers are increasingly value-conscious, turning to pre-owned merchandise for its affordability and eco-friendly benefit. We are continuously innovating and providing exceptional customer service to address these evolving needs.

Speaker Change: Beginning on slide 3, we continue to be a global leader in pollen broking and pre-owned and recycled retail. We operate 1,258 stores in the US and Latin America, having added another 12 stores this quarter.

Speaker Change: We're seeing growing demand for our pawnbroking services to meet short-term cash needs as economic headwinds like rising living costs and limited credit options are impacting our customers.

Speaker Change: We are continuously innovating and providing exceptional customer service to address these evolving needs.

Lachlan Given: Moving to slide 4, during the quarter we open 6th and over stores in Latin America and 1th and over store in the US, as well as acquiring 5 stores in the US. Our earning assets grew 14% year over year to help drive our record PLO balance, which in turn led to a 14% increase in PSC. Our cash balance decreased to 218 million due to the increase in PLO and inventory, as well as our share repurchases of 3 million in the quarter. We continue to have substantial liquidity to fund additional organic earning asset growth to capitalize upon inorganic opportunities as they arise, repurchase shares, and to fund near-term debt maturities as required.

Speaker Change: During the quarter we opened six De Novo stores in Latin America and one De Novo store in the US, as well as acquiring five stores in the US.

Speaker Change: Our earning assets grew 14% year-over-year to help drive our record PLO balance, which in turn led to a 14% increase in PSC.

Speaker Change: Our cash balance decreased to $218 million due to the increase in PLO and inventory, as well as our share repurchases of $3 million in the quarter.

Lachlan Given: Subsequent to quarter end, we paid 34 million in cash and issued 77,328 shares in relation to our convertible notes that matured in July. Slide 5 shows the continued growth of our business across all key financial metrics. With total revenues up 9% year-over-year, merchandise sales up 6%, growth profit up 11%, and adjusted EBITDA are up 15%. As I mentioned earlier, strong consumer demand and excellent customer service continue to propel PLO and PSC.

Speaker Change: Slide 5 shows the continued growth of our business across all key financial metrics, with total revenues up 9% year-over-year, merchandise sales up 6%, gross profit up 11%, and adjusted EBITDA up 15%.

Lachlan Given: Turning to our key business strategy highlights for Q3 on slide 6. We're proud of the stripes we've made in strengthening our core core operations. Our accelerated PLO growth, driven by optimized pricing and lending models, has delivered an impressive 11% increase in growth profit. And in Latin America, our improved lending strategy and execution, combined with increased loan demand, has resulted in robust earnings growth in the region. Further, we have continued to modernize our back-end POS, enhancing the scalability across our systems and processes. In the US, we have expanded the availability of third-party payment programs, driving higher retail sales and reinforcing our commitment to servicing customers.

Speaker Change: Our accelerated PLO growth, driven by optimized pricing and lending models, has delivered an impressive 11% increase in gross profit.

Speaker Change: In the U.S., we have expanded the availability of third-party payment programs, driving higher retail sales and reinforcing our commitment to servicing customers.

Lachlan Given: Growing deeper relationships with our customer base is also reflected by the continued growth of easy-class rewards members, which grew 51% to 5 million members globally. Our core plan website also experienced a 50% boost in traffic. We continue to believe in fostering a culture that empowers and recognizes our team members, as they are the foundation of our success. We completed our annual company-wide engagement survey that serves as the scorecard of how our culture is transforming. With robust participation of over 80% of our team members this year, we scored 84 points, 10 points above the external benchmark.

Speaker Change: Our Corp Horn website has also experienced a 50% boost in traffic.

Lachlan P. Given: They are the foundation of our success. We completed our annual company-wide engagement survey that serves as a scorecard of how our culture is transforming. With robust participation from over 80% of our team members this year, we scored 84 points, 10 points above the external benchmark.

Lachlan Given: This quarter, we also introduced a new 10-year award program to recognize and reward long-term team member commitment. Turning to innovation and growth, we experienced close to a 50% increase in US online payment collection during the quarter, as well as a notable rise in the adoption of online payments in Mexico, with 10% of extensions and layaways now managed online. We also grew Max Corn Luxury Common Sales by seven times, primarily driven through eBay.

Speaker Change: We also grew Mac's <expletive> luxury e-commerce sales by seven times, primarily driven through eBay.

Lachlan Given: On slide seven, we highlight our sustainable and customer-centric approach. By selling 1.2 million pre-owned items, we extended the life cycle of these goods and contributed to a more sustainable future. At the same time, we provided access to critical financial services to hundreds of local communities.

Speaker Change: On slide 7, we highlight our sustainable and customer-centric approach.

Lachlan P. Given: By selling 1.2 million pre-owned items, we extended the life cycle of these goods and contributed to a more sustainable future. At the same time, we provided access to critical financial services to hundreds of local communities. At EZCORP, we're building a diverse and inclusive workplace through a range of initiatives. And our commitment to a positive team member experience extends beyond the job. We actively support employee resource groups as a platform for connection, professional development, and celebrating diversity.

Speaker Change: By selling 1.2 million pre-owned items, we extended the life cycle of these goods and contributed to a more sustainable future.

Speaker Change: At the same time, we provided access to critical financial services to hundreds of local communities.

Lachlan Given: At EasyCorp, we're building a diverse and inclusive workplace through a range of initiatives. Our commitment to a positive team member experience extends beyond the job. We actively support employee resource groups through the platform for connection, professional development, and celebrating diversity. Outside the walls of EasyCorp, we actively contribute to the communities we serve. We continue to partner with charities tackling critical issues like financial literacy, food insecurity, youth development, and poverty reduction, aligning with our commitment to make a positive social impact.

Speaker Change: At EZCORP, we're building a diverse and inclusive workplace through a range of initiatives.

Lachlan P. Given: Outside the walls of EZCORP, we actively contribute to the communities we serve. We continue to partner with charities tackling critical issues like financial literacy, food insecurity, youth development, and poverty reduction, aligning with our commitment to make a positive social impact. I would now like to turn the call over to Tim Jugmans, our Chief Financial Officer, to provide more details on our financial results.

Speaker Change: Outside the walls of EZCORP, we actively contribute to the communities we serve. We continue to partner with charities tackling critical issues like financial literacy, food insecurity, youth development and poverty reduction, aligning with our commitment to make a positive social impact.

Tim Jugmans: I would now like to turn the call over to Tim Jugmans, that she's Financial Officer, to provide more details on our financial results.

Timothy K. Jugmans: Slide 9 details our consolidated financial results for the third quarter. The company delivered another strong quarter of profitability with adjusted EBITDA rising 15% to $31.6 million and adjusted EBITDA margin expanding to 11%. Our US store count has grown to 541 stores, with 5 stores acquired and the opening of WandaNovo Store in the quarter.

Tim Jugmans: I would now like to turn the call over to Tim Jugmans, our Chief Financial Officer, to provide more details on our financial results.

Tim Jugmans: Tim? Thanks, Locky. Slide 9, details are consolidated financial results to the third quarter. As Locky mentioned earlier, we entered the quarter with record PLO of $265 million, a 15% increase and up 13% on a same-store basis. PC revenue was up 14% over last year, with growth primarily driven by same-store PLO growth. Inventory turnover was 2.7 times with age GM inventory at 3.2%. Mojitized sales were up 6% to $157.1 million, and merchandise growth property increased 7%. The company delivered another strong quarter of profitability, with adjusted EBDA rising 15% to $31.6 million, and adjusted EBDA margin expanding to 11%.

Tim Jugmans: Thanks, Lockheed.

Tim Jugmans: Slide 9 details our consolidated financial results for the third quarter. As Lachy mentioned earlier, we ended the quarter with record PLO of $265 million, up 15% and up 13% on a same-store basis.

Tim Jugmans: PC revenue was up 14% over last year, with growth primarily driven by same-store PLO growth.

Tim Jugmans: Inventory turnover was 2.7 times with HGM inventory at 3.2%. Merchandise sales were up 6% to $157.1 million and merchandise gross profit increased 7%.

Tim Jugmans: This increased was primarily driven by higher PSE, partially offset by 10% increase in expenses. Turning to our US corn segment on slide 10, we delivered record third quarter total revenue of $199.1 million, up 8% year over year, and earning assets increased 9%, driven by a PLO increase of up 11% and 6% in inventory.

Tim Jugmans: Slide 11 provides a map showing U.S. states in which we operate. Our US store count has grown to 541 stores, with 5 stores acquired, and the opening of 1.0.0.0 store in the quarter. Average loan size grew 8% driven by PLO jewelry composition, which was up 100 basis points due to continued operational focus on this category. Inventory general merchandise composition is up 200 basis points, driven by increasing handbags, shoes, and tools. Slide 12 provides a financial overview of our U.S. segment. Total PLO balance increased 11% with 10% on the same store basis, driving PSE increase of 13% year over year.

Tim Jugmans: Slide 11 provides a map showing U.S. states in which we operate. Our U.S. store count has grown to 541 stores, with five stores acquired and the opening of one De Novo store in the quarter.

Tim Jugmans: Average loan size grew 8% driven by PLO Jewelry Composition, which was up 100 basis points due to continued operational focus on this category.

Tim Jugmans: Inventory General Merchandise Competition is up 200 basis points driven by an increase in handbags, shoes and tools.

Timothy K. Jugmans: Total PLO balance increased 11% with 10% on the same store basis, driving a PSC increase of 13% year over year. On the US retail side of the business, merchandise sales were up 6% while merchandise sales gross profit was up 3%. The imputed lower gross margin reflects our focus on inventory total.

Tim Jugmans: On the US retail side of the business, merchandise sales were up 6%, while merchandise sales growth profit was up 3%. The imputed lower gross margin reflects our focus on inventory turnover. US pawn EBDA for the quarter was $38.5 million, growing 11% due to higher PSE, partially offset by 8% increase in US expenses. US EBDA margin improved 49 basis points to 19%, reflecting our focus on driving the bottom line.

Tim Jugmans: On the US retail side of the business, merchandise sales were up 6% while merchandise sales growth profit was up 3%.

Timothy K. Jugmans: U.S. Porn EBITDA for the quarter was $38.5 million, growing 11% due to higher PSE, partially offset by an 8% increase in U.S. expenses. U.S. EBITDA margin improved 49 basis points to 19%, reflecting our focus on driving the bottom line. Turning to our Latin American segment on slide 13.

Tim Jugmans: U.S. <expletive> EBITDA for the quarter was $38.5 million, growing 11% due to higher PSE, partially offset by an 8% increase in U.S. expenses.

Tim Jugmans: Turning through our Latin American segment on slide 13, total revenues increased 13% to $80.7 million, which was a record high for the third quarter. Earning assets increase 30% driven by a PLO increase of 30% and imagery increase of 32%. We increase our presence in Latin America to 717 stores this quarter, opening six stores in three countries. PLO jewelry composition is up 500 basis points with an operational focus on growing this category, especially in Mexico. High jewelry PLO composition has also driven average loan size up 10% on a constant currency basis. Turning slides 15, as I mentioned, our Latin region experienced significant PLO growth of 30%.

Tim Jugmans: Turning to our Latin American segment on slide 13. Total revenues increased 13% to $80.7 million, which is a record high for the third quarter.

Timothy K. Jugmans: Earning assets increased 30% driven by a PLO increase of 30% and an inventory increase of 32%. PLO Jewelry Composition is up 500 basis points with an operational focus on growing this category, especially in Mexico. High Jewelry's PLO composition has also driven average loan size up 10% on a constant currency basis. Turning to slide 15, as I mentioned, our LATAM region experienced significant PLO growth of 30%. This was primarily driven by our team's operational performance and the region's higher pawn demand.

Tim Jugmans: Earning assets increased 30% driven by a PLO increase of 30% and inventory increase of 32%.

Tim Jugmans: We increased our presence in Latin America to 717 stores this quarter, opening six stores in three countries.

Tim Jugmans: PLO Jewellery Composition is up 500 basis points, with an operational focus on growing this category, especially in Mexico.

Tim Jugmans: This was primarily driven by our team's operational performance and the region's higher poor demand. PSE was up 19% driven by a same-store PLO growth. On the retail side of the business, merchandise sales were up 8%, while merchandise's gross profit increased 18%, reflecting 200 basis points of margin expansion. Ividar grew an impressive 29% to 11.9 million dollars, with Ividar margin coming in at 15%, up 189 basis points. The Ividar improvement was due to higher PSE, partially offset by a 16% increase in expenses, with same-store expenses increasing 12%. From a consolidated perspective, we anticipate that we will continue to see PLO growth year on year and expect PSE to mirror this trend.

Timothy K. Jugmans: PSE was up 19% driven by same-store PLO growth. On the retail side of the business, merchandise sales were up 8% while merchandise gross profit increased 18%, reflecting 200 basis points of margin expansion. EBITDA grew an impressive 29% to $11.9 million, with EBITDA margin coming in at 15%, up 189 basis points. The EBITDA improvement was due to higher PSE, partially offset by a 16% increase in expenses, with same store expenses increasing 12%.

Tim Jugmans: EBITDA grew an impressive 29% to $11.9 million with EBITDA margin coming in at 15% up 189 basis points.

Tim Jugmans: From a consolidated perspective, we anticipate that we will continue to see PLO growth year-on-year and expect PSG to mirror this trend.

Tim Jugmans: Our ongoing emphasis on optimizing imagery turnover and minimizing age general merchandise remains a core component to our retail strategy. While we still operate in the inflationary environment, we are committed to prudent expense management and perceive the sequential same-store expense growth easing. Additionally, the strategic expense of our sole footprint, the set-sates, increased staffing levels, which contribute to higher operating costs.

Timothy K. Jugmans: Our ongoing emphasis on optimizing inventory turnover and minimising age-general merchandise remains a core component of our retail strategy. Additionally, the strategic expansion of our store footprint necessitates increased staffing levels, which contribute to higher operating costs. A quick word on our Capital Stack and Allocation Priorities. We believe the most effective uses of cash to drive shareholder value include reinvestment in our business to drive organic growth, acquisitions, share buybacks, and debt repayment.

Tim Jugmans: Additionally, the strategic expansion of our soil footprint necessitates increased staffing levels which contribute to higher operating costs.

Tim Jugmans: A quick word on our capital stack and allocation priorities. We continue to have a robust liquidity position with $280 million of cash and $368 million of gross convertible notes on our balance sheet as of June 30, 2024. We'll believe the most effective uses of cash to drive shelter value include reinvestment in our business to drive organic growth, acquisitions, share buybacks, and debt repayments. As Lockhe mentioned earlier, the 2024 notes were retired in early July. We have $103 million of convertible notes that come due in May 2025. We continue to explore a series of options to retire or finance that note, including by use of existing cash, traditional debt, or other equity-linked instruments.

Tim Jugmans: A quick word on our capital stock and allocation priorities.

Tim Jugmans: We believe the most effective uses of cash to drive shareholder value include reinvestment in our business to drive organic growth, acquisitions, shared buybacks and debt repayments.

Timothy K. Jugmans: We have $103 million in convertible notes that come due in May 2025. We continue to explore a series of options to retire or refinance that note, including by use of existing cash, traditional debt, or other equity-linked.

Tim Jugmans: We have $103 million in convertible notes that come due in May 2025. We continue to explore a series of options to retire or refinance that note, including by use of existing cash, traditional debt, or other equity-linked instruments.

Tim Jugmans: Looking ahead, we believe that our focus on cultivating PLO, coupled with our commitment to imagery management, streamline systems, and exceptional customer service, will continue to be the driving forces behind our strong financial performance.

Lachlan Given: I will now turn it over to Lockheap for a few closing remarks.

Lachlan Given: Thanks, Tim.

Timothy K. Jugmans: In closing, I'd like to express my gratitude to the EZCORP team for once again delivering outstanding operating and financial results to our stakeholders this quarter. Our record results are a testament to the team's dedication and hard work. The company has demonstrated robust performance throughout the first three fiscal quarters of 2024, and we remain well positioned to sustain this momentum and deliver returns for our shareholders as we close out the fiscal year. And with that, we will open the call to questions. Operator.

Lachlan Given: In closing, I'd like to express my gratitude to the Corp team for once again delivering outstanding operating and financial results to our stakeholders. Our record results are a testament to the team's dedication and hard work. The company has demonstrated robust performance throughout the first three fiscal quarters of 2024, and we remain well positioned to sustain this momentum and deliver returns for our shareholders as we close out the fiscal year.

Lachlan Given: And with that, we will open the call for questions.

Unknown Attendee: Operator? Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment for questions.

Unknown Attendee: To with a drier question, please press star 1-1 again. One moment for questions.

Brian McNamara: Our first question comes from Brian McNamara with Canaccord Genuity. You may proceed. Good morning, guys. Congrats on the results. Thanks for taking the questions here.

Unnamed Analyst: Hey, good morning guys. Congratulations on the results. Thanks for taking the questions here.

Speaker Change: Hey, good morning guys. Congrats on the results. Thanks for taking the questions here.

Brian McNamara: First off, I was great to see you settled the $34 million in 2024 convertible notes and cash, and it's also great to hear you'll consider maybe a host of refinancing options for the $100 million plus that's due next year. It's also a bit of a tone change, I guess, relative to kind of what we've heard in the past, so maybe an absent of like maybe starting June in the conference circuit, but I'm just curious what's driving that because I think these converts are obviously on top of mine for investors, so it's great to hear. Thanks.

Speaker Change: It's also a bit of a tone change, I guess, relative to kind of what we've heard in the past, or maybe, you know,

Speaker Change: absent of like maybe starting June in the conference circuit, but I'm just curious what's driving that because I think these converts are obviously on top of mind for investors, so it's great to hear.

Lachlan Given: Thank you, Brian. Yeah, but certainly a fantastic quarter.

Lachlan Given: Now look on the financing. I don't think we've changed the tone. I just think we deliberately wanted to continue to address that through Tim's comments today. And really, it's the same as we've always said. We are the board and the team constantly reviewing all financing alternatives. As I've said in the past, the very good news is that, given our operational performance, which continues to get stronger and stronger, our alternatives and options grow out to terms improve. So I think all options are on the table. We've got time. But the best news is we've also got cash.

Speaker Change: Thanks. Thank you, Brian . Yeah, it was certainly a fantastic quarter. Look, on the financing, I don't think we've changed the tone. I just think we deliberately wanted to...

Tim Jugmans: So I think, you know, all options are on the table. We've got time.

Lachlan Given: So I think we're in a very strong liquidity position. The balance sheet is strong. And we've got our scale opportunities continue to grow. So there's a lot to do in the existing business organically. There's a lot to do on the acquisitions front. But we're in a real position of privilege here to have such a strong balance sheet from which to operate. And, as you said, we've paid back the 24s. We've got the 25s to deal with and all options there on the table, whether it's paying with cash, using debt instruments, all sorts of different debt instruments, or some form of equity linked product, or a mix.

Lachlan Given: I think we will, over the coming six to 12 months, work out the best way to go there.

Speaker Change: I think we will, over the coming six to twelve months, work out the best way to go there. But it's certainly an incredibly exciting time for the company. I'm very, very happy with the LATAM growth, I think.

Lachlan Given: But it's certainly an incredibly exciting time for the company. I'm very, very happy with the Latin growth. I think if you look deeply at those results, you can see that that momentum is really accelerating. And what we've said from the outset here is that when this team took over and Blair, you know, Blair got so much done in the US and was able to then turn his mind to Latin America. You're saying very similar things happen down there. When, in terms of earnings momentum, so look, it was a really fantastic quarter. Hey, he took the word that I'm not fun, glad am.

Unnamed Analyst: Looking deeply at those results, you can see that that momentum is really accelerating, and what we've said from the outset here is that when this team took over and Blair, you know,

Speaker Change: got so much done in the US and was able to then turn his mind to Latin America, you're seeing very similar things happen down there in terms of earnings momentum. So look, it was a really fantastic quarter.

Lachlan Given: I was really impressed to see the 30% PLO growth there. I'm just like, what? I think Blair took over early last year. I'm just curious, like, I know it takes time to, you know, train and all this stuff, but I'm assuming this is just a direct function of, of him kind of, you know, his influence given his, you know, vast experiences and palm broken. Look, I think it certainly had started with Blair that he, you know, he had built a we've all built, you know, a really fantastic leadership team across Latin America now. And, and with Blair, Blair leading operations, I think it all starts there.

Speaker Change: Hey, you took the word out of my mouth on LATAM. I was really impressed to see the 30% PLO growth there. I'm just like, what?

Speaker Change: Look, I think it certainly has started with Blair, but he, you know, he has built, or we have all built, you know, a really fantastic leadership team across Latin America now, and with Blair leading operations, I think it all starts there, and as you say, it does take time.

Lachlan Given: And as you say, it does take time. You know, it's, it's been a matter of, you know, real training effort down there is to the 101 of porn breaking, which is all negotiation at the loan counter. And I think, you know, he led that transformation in the US through people and through, you know, the people porn and passion mantra. And was able to then turn his efforts to Latin America and do very similar things as, you know, as we've said to everyone, you know, we're in an industry that is very similar across these different geographies.

Tim Jugmans: You know, it's been a matter of, you know, a real training effort down there as to the 101 of pawnbroking, which is all negotiation at the loan counter, and I think...

Speaker Change: You know, he led that transformation in the U.S. through people and through, you know, the people, <expletive> , and passion mantra.

Speaker Change: and was able to then turn his efforts to Latin America and do very similar things as we've said to everyone.

Lachlan Given: So it's very similar metrics, very similar people issues. So we're able to do much of the stuff that we did in the US down in Latin America. And it just takes time. And I think the team are incredibly excited and engaged about, you know, finally seeing the last couple. All the quarters gained such strong momentum. And in particular, this quarter, the numbers are just, you know, very, very strong. To add to that, the investment that we've made into improving pricing in Latin America is really coming through. And also the focus on building the jewelry part of the business, especially in Mexico, is starting to come through the numbers.

Speaker Change: You know, we're in an industry that...

Unnamed Analyst: I'd add to that the investment that we've made into improving pricing in Latin America is really coming through, and also the focus on building the jewelry part of the business, especially in Mexico, is starting to show in the numbers. So that all does take time, and the execution from the stores has been improving all the time, and the combination of all those things we've just talked about is driving these great results.

Speaker Change: I'd add to that that the investment that we've made into improving pricing in Latin America is really coming through and also the focus on building the jewelry

Lachlan Given: So that all does take time, and the execution from the stores has been improving all the time. And the combination of all those things we just talked about is driving these great results.

Brian McNamara: And I just can't comment on, I mean, PLO hitting it, I think at all time in Q3 is unusual; usually Q4 is the big seasonal quarter for PLO. And I think we've talked a lot about the lack of pay down during tax season for a couple of years in a row now. Any way to explain that in terms of like how sustainable that is, is it just a sense of the fact that paying back upon loans, maybe not on the top of people's list, at least in terms of your core low income segment here any commentary on that would be helpful.

Speaker Change: Great, and I just need to comment on, I mean, PLO hitting, I think, at all time in Q3 is unusual, usually Q4 is the big seasonal quarter for PLO, and I think we've talked a lot about, you know, the lack of pay down during tax season for a couple years in a row now.

Speaker Change: Any any way to explain that in terms of like how sustainable that is is it just a is it just a sense of the fact that paying back upon loans maybe not on the top of people's lists at least in terms of your core low-income segment here any commentary on that would be helpful

Lachlan Given: Look, I think there's a lot of literature out there trying to work out why the last two years has been this way, but it seems to be a trend. And I mean, we can only talk anecdotally here, but I think your hypothesis is probably, you know, it's probably part of the issue that our customers have got other things to pay ahead of their pool line. And look, with again, you know, we're trying to do our best to forecast the year out for next year, but look, it does seem to be a trend in the last two years.

Speaker Change: Look, I think there's a lot of literature out there trying to work out why the last two years has been this way, but it seems to be a trend.

Speaker Change: And we can only talk anecdotally here, but I think your hypothesis is probably, you know, it's probably part of the issue that our customers have got other things to pay ahead of their <expletive> loan. And look, we're... ... ... ... ... ... ... ... ...

Speaker Change: Again, we're trying to do our best to forecast the year out for next year, but look, it does seem to be a trend in the last two years.

Lachlan Given: The other thing I'd add to that is what we've seen from the literature is that the dollars that people are receiving year on year hasn't really moved, but inflation has. and so everything is a little bit more expensive, and so the dollars available to redeem loans, never mind for loans or any other things they do have, is less than they used to as a percentage. And so we think that is some of the driver. And then we see in a whole host of consumer focused companies over the last three months talk about low income weakness, you know, middle to high income trade down things like I mean the big banks were talking about it a couple of weeks ago in terms of low income pressure.

Speaker Change: The other thing I'd add to that is...

Unnamed Analyst: What we've seen from the literature is that the dollars that people are receiving year on year haven't really moved, but inflation has.

Speaker Change: and so everything is a little bit more expensive and so the dollars available to redeem loans, never mind horn loans or any other things they do have, is less than they used to as a percentage.

Unnamed Analyst: And then we've seen a whole host of consumer-focused companies over the last three months talk about low income weakness, you know, middle to high income trade down things like I mean, the big banks were talking about it a couple weeks ago in terms of low income pressure. Are you guys benefiting from this? Are you seeing new faces in stores? You know, we have big retailers rolling back prices. Any sense for that?

Lachlan Given: Are you guys benefiting from this? Are you seeing new faces in stores? You know we have big retailers rolling back prices. Any sense for that? So we're certainly seeing some new faces in the stores, but you look at the sales result. We are still seeing pretty strong sales results across the board. So I think, yeah, there is this trade down going on, but I think really our customer service just gets better and better. And I think that's a big driver here. It's our people in our stores doing a much better job with customers to drive what we're seeing are obviously super strong results on the PLO.

Speaker Change: Are you guys benefiting from this? Are you seeing new faces in stores? You know, you have big retailers rolling back prices. Any sense for that?

Speaker Change: So I think, yeah, there is this trade-down going on, but I think, really, our customer service just gets better and better, and I think that's a big driver here. It's our people in our stores doing a much better job with customers.

Lachlan Given: But on the sales side, you know we are still generating margins that we think are very strong, and we're seeing sales growth, as I said, across all geographies. So I think in our situation it's really coming down to fantastic customer service and engagement from our people and our stores.

Tim Jugmans: Great, and then I think last quarter costs are a little bit of a surprise, Tim. Any thoughts on maybe a directional color for Q4 and maybe how we should start thinking about preliminary 2025? Yeah, so I think we definitely seen a lot of that inflationary pressure come through. What we do see is, from a sequential perspective, that growth and expenses is going to slow down in the next few quarters.

Unnamed Analyst: Great. And then I think last quarter's costs were a little bit of a surprise. Tim, any thoughts on maybe a directional color for Q4 and maybe how we should start thinking about, preliminarily, 2020?

Brian McNamara: Okay, that's all from me. Thanks a lot, guys. Congrats. Thanks, Brian. Thank you.

Speaker Change: Okay, that's all from me. Thanks a lot, guys. Congrats.

Lachlan Given: I would now like to turn the call back over to Lucky Given for any closing remarks. Look, thank you very much everyone for joining the call today. We're obviously very proud of the results, and again I want to thank our team for their part with efforts to deliver these results for our stakeholders. We look forward to talking to a lot of you guys throughout the course of today and next week and look forward to producing another set of strong results in the coming quarter. Thanks, guys.

Speaker Change: Look, thank you very much everyone for joining the call today, we're obviously very proud of the results and again I want to thank our team for their tireless efforts.

Unknown Attendee: Thank you.

Unknown Attendee: This concludes the conference. Thank you for your participation.

Unknown Attendee: You may not disconnect. Thank you. Thank you very much.

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