EZCORP Reports Q3 2026 Results: Full Earnings Call Transcript

EZCORP (NASDAQ: EZPW ) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below. This content is powered APIs. 47.

Core pawn operations drove the growth, with core pawn revenue up 24% and gross profit rising 28%. PLO reached a record $382 million, up 31%. Latin America showed strong results with PLO growing 33% and EBITDA increasing 40%. The company continued its expansion with acquisitions and new store openings in the region.

EZCORP acquired the remaining interest in SMG, now owning 100%, and plans to integrate its systems and operational practices. The strategic focus remains on growing PLO, improving inventory efficiency, expanding through new store openings, and pursuing M&A opportunities, particularly in Latin America. Management emphasized the strong demand for pawn services driven by economic conditions, and reiterated confidence in the company's growth potential despite fluctuations in gold prices. Full Transcript OPERATOR Welcome to the EZCORP third quarter fiscal 2026 earnings call.

At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call may be recorded. I'd 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, Investor Relations Advisor Thank you and good morning, everyone. com. Before we begin, I'd 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 or 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, Lachie Given, and Tim Jugmans, Chief Financial Officer.

Now I'll turn the call over to Lachie. Lachie Given, Chief Executive Officer Thank you, Sean, and good morning, everyone. EZCORP delivered another outstanding quarter, one of the strongest quarters in our history. 47.

The key highlight for the quarter was the exceptionally strong core pawn operating metrics, which normalize out gold scrap across all of the markets in which we operate. Core pawn revenues grew 24%, core pawn gross profit rose 28% and same-store core pawn gross profit increased 13%. As anticipated, gold prices stabilized and scrap sales and margin declined sequentially. While our earnings momentum and growth continued to build in a meaningful way for all of our shareholders, core demand for our product remains strong across all of the markets in which we serve.

PLO finished the quarter at a record $382 million, up 31%, driven by higher average loan sizes and the addition of new stores. More consumers are also choosing affordable, high-quality pre-owned goods, so sales and turns remain robust. Latin America was a standout again this quarter. In constant currency, PLO grew 33%, core pawn gross profit rose 31% and segment EBITDA increased 40% with margins expanding on both the merchandise and EBITDA lines.

We continued to grow our scale in this region during the quarter, extending our market leadership position in Guatemala where we acquired 33 stores. We also opened nine de novo stores across the region, which represents a very exciting element of our short- and long-term growth story as our de novos are consistently performing above expectations. We also reached an important milestone with SMG during the quarter. 4% in July.

Shortly after quarter end we purchased the remaining shares and now own 100% of SMG. Our view on SMG has strengthened as we see considerable opportunity in introducing EZCORP systems, operating disciplines, culture and capital across the platform. I'll now hand it over to Tim to take you through the financials before returning for closing remarks. Timothy Jugmans, Chief Financial Officer Thanks, Lachie.

6 million and EBITDA margin expanded 190 basis points to 16%, driven by merchandise margin expansion, expense discipline and higher scrap gross profit. 47. Earnings grew well ahead of revenue, demonstrating the operating leverage in our model. 4 million on higher merchandise sales, PSC and scrap, along with new stores including SMG.

3 million. PLO ended the quarter at $382 million, up 31%. 1 million, with same-store PSC up 13%. 5 million, with same-store sales up 6%.

Merchandise margin expanded 190 basis points to 38% on pricing, execution and inventory quality. On slide 6, we have provided the consolidated revenue and EBITDA bridges which show the composition and quality of this quarter's growth. 5 million. 9 million.

Same-store core pawn revenues grew 9% and same-store core pawn gross profit grew 13%. As a reminder, core pawn excludes scrap entirely, giving the cleanest read on underlying business performance. The EBITDA bridge provides a clear view of earnings drivers. 9 million of the year-over-year increase, the largest single driver of the bridge.

5 million. Core operations and new stores, not scrap, drove the majority of our earnings growth this quarter. 8 million year over year on higher gold prices. Sequentially, scrap sales and margin declined from the second quarter's unusually elevated levels and as gold stabilized, consistent with the outlook we provided on last quarter's call.

9% in the prior-year quarter. 9 million we generated a year ago. Scrap remains a valuable contributor to earnings and cash. As a reminder, we lend against longer-term gold values, not daily price movements, and use scrap to manage inventory, not speculate on gold.

5 million, up 39%, reflecting higher PLO purchases and layaways. 3% of total general merchandise inventory. Inventory growth was driven by jewelry, which is scrapped if it doesn't sell within approximately 12 months. S.

pawn segment on slides 7 and 8, we ended the quarter with 560 stores across 19 states, including one store acquired during the period. 2 million, with more than half of the improvement attributed to core pawn. Core pawn revenue grew 9% and core pawn gross profit grew 12%, supported by healthy pawn activity and further merchandise margin expansion. 5 million, with same-store PLO up 13%, driven by increased average loan size and continued strong pawn demand.

Average loan size rose 16% to $240 on higher jewelry composition and gold prices. S. PLO. PSC increased 13%, primarily driven by same-store PLO growth.

On the retail side, merchandise sales increased 6%, with same-store sales up 3%, and merchandise margin expanded 130 basis points to 40%. Inventory quality remains excellent. 2 million on higher PLO purchases and layaways, while turnover came in at two times. 7 million.

5 million, and core pawn accounted for 83% of the gross profit growth. Store expenses rose 8% in total and 6% on a same-store basis, well below revenue growth, lifting EBITDA margin 200 basis points to 26%. S. stores.

Turning to Latin America on slides 9 and 10, where the team delivered another excellent quarter, we ended the period with 881 stores across four countries. During the quarter we opened nine de novo stores, including five in Mexico, three in Guatemala and one in Honduras, and consolidated one location. In April we also completed the acquisition of 33 stores in Guatemala, extending our leadership in that market. As a reminder, our Latin American results are presented on a constant currency basis unless otherwise noted.

1 million, up 25%, with about half the improvement from merchandise sales. Core pawn revenues grew 22% and core pawn gross profit grew 31%, so the growth here is broad-based and high quality. 7 million, with same-store PLO up 28% on sustained pawn demand and improved operational performance. On a GAAP reported basis, average loan size rose 28% to $112, or 18% in constant currency.

Jewelry now represents 49% of PLO. PSO rose 26%, supported by same-store PLO growth and new stores. Merchandise sales climbed 20% with same-store sales up 11%. Merchandise margin expanded 490 basis points to 36%, reflecting stronger pricing execution and product mix.

1 times. Aged general merchandise remained below 1% of total general merchandise inventory. 4 million, with 95% of the gross profit growth driven by core pawn operations. Store expenses increased 27% in total and 17% on a same-store basis, primarily reflecting labor costs, including minimum wage increases.

Gross profit growth more than offset those higher costs and EBITDA margin expanded 240 basis points to 22%. Moving to SMG on slide 11. As Lachie mentioned, SMG is now wholly owned effective in the fourth quarter. Because we did not own SMG in the prior-year period, results are presented on an absolute basis without year-over-year comparisons.

SMG ended the quarter with 108 stores across 12 countries under the La Familia and CashWiz banners, including one de novo opened during the quarter in Puerto Rico. 7 million of jewelry scrap sales. 4 million. From a balance sheet perspective, we remain highly liquid and conservatively positioned.

We ended the quarter with $311 million in cash. Our first debt maturity is in December 2029, when our convertible notes of $230 million are due, followed by our $300 million senior notes in April 2032. 2 million in cash deployed into acquisitions during the quarter. Under the $50 million repurchase program authorised by our board in November 2025, we repurchased and retired approximately 132,000 shares of our Class A common stock for $4 million.

We have used $8 million of the program to date. Our capital allocation priorities are unchanged: existing store PLO and other earning asset growth, de novos, disciplined M&A, and opportunistic returns to shareholders, all within a fiscally conservative balance sheet. Looking ahead, our operating priorities are consistent: grow PLO, improve inventory efficiency, build de novos, integrate our recent acquisitions, and manage expenses carefully. As discussed in the last few quarters, scrap margin is mostly driven by year-over-year change in gold price.

As anticipated, consolidated scrap margin came down sequentially and year-over-year to 26%. If gold price does not increase, we'd expect continued normalisation towards long-term historical levels of scrap margin between 15% and 20% on seasonality. S. book usually continues to build, as seen over the recent quarters.

PLO yield also compresses gradually as average loan sizes rise, since larger loans carry lower monthly rates in states such as Texas. And as scrap normalizes, historical sequential bottom-line patterns will be less useful. Core pawn revenue and core pawn gross profit remain the cleanest read on the underlying business. On expenses, we will continue to see sequential increases as we continue to grow existing stores, add de novos, and integrate acquisitions, including SMG.

S. and Latin America, focused primarily on markets where we have trusted local management teams and deep operating knowledge. We continue to evaluate every opportunity against strategic fit, integration complexity, and return on invested capital. Now I'd like to turn it back to Lachie for closing remarks.

Lachie Given, Chief Executive Officer Thanks, Tim. This was clearly an outstanding operating and financial quarter for our company. Most pleasingly, the results were driven mostly by our core pawn operating performance rather than by gold scrap activities. All regions are performing exceptionally well and we are very excited about the opportunity for additional growth in SMG.

We have a strong, liquid balance sheet and no near-term debt maturities. The M&A pipeline remains robust, particularly in Latin America, and we're excited about the large-scale de novo opportunity in that region as well. Finally, a genuine thank you to our 9,700 team members for the passion and professionalism you deliver to our customers every day. I look forward to together closing out what has been an exceptionally strong fiscal year for our company and for our shareholders.

With that, operator, we'll open the line for questions. OPERATOR Thank you. At this time we will conduct the question-and-answer session. As a reminder, to ask a question you will need to press Star 11 on your telephone and wait for your name to be announced.

To withdraw your question, please press Star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Brian McNamara of Canaccord Genuity. Your line is now open.

Brian McNamara, Analyst at Canaccord Genuity Good morning, guys. Thanks for taking the question here. I was hoping you guys could opine on gold prices. I hate to beat the dead horse here, but obviously it's a concern we hear from investors.

You know, gold sits at 4,300 today versus 5,400 at the peak in January. How does that impact your day-to-day operations? And if you can give some color on how you price loans and all that good stuff, I think it would be really helpful. Thank you.

Lachie Given, Chief Executive Officer Thanks, Brian. Tim, you want to have a first crack at that? Timothy Jugmans, Chief Financial Officer Sure. Thank you, Brian, for the question.

On setting gold prices, we look at gold prices on a rolling basis — so, like a three-month rolling basis. So if gold spikes like it did in January and then comes back down, we are not changing what we do on a day-to-day basis. We're looking at more medium-term gold prices to price loans. The biggest effect that we do see on the business is scrap.

So what we saw in quarter two with the rise of the gold prices is that the scrap margin was significantly higher than normal. And this quarter what we've seen is that gold prices have come down and the change year over year in gold price is declining. And so now we've seen sequentially that scrap margin decrease, but also year over year that scrap margin decrease.

And so what we would expect if gold prices remain pretty consistent — obviously there's a little bit of a spike in the last few days, but it's been in that 4,000, just over 4,000 to 4,300 for a number of months if we exclude the spike in January — and so we would expect scrap margins to come back down to normal levels. Lachie Given, Chief Executive Officer I think, to add to that, Brian, as I know you know, we're in the business of satisfying a customer's need for cash. And as you can see from our loan growth, that demand has been pretty phenomenal on a very consistent basis.

We're seeing extremely strong lending trends, which is the most important metric in our business — PLO growth. S. and Latin America, particularly, the demand for cash that we're seeing in our stores is exceptionally strong. So clearly gold is the largest piece of collateral that our customers use.