EZCORP INC

EZCORP, Inc. is a leading provider of pawn services in the United States and Latin America, operating 1,360 locations ¹ with approximately 8,500 Team Members ². The company is headquartered in Austin, Texas and is a Delaware corporation. The pawn industry in the U.S. is described as large, relatively mature and highly fragmented, consisting of a few large operators (of which EZCORP is the second largest) together with independent operators owning a smaller number of stores, primarily one to three locations. The Latin American pawn industry is also fragmented, but less so than in the U.S., and consists of independent for-profit operators, some operating chains of stores, and certain not-for-profit organizations. EZCORP is the second largest for-profit operator in Mexico and the largest operator in Guatemala. The pawn industry, particularly full-line stores dealing in both general merchandise and jewelry, remains in an expansion stage in Latin America.

EZCORP faces significant competition from other pawn stores, banks, alternative lenders and loan brokers, credit unions, consumer finance companies, and for merchandise sales from retail and wholesale stores such as jewelry stores, discount retail stores, consumer electronics stores, other pawn stores, other resale stores, electronic commerce retailers and auction sites. The company believes the primary elements of competition are the quality of customer service and relationship management, convenience, store location, and a customer-friendly environment. EZCORP's EZ+ Rewards loyalty program, which has 6.9 million global members ³, is believed to provide a distinct competitive advantage over other pawn operators. By store count, EZCORP is the second largest pawn store owner and operator in the U.S. and one of the largest in Latin America.

EZCORP generates revenues primarily from pawn service charges (PSC) on pawn loans outstanding (PLO), merchandise sales, and jewelry scrapping. The business model involves advancing cash against the value of collateralized tangible personal property at pawn stores. If a customer redeems their pawn, they repay the amount advanced plus PSC. If not, the pawned collateral becomes inventory for retail sale or scrap. The success of the pawn business is largely dependent on accurately assessing the probability of pawn redemption and the estimated resale or scrap value of the collateral. The company also offers web-based applications under the name EZ+ for customers to manage pawn transactions, layaways, and loyalty rewards online. In fiscal 2025, PSC accounted for approximately 37% of total revenues and 64% of gross profit.

EZCORP's U.S. Pawn segment operates 545 stores ⁴ under names primarily including EZPAWN and Value Pawn & Jewelry. In the U.S., PSC rates generally vary between 12% and 25% per month as permitted by applicable law, and the pawn term generally ranges between 30 and 90 days. Pawn transactions typically average between $200 and $220 ⁵. The segment also offers a product protection plan for general merchandise and a jewelry VIP package. For fiscal 2025, the U.S. Pawn segment reported gross profit of $550.639 million ⁶ and segment contribution of $200.165 million ⁷. The segment's average monthly ending pawn loan balance per store was $399 ⁸, and the monthly average yield on pawn loans outstanding was 14% ⁹.

EZCORP's Latin America Pawn segment operates 815 stores ¹⁰ in Mexico (622 stores ¹¹), Guatemala (148 stores ¹²), El Salvador (20 stores ¹³), and Honduras (25 stores ¹⁴), operating primarily as Empeño Fácil, Cash Apoyo Efectivo, GuatePrenda, and MaxiEfectivo. In Mexico, PSC rates generally vary between 15% and 21% per month, and the pawn term is 30 days, with transactions typically averaging between 1,400 and 1,700 Mexican pesos (approximately $70 to $85 ¹⁵). In GPMX (Guatemala, El Salvador, Honduras), PSC rates generally vary between 12% and 18% per month, the pawn term is 30 days, and transactions typically average between $120 and $140 ¹⁶. For fiscal 2025, the Latin America Pawn segment reported gross profit of $195.426 million ¹⁷ and segment contribution of $46.613 million ¹⁸.

During fiscal 2025, EZCORP continued its expansion with the opening of 40 de novo stores ¹⁹ (20 in Mexico, 14 in Guatemala, 4 in Honduras, and 2 in El Salvador) and the acquisition of 52 stores ²⁰ (48 in Latin America and 4 in the U.S.). The company also consolidated 11 stores ²¹ (10 in Latin America and 1 in the U.S.). In March 2025, EZCORP issued $300.0 million ²² aggregate principal amount of 7.375% senior notes due 2032 (the "2032 Senior Notes"). During April 2025, holders converted approximately $97.0 million ²³ in principal amount of the 2025 Convertible Notes into approximately 6.1 million shares ²⁴ of Class A common stock, and on May 1, 2025, the company repaid the remaining principal balance of $6.4 million ²⁵ with cash. On June 17, 2025, the company acquired 40 pawn stores across 13 states in Mexico for total consideration of $20.3 million ²⁶ in cash. On November 11, 2025, the Board of Directors approved a new share repurchase program authorizing the repurchase of up to $50 million ²⁷ of Class A Non-Voting common shares over the next three years.

For fiscal 2025, total revenues were $1,274.280 million ²⁸, compared to $1,161.602 million ²⁹ in fiscal 2024, representing a 10% increase. Gross profit increased 9% to $746.065 million ³⁰ from $682.273 million ³¹. Net income was $109.613 million ³² compared to $83.095 million ³³ in the prior year, a 32% increase. Diluted earnings per share were $1.42 ³⁴ versus $1.10 ³⁵ in fiscal 2024. Operating income increased to $149.169 million ³⁶ from $112.530 million ³⁷. Cash flows provided by operating activities were $148.985 million ³⁸ compared to $113.600 million ³⁹ in the prior year.

A primary growth vector is the expansion of the store base through de novo openings and acquisitions in both Latin America and the U.S., as well as potential new markets. During fiscal 2025, the company opened 40 de novo stores ⁴⁰ and acquired 52 stores ⁴¹, ending the year with 1,360 locations ⁴². The company sees opportunity for further expansion in Latin America and the U.S. The ability to add new stores is dependent on several variables, including projected achievement of internal investment hurdles, the availability of acceptable sites or acquisition candidates, the alignment of acquirer/seller price expectations, the regulatory environment, local zoning ordinances, access to capital, and availability of qualified personnel.

Another growth vector is the EZ+ Rewards loyalty program, which now has 6.9 million global members ⁴³. Launched in the U.S. and Mexico in 2021 and in GPMX in 2022, the program allows customers to earn points on most transactions that may be applied as a discount towards retail sales. The company believes this program provides a distinct competitive advantage over other pawn operators. Additionally, the company's strategy includes broadening customer engagement to serve more customers more frequently in more locations, supported by IT and Data Modernization to capitalize on growth opportunities and create greater value at every customer interaction.The company's strategy includes a pillar of "Cost Efficiency and Simplification," which aims to shape a culture of cost efficiency through ongoing focus on simplification and optimization. Store expenses increased 4% in fiscal 2025 ⁴⁴ primarily due to increased labor driven by headcount from acquired and de novo stores and inflationary wage increases. General and administrative expenses increased 11% ⁴⁵ primarily due to labor and incentive compensation expense.

The filing does not contain a specific operational outlook regarding supply chain, manufacturing capacity, or headcount strategy for the upcoming period. The company's foundational capabilities include modernizing IT and data assets to capitalize on growth opportunities. The company employs approximately 8,500 Team Members ⁴⁶ across the Company, including approximately 3,700 in the United States ⁴⁷, 3,800 in Mexico ⁴⁸, and 1,000 in Central America ⁴⁹.

In terms of capital allocation, the company's Board of Directors approved a new share repurchase program on November 11, 2025, authorizing the repurchase of up to $50 million ⁵⁰ of Class A Non-Voting common shares over the next three years. The previous program, which authorized up to $50 million ⁵¹ over three years, expired on May 3, 2025. Under the expired program, the company repurchased 3,178,147 shares ⁵² for $30.0 million ⁵³. The company also used approximately $3.0 million ⁵⁴ to repurchase 220,435 shares ⁵⁵ in privately negotiated transactions during fiscal 2025. Capital expenditures, net, were $38.561 million ⁵⁶ in fiscal 2025. The company has not declared or paid any dividends and does not anticipate paying any dividends in the immediate future.

A structural headwind explicitly flagged is the potential impact of changes in gold values. Gold jewelry comprises a large portion of the collateral security for pawn loans and inventory. A significant or sudden decrease in gold values or the volume of gold transactions may have a material impact on earnings and financial position. The impact of a hypothetical change in gold values cannot be reasonably estimated due to the timing of scrap sales, among other operational considerations.

Another significant constraint is the regulatory and political environment in Latin America. The company has significant operations in Mexico, Guatemala, El Salvador, and Honduras, and its growth plans include potential expansion in those countries. Doing business there exposes the company to risks related to political instability, corruption, economic volatility, drug cartel and gang-related violence, social unrest, tax and foreign investment policies, and uncertain application of laws and regulations. Changes in foreign currency exchange rates also pose a risk; a significant weakening of any of these foreign currencies could result in lower assets and earnings in U.S. dollars.

A significant portion of the U.S. business is concentrated in Texas and Florida, with more than 62% of U.S. pawn stores located in Texas (45%) and Florida (17%) as of September 30, 2025 ⁵⁷. A negative legislative or regulatory change in either state could have a material adverse effect on overall operations and financial performance. The company also faces material risk from fluctuations in gold values, as gold jewelry comprises a large portion of collateral and inventory. A significant decline in gold values could result in decreases in sales, sales margins, PLO, and PSC. The carrying value of goodwill was $324.9 million ⁵⁸, or approximately 17% of total assets, as of September 30, 2025, and an impairment could result in a material, non-cash write-down. The company has significant operations in Latin America (815 stores ⁵⁹ as of September 30, 2025), exposing it to risks from political instability, economic volatility, and changes in foreign currency exchange rates. A significant weakening of foreign currencies could result in lower assets and earnings in U.S. dollars. The company's ability to recover its investments in other companies, such as its $45.0 million ⁶⁰ preferred equity investment in Founders One, LLC and $24.4 million ⁶¹ in promissory notes from Founders, is heavily dependent on the success and performance of those companies, including their ability to obtain further debt or equity financing.

Management's message emphasizes a customer-centric strategy supported by three fundamental pillars: Strengthen the Core (relentless focus on superior execution and operational excellence in the pawn business), Cost Efficiency and Simplification (shaping a culture of cost efficiency), and Innovate and Grow (broadening customer engagement). The company relies on four foundational capabilities: Team Members, IT and Data Modernization, Risk Management and Building a Culture of Compliance, and Sustainability. The tone is forward-looking, highlighting the company's position as a leading provider of pawn services with 1,360 locations ⁶² and approximately 8,500 Team Members ⁶³. Management's strategic priorities for the period ahead are centered on these three pillars, with a specific emphasis on expanding in Latin America and the U.S. through acquisitions and de novo openings, as evidenced by the opening of 40 de novo stores ⁶⁴ and the acquisition of 52 stores ⁶⁵ in fiscal 2025.