EZCORP, Inc.

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 Lockie mentioned, SMG is now wholly owned effective in the fourth quarter. Because we do 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. PLO at the end of the quarter was $33.8 million and total revenues were $43.1 million, comprised of $17.1 of merchandise sales, $14.3 of PSC, and $11.7 of jewelry scrap sales. Core point revenues were $31.4 million and core pawn gross profit was $19.7 million out of a total gross profit of $22.4 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, and our convertible notes of $230 million are due, followed by our $300 million senior notes in April 2032. The year-over-year decline in cash primarily reflects the retirement of SMG's third-party debt of $134.2 million in cash deployed into acquisitions. During the quarter under the $50 million repurchase program authorized by our board in November 2025, we repurchased and retired approximately 132,000 shares of our Class A common stock with $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, discipline M&A and opportunity 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 year-over-year to 26%. If gold price does not increase, we'd expect continued normalization towards long-term historical levels of scrap margin between 15% and 20%. On seasonality, a few reminders. For our fiscal fourth quarter, in Latin America, customers receive a mid-year bonus payment in July, which typically drives higher redemptions and seasonal step-down in PLO, while the US 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 porn revenue and core porn gross profit remain the cleanest read on the underlying business. On expenses, we will continue to see sequential increase as we continue to grow existing stores, add to Novos, and integrate acquisitions including SMG. Our M&A pipeline remains active in both the US 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 Lockie for closing remarks.

Thanks, Tim. This was clearly an outstanding operating and financial quarter for our company. Most pleasingly, the results were driven mostly by our core porn 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.

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.

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. Gold sits at $4,300 today versus $5,400 at the peak in January. How does that impact your day-to-day operations? 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.

Thanks, Brian. Tim, do you want to have a first crack at that?

Cool. Thank you, Brian, for the question. On setting gold prices, we are looking at, we look at gold prices on a rolling basis. So look at 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. So 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 price is coming down and the change year over year in gold price is declining and so now we've seen sequentially that gold price margin decrease but also year over year that scrap margin decrease and so what we would expect if gold prices remain pretty consistent where you know obviously it's a little bit of a spike in In the last few days, but it's been in that 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.

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, is PLO growth. And you can see across the US 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, but I think Thank you for joining us. And I think from a micro perspective is what we do in our own stores. We've still got a lot to do in our own performance to continue to improve these stores organically. So from both perspectives, I'm very excited about the growth potential of our business. and Gold. I know you've gone specifically to Gold which a lot of people are doing. It's a good question but I think what really underlines the quality of this business is our ability to service that need for cash.

That's helpful. Just to follow on to that, I've been of the view that, and correct me if I'm wrong, a person comes in for a dollar amount, they need $200 to satisfy a short-term cash need, to your point. If gold drops 25% per se, so something they got three months ago, they get for $160 for argument's sake. Do you, would they then pawn another item to kind of make up that $40? Or do you think there are some folks that just because gold prices are higher, they're getting a higher loan in excess of what the cash they need? I know that's a pretty loaded question there.

Yeah, look, look. Are there certain customers that do the second one? Of course. They take more money because gold's up. But my own anecdotal view here is that, back to what I said, people have a demand for cash, whether it's to pay a medical bill, to fill up their car. That does not depend on the gold price. That is just a fundamental need for cash. and that's what we're there to service. So, look, I know it's a loaded question and I'm sure there are people who are taking more because the gold price is up, but fundamentally speaking, this customer needs cash and that's what we're using all sorts of things, whether it's general merchandise, whether it's gold, whether it's jewellery, diamonds, to satisfy that need.

But we know that to satisfy the need for cash... customers are bringing in less grams than they used to to satisfy the same amount of cash and we know there's a group of customers that is not taking what we're offering so there's definitely a whole group of customers that take just they're taking below what we're offering and not taking any higher so so it just what we what we would say is that The effect on the gold price doesn't affect the average loan size, right? So if the average loan size was moving with the gold price, it would move very differently. And so I think that's an important part. The only part where the gold price has the big effect and trying to have people maximize what they're getting is when they're selling their gold to us. That is where the gold price matters much more. and a lot of that gold that we're buying is stuff that is not really sellable in our stores. So like a broken necklace. And so we're scrapping that pretty quickly. So that's where the customer is trying to maximize. It's quite a different when it's a loan product. Right.

So that's very helpful. I appreciate the detail there, guys. On the stuff where your execution matters here, like merchandise margins, I think it was the highest U.S. merchandise margin since 2022, and I think some of that was stimulus-aided kind of thing, so it looks like a really good result. Blended SMG looks north of your targeted 35 to 38 range. Lockie, I know you guys have been working to get that margin up. Any color on what's driving the progress there?

Tim, do you want to take a crack at that margin?

Yeah, we've... Now, Martin, we still expect to be still on a consolidated basis going in that kind of range. It's definitely crept up, which is really nice to see. You know, we've got better execution in the store, better at pricing, two things. And obviously, there's a little bit of gold and the change in gold price affecting that. But, you know, we're still very happy of where it is, but it will continue to move in that range.

Great. And if I could squeeze one last one on M&A. How is the pipeline looking today? How is the SMG integration going? And how did it come together in terms of getting that asset wholly owned?

There's three more questions, Brian, but there's no worries. You're good at this. Let's start with SMG. It's been a huge couple of quarters, obviously, on the general M&A front. We've done SMG. We've done 33 stores in Guatemala. We've done a bunch in Mexico. We've done a few little ones in the US. We've been incredibly active these last two quarters on execution. M&A, for me, now has two heads. One head is integrating these businesses together. Lachlan Given, Ellen Bryant, Lachlan This was a business that was capital constrained and is no longer capital constrained. So we are going through cultural change now where we don't need to rely on scrapping as much to create cash. We are now doing what EZCORP does, which is to manage inventory with scrap, but to really concentrate on having our jewelry cases full and making strong margins on selling our jewelry. So there's cultural change going on. So I would say this first year is all about getting on our system, getting on to work day and some cultural change, but we're incredibly excited. Once those things are done and they're on our system, we're probably feeling we're going to be ahead of our own expectations as to what this business can do. We're very happy with the leadership there. They've been very open, transparent, and we're working really well together. So I think SMG, and to your question about how it came together, look, these deals, as I always say to the market, they take time. You've got to have a willing seller, a willing buyer, and you've got to have a price, and sometimes they just come together.

Excellent. Thank you very much, guys.

Thank you.

As a reminder, we kindly ask you to limit to one question and one follow-up question. Our next question comes from the line of David Scharf of Citizens Capital Markets. Your line is now open.

Good morning, everyone. Thanks for taking my questions. Hey, I'll tell you what, I'm going to follow up and pile on.

Sorry, did you guys lose me there? I had a broker that called my line, I'm sorry. I was just ending, sorry, let me just end that. So we're very happy on the SMG side, but in the pipeline to Brian's last question, I think the pipeline, as Tim said in his remarks, remains very robust in Latin America particularly. I think in the US, as I've said before, we're kind of and many more. David, do you want to go ahead with your question?

Okay, yeah, I wasn't sure if I was live or not. Sure, just real quickly, maybe just kind of framing the prior questions a little bit differently. You know, when we think about the cash needs versus the collateral value debate on what a consumer is actually going to do when they walk through your door, maybe more directly, Do you think PLO growth would be the same store PLO growth with gold prices at last year's levels? Maybe that's a more direct way of just framing the question.

Go for it, Tim. You mean literally this time last year?

Well, you know, just thinking about gold being up 20%. We know our customers are very smart

They are, for the majority, only taking what they need because if you're taking a loan, why are you going to take more than you feel comfortable paying back if you want that item back? That would not make any sense, right? So if you're coming in with something that you want back, you're only going to take what you need and that you feel comfortable repaying. So it's a very important, it's very different to selling your item where you're trying to maximize it. Now, obviously, I'd have to really speculate on what customers would do, but from what we can see at the counter, that's how customers act. So we would say, you know, if we thought that it was always maximizing, we wouldn't have the amount of customers that don't take the maximum, and we would have a much, the average loan size would increase much more based on the gold price. And so those two things tell you that this is not a, this is a demand-led item, not a gold price-led increase in average loan size.

Got it. No, that's very helpful. I mean, I think it helps investors sort of. Yep.

As a very important part of the business.

Yeah. Yeah. Hey, just one follow-up. In terms of the PLO growth in Mexico specifically, I know we're about a good nine, ten months into this, I think, worker stoppage, this strike at the big Nacional Monte operation. Has there been any direct relationship between The work stoppage is there in your foot traffic?

I mean, I think there has to have been, right? I think, you know, comparatively speaking, we haven't got a whole lot of stores that are very close to theirs. But, you know, I think there is certainly an element of the demand that was in those stores that have come to other pawn shops across the country.

Got it. Great. Thank you very much. Thanks, David.

Thank you. Our next question comes from a line of John Hecht of Jefferies. Your line is now open.

Morning, guys. Thanks for taking my questions. Just first one is getting a little bit more on SMG. Just wondering, like, the characteristics of the stores, you know, and the metrics, like, you know, store PLO size versus other geographies, etc. Inventory terms, the standard loan size and term, is it consistent there or are there differences? And do you guys have objectives to call it change the metrics over time?

Morning, John. Thanks for the question, mate. Yeah, so look, it's region by region. So the biggest two markets for SMG are Florida and Puerto Rico. Then there is a bunch of other countries across the Caribbean where it's much smaller. So I would say generally speaking, the metrics we are certainly aiming for are similar to what we do. I think each market is different. In Puerto Rico, for example, it's similar to Mexico where they have the auto business under the porn regulation there. So those stores do particularly well. and then in Florida it's very similar metrics to what we are certainly looking to do. I think, as I said earlier before, SMG was capital constrained before we bought it and so I think adding our capital, our operating disciplines, our culture... I think will bring that business much more into line with EasyCorp's metrics. But as I said, it's going to take some time. But the great thing about this business is that across markets and across countries, the metrics are similar, the customer base is similar, our teams are similar, so we can manage this business in quite a focused way. And so, as I said earlier, I'm pretty excited about what SMG can do, particularly once it's on our system and once we've got... once we've got this culture sort of rolled out.

John, on slide 11 in the investor deck, we do have some of those metrics that we go through. You'll see that average loan size for SMG is higher than in the US. And most of that is because of the Puerto Rico and the lending on the

on the vehicles, which does push that average loan size up compared to the U.S. And the second question is the PLO obviously has been very strong, the growth in PLO, and that obviously translates into obviously strong revenue growth too. Is the mixer revenue in the U.S. and LATAM, is it consistent with what it was a year ago, it was like 30% less, or are you observing any changes in the types of inventory as things expand?

On the types of inventory? Yeah, we definitely, in the last number of years, we've definitely seen jewelry continue to increase. and then from a general merchandise perspective we've definitely seen the luxury and shoes continue to increase in the stores and things like TVs and other large electronics They are declining. And so it all mix based on what the customer is after and what the customer has to bring in. It also can be quite different neighbourhood to neighbourhood.

I'd say, John, the biggest change we've seen in inventory is in Latin America. I think you'll see in the materials that we are now 50% of our PLO is jewellery. and you know historically we were known as the GM lender and I think the last two years our training led by Blair and a really strong leadership across Latin America has done a phenomenal job in us becoming a very strong jewelry lender too and I can't remember what the percentage was three years ago but I'd take a guess it was 30 or 35 percent jewelry which is now 50 so I think that that Latin American piece is a big part of the growth story there and then as Tim said, we've got luxuries growing, sneakers are growing, laptops are down, so there's definitely elements of different inventory, but I wouldn't say it's anywhere near as big as the jewelry story. Okay, thanks very much.

Thank you. Our next question comes from a line of Kyle Joseph of Stevens. Your line is now open.

Hey, good morning guys. Thanks for taking my question. Since we asked about gold enough, I guess We'll talk about gas prices. Obviously, they've been pretty volatile, but in the U.S. specifically, how much of an impact are you seeing these days from fluctuations in gas prices?

Look, thanks, Kyle. We don't have the number. Obviously, this is anecdotal, but clearly that puts pressure on this customer, and I think the volatility increases the demand for cash. I can't give you a specific number, but it definitely impacts what our customers are doing.

Got it. And then, yeah, on SMG, apologies if I missed this, but I think you're at 108 stores. Just, you know, within those markets, do you have a sense for, you know, how many stores that could eventually be? Obviously, I guess it's an overlap.

Yeah, it's an interesting question given the overlap. So what we're doing at the moment is focusing on leadership, how we're going to run this business. Is it integrated? Is it, you know, who's running what? I think the focus is to get onto our system. So I think that is step one. And then we're going to assess which of these markets, you know, Puerto Rico looks to be a very attractive market. There's markets in the Caribbean. So I think we're sort of in the process now of assessing that. But given it's 100% owned, that'll just be part of our de novo program going forward.

Last one from me on the Latin American PLO growth, obviously really strong. What's driving that? How sustainable is it? Is it just a function of higher inflation down there or is it influenced by inventory mix as well?

I think I want to give that team the credit they deserve. It's been phenomenal execution down there. I think the jewelry mix has been a big part of it, just teaching our teams to be much better lenders on jewelry. As I said before, people would come in with phones and electronics and tools. That was what we were known for. And we've just had this very deliberate execution program for the last few years where jewelry has become a much better part of what we do. and so I think that's been really helpful on the PLO side. I think the macro, absolutely, things are tough for our customers out there so the macro has been supportive but I think the Latin American story is much more about what we've done from an execution and leadership perspective than what the macro is doing.

Got it. Really helpful. Thanks for taking my questions. Thanks, Carl.

Thank you. Our next question comes from the line of Vincent Cantik of BTIG. Your line is now open.

Hi, good morning. Thanks for taking my questions. Two quick follow-ups. So first, Tim, it was helpful. You provided kind of a lot of commentary in terms of how to think about seasonality. I think there's a seasonal component to LATAM, and maybe the U.S. is okay. And then there's also kind of what's happening with jewelry scrap. If you kind of put it all together on a consolidated basis, if you could help us think about, like, should we be thinking about EBITDA or EPS kind of slowing down on a quarter-to-quarter basis? Because underlying, like it does seem, you know, U.S. and LATAM are doing really strong, so I just want to understand, just from a near-term perspective, how all of those things shake out. Thank you.

Thank you. Yeah, the biggest, obviously we don't provide guidance on those numbers, but as we've said, you know, you can see that scrap gross profit had a big effect on quarter two, less of an effect on quarter three from a growth perspective. But what we did say on the call is that scrap margin is assuming gold price stays relatively stable, it will start coming down to that 15 to 20% range that we've had it in while gold was stable. And so that normalization will mean that there is less growth year over year when you're including scrap, but obviously excluding scrap is probably a better way to look at the underlying long-term performance of the business.

I think that's, Vince, thanks for the question. I think that's the key thing that we are trying as a team to show the market and you guys, the analysts, is that We don't get credit anyway for scrapping in the market. So I think this business should be looked at on a core basis. And when you look at the core business, as Tim's done a really good job of outlining in the deck, this is growing really strongly. Lending is strong, sales are strong, margins improving. We're doing M&A in multiple markets. We're building a lot of new stores. We've got a very liquid balance sheet. and Scrapping. Look, Scrapping goes up and down by the quarter. We don't get credit for it, which is okay, but from a multiple and an earnings perspective, but it shows what the business can really do and it provides great cash flow so we can redeploy that into either paying down debt or building de novos or doing M&A. So I think, you know, when you look at it including Scraps, which I don't think many people do, yes, you know, the earnings are The earnings come down because of scrap, but I think what's best to speak about and to look at to assess the real value of this business and the platform is the core operating metrics that we're putting out, and they're very, very strong.

Okay, great. That's super helpful. Thank you. And I guess to follow up on that, of course, we've been getting a lot of these questions and a lot of discussion already on gold prices, but my I guess understanding is, you know, your underwriting of the business, the way you deal with jewelry or any inventory as you're pricing the business. You know, at a discount, you're evaluating the customer's propensity to pay back or if you have to put the item on retail. And so it seems like the greatest maybe focus is if the agent inventory number goes up or down. And it sounds like, I mean, that number has been doing really well. So regardless of where gold or, you know, Inflation or other prices go as long as you're able to turn over the inventory quickly.

and many more. So, you know, to someone who's not as experienced at looking at these numbers, oh, look, turns are flat. Well, you could easily increase your turns by scrapping. We don't want to do that. We want to make sure that our jewelry cases are full, that customers get a great experience, and we can sell the jewelry at a high margin. But yeah, turns, absolutely very critical part of this story.

On the numbers there, like HGM in the U.S. at 1.9% is $0.7 million of inventory. But we're not talking, these dollars are not big. So just keep in mind the size. And, you know, obviously jewelry is different because it can easily be scrapped. And so HGM merchandise is the only thing you really need to be worrying about.

Right. So we're not really taking a... You know, view of what gold prices were a year ago because that inventory would already pretty much be gone at this point if I'm thinking about that correctly.

Correct. Generally, the jewelry is generally scrapped at around that 12-month mark. That's correct.

Okay.

Got it.

Okay. That's super helpful. Thank you. Thanks, Vince.

Thank you. Our next question comes from the line of Eric Wold of Texas Capital Securities. Your line is now open.

Thanks. Good morning. Thanks for taking my questions. A couple of follow-ups on some of the topics before I'll stay off gold prices. But there was a question kind of around gas prices and kind of what you're seeing. You made the comment that the increase in average loan size is really being driven by demand and the need for kind of, you know, Additional liquidity and short-term cash needs. Maybe diving into that a little bit better, what are you seeing for the consumers on a more micro level in terms of coming in and seeking loans in terms of repeat visitation trends, what you can track from those consumers, payoff, forfeiture, anything that gives maybe a roundabout view of consumer health in this environment right now versus maybe a few quarters ago?

Yeah, thank you for the question. Look, I think you start with PLO growth, right? You can just see it is very strong, which means demand for our core loan products is increasing significantly. So, you know, I think our customer is under pressure and there is a need for cash. It's across, you know, all vertical, sorry, all, you know, And, you know, in terms of forfeiture, I think over a pretty long period of time, that's been pretty stable. You know, we don't really see big changes in our forfeiture. As Tim mentioned earlier, we're seeing increased activity in customers selling us gold. But, you know, I think the metrics around forfeiture to your question has remained pretty stable. You know, I think when you look at sales, you know, and you take a different view is they're also robust. And, you know, particularly in Latin America, we're seeing super strong sales growth. So, you know, when you think about the customer being under pressure and you look at the sales and you say, well, you know, that looks quite strong. So I think, you know, it's a mixed bag, but The good news for us is that both sides of our business, and as I said earlier again, it is a mix of some macro tailwind, but I think much more importantly is what we're doing at the team level. We're just getting much, much better at lending. We're better at pricing the inventory. We're better at using digital initiatives, marketing, AI around the core of what we do to help satisfy this growing need for cash from our customers.

I think the important thing there is that we're lending at 40% to 65% of what we think the value is, but we're assessing that on a regular basis. And so if we see, say, for example, which we've seen with laptops, is no one wants to buy a laptop anymore and those prices continue to decrease, we're going to be lending on the low end of those loan-to-values because we want to make sure that we can sell it. And so the forfeitures are really in line with our pricing, and that's why they became pretty consistent through all economic cycles.

Got it. And then just the follow-up question on the acquisition pipeline. It was a question, obviously, about SMG and that kind of just coming together timing-wise to go to 100%. What have you kind of seen in the – The current pipeline, what's been completed and what's in discussion in terms of length of discussion cycles, receptivity of sellers, valuations, what are you seeing in that versus what you would expect at this point in the cycle?

Look, I think it's funny, this industry, the truth of the matter is that these things have a very long cycle. I can tell you I've been close to acquisitions for 10 years. and then others for three months. They just want to get going. So that one truly is a mixed bag, just the length of time it takes to do these sorts of transactions. You've got to remember it's not really private equity that we're dealing with or institutional investors we're dealing with. These are usually family-owned businesses and their personalities and generational change and that kind of stuff. But there's no real difference in, you know, I've been doing this a long time now on the M&A side and I think there's no real change in how that works from a multiple perspective. I think they're pretty consistent. Where you've got to be careful is what scrapping has done. So look, I think that the pipeline itself, particularly in Latin America, is super strong. You've got very large independent chains down there. So we're pretty excited about that pipeline. And as I said earlier, I think the U.S. is much more now a small kind of conveyor belt, almost for want of a better word, of just doing smaller acquisitions and targeted around the markets in which we've got really strong teams.

Thank you, guys.

Thank you, mate.

Thank you. This concludes the question and answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.