Ezcorp Inc Canaccord Genuity's 46th Annual Growth Conference

Thanks, Brian, for having us. Really appreciate the time, and the one-on-ones have been great so far today. Yes, another record quarter for us reporting last week. We continue to grow strength to strength. I think our adjusted EBITDA was up 48% and adjusted EPS was up 47%. The macro continues to help us along the way. We have consumers. The K-shaped economy continue to help us along the way. But a lot of it is what we are doing as a management team. We are getting better at pricing. We are getting better at executing our new stores that we are building in de novos continue to come online at stronger rates, with more stores being built every single year. Generally, we are building about 30 stores a year now. We are building about 40. Lockie talked on the call about even building more for next year.

We match that with very disciplined M&A. We have obviously recently purchased SMG, which I am sure we are going to talk about a little bit later, which over 100 stores in a number of countries. That is coming online as well. All these things are really bringing great momentum on the earnings front.

From a customer perspective, obviously we're not collecting much data on it. But it really is a customer that wants to deal with a short-term cash need. It really doesn't matter if they banked or underbanked or high income or low income. We see all the entire spectrum coming to our store. It's a very easy transaction to do. You only have an ID and an item of value, and you can get a loan very fast, cash in hand, and you can leave the store. It's probably the easiest way to get money that's out there. On the merchandise side, we're definitely seeing on the luxury side and the sneaker side is definitely the fast-growing categories that we're seeing. Things like laptops are going down.

As you wander the halls, you'll even see that far less people are carrying around a laptop and more people are carrying around tablets, even in this environment, never mind the home environment. Those are the kind of things that we continue to change in our stores. Obviously, the values of those laptops are coming down. But also our loan-to-values, we lend on the lower end of those in laptops. But on a luxury handbag, we're lending it slightly higher because we know there are consumers out there that want to buy them. We lend a little bit more aggressively on the items that we know are hot commodities that we can easily sell in our stores.

Legislation across all the geographies we've been operating has been very stable for a very long time. What that does create, in states like Texas, is moats. Because in most places in Texas now, you need to show that there is a need for another pawn store to go into that neighborhood, and that's very hard to do. That means that our established stores make it very hard for somebody else to come in and build something from scratch. That kind of legislation is definitely helpful. The other thing to point to is Illinois is an example of a state which wanted to introduce consumer lending caps that follow the Military Lending Act. Pawn was an exception. They introduced a sliding scale for pawn, similar to the one that we operate in Texas, really aiming at ensuring that the rates that we charge are much lower at the higher dollar value, like $500 plus, when our average loan size is around $200 to $250.

Not much of an effect at all. They realized that our lending is very different to a consumer lending. There is no credit checks. There is no collections. This is really an option for a customer to come back, rather than a traditional loan.

Definitely, the strongest case is definitely in Texas. Las Vegas is the other one. Las Vegas has probably had the strongest moats there, just to the fact that they have given out very few licenses over a long period of time. It is really based on population. The licenses have been very hard to get. Having a license in Vegas is, you can build very good stores. In Florida, there are obviously a lot of competition at the higher because it has got a higher rate there than most other states. There is a lot more competition. To build a really sizable store is definitely a little bit tougher. The rate does definitely help profitability. At the end of the day, the reason that we have that many stores in those states is, one is the rates. It is where we started.

When EZCORP started, it was like 16 stores in Texas, with dirt floors. As soon listed after that, at about 30 stores. It has been a great journey. The other sizable acquisition occurred in Florida. Those are the reasons that we ended up with the structure we have. The regulation has also helped us along the way in both places where it really supports very well-run compliant stores. It costs a lot of money to be able to do that. When you get to the scale that we are, that is a much easier pill to swallow. It is probably much harder to run 30 stores than it is to run 200, because the compliance costs is quite a lot when you are only running 30 stores.

The gold What we do is look at more Sorry. Where's my phone? The gold price is What we do when we're lending on gold is looking at longer-term view of gold. We're not moving it on a daily basis. We're looking at, say, a three-month view and saying, "Well, gold has moved up and down. It looks like it's flattening out. This is where we're going to move our gold lending to." We're not changing it on a daily basis, maybe every three months or so that we're changing it. That allows us to have pretty consistent conversations with our customers. Also, there's a separation between gold price, the spot price, and the retail price of gold. It's not like when you go to a jewelry store, they're changing how much the gold necklace costs to you every single day.