What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-04-28 compared with 2025-02-05 · 194 added, 52 removed, 218 unchanged (53% of the section changed)

6 unchanged sentences

See “ Part I, Item 1A — Risk Factors ” of our Annual Report on Form 10-K for the year ended September 30, 2024, as supplemented by the information set forth in “Part I, Item 3 — Quantitative and Qualitative Disclosures about Market Risk” and “Part II, Item 1A — Risk Factors” of this Report, for a discussion of certain risks, uncertainties and assumptions associated with these statements.

Business Development

On September 11, 2024, the Company announced entry into an acquisition agreement with Presta Dinero, S.A.

Business Developments

2032 Senior Notes

In March 2025, we issued $300.0 million aggregate principal amount of the Company’s 7.375% senior notes due 2032 (the “2032 Senior Notes”), for which $300.0 million remains outstanding as of March 31, 2025.

See Note 7 of Notes to Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements" of this Report for further discussion.

Termination of Acquisition Agreement

On March 19, 2025, the Company announced the termination of an acquisition agreement with Presta Dinero, S.A.

for the purchase of 53 pawn stores in Mexico.

While at the time we expected to complete the transaction by October 31, 2024, the transaction has not yet closed and the parties remain in discussion.

Business Overview

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We remain focused on optimizing our balance of pawn loans outstanding (“PLO”) and the resulting higher PSC.

The following chart presents sources of gross profit, including PSC, merchandise sales gross profit (“Merchandise sales GP”) and jewelry scrapping gross profit (“Jewelry Scrapping GP”) for the three months ended December 31, 2024 and 2023:

The following chart presents sources of gross profit by geographic disbursement for the three months ended December 31, 2024 and 2023:

The following chart presents sources of gross profit by geographic disbursement for the three and six months ended March 31, 2025 and 2024:

Results of Operations

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The end-of-period and approximate average exchange rates for each applicable currency as compared to U.S.

dollars as of and for the three months ended December 31, 2024 and 2023 were as follows:

dollars as of and for the three and six months ended March 31, 2025 and 2024 were as follows:

Three Months Ended

Six Months Ended

2025 2024 2025 2024 2025 2024

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Store Count by Segment

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025

Pawn Latin America Pawn Consolidated

As of September 30, 2024

As of December 31, 2024

542 741 1,283

New locations opened — 9 9

Locations acquired — 1 1

Locations combined or closed — (9) (9)

As of March 31, 2025

542 742 1,284

Three Months Ended March 31, 2024

Pawn Latin America Pawn Consolidated

As of December 31, 2023

530 707 1,237

Three Months Ended December 31, 2023

New locations opened — 9 9

Locations acquired 6 — 6

Locations combined or closed (1) (5) (6)

As of March 31, 2024

535 711 1,246

Six Months Ended March 31, 2025

Pawn Latin America Pawn Consolidated

As of September 30, 2024 542 737 1,279

New locations opened — 13 13

Locations acquired — 1 1

Locations combined or closed — (9) (9)

As of March 31, 2025

542 742 1,284

Six Months Ended March 31, 2024

Pawn Latin America Pawn Consolidated

As of September 30, 2023 529 702 1,231

New locations opened — 14 14

Locations acquired 7 — 7

As of December 31, 2023

Locations combined or closed (1) (5) (6)

As of March 31, 2024

535 711 1,246

Three Months Ended December 31, 2024 vs.

Three Months Ended December 31, 2023

Three Months Ended March 31, 2025 vs.

Three Months Ended March 31, 2024

These tables, as well as the discussion that follows, should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes.

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Pawn segment:

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands) 2025 2024

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Jewelry scrapping sales gross profit 3,663 1,892 94%

Gross margin on jewelry scrapping sales 23 % 12 % *

Gross margin on jewelry scrapping sales 22 % 15 % 700bps

Other revenues 24 29 (17)%

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Depreciation and amortization 2,682 2,516 7%

Loss on sale or disposal of assets and other — 26 (100)%

Loss (gain) on sale or disposal of assets and other 17 (30) (157)%

Segment operating contribution $ 47,147 $ 40,656 16%

Other segment income (11) — 100%

Other segment loss 4 — 100%

Segment contribution $ 47,143 $ 40,656 16%

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Jewelry as a % of PLO 68 % 67 % 100bps

* Represents a percentage computation that is not mathematically meaningful.

(a) Balance includes pawn loans and inventory.

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PLO ended the quarter at $199.4 million, up 15% on a total and same-store basis due to increase in average loan size, increased loan demand and improved operational performance.

Total revenues increased 7% and gross profit increased 9%, reflecting higher PSC and merchandise sales.

PSC increased 11% as a result of higher average PLO.

Merchandise sales increased 3%, and gross margin was flat at 37%.

Aged general merchandise, which is inventory over one year old, increased to 2.6%, or $1.2 million of total general merchandise inventory.

Total revenues increased 7% and gross profit increased 8%, reflecting higher PSC.

PSC increased 9% as a result of higher average PLO, partially offset by lower PLO yield.

Merchandise sales increased 2%, and gross margin decreased to 36% from 37%.

Aged general merchandise, which is inventory over one year old, decreased by 14 basis points to 2.8%, or $1.3 million of total general merchandise inventory.

Excluding our three Max Pawn luxury stores in Las Vegas, aged general merchandise was 1.5%.

Net inventory increased 17%, in line with the growth in PLO.

Inventory turnover decreased to 2.5x, from 2.7x .

Store expenses increased 8% (5% on a same-store basis), primarily due to labor costs (including higher health benefits) supporting more store activity, offset by a decrease in expenses related to our loyalty program.

Net inventory increased 29%, due to the increase in PLO, increase in customer layaways and a decrease in inventory turnover to 2.3x, from 2.6x.

Store expenses increased 3% (2% on a same-store basis) primarily due to labor, the majority of which was offset by a decrease in expenses related to our loyalty program.

Segment contribution increased 16% to $47.1 million, due to the changes noted above.

During the quarter, segment store count remained at 542.

Segment store count remained at 542.

Latin America Pawn

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dollars from its functional currencies noted above under “Results of Operations — Non-GAAP Constant Currency and Same-Store Financial Information.”

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands) 2025 (GAAP)

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Jewelry scrapping sales gross profit 966 34 * 1,148 *

Gross margin on jewelry scrapping sales 21 % 27 % (600)bps 21 % (600)bps

Gross margin on jewelry scrapping sales 24 % 3 % * 24 % *

Other revenues, net 16 15 7% 19 27%

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Depreciation and amortization 1,989 2,392 (17)% 2,295 (4)%

Loss (gain) on sale or disposal of assets and other 8 (196) (104)% 9 (105)%

Gain on sale or disposal of assets and other — (66) (100)% — (100)%

Segment operating contribution 10,090 7,511 34% 11,179 49%

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Jewelry as a % of PLO 39 % 35 % 400bps 38 % 300bps

* Represents a percentage computation that is not mathematically meaningful.

(a) Balance includes pawn loans and inventory.

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PLO improved to $62.4 million, up 1% (17% on constant currency basis).

On a same-store basis, PLO increased 2% (17% on a constant currency basis) due to improved operational performance and increased loan demand.

Total revenues were up 7% (18% on constant currency basis), and gross profit increased 4% (14% on a constant currency basis), mainly due to increased PSC and higher merchandise sales.

On a same-store basis, PLO decreased 2% (14% increase on a constant currency basis).

The constant currency increase was due to improved operational performance and increased loan demand.

Total revenues were up 9% (25% on constant currency basis), and gross profit increased 3% (18% on a constant currency basis), mainly due to increased PSC.

PSC increased to $28.3 million, up 4% (19% on a constant currency basis) as a result of higher average PLO.

Merchandise sales increased 5% (21% on constant currency basis) and merchandise sales gross margin decreased to 30% from 33%.

Aged general merchandise decreased to 1.4% from 1.6% of total general merchandise inventory.

Aged general merchandise increased to 1.9% from 1.4% of total general merchandise inventory.

Net inventory increased 23% (44% on a constant currency basis) due to increase in PLO and decrease in inventory turnover to 3.2x, from 3.6x.

Store expenses were flat (11% increase on a constant currency basis) and on a same-store basis decreased 2% (9% increase on a constant currency basis), primarily due to labor and rent.

Store expenses decreased 2% (13% increase on a constant currency basis) and decreased 4% on a same-store basis (11% increase on a constant currency basis).

The constant currency increase was primarily due to increased labor, in line with store activity and minimum wage increases, offset by a decrease in expenses related to our loyalty program.

Segment contribution increased 30% to $10.6 million (43% on a constant currency basis), due to the changes noted above.

During the quarter, segment store count increased by four de novo stores to 741.

Segment store count increased by one to 742 due to the addition of nine de novo stores, the acquisition of one store, and the consolidation of nine stores.

Other Investments

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dollars from its functional currency of primarily Australian dollars:

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands) 2025 2024

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The following table reconciles our consolidated segment contribution discussed above to net income attributable to EZCORP, Inc., including items that affect our consolidated financial results but are not allocated among segments:

Three Months Ended December 31,

Three Months Ended March 31,

Percentage Change

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Depreciation and amortization 3,349 3,311 1%

Gain on sale or disposal of assets and other — (2) (100)%

Loss on sale or disposal of assets and other — 99 (100)%

Other income — (765) (100)%

Interest expense 3,281 3,402 (4)%

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Equity in net loss of unconsolidated affiliates 361 — 100%

Other expense (income) 1,060 (224) *

Other loss (income) 68 (180) (138)%

Income before income taxes 34,412 28,651 20%

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Net income $ 25,390 $ 21,479 18%

* Represents a percentage computation that is not mathematically meaningful.

Segment contribution increased $9.0 million or 18% over the prior year quarter, primarily due to improved operating results of the U.S.

Pawn and Latin America Pawn segments above.

General and administrative expense increased $2.1 million or 13%, primarily due to labor (including incentive compensation) and, to a lesser extent, ongoing support costs related to Workday.

Income tax expense increased $1.1 million primarily due to an increase in income before taxes of $3.7 million, partially offset by an increase in the benefit for stock compensation for tax purposes in excess of the book expense.

The increase in the effective tax rate is due primarily to an increase in non-deductible items.

General and administrative expense increased $1.4 million or 8%, primarily due to labor and a gain on a corporate lease termination in the prior year.

Income tax expense increased $1.9 million primarily due to an increase in income before taxes of $5.8 million, as well as an increase in the effective tax rate due to an increase in non-deductible officer’s compensation and non-deductible expenses.

Income tax expense includes other items that do not necessarily correspond to pre-tax earnings and create volatility in our effective tax rate.

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Income Taxes of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for quantification of these items.

Six Months Ended March 31, 2025 vs.

Six Months Ended March 31, 2024

The tables below and discussion that follows should be read in conjunction with the accompanying condensed consolidated financial statements and related notes.

The following table presents selected summary financial data for the U.S.

Pawn segment:

Six Months Ended March 31,

(in thousands) 2025 2024

Gross profit:

Pawn service charges $ 175,424 $ 159,083 10%

Merchandise sales 245,715 240,362 2%

Merchandise sales gross profit 89,387 88,855 1%

Gross margin on merchandise sales 36 % 37 % (100)bps

Jewelry scrapping sales 32,396 25,501 27%

Jewelry scrapping sales gross profit 7,193 3,423 110%

Gross margin on jewelry scrapping sales 22 % 13 % 900bps

Other revenues 51 66 (23)%

Gross profit 272,055 251,427 8%

Segment operating expenses:

Store expenses 166,621 158,095 5%

Depreciation and amortization 5,399 5,140 5%

Loss (gain) on sale or disposal of assets and other 17 (4) *

Segment operating contribution 100,018 88,196 13%

Other segment gain (7) — 100%

Segment contribution $ 100,025 $ 88,196 13%

Average monthly ending pawn loan balance per store (a) $ 393 $ 352 12%

Monthly average yield on pawn loans outstanding 14 % 14 % —bps

* Represents a percentage computation that is not mathematically meaningful.

(a) Balance is calculated based upon the average of the monthly ending balances during the applicable period.

During the six months ended March 31, 2025, segment store count remained at 542.

Pawn service charges increased 10% as a result of higher average PLO, partially offset by lower PLO yield.

Merchandise sales increased 2%, and merchandise sale gross profit increased 1%, reflecting a 100bps decrease in gross margin.

Store expenses increased 5% (4% on a same-store basis), primarily due to labor, offset by a decrease in expenses related to our loyalty program.

Segment contribution increased $11.8 million, or 13%, primarily due to the changes described above.

Latin America Pawn

The following table presents selected summary financial data our Latin America Pawn segment, including constant currency results, after translation to U.S.

dollars from functional currencies.

See “Results of Operations — Non-GAAP Constant Currency and Same-Store Financial Information” above.

Six Months Ended March 31,

(in thousands) 2025 (GAAP)

Change (GAAP) 2025 (Constant Currency)

Change (Constant Currency)

Gross profit:

Pawn service charges $ 57,499 $ 54,529 5% $ 64,187 18%

Merchandise sales 110,095 103,728 6% 124,600 20%

Merchandise sales gross profit 33,044 33,766 (2)% 37,477 11%

Gross margin on merchandise sales 30 % 33 % (300)bps 30 % (300)bps

Jewelry scrapping sales 5,274 2,295 130% 6,115 166%

Jewelry scrapping sales gross profit 1,226 377 225% 1,446 284%

Gross margin on jewelry scrapping sales 23 % 16 % 700bps 24 % 800bps

Other revenues, net 32 31 3% 38 23%

Gross profit 91,801 88,703 3% 103,148 16%

Segment operating expenses:

Store expenses 66,357 67,042 (1)% 75,159 12%

Depreciation and amortization 4,035 4,731 (15)% 4,565 (4)%

Loss (gain) on sale or disposal of assets and other 8 (262) (103)% — (100)%

Segment operating contribution 21,401 17,192 24% 23,424 36%

Other segment income (747) (1,075) (31)% (762) (29)%

Segment contribution $ 22,148 $ 18,267 21% $ 24,186 32%

Average monthly ending pawn loan balance per store (a) $ 81 $ 79 3% $ 91 15%

Monthly average yield on pawn loans outstanding 16 % 16 % —bps 16 % —bps

(a) Balance is calculated based upon the average of the monthly ending balances during the applicable period.

(Constant Currency)

Same-store data:

Merchandise Sales 3% 17%

Merchandise Sales Gross Profit (4)% 9%

Store Expenses (3)% 10%

During the six months ended March 31, 2025, net store count increased by five due to the opening of 13 de novo stores, the acquisition of one store and the consolidation of nine stores.

PSC increased 5% to $57.5 million (18% to $64.2 million on a constant currency basis) as a result of higher average PLO.

Merchandise sales increased 6% (20% on a constant currency basis) and 3% on a same-store basis (17% on a constant currency basis).

Merchandise sales gross margin decreased 300 bps to 30% from 33%.

Store expenses decreased by 1% (12% increase on a constant currency basis) and decreased by 3% (10% increase on a constant currency basis) on a same-store basis.

The constant currency increase was primarily due to increased labor, in line with store activity and minimum wage increases, offset by a decrease in expenses related to our loyalty program.

Segment contribution increased $3.9 million, or 21% ($5.9 million, or 32%, on a constant currency basis), due to the changes noted above.

Other Investments

The following table presents selected financial data for our Other Investments segment after translation to U.S.

dollars from its functional currency of primarily Australian dollars:

Six Months Ended March 31,

(in thousands) 2025 2024

Gross profit:

Consumer loan fees, interest and other $ — $ 35 (100)%

Gross profit — 35 (100)%

Segment operating expenses:

Interest income (1,199) (1,206) (1)%

Equity in net income of unconsolidated affiliates (3,489) (2,872) 21%

Segment operating contribution 4,688 4,113 14%

Other segment loss — 15 (100)%

Segment contribution $ 4,688 $ 4,098 14%

Segment income was $4.7 million, an increase of $0.6 million from the prior-year six months ended March 31, 2024, primarily due to the increase in our share of equity in net income of Cash Converters.

Six Months Ended March 31,

Percentage Change

(in thousands) 2025 2024

Segment contribution $ 126,861 $ 110,561 15%

Corporate expenses (income):

General and administrative 38,309 34,809 10%

Depreciation and amortization 6,921 6,913 —%

Gain on sale or disposal of assets — 97 (100)%

Other income — (765) (100)%

Interest expense 6,428 6,842 (6)%

Interest income (2,230) (3,287) (32)%

Equity in net loss of unconsolidated affiliates 509 — 100%

Other loss (income) 1,128 (404) *

Income before income taxes 75,796 66,356 14%

Income tax expense 19,390 16,407 18%

Net income $ 56,406 $ 49,949 13%

* Represents a percentage computation that is not mathematically meaningful.

Segment contribution increased $16.3 million or 15% over the prior year six months ended March 31, 2024, primarily due to improved operating results of the U.S.

Pawn and Latin America Pawn segments above.

General and administrative expenses increased $3.5 million or 10%, primarily due to labor.

Income tax expense increased $3.0 million, primarily due to an increase in income before income taxes of $9.4 million for the six months ended March 31, 2025 compared to the same prior year six month period as well as an increase in the effective tax rate due to an increase in non-deductible officer’s compensation and non-deductible expenses.

Income tax expense includes other items that do not necessarily correspond to pre-tax earnings and create volatility in our effective tax rate.

These items include the net effect of state taxes, non-deductible items and the foreign rate differential.

See Annual Report on Form 10-K for the year ended September 30, 2024, Note 9:

Income Taxes of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data” for quantification of these items.

Liquidity and Capital Resources

Cash and Cash Equivalents

Our cash and cash equivalents balance was $174.5 million at December 31, 2024 compared to $170.5 million at September 30, 2024.

At December 31, 2024, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

Our cash and cash equivalents balance was $505.2 million at March 31, 2025 compared to $170.5 million at September 30, 2024.

At March 31, 2025, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

The table and discussion below presents a summary of the selected sources and uses of our cash:

Three Months Ended

Six Months Ended

(in thousands) 2025 2024

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Net cash used in investing activities (14,781) (18,242) (19)%

Net cash used in financing activities (7,102) (6,392) 11%

Net cash provided by (used in) financing activities 286,456 (9,539) *

Effect of exchange rate changes on cash, cash equivalents and restricted cash 328 (43) *

Net increase (decrease) in cash, cash equivalents and restricted cash $ 4,085 $ (1,982) 306%

The increase in cash flows provided by operating activities year-over-year was primarily due an increase in net income as well as changes in working capital primarily related to the timing of payments of prepaid expenses, accounts payable, inventory, customer layaway deposits and income taxes.

The $2.8 million decrease in cash flows used in investing activities year-over-year was primarily due to a $17.3 million decrease in net cash flows used related to strategic investments, capital expenditures and other, a $3.6 million increase in cash inflows from the sale of forfeited collateral, partially offset by an $18.1 million increase in net pawn lending outflows.

The $0.7 million increase in cash flows used in financing activities was primarily related to taxes paid related to net share settlement of equity awards.

Net increase in cash, cash equivalents and restricted cash $ 334,931 $ 8,724 *

* Represents a percentage computation that is not mathematically meaningful.

The $26.4 million increase in cash flows provided by operating activities year-over-year was primarily due to an increase in net income as well as changes in working capital primarily related to the timing of payments of accounts payable, prepaid expenses, customer layaway deposits, inventory and income taxes.

The $3.5 million decrease in cash flows used in investing activities year-over-year was primarily due to a $23.7 million decrease in net cash flows used related to investments, acquisitions and capital expenditures, a $10.0 million increase in cash inflows from the sale of forfeited collateral, partially offset by an $30.3 million increase in net pawn lending outflows.

The $296.0 million increase in cash flows provided by financing activities was primarily related to the March 2025 financing of the 2032 Senior Notes, in which we issued $300.0 million principal amount (less issuance costs) of 7.375% senior notes due 2032.

The net effect of these changes was a $334.9 million increase in cash on hand during the current year to date period, resulting in a $514.7 million ending cash and restricted cash balance.

Sources and Uses of Cash

See Note 7 of Notes to Condensed Consolidated Financial Statements included in “Part I, Item 1 — Financial Statements” of this Report for further discussion.

If the 2025 Convertible Notes holders do not convert, the Company expects to use approximately $103.4 million of the net proceeds from the offering of the Notes to repay its outstanding 2025 Convertible Notes at maturity and any excess proceeds for general corporate purposes.

On May 3, 2022, our Board authorized the repurchase of up to $50 million of our Class A Common Stock over three years.

As of December 31, 2024, we have repurchased 3,096,011 shares of our Class A Common Stock under the program for $29.0 million.

As of March 31, 2025, we have repurchased 3,178,147 shares of our Class A Common Stock under the program for $30.0 million.

Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.

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We continue to explore acquisition opportunities, both large and small, and may choose to pursue additional debt, equity or equity-linked financings in the future should the need arise.

Depending on the level of acquisition activity and other factors, our ability to repay our longer-term debt obligations, including the convertible debt maturing in May 2025 and 2029, may require us to refinance these obligations through the issuance of new debt securities, equity securities, convertible securities or through new credit facilities.

Depending on the level of acquisition activity and other factors, our ability to repay our longer-term debt obligations, including the convertible debt maturing in May 2025 and 2029 and the 2032 Senior Notes maturing in April 2032, may require us to refinance these obligations through the issuance of new debt securities, equity securities, convertible securities or through new credit facilities.

Contractual Obligations

In “Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended September 30, 2024, we reported that we had $673.5 million in total contractual obligations as of September 30, 2024.

There have been no material changes to this total obligation since September 30, 2024.

There have been no material changes to this total obligation since September 30, 2024, other than the 2032 Senior Notes financing as further discussed in Note 7:

Debt of Notes to Condensed Consolidated Financial Statements included in “Part I, Item 1 — Financial Statements.”

We are responsible for the maintenance, property taxes and insurance at most of our locations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis