EZCORP, Inc.
Q4 2013 Earnings Call Transcript

Published: 8 Nov 2013

[Operator:]

Welcome to the Fiscal Year 2013 Quarter Four Earnings Release. My name is Chris, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now like to turn the call over to Mark Kuchenrither. Mark, you may begin.

[Mark Kuchenrither:]

Thank you, Chris, and good afternoon, everyone. I’m Mark Kuchenrither EZCORP’s Executive Vice President and Chief Financial Officer. On the call with me today is Paul Rothamel, our President and Chief Executive Officer. Today’s conference call contains certain forward-looking statements regarding the company’s expected operating and financial performance for future periods. These statements are based on the company’s current expectations. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors including fluctuations in gold prices for the desire of our customers to pawn or sell their gold items, changes in the regulatory environment, changing market conditions in the overall economy, and in the industry and consumer demand for the company’s services and merchandize. For a discussion of these and other factors affecting the company’s business and prospects through the company’s annual quarterly and other reports filed with the Securities and Exchange Commission. We have provided supplemental information on our website the information provides detail regarding the impact of gold and jewelry scrap on earnings per share, net earning assets by segment is provided as well. These materials can be found at ezcorp.com in the investor resources section. Now I would like to turn the call over to Paul Rothamel, our President and Chief Executive Officer for his opening comments. And then we will open the call to your questions, Paul?

[Paul Rothamel:]

Thank you, Mark and good afternoon everyone. Fiscal 2013 was obviously very difficult year for us at EZCORP, our industry and our customers, our own internal growth significant market changes and regulatory activity, all came together to pressure our short-term financial performance. On many front, we did a credible job of growing market share across the U.S. and Mexico particularly. We posted solid lending and selling revenue gains grew our customer base, and our loan and inventory earning assets are healthy. Investments we’ve made over the last several years in de novo store growth, on acquisitions, Cash Converters and Grupo Finmart are working an accretive today. The additional investments in underwriting and collection and to support our store front and online retail business are also working and adding to our earnings. Our diversified growth is created financial challenges. Our most recent acquisitions in online lending have not yet met our high expectations. They will be continued to be a key focus over the coming quarters. We expect both of these businesses to improve materially over the coming year and combine should add earning in 2014. This will require improved execution from the management team in underwriting customer acquisitions and collection as we grow our portfolio more profitably. And after three and a half years of rapid store expansions and earnings growth and paying, but still struggled in the back half of 2013 as the marketplace shifted rapidly from gold to general merchandise. We were slow to reacted increased competition and we stress our stores teams too far. With our loan book and our margins on inventory will negatively affected. We are making the necessary adjustment and today the bulk of it is discontinued operations are behind us. We intend to slow in lower growth in the year, which will allow our team to focus on operational execution to drive better results in the near-term. Overall, we expect to continue to see an expanding consumer demand for our product and services, due to the economic pressures they feel, the continued reduction in the number of provider in the marketplace and the regulatory changes that make it harder for them to access cash. We believe this will be true for the foreseeable future. With that mean for us and others is that we have to get a lot better at anticipating and serving the changing needs of this growing population. Loan to value ratios, retail pricing and inventory management systems, underwriting collection to decisions sign, consumer driven market and of course regulatory compliance, all have to get better quickly. At EZCORP, we’ve already made many of these investments and continue to improve them today. We expect to see these efforts more than pay themselves in 2014 and the coming years. While we had our growing paying in 2013, which spent a last four years growing into one of the largest, most diversified providers in the industry. We are focused on improving our financial performance quickly, driving profitability to the bottom line. We understand that our shareholders want to see us deliver that kind of results, they saw from us in 2010, 2011, and 2012 and we agree on an attempt on doing that. And with that, we’ll take you questions.

[Operator:]

Thank you. We’ll now begin the question-and-answer session. (Operator Instructions) And our first question comes from Bill Carcache from Nomura Securities. Bill, your line in open.

[Bill Carcache:]

Thank you. Good evening, guys. Can you talk a little bit about what drove the impairment charge at Albemarle & Bond and is there more to come and how should be think about the P&L contribution of the earnings from a unconsolidated subsidiary is going forward? Just wondering how much of that’s going to impacted as result of the impairment?

[Paul Rothamel:]

I’ll let Mark walk you through that…

[Mark Kuchenrither:]

I tell you what, Bill I’ll answer that. But I like to take you through a bridge for the year and for the quarter and then inside that I’ll talk about Albemarle & Bond if that’s okay.

[Bill Carcache:]

Absolutely.

[Mark Kuchenrither:]

Good if you look at net income from continuing operations attributable to EZCORP and a year FY 2013, we had $57 million of net income compared to $148 million in 2012, approximately $91 million variance in fourth quarter we had $26 million loss compared to a $40 million net income figure for 2012 in the quarter or $66 million variance when you normalize 2012 for prior year favorable purchase accounting adjustments that related to group of Finmart those adjustments had an $8 million impact for the year and $6 million in the fourth quarter. So if you subtotal that your variance for the year is $83 million and inside the quarter is $60 million. The one-time adjustments accounted for $35 million both in the year and in the quarter and that was led by the write-down of ABM and what we can say about that is what’s been publicly talked about through the ABM information and that is it’s primarily the gold market that has driven their shortfall. And we had to view that as a permanent reduction and valuation and we accounted for it accordingly. The remaining value on our balance sheet is approximately $10 million and we don’t anticipate at this time any further write-down. The go forward earnings we do expect them to be lower next year from A&B, although we think CCB will have a solid year we think A&B will be down year-over-year. The gold impact to operations in the fiscal year was $31 million and $12 million in the quarter 63% of that – $31 million was driven by volume or $19 million and inside the quarter 70% was driven by volume or $8 million and that’s important to understand that that more and more of that variance on a go forward basis is really volume related more than price. The regulatory impact in the year was $7 million and that is at the Federal, State and Local level primarily State and Local level is inside of Texas and in fact those $2 million in the quarter. We made several business investments during the course of the year acquiring businesses and opening up de novo’s locations and we made investments in our multi-year plan with our information technology systems that we talked about previously. And we try to add G&A support those as well, and that drag of $20 million in the year and $8 million in the quarter and then to your question affiliate performance driven primarily by our estimated performance of A&B heard us $4 million, $5 million in year and $5 million in the quarter.

[Bill Carcache:]

Okay, that’s helpful. Switching gears to cash can you give a little bit more detail on the comment and press release regarding the poorly executed introduction of an installment loan product that caused performance to deteriorate in Q4? And then more broadly can you talk about what gives you confidence that there won’t be I guess further concerns of poor execution as we look ahead?

[Mark Kuchenrither:]

Sure Bill. So if you recall we purchased Cash Genie in the third quarter of 2012, at that time they did not operate to OFT best practices we made those corrections cleaned up the operations, and they’ve all along the [indiscernible] the payroll advance product, it’s just a 30 day loan product. And if you recall that that division actually crossing the profitability in the second quarter, it was very profitable in the third quarter. And in that third quarter we launched the installment product that I referenced earlier. And we didn’t launch it particularly well, and we had substandard execution related to underwriting and collections, we actually moved to the payroll, advanced customers into the product as well. So we recognized that made the necessary changes in moving many of those customers back to the payroll advanced products. We are in the process of retooling the installment product as well. I’d say we’re in the process we made improvements already in the underwriting and on the question side of that product. We feel better about it and frankly we made management changes as well. And the run rates on that we look at and the sensitivities would show us back into profitability probably attention in the first quarter, but more likely in the second quarter.

[Bill Carcache:]

Okay. Switching gears, one last question if I may and then I’ll jump in the queue. Can you share your current thinking on capital return and buyback you particularly given with your stock now down at levels not seen since the crisis? I guess I’m just wondering if you could talk about whether you see value in possibly buying back shares here.

[Mark Kuchenrither:]

I think how I’d answer that Bill is, we look at all those things, we look at buyback dividends with the Board level on a consistent basis, and I’m sure we will look at it again. And we haven’t done it up to this point because we’ve always felt we can deploy our capital and to higher returning earning assets and I would think frankly based on past behavior we would continue to do that because we got plenty of opportunity to do that, but that is looked at on a regular basis, we’ll continue to do that.

[Bill Carcache:]

Okay, I guess a related point is your basis share counts increased by 31% in the last five years. Could you remind us what’s driving the increase in that? Is that equity based employee compensation and if so we thought about I guess it’s not buying back shares to reduce the share count at least at a minimum costs at the dilutive impact of the equity influences?

[Mark Kuchenrither:]

Yeah, the vast majority of the share count increase has to do with our acquisition activity. We’ve financed our growth through equity, primarily there is some compensation in there as well, but primarily it’s acquisitions over the course of the past few years.

[Bill Carcache:]

Got it. Well, thanks very much, guys.

[Mark Kuchenrither:]

Thanks.

[Operator:]

And our next question comes from Bill Armstrong from CL King and Associates. Bill, your line is open.

[William Armstrong:]

Good afternoon, Paul and Mark. The bad debt expense provision presents obviously it was up and you mentioned the transition to the multi-payment loans and I understand that I know with the accounting how that works. But could you talk about within the payday bucket? And then within the multi-loan bucket, are there any trends either positive to negative in terms of bad debt?

[Paul Rothamel:]

Yeah, I’ll answer that. So basically a payday bucket is with in a 100 basis points year-over-year and we haven’t seen a lot of movement by the end of CSO inside of Texas or outside of Texas, and frankly the 100 basis points has primarily been driven outside the Texas with the new stores that we opened. The biggest movement for us in the multi-year bad debt is really being driven by auto title right now, because we grown those balances very aggressively. We’re comfortable, our bad debt balance I think historically was in 11% to 12 % range and now it’s moved up to 18% and 19%, and we’re very profitable at that kind of bad debt level. But because those multi-products are growing faster and our installment products are up a little bit, because those are growing faster than the payday product obviously the mix out causes about 300 point deterioration in the year. And it was little higher in the quarter as we push down unknown balance a bit and frankly pushed the auto title a bit. So I think this current run rates in the fourth quarter were a bid elevated, but that 300 point deterioration of 24% for the year 25% I think it’s very appropriate for us and we’re comfortable with that level.

[William Armstrong:]

24%, 25% of fees?

[Paul Rothamel:]

Yes, yes on a blended basis, exactly.

[William Armstrong:]

I think right, blended, okay. Got it, okay. Thanks.

[Operator:]

Now next question come from John Rowan from Sidoti & Company. John, your line is open.

[John J. Rowan:]

Good afternoon guys

[Mark Kuchenrither:]

Hi, John.

[John J. Rowan:]

Mark, I was wondering could you just kind of walk us through getting from the net capital loss of $0.46 what you view is a more operating number for the quarter. What would be a pro forma tax rate and how you would look at any type of add back for the impairment charge and also for the loss of store closes?

[Mark Kuchenrither:]

If you look at the earning release income statement, you’ll see that for the year our diluted earning per share attributable EZCORP from continuing operations as $1.06, and if you take the $35 million and adjust that $1.06 for the $35 million of one-time adjustment, you’re at $1.71. Our tax rate this year is 33.5% on consolidated basis. On a go forward basis, we expect that to be corporate of 30% based on some of our global tax planing that we’re doing next year.

[John J. Rowan:]

Okay, just for the quarter, right…

[Mark Kuchenrither:]

For the quarter, we’re at a negative $0.48 from continuing operations is on that same line. And again the $35 million was inside the quarter, so if you adjust that negative $0.48 by the $35 million, you would be at $0.16 earnings per share.

[John J. Rowan:]

Where did you get that, I’m sorry I’m not seeing where the $35 million add back as you had $44.6 million of add back from the A&B, which tax effected as $29 million and then there was a little bit for the non-recurring which should be for the loss on store disposal, how do I get to or just say $32 add back?

[Mark Kuchenrither:]

There were $35 million of one-time items that was driven primarily by A&B. The other write-downs or write-off of our other assets in what the remaining $6 million and they were legal expenses associated with the A&B underwriting activity that we said previously in the quarter. And so when you look at the $35 million and that’s adjusted for tax already and divided by the $54.3 million, weighted average shares diluted and add that back to the $0.48, before $0.08 loss come up to $0.16.

[John J. Rowan:]

Okay. I guess my questions, I don’t see maybe I’m missing, but I don’t see kind of [indiscernible] add back, I guess up to that, I obviously see the big $45 million charge. So maybe I’m missing it, I mean I don’t see a pro forma table on here?

[Mark Kuchenrither:]

Well, there is not, we didn’t provide a pro forma table. You can see the loss, gain and sale disposal of assets of 1.2. You can see the $45 million…

[John J. Rowan:]

I see those, but together even tax effective, I’m still not getting to the $35 million, it’s a little bit off from that, but it’s – I don’t….

[Mark Kuchenrither:]

We can go to that tomorrow if you’d you like.

[John J. Rowan:]

Okay. Where do you guys stand relative to your many type of debt covenant? And talk about what your bank would is going to view this on news release and what they’re going pro forma out for the covenant?

[Mark Kuchenrither:]

We have no issues that all with any of our covenants and we’re still very under levered as the Company and there are no issues that all with any of our covenants.

[John J. Rowan:]

Okay. Internally, what do you guys about for jewelry sales setting into December, obviously your inventory is up drastically. How are you going to turn that inventory in December and how much price cutting you think you’re going to need to do in order to do that?

[Mark Kuchenrither:]

Well, John we showed in a press release, we’ve ran of 18% and 14%. We know that inventories are up 66%, I think its 70% range. And just factor of timing that’s a dramatically improved jewelry run rate. We’ve got nice – that’s continuing for us right now. Obviously Christmas is the motherlode. For us Christmas is motherlode. We had a second crack at the – added with Valentines Day, because of the money that’s comes end of our consumer’s hands from their federal income tax return check So as we described before, we expect to carry heavier inventories. We actually think that 18% and 14% will improve. We’ve got sensitivities around that and based on how we’ve edged forward lock gold and we will retail that hard to December and other way to February, and if we have to scrap those scrap. We’ve talked earlier I think in the last call that we had get to the point where we’re frankly we were about 18%, 20%, scrapping 18% of our potential inventory and inventory in 20%. We’ve talked it could go as much as 70%, 30% the other way. We frankly think it’s more of 50/50 proposition today. And I will tell you actually in the last month as an example, we’ve ran up actually 18, I think in the month and our margins rates were higher. So we are comfortable that we’re not going to have to bastardize margin rates to derive sales. We haven’t seen that at this point. So our assumption is we can be in the margin rate range with double digit sales increases and if we have to scrap or scrap.

[John J. Rowan:]

Okay and then just one last question from me. I know this is not necessarily within your control, but is there anyway that shareholders can see how the board is viewing the fairness of the retainer agreement with Madison Park. I bring this up because it was in the 8-K that they rendered an opinion about the fairness or you have an independent committee render that opinion, but is there anyway that we can look at the comps that you’re looking at it in order to justify this 600,000 per month that is paid from Madison Park?

[Mark Kuchenrither:]

I’ll take your question [indiscernible] and put it in front of the board.

[John J. Rowan:]

Okay fair enough, thank you.

[Operator:]

And our next question comes from John Hecht from Stephens Incorporated. Go ahead John.

[John Hecht:]

Good afternoon guys. Thanks for taking my questions. Real quick on the coder. The other revenues had a significant drop off from last quarter I am wondering was there any contra items in there or do you what is the run rate we should take up for other revenues.

[Mark Kuchenrither:]

In general John that’s a pretty small number that had primarily to do with Western Union fees we signed last year at this time a contract with Western Union, the timing of the revenue recognition was favorable last year in the fourth quarter and now what you’re seeing is a more normalized run rate. It grow as we expand stores and expand penetration but I don’t think it’s a number that’s going to grow dramatically.

[John Hecht:]

Okay. And then same kind of question on the admin side, it has been little bit volatile in terms of the initial expense, but from 12, 6 to 17.5 was that was similar to legal fees or and if so what the kind of right normalized run rate going forward?

[Mark Kuchenrither:]

Yeah I have got that. If you look at our fourth quarter we are at $17.6 million this year versus last year of $14, 4 million. So it’s a $3.2 million difference and for the year we are at 52.5, versus 48. So about a $4.6 million difference. So up 22% in the quarter up 10% for the year part of the one-time adjustments that John asked about. There is $3.3 million in admin and that affected both the quarter and the year. So inside the quarter, we are actually down on a normalized basis, 1% year-over-year and we are up 3% for the year that 1% down reflects what we expect our go forward run rate will be as we have, we have told you before in admin we have spent money in investment with IT and our multiyear plan, we set up that IT investment using primarily contractors. So as those whole projects reach their finalization. Then we can start to move the contractors out of the business and we’ve started that process and that will continue during the course of the next twelve months.

[John Hecht:]

Okay that’s very good color. Thank you. Last question. you did a good job bridging but the report was to get core operating level was in the quarter and then we talked about the heightened and position and credit losses and some of the drags some transition to more retail as opposed to scrapping of gold and so forth. So it is not asking sort of guidance but asking for you to – in your opinion, when do you normalize these trends? Paul, I mean when do you get to that 50-50 scrap versus retail level on gold and normalized margins and when do you think you get back normalized credit provision? And the basic concept here is you’re trying to figure out when do you achieve kind of your maximum normal core earnings profile going forward from here, how quickly can you recover the business?

[Mark Kuchenrither:]

Sure I think – well there is two things, I’ll talk about, because specifically around let’s just finish the goal discussion. Mark touched on the fact that in the fourth quarter the percentage impact to our business driven by volume and that’s volume of – grand volume. That is grand volume coming in the door. And that was actually worse in Q4, so we’re thrilled that the price of gold is moderated in a narrower band between 2015, 1350 generally speaking. But the issue since the middle of last year to we believe the middle of next year is volume. And if you recall frankly in the first two quarters of this year we actually achieved the high end of the analyst expectations and it was in the back half where we got separated from analyst frankly driven by gold volumes. Where we sit right now today, on our gold volumes in the back half of this year and what just occurred inside of our business is pretty much what we forecasted and expected. We have the same forecast and expectation for the next 6 months related to our gold business. Every other metric inside of our pawn business in United States particularly is working, general merchandize all those things are working, lending and selling. But we can out run the gold yet, and the volume is the problem. So we think we still have 6 months of tough flooding. Now we’re getting every bit of market share we can all those things, but we still a tough flooding on the gold scraping and the volume of gold coming in, that forward selling in 42% to 45% margin as that is scrapping at 2015. And that’s going to continue drove these 6 months. If you just early six months and if you think about – I just talked about February, you would end up scrapping in March and April which is the last month of the second quarter, and the first month of the third quarter. On the financial service side, provision rates I believe we will blend down in the 24% to 25% bad debt range. And I believe that’s appropriate or it’s aggressive as it’s remaining on some of our loan balance growth. Our U.S online business and our U.S. storefront business, I am comfortable that we’re operating appropriately with our bad debt performance, and we’ve already talked a bit about cash changing, but that’s gong to get corrected. But that also is a much, much smaller piece of our business as smallest piece of everything I’m just about.

[John Hecht:]

Yeah, the final question that 24 or 25 blend is that to the course of next fiscal year or is that right to think it would be each quarter something around that?

[Mark Kuchenrither:]

Well, there is seasonality to it obviously. That’s where we’ll blend out. I think it will be a little higher than that in Q1 or certainly be lower that in Q2 as the our consumers get their refund checks, and then will probably be in that range in last two quarters. That’s how I think about it.

[John Hecht:]

Okay, appreciate I guess, thanks.

[Mark Kuchenrither:]

Thanks.

[Operator:]

And your next question comes from Bob Ramsey from FBR. Bob your line is open.

[Bob Ramsey:]

Hi, good afternoon guys.

[Mark Kuchenrither:]

Hi Bob

[Bob Ramsey:]

I wanted to follow up the U.S. earlier about sale repurchases and the growth and share account related acquisitions remind me in the December quarter is when you will have to make the next payment on go cash correct?

[Mark Kuchenrither:]

Yes, that’s right.

[Bob Ramsey:]

And you all have the option do that in cash or stock or you inclined of issue stock at these levels for that price.

[Mark Kuchenrither:]

We are not inclined to issue stock.

[Bob Ramsey:]

Okay, all right for that’s encouraging, and then moving on I know you all talked about the installment loan product issue in the U.K. I was just curious, why that doesn’t show in the earning asset segment break out, and there is not anything under the installment loan line on the international segment?

[Paul Rothamel:]

That’s a good question, Mark will look at that?

[Bob Ramsey:]

Okay. All right.

[Mark Kuchenrither:]

The answer is Bob the answer is that the team over there are working to separate that out at time that we published as we didn’t have a clean separation between the two different numbers, so we have good clean consolidated number that we can reconcile to and that’s what I chose to put on in one line in stead of put it out have we said right now.

[Bob Ramsey:]

Okay, so it’s a sub piece of the single pay balance.

[Mark Kuchenrither:]

That’s correct I mean that’s all one company right there is – that’s Cash Genie there is nothing else there that’s called mingling in those numbers.

[Bob Ramsey:]

Okay, I was wondering in too, you could talk a little more about the gain on disposition of merchandise pressure in Mexico specifically, I’m curious, I know you all sighted heightened competition, is that really on the pawn side, or is the TUYO franchise seen similar or more or less pressure, and what do you really see driving that? Where is the competitive pressure coming from seems to be more general merchandising gold.

[Paul Rothamel:]

Sure to answer your question, we don’t necessary see it much on the TUYO side today. Much more Frank, it’s a 20 store group. It’s a much smaller group for us. But on the [indiscernible] what are seeing in and by the way it’s a buy/sell business primarily versus lending and selling. What we are seeing is that – if you remember in the gold in the market in the pawn marketplace in Mexico, when there was 85% of the pawn shops were gold only, and gold got tight and what happened was the most of the independent started hanging in shingle with what they would pay for an ounce of gold, the try ounce of gold, and it completely changed the marketplace got very competitive, margins have shrunk diametrically, for gold scrap there. Those same pawn providers are now jumping into the general merchandise because the gold market is not profitable for them. So just a bit of a chaotic marketplace and we recognized that we didn’t recognize the impact to our lending along the value table. Does not just us, if you look at any of the public providers that provide information that operate maximum provider you’re seeing margin compression, coming of that because of vast majority of inventory is still coming out of the loan book. So we think today our value proposition is still correct meaning, we have the right size footprint, we got very good locations frankly we were closing 53 stores and opening 66 and we tapped our team too hard, and that’s on [indiscernible]. So we’re passed the discontinued ops most of it. We slowed the new store growth. We’ll get back into focused on execution on both the lending side and the retailing side, we are doing that today. And so I think, we fit it to another marketplace where we think there is going to be considerable fallout over time, these along with all of this market activity, the other thing has gone on and I’m sure you know about it is the federal legislation that we all hope to get push through. We’ll push some of these smaller providers out, because in up line by the rules and then are transparent to the consumer. But it’s just a bit chaotic right now. And again, most of these providers are going from gold to general merchandise, but the general merchandise generally is small electronics, because it’s very difficult. And so we think we’ll protect their market share and grow our market share, but we’ve got to do a better job both on the lending side and on the selling side.

[Bob Ramsey:]

I was surprised to see that the general merchandise loan balances were down year-over-year, since that isn’t really related to gold or as much to the store closures. Is that because of these other businesses that are sort of let’s say, migrating more in general merchandise, is that the reason that the balance was down?

[Mark Kuchenrither:]

Yes. Sure, two things, well, two things. Gold is affected by the way as small it is, but actually about a third of that drop. And the rest of it was that we’ve tied, we’ve pulled back because we are over lending. As the competition got in there, we found ourselves over lending frankly, so we pulled back hard and we are now coming back much more appropriately on the loan-to-value ratios, but it will take us a quarter to plan it out.

[Bob Ramsey:]

Okay. Okay, that’s helpful. Thank you.

[Operator:]

And we do have a follow-up question from Bill Armstrong from C.L. King & Associates. Bill, your line is open.

[William Armstrong:]

Thank you. I just had a couple of – just wonder if you had any same-store data for U.S. and Canada for same-store pawn balances, same-store revenues, retail sales, do you have any of that – those – that a bit?

[Mark Kuchenrither:]

Yes. So same-store pawn loan growth I believe was down 1% for the year and 4% in the quarter. Same-store sales was about the same range – I’m sorry, same-store sales is actually plus 3 in the year driven by general merchandise and with [indiscernible] down.

[William Armstrong:]

How about for Q4?

[Mark Kuchenrither:]

I should have that right in front of me and I don’t.

[Paul Rothamel:]

Okay. So where do you want me to start?

[William Armstrong:]

Q4 same-store sale.

[Mark Kuchenrither:]

Same-store sales for Q4, for U.S. pawn, same-store sales was 11.6% in total, and same-store 8% in Mexico 20% in total and relatively flat same-store.

[William Armstrong:]

PLO?

[Mark Kuchenrither:]

And in PLO, we were 1% in total and down 4% same-store and that was driven primarily by jewelry, were down 6% and 10% and general merchandise was up 11% and 6%.

[William Armstrong:]

Great. Did you say PLO?

[Mark Kuchenrither:]

Yes, pawn loan.

[William Armstrong:]

What’s that?

[Mark Kuchenrither:]

That’s your loan balance.

[Paul Rothamel:]

That’s your loan balance.

[William Armstrong:]

Okay. So that was down 4%?

[Mark Kuchenrither:]

Down 4% same store driven primarily by our jury loan balances were down 10%, but our general merchandize was up 6%.

[William Armstrong:]

Okay. Thank you.

[Mark Kuchenrither:]

Thanks Bill.

[Operator:]

At this time, we have no further questions. I would like to turn the call back over to EZCORP’s management for any closing remarks.

[Paul Rothamel:]

Well, we thank you for your time today, and we look forward to reporting a better financial to you next quarter. Thanks.

[Operator:]

Thank you ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.