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DATE
Thursday, Nov. 12, 2026
CALL PARTICIPANTS
- Chief Executive Officer-Lachlan Given
- Chief Financial Officer-Timothy K. Jugmans
- Investor Relations Advisor-Sean Mansouri
TAKEAWAYS
- Adjusted EBITDA — $64 million for the fourth quarter, representing a 33% increase driven by core pawn gross profit growth.
- Total Adjusted Revenue — $439.8 million for the fourth quarter, growing 31% due to higher pawn service charges and merchandise sales.
- Adjusted Diluted EPS — $2.02 for the full fiscal year, a 43% increase reflecting operating leverage and store expansion.
- Pawn Loans Outstanding — $402.8 million at fiscal year end, a 31% increase primarily resulting from higher average loan sizes on jewelry collateral.
- Same-Store PLO — 16% on a consolidated basis, reflecting increased demand for short-term cash across all operating regions.
- U.S. Same-Store PLO — 13% for the fourth quarter, maintaining the same growth rate for three consecutive quarters.
- Latin America Same-Store PLO — 24% on a constant-currency basis, driven by strong loan demand and improved operational performance.
- Merchandise Margin — 37% on a consolidated basis, expanding 130 basis points due to improved pricing strategies supported by artificial intelligence.
- U.S. Segment EBITDA — $73.2 million, a 28% increase with margin expansion of 300 basis points to 27%.
- Latin America Segment EBITDA — $26.3 million on a constant-currency basis, representing 44% growth as margins expanded on merchandise sales.
- Store Count — 1,590 locations across 15 countries, following the addition of 190 acquired stores and 48 de novos during the fiscal year.
- EZ+ Rewards Participation — 64.5% of merchandise sales customers, an increase of 479 basis points that allows for enhanced customer reengagement.
- U.S. Online Payments — $163 million for the fiscal year, an increase of $42 million as the company expanded digital payment options.
- Aged Inventory — 1.4% of total general merchandise inventory, a decline of 154 basis points reflecting improved inventory efficiency.
- Operating Cash Flow — $186 million for the fiscal year, an increase of 25% that supported earning asset growth and acquisitions.
- Share Repurchases — $11 million during the fiscal year, used to retire approximately 381,000 shares under the authorized program.
- Unrestricted Cash — $295 million at fiscal year end, providing liquidity for future acquisitions and de novo expansion.
- U.S. Average Loan Size — $239 for the fiscal year, an increase of 14% driven by rising gold prices and jewelry collateral value.
- Latin America Average Loan Size — $108 on a constant-currency basis, growing 14% due to customer demand and cost-of-living constraints.
- Scrap Gross Profit — $71 million for the fiscal year, benefiting from higher gold prices throughout much of the period.
- SMG Segment Revenue — $42.3 million for the quarter, following the acquisition of the remaining interest in July 2026.
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RISKS
- Timothy K. Jugmans warned that net interest expense will be higher year over year in the first half of fiscal 2027 due to lower interest income on cash balances.
- Lachlan Given noted that the integration of Simple Management Group stores is taking more time than the company initially anticipated.
- Timothy K. Jugmans stated, “We expect labor costs in Latin America will continue to rise,” primarily due to minimum wage increases and higher store activity.
SUMMARY
EZCORP, Inc. (EZPW -3.22%) reported record levels of revenue and pawn loans outstanding for the fourth quarter and full fiscal year 2026. Management stated that growth was driven by core pawn metrics across all geographic segments, supported by significant expansion through de novo store openings and strategic acquisitions. The company indicated a strategic focus on digital modernization, including the development of a new point-of-sale platform and enhanced e-commerce capabilities. Management also highlighted the transition of Simple Management Group stores to the corporate operating system and the expansion of the customer rewards program to capture more granular buyer data.
- CEO Given noted that demand for pawn loans remains high as cost-of-living pressures, such as energy prices and inflation, impact the company’s core demographic.
- The company completed the initial development phase of a new AI-integrated point-of-sale platform, POS 3, designed to improve transaction speed.
- Management reported that the EZ+ rewards program now captures data for 64.5% of merchandise sales customers, facilitating reengagement through digital marketing.
- Lachlan Given reported that the company is piloting e-commerce initiatives, including a jewelry-focused website and full online payment capabilities in select markets.
- Timothy K. Jugmans stated, “If gold holds around current levels, we expect scrap margin to normalize at about 15%.”
- CEO Given stated, “I think that the demand for loans is exceptionally strong,” noting 13% same-store growth in the U.S. for three consecutive quarters.
INDUSTRY GLOSSARY
- PLO (Pawn Loans Outstanding): The total principal amount of loans currently held by the company that are secured by collateral.
- PSC (Pawn Service Charges): The fees and interest earned by the company on pawn loans.
- De Novo: A new store location built and opened by the company from the ground up rather than acquired.
- Scrap: Gold or jewelry that is not sold at retail but is instead sold to refiners at prices based on the prevailing market price of gold.
- Constant Currency: A financial reporting method that eliminates the effects of foreign exchange rate fluctuations to compare underlying performance.
- SMG (Simple Management Group): A recent acquisition providing a growth platform in the Caribbean and Central America.
- LTV (Loan-to-Value): The ratio of a loan to the appraised value of the asset used as collateral.
Full Conference Call Transcript
Operator: Good morning, ladies and gentlemen, and welcome to the EZCORP fourth Quarter and Fiscal Year 26 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to turn the conference over to Sean Mansouri, the company’s Investor Relations Advisor with Elevate IR. Please go ahead, Sean.
Sean Mansouri: Thank you, and good morning, everyone. During our prepared remarks, we will refer to slides which are available for viewing or download from our site. At investors.ezcorp.com. Before we begin, I would 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. 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 and 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. Joining us on the call today are EZCORP’s Chief Executive Officer Lachlan Given and Timothy K. Jugmans, chief financial officer. Now I will turn the call over to Lachlan.
Lachlan Given: Thank you, Sean, and good morning, everyone. We finished fiscal 26 with a very strong fourth quarter. And the highest revenue, EBITDA, and pawn loan balance in the company’s history. Adjusted EBITDA was up 33% to $64 million and PLO finished at a record $401.5 million up 31%. For the year, GAAP diluted EPS grew 46% to $2.07 and adjusted diluted EPS grew 43% to $2.02. The highlight of the quarter was the continued strength and well-balanced growth in our core pawn operating metrics. Across all of the markets in which we operate. Core Pawn revenues grew 24% and Core Pawn gross profit grew 27% for the quarter. As a reminder, Core Pawn excludes scrap entirely.
On a same store basis, core pawn gross profit increased 14%, and same store PLO was up 13% in The US. And an extremely strong 24% in Latin America. We have said for some time that high single digit same store PLO growth in The US would be a compelling long-term objective for our stores. So 13% for a third consecutive quarter. On top of last year’s growth is an outstanding result for our shareholders, and provides exciting momentum into 2027. Lending, merchandise sales and merchandise margin all performed very well this quarter, delivering excellent earnings growth even as scrap margins normalize. Consistent with the outlook we have provided to the market in recent quarters.
Latin America was, once again, a standout this quarter. On a constant currency basis, 33%, Core Pawn gross profit grew 30%. And segment EBITDA increased 44%. With margins expanding on both the merchandise sales gross profit and EBITDA lines. We also opened 25 de novo stores across Mexico, Guatemala, and Honduras in the quarter. And acquired 17 stores in Mexico. Both our acquisitions made to date in fiscal 2026 and our de novos in this region continue to perform above expectations. Turning to the full year, On a consolidated basis, we delivered record revenue and PLO balances to close fiscal 26.
Revenues grew 30% to $1.7 billion and adjusted EBITDA grew 47% to $277 million It was also the largest year store growth in our history. Reflecting the continued highly robust acquisition and de novo pipeline across our markets. Particularly in Latin America. Turning to slide 3, we added a net 32 stores–190 acquired and 48 de novos. Less 8 consolidated or closed–ending the year with 1590 stores, across 15 countries. And approximately 9800 team members. These additions strengthen our position in attractive existing markets, including Texas, Florida, Mexico, and Guatemala, and SMG added new markets for us across The Caribbean and Central America. Including Puerto Rico.
With SMG now wholly owned, our focus is on bringing those stores under our systems and embedding our operating disciplines and culture. Onto what is an exciting growth platform full of committed, highly engaged team members. Slide 4 provides an update on the strategic initiatives underpinning this year’s results. Under strengthen the core, we strengthened our pricing and lending on general merchandise, Expanding coverage across categories, and improving accuracy where values vary most. Heavily supported by AI. We also lifted merchandise margins through sales training, pricing, and loan to value adjustments, and continue to grow the jewelry share of PLO. Particularly in Latin America.
Better decisions at the lending counter flow through to inventory quality, merchandise margin, and return on capital. Under customer focus, the growth in EZ+ rewards means we now have customer detail on more than 64.5% of our merchandise sales customers up 479 basis points. Helping our teams take better care of and reengage those customers. Approximately 2 thirds of identified customers who completed 3 or more transactions with us in fiscal 25 returned in fiscal 26. And that group accounted for around 2-thirds of fiscal 25’s new transactions. Website visits more than doubled to 18.8 million We provided multiple financing alternatives to our customers, rolling out a third party lease to own option to all U. S.
Stores alongside layaway and buy now, pay later. Net promoter scores of 58 to 60 in The US and Mexico remain above published consumer finance and retail averages. Under team members, we enhanced our field incentive programs with additional sales bonuses. Extended long term incentive eligibility to field leaders, and deepened our leadership bench through stronger enterprise talent planning. And under innovate and grow, in addition to our largest ever year for store growth, completed the development of the first stage of POS 3. A new point of sale platform using an agile AI first approach. We collected a $163 million in US online payments up $42 million Mexico’s online share of extensions and layaway payments reached 26%.
We expanded Instant Quote. Our online loan and purchase estimation tool, to all US stores. These tools simplify transactions for customers and reduce store level complexity. Giving our team members more time to serve our customers with passion and respect. I will now hand it over to Timothy to take you through the quarter, the year, and our multiyear track record before I will be returning for closing remarks.
Timothy K. Jugmans: Thanks, Lachie. Turning to Slide 5 for the consolidated financial highlights for the quarter. Adjusted EBITDA rose 33% to GBP 64 million and EBITDA margin expanded 20 basis points to 15%. Adjusted diluted EPS improved 23% to $0.43 EBITDA outpaced diluted EPS primarily because net interest expense rose $6.7 million from $2.8 million reflecting lower interest income after we deployed cash into acquisitions. Depreciation and amortization also increased with a larger store base. Total revenues grew 31% to $439.8 million and gross profit increased 27% to $251.7 million As Lachlan mentioned, PLO ended the year at a record $401.5 million up 31%, with same store PLO up 16%, driven by higher average loan size on jewelry collateral.
Turning to Slide 6 for the drivers of that growth. PSC rose 27% to $160.2 million with same store PSC up 13%. As a reminder, PSC reflects average PLO during the quarter rather than just the closing PLO balance. On the retail side, merchandise sales grew 23% to $216.3 million with same store sales up 9%. Merchandise margin expanded 130 basis points to 37%. Scrap sales of $63.2 million increased $28.9 million on higher gold prices and jewelry purchases. Scrap growth margin was 19% compared to 29% a year ago, as the gold price declined from third quarter levels against a sharp increase during the prior year quarter.
Scrap gross profit of $12.1 million was up modestly from $10.1 million The revenue bridge shows SMG contributing $42.3 million in its third quarter of consolidation, same store core pawn revenues adding $31.3 million same store scrap sales of $18.4 million and other new stores of $10.9 million Same store Core Pawn revenues grew 10%. The EBITDA bridge provides a clear view of the earnings drivers. Same store EBITDA, excluding scrap gross profit, contributed $22.7 million of the year over year increase, the largest driver. SMG EBITDA added $5.4 million before SMG related corporate costs included in the other category.
Same store scrap gross profit was down £400 thousand which shows that this quarter’s earnings growth came entirely from excellent performance of the Core Pawn business rather from scrap. The other category was an $11.7 million offset. Primarily driven by general and administrative expenses. G&A rose 36% to $39.9 million including $5.5 million related to SMG and its integration. Same store core pawn profit grew 14% compared to 13% in the third quarter and 12% in the second. Consolidated net inventory ended the year at $357.3 million up 44% and up 26% on a same store basis. The growth is mostly jewelry and reflects higher PLO. Purchased from customers, layaways and additional stores.
Turnover was 2.2 times compared to 2.3 times a year ago, and aged general merchandise declined 154 basis points to 1.4% of total general merchandise inventory. Moving to the U. S. Pawn segment on Slide 8. We ended the year with 563 stores across 20 states after acquiring 4 stores in Louisiana, 1 in Texas and consoled 2 stores during the quarter. Fiscal year average loan size increased 14% to $239, and jewelry represents 72% of U. S. PLO, up 360 basis points. On Slide 9, fourth quarter total revenues increased 14% to $272.1 million, with over half of that improvement attributable to core pawn. Core Pawn revenue grew 9% and Core Pawn gross profit grew 12%.
PLO grew 15% to $269.4 million with same-store PLO up 13%, driven by higher average loan size. PSC increased 12%, primarily driven by same-store PLO growth. On the retail side, merchandise sales increased 7% with same store sales up 5% and merchandise margin expanded 160 basis points to 39%. Inventory grew 31% to $243.8 million on higher PLO, layaways and purchases, and turnover was 1.9 times. Aged general merchandise declined 61 basis points to 1.9% or just over $800,000. Our focus remains on improving inventory efficiency. Store expenses increased 1% in total and decreased 1% on a same-store basis, with gross profit up 12% and store expenses up just 1%.
Segment EBITDA improved $16 million or 28% to $73.2 million and EBITDA margin expanded 300 basis points to 27%. Turning to Latin America on Slide 10. As a reminder, our Latin American results are presented on a constant-currency basis, unless otherwise stated. We ended the year with 22 stores across 4 countries. During the quarter, we opened 25 de novo stores, 13 in Mexico, 10 in Guatemala and 2 in Honduras, acquired 17 stores in Mexico and consolidated 1 location. For the full year, we acquired 64 stores and opened 45 de novos. Fiscal year average loan size rose 23% to $108 on a GAAP basis or 14% in constant currency.
And jewelry now represents 49% of Latin American PLO, up 860 basis points. On Slide 11, revenues reached a record $120.4 million up 28%. With approximately half the improvement from merchandise sales. Core Pawn revenues grew 24%, and Core Pawn gross profit grew 30%. PLO increased 33% to $98.4 million with the same store PLO up 24% on very strong loan demand and improved operational performance. 25%, supported by same store PLO growth and new stores. Merchandise sales climbed 23% with same store sales up 17%, and merchandise margin expanded 350 basis points to 35%. Inventory finished at $82.2 million up 31%, mainly as a result of PLO growth, with turnover consistent at 2.9 times.
Aged general merchandise remained below 1% of total general merchandise inventory. Store expenses increased 19% in total and 10% on a same store basis, primarily reflecting higher labor expenses in line with store activity and minimum wage increases. Core pawn gross profit more than offset these costs, and segment EBITDA grew 44% or $8 million to $26.3 million with EBITDA margin expanding 30 basis points to 21%. Moving to SMG on Slide 12. We have owned 100% of SMG since July. And because we did not consolidate in prior year period, results are presented on an absolute basis without year over year comparisons.
SMG ended the quarter with 105 stores across 11 countries, after closing 2 stores and consolidating 1 during the quarter. PLO at the end of the quarter was $33.7 million and total revenues were $42.3 million Core pawn revenues were $32 million and core pawn gross profit was $19.1 million out of a total gross profit of $21.4 million Segment EBITDA was $5.4 million compared to $6.6 million in the third quarter before SMG corporate costs discussed earlier. Merchandise margin was 26.3%, and both merchandise and scrap margins were lower sequentially. The integration work is focused on moving the stores onto our systems and embedding our operating disciplines and culture. That work is on track.
And over time, we expect to improve lending, retail sell-through, and inventory across the stores in what remains an exciting opportunity for us. Turning to Slide 14, which displays our multiyear track record for fiscal 2022 through fiscal 2026. Over the period, total revenues grew from $886 million to $1.7 billion a 17% compounded annual growth rate with Core Pawn revenues and Core Pawn gross profit, each compounding at 14%. Adjusted EBITDA grew from $113 million to $277 million at 25% CAGR with EBITDA margin expanding from 13% to 17%.
On Slide 15, PLO compounded at 18% as the store base expanded from 1180 to 1590 stores, and average loan size increased Slide 15 also sets out the contribution against the gold price. Scrap gross profit rose $3.3 million in fiscal 22 to $71 million in fiscal 26. As the average annual gold price moved from approximately $1800 to $1900 an ounce. Slide 16 shows the full year bridge. Same store core pawn revenues grew 9% for the year. Same store core pawn gross profit grew 12%. Merchandise margin expanded 190 basis points to 37%. On EBITDA, same store EBITDA, excluding scrap gross profit, contributed $57 million of an $89 million increase.
Same store scrap gross profit $30 million of the increase, and SMG contributed $22 million The other category, primarily G&A, included $10 million related to SMG–was a $20 million partial offset. EBITDA margin expanded 200 basis points to 17%. Fiscal 2026 total scrap gross profit, including SMG, was $71 million compared with $26.3 million in fiscal 25. Gold price was a benefit to the full year results and to cash flow. Adjusted net income attributed to EZCORP grew 49% to $161.7 million and adjusted diluted EPS grew 43% to $2.02 Turning to capital deployment and liquidity on Slide 17. We generated $186 million of operating cash flow, up 25%. We invested $92 million into earning asset growth.
And $45 million into capital expenditures, including de novos. We deployed $191 million into acquisitions, including the retirement of SMG’s third-party debt and the acquisition of the remaining minority interest. Under $50 million share repurchase program authorized in November 2020, we repurchased and retired approximately 381,000 shares for $11 million during the year. From a balance sheet perspective, we remain highly liquid and conservatively positioned. We ended the year with $295 million of unrestricted cash or $311 million including restricted cash, as shown on Slide 17. Against $530 million of debt at par. The net debt of $235 million. Our first scheduled debt maturity is in December 2029, with an early call date of December 21, 2026.
Our current planning assumes no change to the capital structure in the near term. Our capital allocation priorities remain unchanged. Earning assets growth across existing stores, disciplined network expansion through both de novos and M&A and an opportunistic return to shareholders, All with a fiscally conservative and liquid balance sheet. Looking ahead, our operating priorities are also consistent and simple. Grow PLO, improve inventory, efficiency, build de novos, integrate our recent acquisitions well and execute on more. And manage expenses prudently to capitalize on the operating leverage inherent in what is an exciting growing business. On scrap, margin obviously depends on gold price. When we sell compared with the price when we originally made the loan or bought the item.
Fiscal 26 gross profit of $71 million benefited from a gold price that rose through most of the year. If gold holds around current levels, we expect scrap margin to normalize at about 15%. Core Pawn revenue and Core Pawn gross profit remain the key metrics to focus on in assessing the underlying performance of the business. On seasonality, a few reminders. US PLO usually continues to build through December before tax refund season drives higher loan redemptions in our fiscal second quarter. In Latin America, most customers receive additional compensation in December, which typically drives higher redemptions and seasonal step-down in PLO, While supporting merchandise sales. PLO yields can also compress if average loan sizes rise.
Because larger loans carry lower monthly rates in markets such as Texas. On expenses, we expect growth to reflect store activity, de novos, and integration work, including SMG. And we expect labor costs in Latin America will continue to rise. SMG will contribute 12 months in fiscal 27 versus 9 in fiscal 26, with the additional quarter of consolidation, our first fiscal quarter. At current cash and debt levels, net interest expense will also be higher year over year in the first half. Because interest income on our cash is lower than a year ago. Our M&A pipeline remains strong and active in both The U. S.
And Latin America, focused on markets where we have trusted and high performing local management teams in The U. S, we aim to continue with smaller target acquisitions, while in Latin America, the pipeline includes larger independent operators and our de novo program remains a core part of our growth. We continue to evaluate every opportunity and strategic rationale quality of management, integration complexity, growth profile and return on invested capital. Now I would like to turn it back to Lachie for closing remarks.
Lachlan Given: Thanks, Timothy. This was another exceptionally strong quarter for our business. Most pleasingly, the fourth quarter’s outstanding earnings growth was driven primarily by the core pawn business, across lending, sales and merchandise margins in both The US and Latin America, rather than by gold scrapping. We are excited to carry this operating and financial momentum forward into 2027. As Tim said, our focus is simple. To grow the core pawn business in a balanced way by a relentless focus on store by store execution, to expand our footprint through de novos and disciplined acquisitions, and to allocate capital prudently all supported by a strong liquid balance sheet.
Finally, a very genuine thank you to our 9800 team members for the passion and dedication you deliver to our customers every day. Guided by our core values of People, Pawn, and Passion, we remain confident in our ability to scale with discipline, invest with purpose, and deliver sustained long term value for our shareholders. With that, operator, we will open the line for questions.
Operator: Certainly. And our first question for today comes from the line of Brian McNamara from Canaccord Genuity. Your question please.
Brian McNamara: Hey, good morning, Thanks for taking the question. Congrats on another set of really impressive results here. Well, that is fast. So firstly, your larger competitor had a good set of results 3 weeks ago, but the stock their stock and your stock got hit particularly hard on their loan growth deceleration from plus 19 to plus 12 in The US. Your US business has been pretty steady at plus 13 in the last 3 quarters, so I am curious how you would characterize the current demand environment and any market share shifts.
Lachlan Given: Lachlan Given: Look, I think. Thanks for the question, Brian. I think that the demand for loans is exceptionally strong. 13%, 3 quarters in a row In The US, I think, is an extremely strong result. And the 24% in same-store, The 24% we saw in Latin America was absolutely outstanding. And in The US, I think you know, we are all hearing a lot about the cost of living for customers in The US, and I think with our demographic, you can see it in our numbers.
So the cost of energy, the cost of the gas pump inflation rates, They are putting a lot of pressure on customers, and I think I think the demand for loans, as I said, has been very, very robust. So I think this quarter is probably as good as I have seen the business perform.
Brian McNamara: Great. that is helpful. Related to that, there broader industry concerns that a pawnbroker can keep growing loans that help people after lapping several years of record results here. So I am curious what gives you confidence of continued growth next year, both internally and execution wise and, you know, as it relates to the macro front.
Lachlan Given: Yeah, look, I think we get this question every single quarter. And we just continue to put outstanding operating results on the scoreboard. I think you can only look at your most recent quarter and the growth in that quarter, and you take out scrap. And as I said, the results are phenomenal. I think as we have heard through the midterm elections, this. As I said, the customer is under significant pressure. I think from an operating perspective, we continue to get better. In every single store we have got, we see a lot of opportunity, even our very best stores across all of the markets in which we operate.
So, you know, I would just say you look at the most recent quarter, you think about The US customer, and so I think the business is set up exceptionally well for the future.
Brian McNamara: Great. And then last 1 for me. I know you guys bucket your stores, tiers 1 through 5, obviously, 5 being the most productive. I am curious if your tier fives are reaching kind of a peak productivity here. And if not, what are you doing internally to drive growth in stores that are already productive? And how impactful will it be getting your tiers 1 and 2 up to average productivity?
Lachlan Given: Yeah, I think there is plenty to do in the tier fives for sure. You know, they are off. They often have our best operators and we start with their mindset. Because, you know, a lot of people think like the way you just described, which is, wow. I am so big. I have grown so much. How do I do it again? And so we coach these store managers into thinking much more about a growth mindset, removing obstacles, investing in people, and I think those tier 5 stores are, you know, potentially our best opportunity for growth.
We have just Included consistency bonuses across The US where we are paying bonuses for teams that get all stores across the line to plan. So 5. So we are we are trying to we are trying to grow consistency. Across the whole store base. But yeah, look, I think the tier 5 stores are a massive opportunity. As good as they are.
Brian McNamara: Very, very helpful. I appreciate it. I will pass it on.
Lachlan Given: Thanks, Brian.
Brian McNamara: Thanks.
Timothy K. Jugmans: Bye.
Operator: Thank you. And our next question comes from the line of John Hecht from Jefferies. Your question please.
John Hecht: Good morning. This is Alex Lebowski on for John Hecht. Thank you for taking my question. A quick 1 on the inventory turnover between the geographies. I think on a full year basis, US inventory might have slowed slightly; in LatAm, it accelerated. So just wondering if there is any different dynamics between the 2 geographies or if it is completely just mix driven. Thank you.
Lachlan Given: Yes, there are a lot of issues at play. Thank you for the question. there is a lot of issues at play there. The US was only very slightly down. That said, pawnbroking is about turning that inventory. You know, you start with the lending, but we really need to improve inventory efficiency always. So This coming year, it is definitely a focus of the teams to improve, as Timothy said in his remarks. Improve our inventory turns. Mexico did a phenomenal job. Guatemala as well. So I think, you know, you would see a lot of focus again this year from us in that area.
John Hecht: Great. Thank you. And then just a second 1. I know you guys are seeing pretty strong engagement online. And I am just curious beyond payments if there is any milestones or metrics that we should be monitoring, whether that is higher conversion, anything else you could provide there would be great. Thank you.
Lachlan Given: Yeah, it is a good question. We are in our infancy, to be honest with you, on the online business itself. We have got pilots going You know, as a reminder, we have got Max Pawn in Vegas that is fully e-commerce enabled, so you guys can get on there, have a look. You can buy stuff, and we will ship it to you. So it is the full e-commerce model. The rest of EZCORP is essentially you can browse our catalog online and then go into a store and pick up. And we are piloting a small jewelry full e-commerce website just now. So look, we have got a lot of digital initiatives going on.
We do a lot of search. We do a lot of digital marketing across social media. But I think, you know, I just had a call just yesterday with the team as to getting these metrics nailed. But I do think that online is a real opportunity for us. You know, we all know that pawnbroking is a neighborhood physical business. But I think it can be enhanced online. You know, you just look at the big guys out there, Facebook Marketplace, OfferUp, eBay, do massive, massive business online. So I cannot see why we cannot not only acquire new customers online, but sell to them as well.
So I think, look, we are in our infancy, but in the coming 12 months, I think you will hear more from us on those metrics and how we are doing.
John Hecht: Great. Thank you.
Operator: And our next question comes from the line of David Scharf from Citizens Capital Markets. Your question please.
David Scharf: Hi, good morning. This is a question for David. Thanks for taking our questions and congrats on another strong quarter. Wanted to dig in a little bit more on the average loan size. Obviously, you had strong same store PLO growth. A little bit of upside, it sounds like, from the jewelry side of things, kind of driving a little bit more of the larger average loan size. Particularly in The US. I wanted to see if we can get a little bit more color on how much more upside there is to that metric.
Timothy K. Jugmans: Can you hear me? Can you hear me now? Yeah. I got you. Go. Okay. Good. Sorry. What we see with the average loan size is more a reflection of the demand for cash from a customer perspective than anything else. So what we have seen over a number of years, obviously, with inflation, with the cost of living, is that the need for short term cash continues to rise over time. And the way that customer is dealing with that need for cash is now a little bit easier to use jewelry than general merchandise because jewelry is worth more. And so we separate those 2 things out. So if you.
The outlook, obviously, from what Lachie was saying and what you can hear in the media is that the cost of living continues to be a constraint for a lot of people. And so the expectation is that average loan size is probably going to continue to increase as it has for a number of years in a row. And so that is that is the way we would look at it.
David Scharf: Got it. that is very helpful color. And I also wanted to get a little bit more color on the Founders acquisition and integration. Obviously, store count was down slightly sequentially, assuming just operational, efficiency improvements. So I wanted to see what the outlook is for store growth versus the company focusing more on this integration of bringing the stores online to the broader EZ system.
Lachlan Given: Yeah, good question. I think it is early in the integration process, but it is 1 of the biggest priorities in the company is to make sure that this integration is successful. it is probably taking a little longer upfront than what we would hoped, but nothing major. You know, we are just getting that business onto our systems, getting our compensation programs, our cultural things, but it is full of fantastic, really engaged people, as I said, And then to your specific question, I think there is definitely store growth potential in that business. Absolutely.
I just think for right now, let us let us get it integrated so that we can then get about building a really exciting growth platform. So I think I would say to you that this year is integration, and then look for growth in the following year.
David Scharf: Understood. Thank you. Cool. Thanks for the questions.
Operator: And our next question comes from the line of Kyle Joseph from Stephens.
Kyle Joseph: Hey, good morning, guys. Thanks for taking my questions.
Lachlan Given: Good morning, Kyle.
Kyle Joseph: I just wanted to touch on operating expenses in the US. They have been really consistent throughout the whole year and were flat quarter-on-quarter. How are you guys achieving that, and still driving really strong growth from that segment? Just want to see the balance there.
Lachlan Given: Timothy is exceptionally tight, Kyle, as you know. So he is kept a he is kept a tight rope on us all, But look, I will let Timothy. So there are some– we do have some vacancies in those stores. which I would like to see filled. I want I wanna see more people. More team members in our stores because the activity from customers in our stores is really growing. So I would say to you that, well, it is a fabulous result. I think you know, going forward, I mean, Timothy said in his prepared remarks, we would expect that to rise because we wanna put more team in the stores.
But Tim, if you want to add anything to that?
Timothy K. Jugmans: that is correct, Lachie. We would we would expect that to rise. But remember, we also have been working on a lot of initiatives to drive efficiencies in-store. And so some of that is coming through in the numbers where previously, we would have to add many more team members as the stores grew. Now with a lot of the investment in technology, we are seeing that there is a little bit less pressure on that. As we try and take a lot of the administration out of running stores out of the stores’ hands and make it much more a technology or support center part of the running the company.
Kyle Joseph: Great. Really helpful. And then just a follow-up Apologies if I missed it. But seeing some good strength in margin. You know, is that just a function of a mix shift of collateral? Or is that any adjustments to LTVs? what is driving that? Thanks.
Timothy K. Jugmans: The 1 thing that we are working on is on pricing. Definitely, that pricing team has done a lot of work with the assistance of AI on getting better at pricing the items that come to our store. The better we get at that, definitely is starting to reflect into margin. But our stores are also getting better at selling And so the combination of those 2 are able to drive some of that margin increase. Now that margin will move up and down That sales margin will move up and down through the different cycles depending on how much cash the customers have.
Kyle Joseph: Got it. Thanks for taking my questions. that is it for me.
Timothy K. Jugmans: Thanks, Kyle.
Operator: Thank you. And our next question comes from the line of Eric Wold from Texas Capital Securities. Your question please.
Eric Wold: Good morning. First question, I know that you are intensely focused on improving our loan-to-value ratios. But with the target consumer continuing to be under pressure here, have you seen any shift in loan redemption levels in recent months? Frequency of visits? And then as that average loan size continues to move higher, obviously, with a greater need from the customer do you think that risks at all the redemption trends in the coming quarters and what do you think around those?
Timothy K. Jugmans: I will take that 1, too. Yeah. Because we are changing loan to values and prices on a continual basis, We are always monitoring redemptions, as well as drops and, I mean, ensuring they stay within normal ranges. And so that is how we run the business for a number of years because we have got much better data on those numbers and so we. Because we can change it and because the loans are only 30 to 90 days, we are really in control of what is happening. So if we see, look, This consumer is really hurting. They are gonna struggle to repay.
You know, we will slowly lower those LTVs and prices it is the same thing we have done with laptops. You know, laptops; definitely, fewer and less people want laptops. So we are lending less on laptops than we ever used to, because the demand on the other side of buying them is not there. And so that is how we have run the business. And so we are very comfortable through the cycles depending on the customer demand on what we are going to lend to ensure that we can always sell through the items that do drop.
Eric Wold: No. it is helpful. And then just obviously, you talked a little bit about the kind of the repeat customer and the loyalty customer and kind of what that drives in your results. Anything you glean from the kind of the profile of the new customers coming through the door that, you know, may or may not join the loyalty program that, you know, may be different from average that maybe shows a shift in kind of your. Broadening your reach in this environment?
Lachlan Given: Yeah, look, we are just starting on that journey now. Of measuring customers, who they are, where they come from, And so no, there is nothing I can really share on anything that is changing there. That said, you know, anecdotally, we hear in our stores that we are seeing more customers coming in the door who may not have been to a pawnshop before, And, you know, that tells me that the customer out there who might usually buy a second TV at Walmart is happier buying it secondhand because they are under pressure.
So I think you are gonna see a big initiative from us over the next 12 months where we start talking more about customer metrics, but we are we are pretty early in the journey there.
Eric Wold: Yeah. that is helpful. Thank you. Thanks for the questions.
Operator: Thank you. And our next question comes from the line of Andrew Scutt from ROTH Capital Partners. Your question please.
Andrew Scutt: Hey, guys. Thank you for taking the questions, and congrats on continued progress. So first question for me, you guys opened nearly 50 de novo stores, I believe, with my quick math here in the year. Can you just kind of talk about new store economics, how you have seen the de novos perform so far kind of against your targets?
Lachlan Given: Yeah. Thanks. Good morning, and thank you for the question. Yeah. it is it is been performing really well, that side of the business. it is become a much more important part of our growth platform. We are now very consistent We have a full team down in Latin America that is responsible for that business, and they are very experienced, and they are very data and AI enabled. So it is it really is an exciting part of the business. I would like to see it accelerate. But you have to be conscious of acquisitions at the same time.
So, you know, if you get a meaty acquisition come through, the pipeline, you know, you are probably likely to slow your de novo program at least a little. But, yeah, I am very, very happy with the de novo performance. the economics are ahead of what we model. The return-on-hurdle is extremely strong. Yeah. So it is very exciting.
Timothy K. Jugmans: The 1 thing we would add there is that, you know, the other limiting factor on building a lot more de novos is really expanding the bench strength in our stores. You know, hiring and training new people to be able to go and run new stores, is probably the most limiting factor. I think we could physically go build a lot more of the stores And you have seen that we slowly over time. I thought. I think we were doing, like, 30 a year for a number of years, and we started doing 40, now 50. Or close to 50.
And so we continue to eke up as we are growing that bench strength, which especially the Latin American team has done a very good job of expanding over time. And we are we are already thinking about 2028 now, and that means the bench. So we are already building bench strength now so that we can hopefully start accelerating the de novo program, but yeah, it is 48 stores for last year, which is, you know, almost 1 a week. So we are. You know, we think it is it is going really well.
Andrew Scutt: it is great to hear, and I really appreciate the color. And then second, for me, you guys did mention you developed kind of your first stage, I guess, third iteration of your point of sale system. Just kind of wondering if you had any rollout targets here in 2027. Was there anything you are kind of targeting to improve whether it be, you know, transaction time, pricing, all the above. Any color there would be great.
Lachlan Given: Yeah. Absolutely. So it is. It absolutely does include much faster time, much more user friendly for our store people. We, you know, we are including digital receipts, digital contracts where we can you know, reducing paper in a really big way. But as you said, it is about getting cash to the customer quickly. So, yeah, the first stage is done. We will roll that out over the next sort of 9 months. there is a lot of work for our IT team to do still. But, yeah, the things that you mentioned are all the objectives of this new system.
Andrew Scutt: Perfect. Well, appreciate the color, and thanks for taking the questions. Thanks.
Operator: Thank you. This does conclude the question and answer session as well as today’s program. Thank you, ladies and gentlemen, for your participation, and have a great day.
