I'm Brian McNamara, one of the Canaccord analysts in the consumer space, and we are delighted to have EZ Corp here and to host CFO Tim Jugmans. Tim, thanks so much for joining us. So the company reported another impressive quarter last week. Can you kind of give us a high-level overview of the company and the industry as a whole and kind of why growth has been so strong over the last few years?

Thanks, Brian, for having us. I really appreciate the time, and the one-on-ones have been great so far today. Yes, another record quarter for us reporting last week. It was, you know, 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're doing as a management team. We're getting better at pricing. We're getting better at executing our new stores that we're building and de novos continue to come online at stronger rates with more stores being built every single year. Generally, we're building about 30 stores a year. Now we're building about 40. Lachie talked on the call about even building more for next year. And then we matched that with a very disciplined M&A. So we've obviously recently purchased SMG, which I'm sure we're going to talk about a little bit later, which over 100 stores in a number of countries. So that's coming online as well. So all these things are really bringing great momentum on the earnings front.

So your core customer is kind of low-income, unbanked, underbanked consumers. Have you seen any notable changes in customer mix, including middle and higher-income customers maybe trading down, and how might that influence merchandise or lending trends?

So 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 many far less people are carrying around laptop and more people are carrying around tablets even in this environment never mind the home environment and so those are the kind of things that we continue to change in our stores so we lend even you know the obviously the values of those laptops are coming down but also our loan to values we lend on the lower end of those in in laptops but you know on a luxury handbag we're lending a slightly higher because we know there are consumers out there that want to buy them and so we lend a little bit more aggressively on the items that we know are hot commodities that we can easily sell in our stores what about regulation would you consider regulation a friend or a foe and are there any concerns about potential legislation down the road you know legislation across all the geographies we mean operating has been very stable for a very long time what that does create you know in states like texas is moats because you need, in most places in Texas now, you need to show that there is a need for another porn store to go into that neighbourhood, and that's very hard to do. And so that means that established stores make it very hard for somebody else to come in and build something from scratch. So 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. And porn was an exception. They introduced a sliding scale for porn, 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, $250, so not much of an effect at all. They realised that our lending is very different to a consumer lending. There is no credit checks. There's no collections. this is really an option for a customer to come back rather than a traditional loan.

Great. And so I think over 60% of your U.S. stores are in two states. You mentioned Texas and Florida. Is it safe to say in most states you're in it's just hard for the municipality to issue a poem license? Is that the moat you're talking about? Is that representative of kind of your other exposures?

Definitely, the strongest case is definitely in Texas. In Las Vegas is the other one. Las Vegas has probably had the strongest moats there. Just to the fact that they've given out very few licenses over a long period of time, it's really based on population. And so the licenses have been very hard to get. So having a license in Vegas, you can build very good stores. In Florida, there are obviously a lot of competition because it's got a higher rate there than most other states. So there's a lot more competition. So to build a really sizable store is definitely a little bit tougher. But the rate does definitely help profitability. You know, at the end of the day, the reason that we have that many stores in those states is, one, is the rates. It's where we started, you know, when this Easy Corp started, it was like 16 stores in Texas with dirt floors. You know, that's soon listed after that at about 30 stores. So it's been a great journey, and then the other sizable acquisition occurred in Florida, and so those are the reasons that we ended up with the structure we have, but the regulation has also helped us along the way in both places where it really supports very well-run, compliant stores, and that costs a lot of money to be able to do that. And so when you get to the scale that we are, that's a much easier pill to swallow. It's much harder to run. It's probably much harder to run 30 stores than it is to run 200 because the compliance costs is quite a lot when you're only running 30 stores.

So your average loan size in the U.S., I think it was up 16% year over year in Q3, flat sequentially. That compares the gold prices, the underlying commodity up 37% year over year and minus seven sequentially. The market appears increasingly concerned over gold prices. Obviously, your average loan size has moved higher with the underlying commodity. It's roughly two-thirds of your collateral in the U.S. How do you price gold loans and manage gold price volatility?

The gold, what we do is look at more, sorry, gold price is, what we do when we're lending on gold is looking at longer term view of gold. It is not, we're not moving it on a daily basis. So 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. And so this is where we're going to move our gold lending to. And so we're not changing it on a daily basis, maybe every three months or so that we're changing it. And that allows us to have pretty consistent conversations with our customers. and also there's a separation between gold price the spot price and the retail price of gold they don't necessarily 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 and so the same thing we view on the loan side and the retail side and so we're moving obviously as gold prices increase we've moved up but you know gold did spike up at the beginning of the year and now come back down uh you know we never took that spike up at all because a very short term it was a very short term view um the other thing to notice is that our average loan size is not moving with the gold price you know our average loan size moves with the need for cash. So a customer is coming in for a need for certain dollars to deal with their short-term cash needs. How they fulfil that need is generally on the jewellery side, so mostly gold. So now, because gold is up, they can bring in less grams than they used to to get the same loan amount and so that's what you're that's what we're seeing is that less grams are coming in even though the loan size has slightly gone up they don't necessarily need to bring in as much as they used to if gold was you know back to the three thousand dollars an ounce it was not long ago so you guys have posted record results for a few years now there's a an emerging view from some maybe some market skeptics that this is quote-unquote as good as it gets for both yourselves and your larger peer first cash what's your view on that and what are the key sustainable growth drivers in each of your geographies yeah we we don't quite understand this uh peak earnings uh narrative uh you know We've got underlying same-store PLO in the US growing at 13%. We have core porn gross profit on a same-store basis also growing at 13%. So core porn is like excluding scrap, so ignore that, and it's still growing at 13%. So these underlying factors show us that, you know, this is growing very healthily. We read all the consumer papers which indicate that our consumer base, there's nothing, doesn't look like there's anything that's going to change how our consumers are going to act in the next 12 to 24 months at least. and lots of the reading would indicate that it's probably actually going to get worse. So all of that would indicate that we in the industry are set to continue to hit record loan balances and record profits and so I think that continues to grow. Now, are we going to grow a little bit less than we did when Scrap was hitting records this year? Yes, definitely. Obviously, taking Scrap out is a much easier way to look at the underlying growth of this business. But overall, you can look at Canaccord's view of the future of both First Cash and us and all other analysts, and all of them have us growing and have strong shared price targets. across the board.

So tell us about your recent acquisition of SMG and the markets you enter with that.

So that was 108 stores across 12 countries. Predominantly, the dollars are coming from Florida and Puerto Rico. That's around 60 of the stores. Then we have a number of the Caribbean islands, uh panama costa rica and dominican republic uh we've been invested in that business for a number of years and had the opportunity to now acquire 100 of that um we see a lot of upside in that business um you know when you're a small operator you know you're spending um quite a bit on dealing with compliance for example obviously you have a full finance head office you know you either you're probably getting some external help on the legal side and these things and we've got a full full department to departments to look after all of that plus we've got the capital to grow so when you're a private player generally you're a little bit more capital constrained and so this allows us to continue to grow so those grow existing stores grow the in the markets they operate by building new stores and acquiring stores in those in those jurisdictions so we're very excited about that opportunity now the 108 stores in those number of countries obviously going to take a bit of time to integrate them so we need to put them on our systems that includes the POS system includes the finance and HR systems and so we're in the middle of that integration process so far everything seems to be going well it's obviously always slower than we want we want to click our fingers and say integrate now but you know we having a whole training process getting a run trained up on the new systems and integrate it well and so what was you know what you know what we'll see as we've seen in all the other acquisitions is that year over year we'll continue to see improvements so your i think smg's merchandise margin is a little lower than yours in the u.s like what are what other like margin opportunities do you see with that business and when do you expect those impacts to be reflected in your financials So there's obviously the SMG is a number of countries, so the comparison to the US is not quite the right comparison and the comparison to Latin America is not also quite the right comparison, to be honest, because of their clear mix is quite different. But, you know, as we've said from an EZCorp perspective, EBITDA margin, we want to continue to improve that year over year. and in SMG, it would be the same thing. So what we want to see is we want to, the capital constraint part of the business, I think we can lend a little bit more. I think we can do a little bit better on the merchandise side, probably scrap a little bit less than they have been scrapping and then change incentives a little bit to match the new way we want to operate. I think they're all very exciting ways that we're going to see improvements. But as we said, it's going to take a little bit of time for this implementation to occur. But I think next year at this time, I think we're going to see a lot more of those improvements come through because we're fully integrated.

So tell us about your M&A strategy overall. is it fair to say M&A will be kind of more onesies, twosies while you kind of digest SMG or is there bigger opportunities out there?

In the US, I think that's right, only because there are not that many larger opportunities in the US. You know, First Cash and us have bought many of the larger players in the space in the states we want to operate. but the industry is dominated by mum and pups running one to two stores and so that's where we see, we want to continue to see growth on a unit economic basis in the US but the bigger growth on unit economics is really coming in Latin America as we said before, we're building 40 plus stores a year and but the acquisition pipeline you know there are a number of store chains out there that are 50 plus and so the number of stores able to buy in one transaction is far higher in in especially in Mexico compared to any other place we currently operate and so we see the acquisition pipeline remaining very strong so we you know that's definitely a place our capital will continue to go to so the current management team yourself Lockie have been in place for roughly six years or so you turned around the US business first you're making similar progress in LADM can you kind of kind of provide detail on the improvements you've seen in LADM and whether you can kind of use the same playbook you used in the US and talk about you know Blair

Blair Powell, your COO's influence there?

Sure. You don't want to talk about the share price going from $5 to $30 in the period of time the management team has been there. But, yes, you know, the first, obviously, where the dollars were, we wanted to focus on, so really turning around the U.S. was really a focus on ensuring that we were selling the inventory we had with a focus on turns and making sure there was no, you know, minimising aged inventory on the general merchandise side and getting incentives right. And so that was the playbook, a really simple playbook, really a focus on the stores, focus on our team members is really what we did in the US. And now we're taking that same playbook and been implementing in Latin America. You've seen, you know, the last, especially the last year, Latin America has just been on fire. It's because of the build that we've had over a long period of time, using the same techniques that we use in the US and implementing them. I think, you know, a couple of years ago, we said, you know, Latin America was two to three years behind. Now it's probably, you know, a year to 18 months behind the US on the implementation. Execution continues to get better there. We've seen in the numbers, we've also seen in the mix, we've seen that the mix of GM and Jewry, you know, Jewry was 40% of the portfolio a year ago. Now it's 50%. These are on purpose. what we're doing to improve the economics is pushing and showing our team down there that they are very good lenders on the jewelry side and they're getting the confidence to continue to do that.

So to your point, the stock has done very well, particularly over the last two years.

You still traded a pretty big discount to your larger public company competitor. um what have you so but the gap is significantly narrowed right so what have you proven to the market and how do you continue narrowing that gap definitely hasn't uh hasn't uh closed as much as we wanted but um you know that we you know that's not in our control our control is really in execute continue to execute uh saying what we're going to do showing the numbers that continue to improve and so that's what we have been doing. This share price has moved all over the place in those five years on days that you think should go up because you've got good news, it goes down and then other times it just takes these meteoric rises and so we as a management team are not focused on that but just on the underlying numbers and the share price will take care of itself. The things that we have done that we think have made a difference in getting closer, one is obviously the numbers. Two is getting the $300 million notes instead of using convertibles. I think that's definitely helped. Having a buyback in place I think has also helped. And so those things are helping, but I think the execution at our stores, being disciplined on the M&A, I think that's what will eventually drive the share price even higher.

So the last question, we're asking all of our companies expose the consumer, and I think you obviously, you guys give a great read through into particularly the low-income consumers. How healthy do you think the consumer is today compared to this time last year? how do you see consumer spending overall shaping up as we head into the back half of the year and into 2027?

How, you know, the PLO growth and average loan size growth that we've seen year over year would indicate that the consumer is hurting a little bit more than they were a year ago. You know, what we read is that either this is going to remain similar or get worse for the rest of the year we're here to help consumers deal with those short-term needs and also on on the retail side you know get great deal and be able to shop secondhand environmentally friendly and so we're pretty excited about the future growth of the business we'll wrap it up there.

Thanks so much, Tim.

Thank you, Pastor Brock.