• Revenue: Record Q2 revenue of $318.9 million, a 12% year-on-year increase.
• PLO (Pawn Loan Outstanding): Grew 15% to a Q2 record of $271.8 million.
• EBITDA: Increased 23% to $45.1 million.
• Diluted EPS: Grew 21% to $0.34.
• Store Locations: 1,284 stores across the US and Latin America; opened nine de novo stores in Latin America and acquired one store in Guatemala.
• Cash Balance: Increased to $505.2 million, up from $174.5 million last quarter.
• Merchandise Sales: Increased 8% to $177.4 million.
• Gross Profit: $185 million, reflecting a 10% increase.
• EBITDA Margin: Increased to 14.1%.
• Inventory: Increased 32% year-over-year.
• US Pawn Revenue: Up 7% to $221.4 million.
• Latin America Revenue: Increased 25% to $97.5 million.
• PSC Revenue: Rose 12% year-over-year.
• Average Loan Size: Increased 15% in the US.
• Online Payments: Increased by $7 million, reaching $29 million in the US.

• Warning! GuruFocus has detected 6 Warning Sign with EZPW.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• EZCORP Inc (NASDAQ:EZPW) achieved record Q2 revenue of $318.9 million, marking a 12% year-on-year increase.
• The company reported a 23% increase in EBITDA to $45.1 million and diluted EPS growth of 21% to $0.34.
• EZCORP Inc (NASDAQ:EZPW) opened nine new stores in Latin America and acquired one store in Guatemala, expanding its footprint.
• The EZ+ Rewards program saw a 34% increase in membership, now accounting for 77% of all transactions.
• The company's cash balance increased significantly to $505.2 million, providing a strong liquidity position for future growth opportunities.

Negative Points

• Merchandise margin contracted by 150 basis points due to increased price negotiations at the counter.
• Inventory turnover decreased to 2.5 times from 2.9 times, partially due to the expansion of the layaway program.
• The introduction of a long-term layaway option has shifted some sales to future quarters, impacting current revenue.
• Merchandise sales growth was modest at 8%, with a 2% increase in the US, indicating potential challenges in retail sales.
• The company faces macroeconomic pressures, including persistent inflation and economic uncertainty, impacting consumer behavior.

Q & A Highlights

Q: During the tax season, your US PLO declined 9% sequentially. Is this a new normal or a reflection of the macro environment? A: Timothy Jugmans, CFO: The 9% decrease is similar to last year, indicating a new normal. The average tax return grew only 4%, while consumer costs have increased more, suggesting a shift in consumer behavior.

Q: Are you seeing any impact from tariffs on merchandise prices and customer demographics? A: Timothy Jugmans, CFO: Tariffs have led to inflationary effects on general merchandise, increasing average loan sizes. We are also seeing new faces in our stores, with some customers trading down.

Q: Your merchandise margins have been lower than expected. Why is this, and how does it compare to competitors? A: Timothy Jugmans, CFO: We prioritize gross profit over merchandise margin. By satisfying customer cash needs, we generate more PSC, even if it means lower margins on item sales. This strategy maximizes overall gross profit.

Q: With $300 million in senior notes, what are your capital allocation priorities? A: Lachlan Given, CEO: Our priority is scaling the business while maintaining a conservative balance sheet. We aim to pursue disciplined M&A in existing markets and remain liquid to capitalize on opportunities.

Q: How is your Latin American acquisition strategy evolving, and what opportunities do you see? A: Lachlan Given, CEO: Latin America is a key growth area with strong momentum. We see opportunities for acquisitions ranging from small to large operators and will pursue them with a disciplined approach.

Q: How are discretionary and nondiscretionary factors like layaways and gold prices impacting your business? A: Lachlan Given, CEO: Internal initiatives like layaways are driving operational performance, while external factors like gold prices boost average loan sizes. Layaway sales will impact future quarters, setting us up for strong sales.

Q: What is the status of Max Pawn, and are there plans to expand this luxury market segment? A: Lachlan Given, CEO: Max Pawn is performing well, and we are considering expanding into new markets. While currently small, we see it as a significant growth opportunity over the next few years.

Q: Can you provide an update on the founders group and their performance? A: Lachlan Given, CEO: Simple is doing well with strong lending growth and sales. As the third-largest pawn broker in the US, we are pleased with their performance and will continue to assess future collaboration.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.