EZCORP, Inc. (EZPW) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the EZCORP Annual Meeting of Stockholders. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lachie Given, CEO. Please go ahead.

Good morning, everyone, and thanks for joining us for the 2025 Annual Meeting of Stockholders. We will discuss our corporate strategy and financial results for fiscal year 2020 to 2024. Before we get to that, I'm happy to report that our voting stockholder has reelected our incumbent directors to serve another 1-year term. Now turning to the presentation. Beginning on Slide 3, we continue to be a global leader in pawn broking and pre-owned and recycled retail. As of fiscal year-end, we operated 1,279 stores in the U.S. and Latin America, having added another 48 stores this year. Demand for our pawn broking services continues to grow as economic pressure from elevated living costs and limited credit options drive customers into short-term cash solutions. Additionally, consumers are becoming increasingly value conscious, turning to pre-owned merchandise for its affordability and eco-friendly benefits. We are continuously innovating and providing exceptional customer service to address these evolving needs. Slide 4 highlights our strategic progress over the past 4 years. In fiscal 2020, we transitioned to a seasoned leadership team largely promoted from within and deeply experienced in the pawn business. This team initiated a comprehensive review across all functions, leading to a new multiyear plan focused on cultural enhancement, team development and optimizing our core pawn operations. We aim to improve lending models, increase inventory turnover, reduce costs and expand both our customer base and our store footprint, all while prioritizing exceptional customer service. These efforts have driven substantial growth on the top and bottom line, along with strong returns on capital for our shareholders. On Slide 5, you can see how the execution of our strategy over the past 4 years has led to material improvements in profitability and shareholder value. Net income is up nearly 4x since fiscal 2020 and EBITDA has more than doubled, with the share price increasing 123% during the full year period, significantly outperforming both the Russell 2000 and S&P 500. Tim will now detail other substantial financial improvements we've achieved over the last few years.

Thanks, Lachie. Over the past 4 years, we have seen a substantial improvement in our financial results. Starting with PLO on Slide 6, we've reached a low in fiscal 2020 due to COVID impacts, but demand has rebounded strongly. At the end of fiscal 2024, PLO hit an all-time high, while PSC increased to $434 million for the fiscal full year. Jewelry pawn demand growing faster than general merchandisers contributed to a high average loan size. And based on current gold prices, we expect to continue to grow this key category. On Slide 7, you will see our progress to more effectively manage inventory. Despite the increase in inventory driven by our focus on PLO, inventory turns remained strong at 2.8x, while our aged GM sits at 1.7%. It's worth noting that excluding luxury handbags in our 3 Max Pawn stores in Las Vegas, aged GM remains under 1% of total GM inventory in fiscal 2024. Slide 8 highlights record merchandise sales and gross profit in fiscal 2024, reflecting the improvements made to our operating model over the last 4 years. Sales gross profit increased to $234 million in fiscal 2024, reflecting a 9% CAGR since 2020, while our merchandise margin after peaking in FY '24 has now stabilized within our target range at 36%. Turning to Slide 9. We have achieved sustained growth in customer engagement driven by our EZ+ Rewards program, which has led us to market share gains and improved customer service efficiency. EZ+ Rewards surpassed 5 million at the end of fiscal 2024, and those members accounted for 77% of transactions for the year. We also continue to drive strong growth across a number of key metrics, including online extensions and layaways as well as cumulative reviews, which are highlighted on this slide. Moving to Slide 10. Since fiscal 2020, we've added 274 stores, with 160 of those stores added through acquisition and 131 de novos, while consolidating 24 locations that did not meet our growth and profitability thresholds. We've also entered the luxury segment since that time with our Max Pawn stores in Las Vegas. Our strong balance sheet underpins these growth initiatives, with $249 million invested in earning assets and $71 million in strategic assets. Since August 2022, we've repurchased 3.4 million shares for $31 million and extended over 68% of our debt maturities for fiscal 2029, maintaining a favorable long-term cash cost of 3.75%. I will now hand it back to Lachie.

Thanks, Tim. We are consistently delivering very strong operating and financial results for our shareholders, driving growth organically as well as through de novo store build-outs and disciplined acquisitions, all while maintaining a strong liquid balance sheet and returning capital to shareholders. Every day, we continue to work tirelessly towards improving the experience for our employees and our customers and to deliver significantly enhanced value for our shareholders. That concludes the end of our presentation today, and we'll now open it up for a few questions. Operator?

[Operator Instructions] I'm showing no questions at this time. I'd like to turn it back to Lachie Given for closing remarks.

Thank you, operator. Thank you, everyone, for joining the call. We appreciate it, and we look forward to delivering our second quarter results and speaking to you all then. Thanks very much.

This concludes today's conference call. Thank you for participating, and you may now disconnect.