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F3Q 2013 Earnings Call

July 30, 2013 04:30 pm ET


Paul Rothamel – President & Chief Executive Officer

Mark Kuchenrither – Executive Vice President & Chief Financial Officer


Bill Carache – Nomura Securities

William Armstrong – CL King and Associates

John Rowan – Sidoti & Co.

Robert Ramsey – FBR Capital Markets



Welcome to the EZCORP F3Q 2013 Earnings Release. My name is Adrian and I will be your Operator for today’s call. (Operator instructions.) Please note that this conference is being recorded. I’ll now turn the call over to Mark Kuchenrither. Mark Kuchenrither, you may begin.

Mark Kuchenrither

Thank you, Adrian, and good afternoon, everyone. I am Mark Kuchenrither, EZCORP’s Executive Vice President and Chief Financial Officer. On the call with my today is Paul Rothamel, our President and Chief Executive Officer.

Before we begin I’d like to remind everyone that this conference call contains 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 or implied by these forward-looking statements due to a number of uncertainties and other factors including fluctuations in gold prices or the desire of our customers to pawn or sell their gold items; changes in the regulatory environment; changing market conditions in the overall economy and in the industry; and consumer demand for the company’s services and merchandise.

For a discussion of these and other factors affecting the company’s business and prospects, see the company’s Annual, Quarterly and other reports filed with the Securities and Exchange Commission. Now on to the call.

As many of you have noticed, we have not offered forward-looking guidance in our press release. We are continuing with our strategy of diversification and investment in our business and we make our decisions based on what is in the best interests of shareholders for the long term. These long-term decisions do not easily translate into short-term quarterly guidance.

In addition, we and others in the industry have struggled to provide accurate and appropriate guidance in the face of the current volatility in the gold market. Gold is having an overriding impact on our earnings and in this environment we do not feel comfortable that we can provide guidance that gives an accurate forward view of the company’s financial metrics.

Starting this quarter we are changing our traditional call format. We’re adding more content to our press release and adding supplemental information to our website so we can focus on questions and answers during the conference call. On our website you’ll find an analysis of US net revenues from loans excluding pawn, growth in earning assets by segment, and the impact of gold and jewelry scrap on earnings per share. For this additional content please go to www.investors.ezcorp.com and look under the heading “Investor Resources and Supplemental Information.”

I encourage you to visit our website as we will continue to add content that helps explain in greater detail the significant factors that drive our business. Now, Paul Rothamel, our President and Chief Executive Officer, will present a brief commentary and then we’ll open the call to your questions. Paul?

Paul Rothamel

Thank you, Mark, and good afternoon everyone. As Mark noted we added more content to our press release and our website this quarter so I’ll keep my comments brief.

In the quarter we saw growth in all of our non-gold revenue streams. We took significant action to jettison several legacy businesses that were not contributing in the current environment and were not a part of our go-forward strategy. Finally and more importantly we continued to diversify our business according to our multi-year plan.

These efforts are working as evidenced by our growth in revenue and earning assets, penetration of revenue and segment contribution coming from new businesses and geographies, and the growth of our second generation loan products in our storefronts and online.

While consumer behavior is obviously changing due to the macroeconomic environment, customers continue to come to us to satisfy their cash needs. We are seeing more use of collateral other than gold and greater demand for our other financial services products. We planned for this transition and are offering the right solutions to fit our customers’ evolving needs.

In fact, we believe we have significant competitive advantage in the marketplace due to our size, scale, and flexibility. We understand the consumer and are evolving rapidly to serve them best. We continue to enter new geographies where we believe we can be the market leader and we are growing other channels to complement our storefront businesses including online retailing and online lending. We are also developing new products, both storefront and online, that will help us maintain our leadership position.

We still have much to do and we will continue to be prudent with our growth plans and our investments. We remain committed to providing our customers with the products and services they want, when they want them and how they want them. And with that we’ll take your questions.

Question-and-Answer Session


Thank you. We’ll now begin the question-and-answer session. (Operator instructions.) And we have Bill Carache from Nomura online with a question. Please go ahead.

Bill Carache – Nomura Securities

Thank you. Good afternoon, guys. I was hoping to maybe start off with some of the comments in the press release on the online business. You talked about your efforts there to increase marketing investments as you try to drive loan growth. I guess I’m just trying to get a sense of how comfortable you guys are that you can accelerate loan growth while keeping credit in check?

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