What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-28 · 85 added, 88 removed, 324 unchanged (35% of the section changed)

7 unchanged sentences

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.

2025 Convertible Notes

During April 2025, holders converted approximately $97.0 million in principal amount of the 2025 Convertible Notes into approximately 6.1 million shares of our Class A common Stock, with payments of cash in lieu of any fractional shares.

On May 1, 2025, the Company repaid the remaining principal balance, $6.4 million, with cash.

See Note 8 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.

Acquisition Agreement

On June 17, 2025, the Company closed the acquisition of 40 stores across 13 states in Mexico.

The stores, operating under the names “Monte Providencia” and “Tu Empeño Efectivo” offer traditional pawn loans, as well as auto pawn transactions, some of which are in stand-alone auto pawn stores.

With this acquisition, the Company also takes over the management of 7 additional Monte Providencia stores, which we plan to acquire in the coming months.

See Note 2 of Notes to Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements" of this Report for further discussion.

Business Overview

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In Latin America, most of our customers receive additional compensation from their employers in December, and many receive additional compensation in June or July, applying downward pressure on loan balances and fueling some merchandise sales in those periods.

In Mexico, we saw similar downward pressure in loan balances during the third quarter of fiscal 2023 due to a change in law related to company profit sharing payments to employees.

We anticipated this change would impact pawn loan redemptions annually in May and June;

however, in fiscal 2024, the demand for pawn loans in Mexico exceeded any downward pressure related to profit sharing payments.

As a net effect of these and other factors and excluding discrete charges, our consolidated income before tax is generally highest in our first fiscal quarter (October through December) and lowest in our third fiscal quarter (April through June).

Financial Highlights

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 and six months ended March 31, 2025 and 2024:

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

The following chart presents sources of gross profit by geographic disbursement for the three and nine months ended June 30, 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 and six months ended March 31, 2025 and 2024 were as follows:

dollars as of and for the three and nine months ended June 30, 2025 and 2024 were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

2025 2024 2025 2024 2025 2024

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Store Count by Segment

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Pawn Latin America Pawn Consolidated

As of December 31, 2024

As of March 31, 2025

542 742 1,284

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Locations combined or closed — (1) (1)

As of March 31, 2025

As of June 30, 2025

545 791 1,336

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Pawn Latin America Pawn Consolidated

As of December 31, 2023

As of March 31, 2024

535 711 1,246

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Locations acquired 5 — 5

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

As of March 31, 2024

As of June 30, 2024

541 717 1,258

Six Months Ended March 31, 2025

Nine Months Ended June 30, 2025

Pawn Latin America Pawn Consolidated

3 unchanged sentences

Locations combined or closed — (10) (10)

As of March 31, 2025

As of June 30, 2025

545 791 1,336

Six Months Ended March 31, 2024

Nine Months Ended June 30, 2024

Pawn Latin America Pawn Consolidated

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

As of March 31, 2024

As of June 30, 2024

541 717 1,258

Three Months Ended March 31, 2025 vs.

Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 vs.

Three Months Ended June 30, 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.

1 unchanged sentence

Pawn segment:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2025 2024

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Depreciation and amortization 2,651 2,408 10%

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

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

Other segment loss 4 — 100%

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

Segment contribution $ 47,633 $ 36,087 32%

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

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 8%, reflecting higher PSC.

PLO ended the quarter at $221.1 million, an increase of 11% on a total and same-store basis due to increase in average loan size, increased loan demand and improved operational performance.

Total revenues increased 11% and gross profit increased 12%, driven by increased PSC, merchandise sales and scrap sales.

PSC increased 8% 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%.

Merchandise sales increased 4%, on a total and same-store basis, and sales gross margin increased by 80 bps to 38%.

Aged general merchandise, which is inventory over one year old, decreased by 260 basis points to 2.5%, or $1.2 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 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.

Segment store count remained at 542.

Excluding our Max Pawn luxury stores, aged general merchandise was 1.8%.

Net inventory increased 36%, due to the increase in PLO, layaways and purchases and a decrease in inventory turnover to 2.1x, from 2.6x.

Store expenses increased 3% on a total and same-store basis.

Segment contribution increased 32% to $47.6 million.

Segment store count increased by 3 to 545, due to acquisitions, including one luxury store in Miami.

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 March 31,

Three Months Ended June 30,

(in thousands) 2025 (GAAP)

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Jewelry scrapping sales gross profit 918 42 * 1,018 *

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

Gross margin on jewelry scrapping sales 29 % 3 % 2,600bps 29 % 2,600bps

Other revenues, net 17 28 (39)% 20 (29)%

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Depreciation and amortization 2,156 2,090 3% 2,373 14%

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

Loss (gain) on sale or disposal of assets and other — 22 (100)% — (100)%

Segment operating contribution 12,076 9,787 23% 13,005 33%

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Store Expenses (3)% 7%

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

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%.

PLO improved to $70.6 million, an increase of 13% (16% on constant currency basis).

On a same-store basis, PLO increased 2% (4% increase on a constant currency basis).

The difference is primarily driven by our recent acquisition.

Total revenues increased 11% (21% on constant currency basis), and gross profit increased 6% (16% on a constant currency basis), primarily due to increased merchandise sales and pawn service charges.

PSC increased to $31.4 million, an increase of 3% (13% on a constant currency basis) as a result of higher average PLO.

Merchandise sales increased 12% (23% on constant currency basis) and increased 8% on a same-store basis (19% increase on a constant currency basis).

Merchandise sales gross margin decreased to 31% from 32%.

Aged general merchandise increased to 2.2% from 0.9% 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 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.

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.

Net inventory increased 18% (21% on a constant currency basis) due to an increase in PLO and decrease in inventory turnover to 3.0x, from 3.1x.

On a same-store basis, net inventory increased by 10% (13% on a constant currency basis).

The difference is driven primarily by our recent acquisition.

Store expenses increased 1% (12% increase on a constant currency basis) and decreased 3% on a same-store basis (7% 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.

Segment contribution increased 20% to $12.4 million (30% on a constant currency basis)

Segment store count increased by 49 to 791, primarily due the acquisition of 40 stores, the addition of ten de novo stores, and the consolidation of one store.

Other Investments

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dollars from its functional currency of primarily Australian dollars:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2025 2024

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Segment contribution $ 2,013 $ 1,999 1%

Segment contribution was $2.5 million, an increase of $0.1 million primarily due to the increase in our share of equity in net income of Cash Converters.

Segment contribution was $2.0 million, consistent with prior quarter, primarily due to the increase in our share of equity in net income of Cash Converters.

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 March 31,

Three Months Ended June 30,

Percentage Change

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Depreciation and amortization 3,196 3,660 (13)%

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

Other income (1,262) — 100%

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Net income $ 26,503 $ 17,950 48%

* Represents a percentage computation that is not mathematically meaningful.

Segment contribution increased $13.7 million or 28% over the prior year quarter, primarily due to improved operating results of the U.S.

Pawn and Latin America Pawn segments above.

Pawn and Latin America Pawn segments.

General and administrative expense increased $1.7 million or 9%, 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 increased $3.2 million primarily due to an increase in income before taxes of $11.7 million.

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

Nine Months Ended June 30, 2025 vs.

Nine Months Ended June 30, 2024

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

1 unchanged sentence

Pawn segment:

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands) 2025 2024

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(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.

During the nine months ended June 30, 2025, segment store count increased to 545.

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.

Merchandise sales increased 3%, and merchandise sale gross profit increased 2%.

Store expenses increased 5% (5% on a same-store basis), primarily due to increased labor, in line with store activity and minimum wage increases.

Segment contribution increased $23.4 million, or 19%, primarily due to the changes described above.

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

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands) 2025 (GAAP)

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Store Expenses (2)% 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.

During the nine months ended June 30, 2025, net store count increased by 54 due to the acquisition of 41 stores, the opening of 23 de novo stores and the consolidation of ten stores.

PSC increased 5% to $88.9 million (16% to $98.5 million on a constant currency basis) as a result of higher average PLO.

1 unchanged sentence

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.

Store expenses remained constant and decreased by 2% on a same-store basis (10% 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.

Segment contribution increased $6.0 million, or 21% ($9.0 million, or 32%, on a constant currency basis), due to the changes noted above.

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dollars from its functional currency of primarily Australian dollars:

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands) 2025 2024

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Interest income (1,803) (1,811) —%

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

Equity in net (income) loss of unconsolidated affiliates (4,898) (4,278) 14%

Segment operating contribution 6,701 6,124 9%

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Segment contribution $ 6,701 $ 6,097 10%

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.

Segment income was $6.7 million, an increase of $0.6 million from the prior-year nine months ended June 30, 2024, primarily due to the increase in our share of equity in net income of Cash Converters.

Six Months Ended March 31,

Nine Months Ended June 30,

Percentage Change

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* 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.

Segment contribution increased $30.0 million or 19% over the prior year nine months ended June 30, 2024, primarily due to improved operating results of the U.S.

Pawn and Latin America Pawn segments above.

General and administrative expenses increased $5.2 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 increased $6.1 million, primarily due to an increase in income before income taxes of $21.2 million for the nine months ended June 30, 2025 compared to the same prior year nine month period.

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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Cash and Cash Equivalents

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.

Our cash and cash equivalents balance was $472.1 million at June 30, 2025 compared to $170.5 million at September 30, 2024.

At June 30, 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:

Six Months Ended

Nine Months Ended

(in thousands) 2025 2024

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The $27.5 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 $6.8 million increase in cash flows used in investing activities year-over-year was primarily due to a $29.1 million increase in net pawn lending outflows, partially offset by a $19.1 million increase in cash inflows from the sale of forfeited collateral and a $3.2 million decrease in net cash flows used related to investments, acquisitions and capital expenditures.

The $288.3 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 $7.6 million) of 7.375% senior notes due 2032, partially offset by the repayment of $6.4 million of principal for the 2025 Convertible Notes.

The net effect of these changes was a $307.3 million increase in cash on hand during the current year to date period, resulting in a $487.1 million ending cash and restricted cash balance.

Sources and Uses of Cash

On May 1, 2025, we repaid the remaining principal balance, approximately $6.4 million of the 2025 Convertible Notes.

In March 2025, we issued $300.0 million aggregate principal amount of the Company’s 7.375% senior notes due 2032, for which $300.0 million remains outstanding as of June 30, 2025.

See Note 8 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 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.

Under the stock repurchase program, we may purchase Class A Non-Voting common stock from time to time at management’s discretion in accordance with applicable securities laws, including through open market transactions, block or privately negotiated transactions, or any combination thereof.

In addition, we may purchase shares pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934.

The amount and timing of purchases will be dependent on a variety of factors, including stock price, trading volume, general market conditions, legal and regulatory requirements, general business conditions, the level of cash flows and corporate considerations determined by management and the Board, such as liquidity and capital needs and the availability of attractive alternative investment opportunities.

The Board of Directors has reserved the right to modify, suspend or terminate the program at any time.

As of June 30, 2025, we have repurchased 3,178,147 shares of our Class A Common Stock under the program for $30.0 million.

This program expired on May 3, 2025.

During the three months ended June 30, 2025, the Company used approximately $2.0 million of the net proceeds from the 2032 Senior Notes offering to repurchase for cash 148,921 shares of its Class A common stock in privately negotiated transactions.

Such transactions were authorized separately from, and not considered a part of the Common Stock Repurchase Program.

See Note 9 of Notes to Condensed Consolidated Financial Statements included in “Part I, Item 1 — Financial Statements.”

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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 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.

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 December 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

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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