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F3Q 2014 Earnings Conference Call

July 29, 2014 17:00 ET


Mark Trinske - Vice President, Investor Relations and Communications

Mark Kuchenrither - Interim President and Chief Executive Officer

Tom Welch - Senior Vice President, Secretary and General Counsel


Bob Ramsey - FBR Capital Markets

John Rowan - Sidoti & Company

Henry Coffey - Sterne Agee

David Scharf - JMP Securities

Bill Armstrong - CL King & Associates

John Hecht - Jefferies



Good afternoon, ladies and gentlemen and welcome to the EZCORP Third Quarter of Fiscal Year 2014 Conference 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. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Mr. Mark Trinske, EZCORP’s Vice President of Investor Relations and Communications.

Mark Trinske

Thank you, operator, and good afternoon, everyone. On the call with me today is Mark Kuchenrither, our Interim President and Chief Executive Officer. Also with us today is Tom Welch, our Senior Vice President, Secretary and General Counsel.

Today’s 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 for the desire of our customers to pawn or sell their gold items, changes in the regulatory environment, changes in market conditions in the overall economy, and in the industry and consumer demand for the company’s services and merchandize.

For a discussion of these and other factors affecting the company’s business and prospects, please see our annual, quarterly and other reports filed with the SEC. Also we have provided supplemental information on our website. This information gives more information on a breakdown of our net earnings asset by segment. This material can be found at ezcorp.com in the Investor Relations section of our website.

On today’s call Mr. Kuchenrither will present his opening comments, talk about a few items on our financial statements and then we will open the call to your questions.

Now, I would like to turn the call over to Mark Kuchenrither. Mark?

Mark Kuchenrither

Thank you, Mark and good afternoon everyone. During my remarks today, I will start with an update on the recent board and management changes at EZCORP and then continue with the review of the quarter.

Let me start by saying that the leadership changes to both the Chief Executive Officer and Board of Directors were done to significantly improve the operating and financial performance of EZCORP and to realign corporate strategies to create long-term value. We are focusing our strategy to return to a sustainable growth model creating consistent financial returns. There are two primary factors involved in the strategy changes we are embarking on today. Number one, enhance operational execution and number two, employ a capital allocation strategy focused on achieving a return on invested capital of at least 15%.

Today is the new day for EZCORP as we continue to focus on providing customers with the cash they need. We are also making strategic changes to our business to deliver a superior return on invested capital. We will now focus on delivering consistent financial results and increasing value. The leadership changes at the Board and management levels in the past two weeks are an example of the deep commitment we all have to improving our performance.

I have initiated a 90-day plan for our team to closely evaluate all aspects of our business and ensure that we have specific strategic plans and personnel to achieve this new standard of at least 15% return on invested capital. As you saw in our press release, we achieved our outlook in the third quarter. And that’s a good first step, but we are not satisfied with this performance. We have operational opportunities across all of our businesses and we know there are areas we can improve.

Hopefully, you saw our announcement yesterday that we added three extremely qualified Board of Directors, Joe Rotunda, Tom Roberts, and Peter Cumins. As many long-time EZCORP shareholders know, Joe was President and Chief Executive Officer of our company and a member of the Board of Directors from the year 2000 until his retirement in 2010. Under Joe’s leadership, EZCORP grew from a few 100 storefronts operating in 11 states to over 1,000 owned and operated locations in the U.S., Mexico and Canada. And the company’s market capitalization grew from approximately $17 million to over $1 billion at the time of his retirement. As many years of experience with our company and our industry will be invaluable to me and the rest of the board. We welcome him back.

Tom Roberts served on our Board of Directors for nine years from 2005 to January of 2014 and one of our lead Independent Director much of that time. He is currently the Chairman of the Board of Directors of Pensco, a financial services company. Previously he spent 15 years with Schlumberger and various executive positions including Chief Financial Officer. He spent four years as President and Chief Executive Officer of the Computer Systems and Services operations of Control Data Corporation. Tom brings a wealth of experience in managing and growing large international businesses as well as a highly sophisticated financial acumen. Tom will serve on the audit committee and he will chair that committee on interim basis.

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