EZCORP, Inc. (EZPW) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong growth in Latin America, particularly in PLO and merchandise sales, with improved margins. The M&A pipeline remains robust, and the company is focused on disciplined growth. Despite some uncertainty in management's responses, the overall sentiment is positive, driven by strategic acquisitions and operational improvements. The Q&A highlighted confidence in future growth, especially with the SMG acquisition, and the company is effectively managing gold price fluctuations. Although expenses are expected to rise, the focus on growth and shareholder returns is likely to positively impact the stock price.
Key Financial Performance
Net Income and EBITDA Both net income and EBITDA grew by more than 35% year-over-year. This growth was driven by disciplined execution and the operating leverage inherent in the company's platform.
Adjusted EBITDA Adjusted EBITDA rose 36% to $70.3 million, with margin expanding 260 basis points to 19%. This reflects the operating leverage embedded in the company's model as it scales.
Diluted EPS Diluted EPS improved 34% to $0.55. This improvement is attributed to the scalability and operating leverage of the company's platform.
Total Revenues Total revenues reached a record $374.5 million, up 17% year-over-year. The improvement was broad-based, with contributions from PSC, merchandise sales, and a significant increase in scrap due to elevated gold prices.
PLO (Pawn Loans Outstanding) PLO increased 12% to $307.3 million, marking an all-time Q1 high. This was fueled by sustained consumer demand and higher average loan sizes across all geographies.
PSC Revenue PSC revenue rose 11% to $129.6 million, generally in line with the growth in PLO.
Merchandise Sales Merchandise sales climbed 10% to $205.2 million, with same-store sales up 7%. Merchandise margin expanded 230 basis points to 37%, reflecting improved pricing, execution, and product mix.
Scrap Margins Scrap margins expanded significantly from 23% to 34%, benefiting from higher gold prices.
Gross Profit Gross profit increased 18% to $218.9 million, supported by contributions across all three revenue streams.
G&A Expenses G&A expenses rose 9%, primarily due to higher incentive compensation and professional fees related to acquisition activity.
U.S. Segment Revenues Total revenues for the U.S. segment increased 16% to $269.8 million. This growth was driven by higher scrap sales, elevated gold prices, and increased jewelry purchasing activity.
U.S. PLO U.S. PLO expanded 9% to $239.9 million, with same-store PLO up 8%. Average loan size rose 12% to $231, largely due to higher jewelry prices.
U.S. Merchandise Sales Merchandise sales in the U.S. climbed 8%, with same-store sales up 7%. Merchandise margin improved 170 basis points to 38%.
Jewelry Scrap Gross Profit Jewelry scrap gross profit rose $8.6 million, reflecting the company's ability to efficiently monetize inventory in the current gold price environment.
Latin America Segment Revenues Total revenues for the Latin America segment rose 19% to $104.7 million. This growth was driven by merchandise sales and solid retail execution across the region.
Latin America PLO PLO in Latin America expanded 23% to $67.4 million, with same-store gains of 12%. Average loan size improved 16% to $102, largely reflecting higher jewelry prices.
Latin America Merchandise Sales Merchandise sales in Latin America climbed 15%, with same-store sales up 8%. Merchandise margin improved 380 basis points to 34%.
Latin America Segment EBITDA Segment EBITDA for Latin America improved 23% to $21.4 million, with margins expanding 70 basis points to 20%. This was achieved despite a 16% rise in same-store expenses, mainly due to labor costs, including minimum wage increases.
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Operating Highlights
Record first quarter revenue in PLO: Achieved record revenue in pawn loans (PLO) with over 35% growth in net income and EBITDA.
Expansion of pawn footprint: Acquired Founders One (Simple Management Group) and El Buffalo Pawn, adding 117 stores and expanding operations to 16 countries.
New product offerings: Introduced auto pawn and auto title loans in Puerto Rico, complementing traditional pawn services.
Geographic expansion: Expanded into 11 new countries through the acquisition of Simple Management Group, including operations in Florida, Puerto Rico, Costa Rica, Panama, and the Caribbean.
Strengthened domestic market: Acquired 12 stores in Texas, enhancing presence in a key U.S. market.
Improved financial performance: Adjusted EBITDA rose 36% to $70.3 million, with total revenues reaching $374.5 million, up 17%.
Enhanced inventory management: PLO to inventory ratio remains healthy at 1.2x, with improved merchandise margins and inventory turnover.
Operational scalability: Demonstrated scalability with top and bottom-line growth outpacing operating expenses.
M&A strategy: Focused on disciplined capital deployment for acquisitions to drive long-term shareholder value.
Sustainability and customer focus: Emphasized environmentally responsible practices and customer-friendly pawn services.
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Risk or Challenges
Consumer Credit Conditions: Challenging consumer credit conditions, particularly for lower and middle-income households, may impact the demand for pawn services and the company's ability to maintain growth.
Acquisition Integration: The need to successfully integrate recent acquisitions (Founders One and El Buffalo Pawn) to maximize profitability and returns poses operational and strategic risks.
Geographic Expansion: Expanding into 11 new countries and managing operations across 16 countries increases complexity and potential risks related to regulatory compliance, cultural differences, and operational execution.
Gold Price Volatility: The company's reliance on elevated gold prices for scrap margins introduces financial risk if gold prices stabilize or decline.
Inventory Management: Increased inventory levels, particularly in jewelry, carry risks of lower turnover and potential inventory obsolescence.
Labor Costs: Rising labor costs, including minimum wage increases in Latin America, could pressure margins and profitability.
Economic Uncertainty: Economic conditions, including potential downturns, could impact consumer demand for pawn services and preowned goods.
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Guidance & Outlook
Revenue and Earnings Growth: The company expects Q2 momentum to remain favorable, driven by tax refund season, increased loan redemption, retail activity, and elevated scrap contributions due to rising gold prices. They anticipate approximately two quarters of elevated scrap gross profit margin before normalization.
Operational Efficiency: Focus remains on expanding PLO, improving inventory efficiency, and scaling operational best practices across all geographies.
M&A Activity: The company has an active M&A pipeline in the U.S. and Latin America, with disciplined financial evaluation of opportunities. Recent acquisitions include SMG and El Buffalo Pawn, which are expected to drive long-term shareholder value.
Capital Allocation: The company prioritizes building scale in a disciplined manner, focusing on growth, return on capital, and maintaining a fiscally conservative balance sheet.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Why was now the right time to take a controlling stake in SMG?
A:The timing was right due to operational readiness, favorable deal terms, and the opportunity to scale the business quickly. The management was confident in SMG's team after years of investment and saw this as a beneficial long-term move for shareholders.
Q:How does the M&A pipeline look after the acquisition of SMG and El Buffalo?
A:The M&A pipeline remains strong, particularly in Mexico and other Latin American countries. The company continues to prioritize scale and growth while maintaining a disciplined approach to capital allocation.
Q:What are the expectations for the upcoming tax season and its impact on the business?
A:Management is preparing for potential changes in customer behavior due to larger tax refunds but does not expect a monumental change. Historically, there has been an 8-9% decrease in PLO from December to March, and this year might see a slightly higher decrease.
Q:How should new investors think about the price of gold and its impact on the business?
A:Gold price fluctuations are managed by focusing on long-term trends rather than daily changes. The company builds a margin into its lending practices, and current scrap margins are benefiting from higher gold prices.
Q:What is the growth potential in the 11 new countries from the SMG acquisition?
A:The most significant opportunity lies in Puerto Rico, with 29 stores and potential for more. Other countries like Panama and Costa Rica are being assessed, but the focus will be on disciplined de novo store build-outs.
Q:What is the M&A outlook in the U.S. for 5-plus or 10-plus store chains?
A:There are fewer opportunities for larger chains in the U.S. The focus will shift to acquiring smaller chains (1-3 stores) while maintaining a disciplined approach to return on capital.
Q:What progress has been made in Latin America, particularly in the jewelry business?
A:Latin America has shown phenomenal organic growth with a balanced increase in PLO, inventory, net revenue, and profit. Jewelry is becoming a more significant part of the business, supported by training and operational improvements.
Q:What factors contributed to the strong general merchandise margins in the quarter?
A:Improved use of data and AI for lending decisions, strong sales counter performance, and fresh inventory velocity contributed to better general merchandise margins.
Q:How does the company plan to balance growth investment, debt repayment, and shareholder returns?
A:The company prioritizes growth and scale through M&A and organic expansion while maintaining a balance with shareholder returns and debt management. Integration of recent acquisitions is a key focus.
Q:What are the expected expenses related to the integration of SMG?
A:Expenses will include investments in control environments like finance, legal, and IT functions. However, the company aims to leverage existing teams to minimize costs while focusing on revenue growth.
Q:What is the macroeconomic update for Latin America, particularly regarding wage growth and inflation?
A:Mexico's minimum wage increased by 13%, leading to higher labor costs. Despite this, the region has shown strong growth in lending and sales, with impressive operating leverage.
Q:What is the company's approach to scrapping jewelry?
A:Scrapping is based on inventory management rather than profit manipulation. Items are scrapped if they are aged or unsellable, regardless of gold price fluctuations.
Q:What is the company's stance on further M&A, particularly with cash converters?
A:The company evaluates each M&A opportunity on its merits and is currently satisfied with its 43% ownership in cash converters. The focus remains on strategic growth in existing markets.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the expected expenses related to the integration of SMG, stating that more information would be available in the next quarter. Additionally, they did not provide guidance on the continuation of organic growth or specific M&A targets, emphasizing a balanced and disciplined approach instead.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Buffalo Pawn
El Buffalo
Founders
GA
GM Segment
GM inventory
Inventory PLO
Jewelry
Merchandise margin
PLO expansion
PLO gain
PSC merchandise
Pawn store
Puerto Rico
SMG transaction
Segment basis
elevated scrap
end acquisition
geography
increase scrap
intercompany debt
interest
inventory velocity
layaway product
leverage platform
merchandise GM
milestone
mix
opportunity transaction
practice
price environment
revenue improvement
sale Merchandise
scrap contribution
store Texas
store country
trend momentum
EZPW Transcript
EZCORP, Inc. (EZPW) Q1 2026 Earnings Call Transcript
Positive2-5
The earnings call indicates strong growth in Latin America, particularly in PLO and merchandise sales, with improved margins. The M&A pipeline remains robust, and the company is focused on disciplined growth. Despite some uncertainty in management's responses, the overall sentiment is positive, driven by strategic acquisitions and operational improvements. The Q&A highlighted confidence in future growth, especially with the SMG acquisition, and the company is effectively managing gold price fluctuations. Although expenses are expected to rise, the focus on growth and shareholder returns is likely to positively impact the stock price.
EZCORP, Inc. (EZPW) Q4 2025 Earnings Call Transcript
Positive11-15
The earnings call reflects strong financial performance with revenue and EBITDA growth across segments. The company is expanding in Latin America and enhancing digital engagement, with a robust M&A pipeline. Despite not providing specific guidance, the outlook is optimistic with plans for capital deployment. The Q&A session highlighted adaptability to gold price changes and strong loan demand, particularly in Latin America. These factors, coupled with a strong loyalty program and digital initiatives, suggest a positive stock price movement over the next two weeks.
EZCORP, Inc. (EZPW) Q3 2025 Earnings Call Transcript
Positive7-31
The earnings call presents a positive sentiment with strong financial performance indicators such as increased EBITDA margin, revenue growth in both U.S. and Latin American segments, and robust acquisition pipeline. The Q&A session reinforces this with optimistic expansion strategies and effective inventory management. Although there are concerns about merchandise margins in Latin America and limited stock buybacks, these are outweighed by the overall growth prospects and strategic investments. The company's focus on scaling operations and leveraging market opportunities suggests a positive stock price movement.
EZCORP, Inc. (EZPW) Q2 2025 Earnings Call Transcript
Positive4-29
The earnings call reveals strong financial performance with revenue, PLO, and EBITDA growth. Despite a 9% decline in U.S. PLO, the company maintains a positive outlook, with strategic initiatives in Latin America and expansion plans for Max Pawn. The Q&A highlights management's focus on disciplined growth and capital allocation. While merchandise margins are lower, the overall gross profit remains strong. The $300 million debt financing boosts cash reserves, providing flexibility for future opportunities. These factors, combined with optimistic guidance, suggest a positive stock price movement.
EZPW Slides
EZPW Report
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