Q3 2025 EZCORP Inc Earnings Call
This call may be recorded I would now like to turn the conference over to Sean Mansouri of the company.
So I'm going to show you the company's Investor Relations adviser with elevate IR. Please go ahead 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 not easy Corp dotcom.
Before we begin.
And 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 and Exchange Commission.
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 Corp's, Chief Executive Officer, Lockheed given and Tim Doug <unk> Chief Financial Officer.
Now I'd like to turn the call over to Lucky given <unk>.
Rocky.
Thanks, and good morning, everyone.
This quarter showed continued.
Continued strong financial and operating momentum across the business disciplined execution by our team and the growing operating leverage in our platform.
Driving.
Earnings growth for our shareholders.
We delivered record third quarter revenue of $319 9 million.
Up 14% year over year.
Upon Hart PLO $293 $2 million.
Reflecting sustained demand for immediate cash.
Portable prion merchandise across our geographies.
For the quarter were up significantly.
That EBITDA rose 42% to.
The $45 $2 million.
And diluted EPS increased 38% to 33.
Driven by operating leverage embedded in our model.
As we scale, we're capturing more margin and deeper customer engagement across both new and existing markets.
Turning to slide three easy call now operate 1336 point all across.
In Latin America, including 604 in Mexico.
We remain a global leader in short term collateralized lending and pre owned retail.
Persistent inflation and tighter access to credit continue to drive customers towards pone as a trusted apparent alternative for instant cash.
Our value proposition is Boston accessible with no credit checks no collection and no long term obligations.
With ongoing demand is translating into strong lending activity and deep customer engagement across the business.
Alright thousand plus team members commitment to customer service and innovation allows us to scale with discipline remain highly engaged with the customer and deliver valuable financial solutions when people need the most.
Moving on to slide four this was a meaningful quarter for both expansion about store footprint and earning asset base.
A demonstration of how we're deploying capital to grow the business.
Support long term earnings growth.
During the quarter, we acquired 40 stores under the multi private NCI and <unk> in fact, Tivo brand across 13, Mexico site.
The business offers traditional pawn loans as well as all of our colon transactions some of them through.
<unk> Standalone auto pawn stores.
These stores not only expand our geographic footprint.
Also meaningfully growing our addressable market through secured auto lending.
<unk> is a growing category of collateral in Mexico with high ticket sizes and stronger appeal to customers, who may not qualify for traditional credit.
It also allows us to reach a broader demographic and.
And participate in a segment, where we've historically been underpenetrated.
In the U S. We added three.
Including our Mexico and luxury format location in Miami Beach, and often tend to novo locations across Latin America, focusing on Mexico.
And El Salvador.
All of it's helped drive earning assets to $520 million, including a record of $293 $2 million up 12% year over year.
We saw continued strength in <unk> lending and rising average loan sizes, particularly given increased jewelry.
The PLO to inventory ratio also remains healthy at one three times.
We ended the quarter with $472 million in cash down from $505 $2 million last quarter, reflecting capital deployed into store acquisitions and growth in earning assets, partially offset by strong operating cash flow.
In the three month period, ending July 31, we repurchased $3 million worth of shares.
We also provided an additional $3 million.
Unsecured loan to found is one a growth platform through which we invest and simple management group, which currently operates 99 towards those.
The acquisition pipeline remains robust and we believe that with our highly liquid balance sheet. We can continue to deploy capital opportunistically.
<unk> scale of platform for our shareholders.
Turning to slide five although you can only see the past four quarters. The performance here, it's worth noting that we've delivered more than two years of consecutive growth across all four of our key performance metrics revenue PLO adjusted EBITDA and adjusted EPS, a testament to the durability of our model and the X.
<unk> across our store network.
Additionally, our earnings growth has accelerated for three quarters in a row further demonstrating the momentum in our business.
Total revenue increased 14% year over year to $319 9 million driven by growth in PSC.
<unk> sales and a significant increase in scrap.
Merchandise sales grew 10% with same store sales up 9% supported by strong customer demand and effective retail execution.
Gross profit rose, 13% to $198 4 million in line with revenue growth.
EBITDA increased 42% to $45 2 million with EBITDA margin, expanding 290 basis points to 14, 1%.
And adjusted EPS Rose, 38% to 33.
It's worth noting that EBITDA margin has now expanded five quarters in a row on a year over year basis.
These results reflect the operating leverage we're capturing as we scale both in terms of loan demand and retail productivity.
Slide six provides a closer look at our consolidated revenue and gross profit performance for the quarter.
In Q3 total revenue grew 14% to $319 $9 million and gross profit increased 13% to $198 4 million.
Supported by growth across all major revenue streams.
As always.
This is on driving gross profit dollars and margin whether from PSC merchandize sales for scrap.
PSD increased 10% year over year to $118 2 million and remains our most consistent and high margin earnings engine.
Merchandise and sales gross profit rose, 19% to $70 2 million.
Reflecting both higher gold prices and improved execution at the counter.
Gross margin held steady at 59% even.
Even as we scaled a reflection of the consistency embedded in our model.
While PLO increased 12% year over year inventory grew at a faster pace up 32%.
By greater purchasing activity this quarter.
<unk> as well as lower inventory turns.
It's worth noting that outright purchases generally yield higher margin important soft goods.
From a mixed perspective U S. Poland continues to drive the majority of our business contributing 69% of revenue and 71% of gross profit this quarter.
As we continue to grow in Latin America, we're applying the same operating model that's delivered consistent results in the U S from pricing and inventory systems training.
Training and in store execution.
The opportunity ahead is clear to.
To improve performance strengthened unit economics, and drive higher margin contribution as the platform scales.
Turning to slide seven our business strategy highlights for the quarter, we continued to strengthen our core pulling operations, while advancing initiatives that position us for long term growth.
Across customer experience digital engagement and field execution.
BB plus rewards program continued to grow as we added 300000, new members during the third quarter, reaching $6 5 million globally.
And accounting for over 70% of our known customer transactions in Q3.
<unk> grew 9% to $1 9 million visits supported by continued improvements in our ACO programs.
We also saw increased digital traction with $30 million in U S online payments.
In Mexico, 20% of <unk> and extensions were completed digitally more than doubled from this time last year.
Our view online purchase in store experience now covered nearly 80% of U S stores.
Our inventory more accessible and convenient to browse.
We also began testing instant quite a new tool that gives customers the preliminary loan estimate before visiting the store.
While still early we believe it has the potential to drive stronger conversion and improving store efficiency.
<unk> E Commerce platform sales increased 28%.
<unk> sustained demand for affordable luxury and.
In <unk>, our position in the high quality retail category.
From a team perspective.
We completed the FY 'twenty five team member engagement survey during the quarter with 89% participation and engagement score of 85.
Well above industry benchmarks.
This speaks to our unique culture are proud to work at <unk>, serving our customers with passion and respect and genuine alignment to our companywide mantra of people pull and passion.
Having a highly engaged tenured workforce is a unique competitive advantage for easy coal and continues to be a strong focus for our leadership team.
Our strategy remains focused on investing in the platform empowering our people and.
And delivering consistent high quality service at scale.
With that I'll hand, the call over to Tim <unk>, our CFO, who will provide a deeper look at our financial results Tim.
Thanks, a lot.
Slide nine provides a detailed look at our consolidated financial results for the third fiscal quarter.
We ended Q3 with record pawn loans outstanding of $293 2 million up 12% year over year and 9% on a same store basis.
This was driven by sustained demand improved operational execution.
Average line size supported by both organic expansion and new store contributions.
On service charges revenue increased 10% generally in line with PLO growth and reflecting strong lending activity across our footprint.
Merchandise sales rose, 10% is non same same store growth as customer demand continues to support strong retail performance.
Inventory increased 32% year over year, driven by higher PLO elevated purchase activity and growth in our U S <unk> program.
<unk> declined to two four times from two seven times last year.
Some of which is due to credit mixture jewelry, which naturally carries a longer sale cycle.
Despite lower inventory tonnage, aged general merchandise declined 83 basis points to two 3% or 2%, excluding luxury reflecting disciplined pricing and markdown execution.
Merchandize margin came in at 35, 7%.
Down 30 basis points year over year improved 166 basis points sequentially from Q2.
As Archie mentioned, we continued to grow with discipline and deliver meaningful operating leverage adjusted EBITDA increased 22% to $45 $2 million and EBITDA margin expanded 280 basis points to 14%.
Moving to our U S. Pawn segment on slide 10 revenue increased 11% year over year to $220 million of which approximately half came from scrap sales.
Earning assets increased 21% to $387 4 million, which includes and an 11% increase in PLO, two $221 1 million and a 36% increase in inventory.
<unk> hundred $66 4 million.
The inventory increase is a function of higher PLO, greater pershing activity and the customer that way program introduced in July of last year.
We remain focused on optimizing our merchandize mix and improving <unk> and.
In the current quarter, we are increasing incentives for our team members, increasing marketing activities, including the use of reward points as well as targeted price reductions and category specific promotions to drive further improvements.
Slide 11 provides a geographic view of our U S operations, where we now have 545 stores across 19 states.
As <unk> mentioned earlier this quarter, we added three stores, including a luxury format location in Miami Beach.
Our platform continues to be anchored in Texas, Florida, and other major urban markets, where we benefit from scale advantages local pricing intelligence and strong brand equity.
Lending dynamics remain healthy U S average line size rise, 13% to $207 supported by increased values in both jewelry and general merchandise.
Roughly 80% of that growth came from high jewelry pricing, particularly golf.
Turing now accounts for 67% of PLO and 65% of inventory both up from prior year, given our emphasis on the category and current gold prices.
Slide 12 provides a deeper look at our U S segment financial performance for the quarter.
All lines outstanding rates of 11% year over year, but have a higher loan values improved store level execution and steady demand for short term liquidity.
Service charge revenue rose, 8%, primarily driven by same store PLO growth.
While the growth in P&C child, PLO as the overall performance reflects a strong lending environment across the store base.
On the retail side merchandise sales rose, 4% year over year and 4% on a same store basis.
Thanks, you guys margin expanded 80 basis points to 38, 5% supported by better pricing execution and improved product mix.
Inventory increased 36% driven by growth in PLO purchases and <unk> as well as a decline in turnover to two one times from two six times.
Despite this aged general merchandise grew 260 basis points to two 5% or one 8% excluding luxury attachment to active inventory management.
Running a balanced business in the U S pawn segment through a combination of growth and PSC and merchandise sales on scrap revenue with expense management led to an EBITDA increase of 31% to $50 3 million.
Margin expansion of 360 basis points to 23%.
Turning to our Latin American segment on Slide 13.
Revenue increased 21% $99 9 million in Q3.
Selecting continued strength across the region.
Owning assets rose, 18% with PLO up 16% or 4% on a same store basis, driven by improved operational performance and increased loan demand.
Inventory increased 21% and 13% on a same store basis with aged general merchandise, increasing modestly to two 2% of total GMA inventory, which equates to a total of.
800000 volts.
The increase in PLO in English. It was also largely driven by our recent acquisition in Mexico.
Importantly, we remained focused on embedding best practices from our U S operations to drive consistent execution and profitability growth across Latin America.
As shown on slide 14, we ended the quarter with 791 stores across four countries.
During the period, we acquired 40 stores in Mexico, and our content de Novo stores across Mexico, Guatemala, and El Salvador and consolidated of one store in Mexico.
Jewelry PLO increased 510 basis points year over year to 40, <unk> supported by our focused operational initiatives in Mexico and higher gold price.
Jewelry inventory composition also increased by 150 basis points to 35%.
Turning to slide 15 for more detail on our Latam operations.
Merchandise sales grew 23% with 90% same store growth.
<unk> gross profit increased 17%, partially offset by 170 basis point decline in margin due to more frequent kind of base price negotiation, a reflection of higher transaction volumes.
PSC grew 13% year over year supported by the growth in PLO.
EBITDA rose, 28% to $15 $5 million driven by higher gross profit offset in part by 12% increase in expenses with <unk>.
7% same store expense growth, primarily driven by labor expense.
<unk> margin expanded 90 basis points to 15% reflected continued operating leverage.
From a balance sheet perspective, our robust position of $472 1 million and a low net leverage will enable us to continue funding organic growth excellent compelling acquisition opportunities and thoughtfully to return capital to shareholders over time.
This quarter's acquisition of 41 stores in Mexico as a strong example of how we deploy capital with a discipline to capitalize on the global scale opportunity.
Looking ahead, we remain focused on growing PLO, improving inventory efficiency and scaling operational best practice across all geographies based on the current gold price remaining steady we expect seamless craft's gross profit in quarter four and then for scrap margins declined sequentially during FY 'twenty six.
We are very pleased with the expense management Tonight, how will we do expect a sequential increase in total expenses.
Our MNI up pipeline is very attractive in both the U S and Latin America, and we continue to approach each have changed with rigorous financial discipline.
We believe this focused execution will continue to drive long term compounding value for our shareholders.
Now I would like to turn it over to Lucky for a few closing remarks.
Thanks, Tim.
I'd like to extend my sincere appreciation to our entire team for delivering exceptionally strong quarter of earnings growth.
It reflects our rigorous focus on operational excellence and creating scale robust core business model and an extremely strong balance sheet.
As we look ahead, we remain confident in our ability to scale with disciplined invest with purpose and deliver sustained long term value for our shareholders.
And with that we'll open the call to questions operator.
Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone extra question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Yes.
Yeah.
Our first question comes from John Hecht with Jefferies. Your line is open.
Hey, guys. Thanks for taking my questions and congrats on a good quarter.
First question is just in the U S retail margins have been.
It's stronger than we expected.
Some sustained momentum there I'm wondering if you look at the mix of retail activity with gold jewelry and other and other products.
Well as Blake aged inventory.
What do you attribute the strong margin performance to it.
Is it that the consumers negotiating less or is it just that the.
The value of jewelry is going up with gold or how do we think about the trends there.
Good morning, gentlemen, thank you for the question Tim do you have a title.
Hello.
The.
Two things there John one is the gold price increase.
Has helped.
But it's also is that we.
Our lending.
Improved lending.
So.
That as both both of those have helped increase that margin better lending means that we pricing it correctly when we lend it so if it does drop into inventory that.
It's at the right price to be able to sell at at the right margin.
Okay, and then you guys have been pretty active.
In acquisitions and consolidation maybe talk about the pipeline now and.
The pricing in the market and maybe geographically where you guys are looking.
Sure.
So we obviously did a financing.
A few months back and now have it.
A really strong balance sheet from which to to pretty opportunistically execute on acquisitions and so we're really excited about the pipeline I think.
It's.
We've got plenty of opportunities across our existing.
Market and we're starting to look at new markets as well.
But I think that the.
Pipeline is always been quite robust it's just that now we are.
We are really well capitalized and I think we've been very consistent in our message to our shareholders and to the market.
This is a business that's capable of of truly scaling up from here. We think we're actually under capitalized for a mission because the global the global opportunity is so large in Poland braking and just even in our own existing market.
It's a very very large scale opportunities. So we're trying to match our capital base with the size of that opportunity and clearly we've got we've got a good amount of cash in the bank at the moment.
But as I said, even just in our existing markets in the U S Mexico and the rest of Latin America, we see a really large opportunity.
We're doing a pretty robust de Novo store network.
Our store growth strategy as well those those are proving to be outstanding uses of capital.
And then two out our capital allocation strategy, we've been pretty clear on all our message there as well, but this is our core strategy of scale, we think the earnings and cash flow can be scaled significantly from here, but we're trying to balance that with returning some capital to shareholders as well, we think the stock price is materially undervalued.
I don't know all the analysts do as well, we're looking to balance our capital allocation, but.
Again, our core strategy here is scale in terms of the store base in terms of profit and then in terms of cash flow.
And I hope over the next 12 to 18 months, we're going to be announcing more and more of these.
These acquisitions that are done with discipline.
<unk> strategy of scale.
I appreciate that thanks very much.
One moment for our next question.
It's fine.
Our next question comes from Brian Mcnamara with Canaccord Genuity. Your line is open.
Hey, good morning, guys. Thanks for taking the question congrats on another great quarter.
So one question I have is a pretty simple one why aren't you guys buying back more stock I don't want to take away from all the strong execution, but this is by far the number. One question. We were we received recently from investors and number two isn't particularly close so your recent acquisition I'm actually I think it was $20 million, but given the unexpected dilution.
From the May 2025, convert I think you still have roughly $80 million more in <unk>.
Cash than you would've expected previously, even including that acquisition and I think your prior repurchase authorization expired may slurry. So why doesn't the board at least authorize another repurchase program I understand you're prioritizing growth and scale here, but can you do both Simon simultaneously I think 2 million to 3 million a quarter.
Just feels like a rounding error given the huge valuation discount you guys trade at relative to both of your larger peer in the market as a whole.
Great. Thanks, Brian look I've touched on this already but let's.
Let's start with this quarter were up 42% and EBITDA growth.
It's.
It is an abnormal quarter, although they have any how many companies you cover that delivering 42% earnings growth, but the regular side of that is that you can see what this platform is capable of doing as we scale.
It's growing phenomenally strongly with a really conservative balance sheet, which gives stability for our shareholders in the long term.
So I've been really consistent on what were you trying to do here and you can see this quarter in our earnings numbers.
Our priority is scale.
And I actually think we are completely under capitalized for our mission.
Because that is the size of the acquisition opportunities in the de Novo opportunities that are out there you know our real estate team would love to build a 1000 more stores in Mexico.
Our issue is we've got to actually staff those stores, but it gives you just just on the de Novo THAAD the sides of the scale opportunity in terms of acquisitions.
Yeah.
We're not even touching the other areas of the World, where you look at India, and the Philippines and stuff that we're not even close to that.
Multiple billion dollar opportunities and so.
Well I'm really happy with our cash on the balance sheet.
It is not enough.
To give our shareholders a chance at genuine scale.
So I think in buying easy Corp shares you should know that our number one.
More on strategy here is is scaling up profit and cash flow.
So.
While.
It's a great return on capital buying back shares because they say is assigned materially undervalued I think it's probably less than four times. This year's EBITDA consensus number of somewhere close to that.
A genuinely do understand.
The buyback strategy and Thats why were doing it and we're looking for balance.
I do understand your comment that you think it's too low, but I think our cash at.
Bank is too low.
Because.
Tim and all of that team are out there in the market looking at acquisitions that.
Could materially change things for our shareholders.
I think this has been a very consistent message from from us.
For balanced spot.
Erring on the thought of scale.
But as you say, we have bought back shares we have bought with $3 million I don't think that's a rounding error at all I think it's a good return on capital.
But our priority and as I said in the next 12 months 12 to 18 months I Hope you will see after announcing some.
Putting our money to work in putting our money, where our mouths Saar.
In India, the scale opportunities, but.
The new message I think we've been very consistent on it.
Fair enough.
It's fair to assume I think last year, you did $15 million or sorry, you did $12 million in cash paid for acquisitions here before about 15 16. This year year to date you are at 17 is it fair to assume that number increases over the next 12 to 18 months to your point.
So I'd love to say, yes.
But as you know acquisitions are unfortunately.
You need a willing buyer and a willing seller.
So I would love to say, yes, I hope that that is the case.
Now we now have the firepower to do it as I said the pipeline is robust, but its still opportunistic in.
We've got to land these deals but that is that is why we have raised this capital because we think we can deploy it.
Skiles, So look I can't obviously commit to the market that it's going to be more than $58 million, but my intention is absolutely to be to be deploying significantly more capital than we have in the last year or two.
Now that we've got this financing behind us.
Fair enough. So second question that you guys launched an additional $3 million of foundries, which is invested in simple I think it takes your investment there north of $60 million correct me, if I'm wrong between preferred equity and loans why is that the preferred investment route and kind of what's the end game there.
Yeah look it's a good question.
That management team is doing a terrific job in building out their platform and then the third largest Poland broker at outrageous behind first cash enough.
So I think that that represents a fantastic opportunity for <unk>.
And its shareholders.
We're currently assessing exactly the question you've asked so whereas I think what is the best structure going forward.
Because <unk> demonstrated over the last three years since we invested that theyre capable capable of growing.
Growing really well in the market there in Florida, Puerto Rico and then.
Think about 10, other smaller countries across the Caribbean, plus Panama and Costa Rica.
So while we are in Florida, most of those markets we're not in.
We're very excited that we've.
With deployed capital there.
Taking a really conservative why over the last three years, while life prove up.
Their ability to scale in markets that we're not in.
I think it very high on our board's agenda.
What that looks like going forward because I.
I think the management team there it's proven they can do it.
Built value pulled in jewelry, which is obviously the best acquisition, we ever did for over $100 million in.
2000, a night.
So we know that I can do it the last three years that prove that can do it again.
And as you know we're not recognizing.
The.
The preferred equity side of that investment.
Income statement, so I think.
It is high on the board's agenda Oh.
For the next 12 months or so now that we're very well capitalized, but what we do with that investment, but as I said it it's the <unk>.
Hypothesis three years ago. It was let's provide let's provide some early capital here and see what this team can do.
And we're very happy with the with the plan that <unk> got 99 stores and doing really really well.
The third the third fourth and Poland, breaking so I think we've got the case seat at the table.
And.
I think you'll hear more from us over the next 12 months or so on on what we're going to do it.
Great maybe a couple for Tim.
Probably nitpicky, but worth asking nonetheless in the U S. I think you are PLO was up 11% similar to last year your larger peers.
The plus 12 on top of a plus 22 anything to call out competitively there.
Okay.
No I think.
If you look at quarter by quarter.
Are there different wins for different companies as we go along but on.
On average.
Our stores do have more <unk> than other competitors.
And we are focused on maximizing our net revenue per store and I think our numbers.
We continue to prove that out.
Great.
I think to call. It out I think it was a truly phenomenal quarter across the business and I think one thing to call out for everyone is is the sustained momentum in Latin America in that business.
Blair and his team.
We came together as a management team for years ago Blair and the team obviously concentrated on the U S to begin with given it roughly 70% of our business.
You can see that.
The incredible growth in that business, but once once the team was able to really truly focused on Mexico and the Latin American business. You can see now that we're kind of I think it's probably about three quarters straight now.
Really.
Really exceptional performance and so I think that leadership team starting with Blair and then into the into the Latin American latest chip team has just done.
Fantastic job.
And where it's not just the earnings performance that you see in the income statement you can see the balance.
Come back to that business of revenue PLO EBITDA our inventory.
So we're really excited about the prospects there as well but.
Thank you.
It was just a fantastic quarter and as I said looking at 42% EBITDA growth and 38% EPS growth.
Just shows the quality.
Of the operating leverage in this business win win when you get it right yet we've had some tailwind from golden from scrap, but thats that is the leverage that that's available in this platform and I think it was just a truly phenomenal quarter.
Great and then just the last one is on merch margins in Latam I think they've declined three quarters in a row. Despite obviously the EBITDA is growing really nicely there. After a good progress on this line last year, aged inventories increasing in Latam also.
What's driving that and how much of that is just simply the impact from some of these new acquired stores.
Tim will have a view on age.
It's really qualify how much inventory and GM. We've got we've just we've just printed $45 million of EBITDA.
The entire AG inventory and GM is $2 million.
So in terms of materiality.
It is such a small number.
And that includes locks age. So we're talking about a $45 million quarter. I think consensus is that we make a 170 or 190 million of EBITDA per year, our HTM over 365 days a $2 million. So it's it is a very very small number.
We focused on it yes of course.
This business used to operate at 6% to 7% <unk>, Jim It's now too so its well down the number of small are we focused on it yes of course.
But it's.
It's a pretty small number.
I don't know if you'd add anything to that.
Yes, I think the other thing to look at is the.
Not just to look at inventory by itself I'd look at ratios.
Our inventory continues to be.
In the in the in that.
Above one which is what you want to say surprised.
<unk> when <unk> was very high we had more inventory than Peel out that was not the way to run the business.
And we found that this is a sustainably.
Sustainably over the last four or five years, we've done very well at running the business the way we are.
And we continue to do that.
So very excited about the future.
As we continue to improve sales I talked about a little bit in the call about other things that we're focused on.
For the next quarter or about.
We're going to increase in promotions.
Youre going to increase incentives to team members to drive more sales.
Because we do want to do that.
But we don't see we.
We don't see this as a major issue in the business right now.
Fair enough. Thank you very much guys best of luck. Thanks.
Thanks, Brian one moment for our next question.
Our next question comes from Kyle Joseph with Stephens. Your line is open.
Hey, good morning, guys nice quarter, thanks for taking my questions.
Piggyback off that last one, but just focusing on the U S. On the margin obviously, it's been strong.
But just when inventory was obviously up.
But it sounds like a portion of that is attributable to purchases, which obviously.
Support your margin is kind of how you expect that playing out over time, not im not asking you to predict oil prices, but just more on that on the general merchandise side of things.
Yes look inventory is clearly off but there are reasons for that first is PLO growth, which is exactly what we want to see the inventory clearly grows when PLO growth.
As you said.
<unk> comment we also make the point that we are purchasing more.
And then you've also got layaway growth. So for very good reasons now inventory adopt turns are down however, and so as Tim said, we will more styles and more tons and so we've got incentives.
Incentives and we're going to spend more marketing dollars on driving those styles, but.
I think in terms of as Tim just said in terms of where their inventory is an issue.
I do not think that this is a major strategic issue for easy called it is growing.
For good reason.
Yet.
It is an opportunity to sell more.
In terms of margin, Tim do you want them.
Comment on that.
Yes, I think just going back to purchase as well.
The majority of purchases of the increase is really coming from jewelry on gold.
People are coming into our store and not necessarily getting a loan on that call, but actually selling that goal based on where the gold prices are.
So.
Ask a questions about.
And I guess, where gold is but gold is.
Some of the reason that this is occurring.
That.
That plays into this margin as we go forward.
But we continue to improve.
Pricing at the counter on how much we lend on both.
Coming back to the GM on the GM items.
And as we get as that improves we learn better and that as that happens we also be out there.
<unk>, which helps which does help margins.
Yes, that's very helpful. Thanks, and then.
Just shifting over to Latin America, just kind of.
Hoping for a little bit of a market update there last year in recent years is you've seen impacts as minimum wage increases, particularly in Mexico.
In this quarter it sounds like.
The redemption rate was really high and it is never a bad thing to get payback for alone but.
Just talk about any sort of trends you've been seeing in those markets.
Theres more than one market in that segment.
Yes.
Hi, guys.
That market is.
Substantially increased and profitability as you can see.
So very excited about and continue to see more opportunities to improve the stores.
We definitely focused.
And when these take time together about four years ago four five years ago, We did focus on the U S driving where the dollars are.
And we continually.
And we continue to try and put best practices across all geographies and.
We continue to see those improvements coming through in.
In Latin America, I think the big focus that we've been talking about is.
In Mexico on the goals you.
You can see that we continue to increase the gold.
Hello, which continues to be a great driver of the business, including obviously the gold price increasing at the same time as definitely definitely helped us.
Well I think Carl you can see on the inventory side I think one of the analysts raised an issue last quarter that.
Inventory was going growing too quickly and in Latin America, you can see this quarter. How quickly you can fix that you can see 19% sales growth on a same store basis in Latin America or in inventory coming right back into balance.
I think they're demonstrating down there that they are operating practices have improved significantly and you can see how quickly you can you can bring the business back into balance. So I think it's a it's.
It's a super exciting region as you say, we're in a bunch of different countries, but.
Obviously the market later in Guatemala by far in and that business is doing very well, but I'm, particularly excited about the Mexican opportunity there as well.
Got it very helpful. Thanks for taking my questions.
Thanks, Brett.
One moment for our next question.
Yeah.
Our next question comes from Russia armor, with Texas Capital Bank. Your line is open.
Hi, Thank you for taking my question and solid results congratulations.
I just wanted to.
Understand.
I know you've already addressed is the pipeline of acquisitions, you say stays stays robust is it fair to assume you'll focus more on Latam or international rather than the U S. And then any size you are likely to do or one you wouldn't do so.
Related questions on capital return.
It would be the shareholders would be a priority.
And our dividend.
More.
In the cards or not.
Could you could you give some color on that please clarify thanks.
Cool.
Let me start on the acquisition side so.
So in terms of which region.
We've spoken about <unk> already.
That's clearly a large opportunity for us that straddles both the U S and and.
And Latin America. So that's that's the third largest pulling broker in.
In the regions in which we operate which I've already discussed so that's clearly an opportunity and then in terms of size look we look at everything right. So this quarter. We did three one store acquisition in the U S. So we're looking at everything from one store to.
A much bigger chains in Mexico, and we've got.
We've got the Max pulling business two we bought a pawn shop in Miami Beach this quarter.
The oily pulling shopping Miami Beach, it's relatively small in terms of size, but what we're really really excited about that opportunity. It's the first time, we've done anything in the luxury category outside of outside of Las Vegas.
So we're going to we're going to see how that one guys, but we're excited about that.
In Latin America, you've got everything from one door to many many times that are over 100 stores.
I think it's a pretty balanced pretty balanced view of the markets that we're already in.
We're looking absolutely we look at new markets of course.
Theres, just selling lots to do in our existing markets.
So I think it's pretty balanced between the U S and Latin America.
In terms of your last question on on dividends look you never say never.
Because I think our board of directors has to consistently look at capital.
Capital allocation alternatives, but so in terms of the dividend I think it's.
It's back to the same thing I said earlier, which is the size of our opportunity is so large.
And then I think we're actually under that.
And I could see how much cash we've got but I think we're actually under capitalized for ambition.
So I wouldn't expect to see any dividend.
Notwithstanding that the board is always considering that but I think we're going to put out capital.
Into high return scale opportunities.
Across the world in Poland braking.
Because I think.
Scale is is that competitor has shown.
Is is the main game because I know your corporate costs have to materially change as you scale and so most stores means more EBITDA and more EBITDA margin and with the opportunity set that we've got.
I think that's the way, we're going to put out capital.
Got it. Thank you. Thank you for that and just just a follow on.
The retail gross margins were up nicely in the U S down in.
Latam.
Any color there as to the reason that does it and also are your ltvs getting impacted.
In the business the retail margins are up.
In the interim.
So yes, we definitely yes, we are definitely moving ltvs.
All the time.
We're looking at how much things are selling for how much consumers and negotiating.
And so we continually move we have a whole team that continually monitors every category and moves.
The prices and therefore, the ltvs on what we learned.
So is that.
Because we have studied 90 day loans, we can affect what we do very quickly.
So that has helped that some of the reasons that helped the margins in the U S.
But obviously gold and gold prices will is also affecting things.
In Mexico, Yes, it does it doesn't move around.
A little bit as we go along some corners.
Consumers.
Pushing a lot hotter on negotiated negotiating.
And other quarters are little bit Asia, but still.
It's still running at relatively the same kind of margins as we run before.
Think.
Nothing.
Yeah.
Nothing unusual.
Got it.
And then just lastly.
Obviously, a lot of the performance.
It seems to be driven by the rising gold prices.
Is there any can.
Can you comment on.
And thoughts on the sensitivity of the scrapping revenues of two.
The changes in gold prices, given golar has such a decline.
If gold was to stabilize or go down would.
Do you think it seems to impact your operations.
The gold price gold.
The old price.
Yes.
So it depends on when we increase the how much we lend on gold is really.
The.
That really has on the short term and that's really on scrap is really the only the real short term number there.
So our margins on scrap.
If if gold stays steady in FY 'twenty six we're not going to see the margins that we are making on on scrap as we have in the last quarter.
But.
Consumers do have a need for cash and right.
I need $200 of cash today, and again, bringing one gold chain.
Next week, they still need $200 of cash, but the Gulf China is only worth $100, they're going to find another item in the house to get the 200 adults.
You can't just take goal by self and apply it across the business because there is a there's a demand for cash that needs to be matched.
It doesn't matter whether gold projects.
Got it that's very helpful. Thank you. Thank you for pointing that out and just lastly.
That Tam is growing really nicely.
Your competitors can't seem to grow that segment that much any comments on the gap.
Well I think I think everyone's growing pretty well.
In Mexico, and the rest of Latin America, I think it's a.
It's a very very attractive market.
A very large proportion of consumers don't have access to a bank and so one broking as part of the kind of.
Financial fabric of society. So, it's a very well accepted form of consumer credit.
In Mexico and beyond so look I think it's.
As I said earlier, we think that the size of the de Novo opportunity is very large there is a huge acquisition pipeline in that region.
And I think as.
As we.
As our training.
Is that training and development programs improve we're teaching our teams in particularly in Mexico.
To build better negotiated at the counter and how to do better on jewelry and I think even this.
The organic growth opportunity is still very significant as well. So look when we look at acquisitions down there a lot obviously and most of them are growing pretty well so I think.
I think it's an industry that's.
It's growing it is a large part of the Saudi and particularly in Mexico and Guatemala.
You've seen three quarters in a row of pretty phenomenal growth and we're excited about what we can still do.
Perfect. Thank you so much again, great results solid results I'll take it offline. Thank you for answering my questions.
Thanks, Matt will talk to you later, okay. One moment for our next question.
Our next question comes from Andrew Andrew shot with Roth Capital Partners. Your line is open.
Hey, good morning, guys. Congrats on the strong results and thanks for taking my questions.
A lot of a lot of my questions have been answered so.
High level one for me here.
You guys posted another strong quarter across kind of growth metrics for your.
Digitization.
Efforts kind of where in the journey would you say you are for digitizing your storefronts and then secondly, maybe more importantly.
How is that kind of allowing in store management.
Our increase their operational efficiencies across the stores.
Andrew It's a good question.
I would say in terms of where we're at on Digitization is that we are still.
Notwithstanding a three years of work.
Two or three years of work on the rewards program I still think we're early.
We're only just now rolling out now.
Now browse online.
Up in store program to all of our U S stores. So that's the only sort of just happened where you can look at all of our inventory online you still have to go into a store bought.
It just happened.
We've got.
And that's just the U S and then we've got the teams.
Quote tool that I mentioned earlier, where you can you can get a quote on the initial call. It online for a product that you want to pull in so I think that's only being tested in San Antonio So while we've got the.
The easy App.
That's been out there for a while I would say to you.
Still quite early.
The good news for easy Coke shareholders as the pull.
Broking is still fundamentally a store based business I think online <expletive> broking is hard because you really do need that physical product to be stored in the store.
In order to be paid back. So I think we are fundamentally a physical business.
With with digital channels channels that.
So I think to your question on how does it support the table, we've got online extensions and online payments that absolutely help our store teams so that they get off the phone.
And can help customers with load who can help them with the style.
So I think those digital alternatives are growing so fast and are really helpful for our store teams.
I think the rewards program with digital and that that gives our store teams a great conversation tool to talk about.
To talk about their rewards points.
I think I think the digital program is absolutely, helping us dozed off but I would say it's still quite early.
And if we look at it from a global perspective.
We started quite a lot in the U S and the U S as early but in Latin America.
We've done we've rolled out extension likewise in Mexico, but it's not in the rest of the countries yet so.
This is really really infancy and other other other countries.
Countries that we operate.
And so we're very excited about that opportunity.
I'd say that.
Some we think some of the reason that the lifeway programs have been so successful for us and continue to grow.
Because we give the customers the ability to just how are you.
That on online and our apps coming to install and sorry, if you're paying something over 10 months and it's your decision whether or not to.
Hi.
You can just do it online and pressed the button I don't have to come to a store and I think thats.
Really helped ally why program growth.
Great really appreciate the color and congrats again on the results.
Thanks for that.
And I'm not showing any further questions.
Call back over to Lucky for any further remarks.
Well look thank you everyone for joining the call and again I think this is it's been a phenomenal quarter, which shows showcases what this platform can achieve.
I'm very grateful to our team for delivering such a strong quarter.
We are excited about where we go from here.
Thanks to everyone for joining and I'm sure we're going to talk to a lot of you through the course of today Tomorrow and the next few days. So thanks for joining and we'll talk soon.
Thank you ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.