Good afternoon, ladies and gentlemen. And welcome to the EZCORP Fourth Quarter and Full Year Fiscal 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call may be recorded.

I would now like to turn the conference over to Michael Kim, Investor Relations. Please go ahead, Michael..

Thank you, and good afternoon, everyone. During our prepared remarks, we will be referring to slides, which are available for viewing or download from our website at investors.ezcorp.com.

Before we begin, I’d like to remind everyone that this conference call, as well as the presentation slides contain 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 risks and other factors that are discussed in our annual, quarterly and other reports filed with the Securities and Exchange Commission.

And as noted in the presentation materials, and unless otherwise identified, results are presented on an adjusted basis to remove the effect of foreign currency fluctuations and other discrete items. Now I’d like to turn the call over to Mr. Stuart Grimshaw.

Stuart?.

Thanks, Michael. Good afternoon and welcome to the fourth quarter results. If we turn to Page 4 of the presentation, I would like to highlight a few of the key themes from the quarter. The Board has approved and up to $16 million share repurchase program of our Class A Non-Voting common shares over three year period.

This decision reflects our commitment to driving shareholder value through the efficient and effective use of capital. Supporting the decision of the Board has been the strengthening of our balance sheet for the cash balance of $162 million at September year end.

You'll also remember that we repaid the $195 million June of 2019 convertible note debt maturity. Our next bond maturity is in 2024. For the 2019 financial year, we opened 22 de novo stores in Latin America and the targeting of further 40 throughout the 2020 financial year. We also acquired seven stores in Nevada in June 2019.

As we mentioned on the last call, we remain disciplined on the acquisition front. And while we continue to see attractive opportunities, the vendor asking price did not reflect the desired returns and ROC targets that we have for ourselves.

The new point of sale system was successfully rolled out across all stores in the US and Mexico in October of this year. From a management perspective, we've achieved a lot over the past four years with EBITDA more than doubling. LatAm presence expanding resolving the LatAm EBITDA CAGR of 36% since 2017.

Strong cash generation in fiscal 2019 with $112 million free cash flow collection on notes receivable. A continued sound performance from the US business. And importantly simplifying the business with a solid Grupo Finmart as well as the closure of our US financial services business. Turning now to slide five.

Simplistically, this chart shows that we've followed a disciplined path of growth that has seen an EBITDA CAGR of 20% per annum from 2015 to 2019.

As we have highlighted, this growth has been driven by focusing their business back onto our core customer by the pawn business supported by strong operational performance, acquisitions, de novo store openings and expense control.

On page six this shows the strong free cash flow generated by the business, as well as the collections of the notes receivable from the sale of the Grupo Finmart business. To-date we have received $96 million from the purchases of that business.

You can see the material change in free cash flow generated from fiscal 2018 of $59 million to $77.9 million in fiscal 2019. On slide seven, we look toward the more strategic objectives. We continue to focus on serving and satisfying our customers' need for cash. And we've seen this focus play out through a history of long term PLO growth.

As mentioned, we opened 22 stores in fiscal 2019; 10 in the fourth quarter of this year, and plan to accelerate this to 40 in fiscal 2020. We remain disciplined on the acquisition front. And coupled with an effective capital management strategy have authorized a three year up to $16 million share repurchase program.

Our digital platforms in the beta stage with anticipated public release by the end of this calendar year, initially in Texas and Florida. We believe this platform, now called Lana will enhance the retention and acquisition of pawn customers, as well as attract completely new customers to this platform. And with that, I'll hand over to Danny..

Thanks, Stuart. Good afternoon. I want to start by flushing out the share repurchase authorization we announced in conjunction with the earnings as Stuart mentioned a moment ago. At a high level we remain focused on allocating capital to opportunities that can deliver the highest long-term returns to our shareholders.

In light of the disconnect we see between the value of our core business and the stock's current valuation, we see EZCORP stock is one of the highest investment return opportunities with a favorable risk reward relationship that also allows us to return capital to shareholders in a tax efficient manner.

The board's approval of a share repurchase program of up to $60 million over the next three years reflects the strength of our balance sheet combined with the strong free cash flow generation in the business. To that point we ended fiscal 2019 with $162 million in total cash on hand and our net cash from operating activities continues to build.

Including collections on notes receivable we generated $112 million of free cash flow in fiscal 2019, up 23% from the prior year. Looking back over the past three years free cash flow plus Alpha Credit payments on those notes receivable, have compounded at a 33% annual growth rate.

We maintain ample capacity for continued growth investment in the form of new store development, funding pawn loan growth, investments related to building out our digital capabilities, repurchasing shares and capitalizing on M&A opportunities all evaluated against our strategic and financial criteria.

We are adopting an opportunistic methodology to repurchasing shares based on a number of factors, consistent with our overall approach to capital management of maximizing returns.

And understanding that from time-to-time we may be precluded from repurchase activity when we have access to non-public information such as regarding potential M&A activities or during other blackout periods.

On the investment side we plan to accelerate new store openings in Latin America as Stuart mentioned, with around 40 new stores or nearly double the 22 stores we opened in fiscal 2019. From a return perspective new stores typically carry returns on invested capital in the range of 30% to 35% by year five.

Their related upfront costs typically pressure near-term earnings for the first six to nine months and reduce overall operating margins until the stores mature. Turning to our financial results. On a GAAP basis we reported a loss of $0.01 per share for the fiscal fourth quarter, representing $0.01 per share improvement from the prior year quarter.

Included in the GAAP results were $2.7 million of costs related to build-out of our digital platform, $2 million for our portion of discrete charges recognized by cash converters, $1.9 million related to the exploration of a call option on an unconsolidated affiliate following their third-party capital raise, $1.7 million of due diligence costs on an acquisition that we ultimately walked away from and other smaller discrete items.

GAAP results also include non-cash interest expense related to our convertible debt which has added back in our adjusted figures. On an adjusted basis, we reported diluted earnings per share of $0.19 for the fiscal fourth-quarter of 2019 and $0.90 for the full year, up from $0.86 in the prior year on an apples-to-apples basis.

Subsequent at fiscal year-end, on October 21st cash converters announced an agreement to settle its remaining class-action lawsuit. As part of the settlement cash converters is expected to pay AUD 42.5 million with cash on hand and cash flow from their operations. Based on our minority interests in cash converters and translation to U.S.

dollars we will recognize an estimated $10 million non-cash charge in our fiscal 2020 results, once the settlement is approved by the court. We're pleased to see cash converters put this matter behind them as are their shareholders indicated by the 70% share price appreciation since September 30th.

As shown on slide nine we grew EBITDA by 2% in fiscal 2019 and longer-term trends remain favorable. Consolidated EBITDA compounded at an annual growth rate of 17% over the last three years fueled by strong growth across Latin America complemented by steady contributions from our U.S. pawn operations.

While margin expansion took a pause in fiscal 2019, much of the downtick related to the rightsizing of aged inventory levels and the seasoning of new stores, I expect some continued pressure on short-term EBITDA margins in Latin America as we accelerate new store openings in fiscal 2020. Turning to the adjusted highlights on slide 10.

Total revenues were up $9.4 million or 5% year-over-year reflecting a 37% increase in scrap sales, 3% growth in merchandise sales and a 2% uptick in pawn service charges or PSC all of which contributed to the increase in free cash flow.

Ending consolidated pawn loans outstanding or PLO was up 1% year-over-year, primarily reflecting acquisitions and new stores with average PLO during the quarter increasing 2% driving a similar growth rate in PSC as related yields remain consistent with the prior periods. As noted on our last earnings call, PSC in the U.S.

and Mexico was negatively impacted during the quarter by a 24-hour system outage on July 9th as well as the knock-on effects related to system performance issues in the May to June timeframe both of which were resolved by mid-July. We estimate the July system outage cost us about $0.03 to $0.04 EPS in the fourth quarter.

And the May to June system issues decreased EPS another $0.03 spread between Q3 and Q4 as these issues affect not only sales but the loan portfolio in which pawn service charges are earned. Other than the outage there were no further system performance issues in Q4.

And POS improvements implemented mid-July significantly enhanced processing speeds and stability. Merchandise sales grew 3% in total while same-store sales growth came in at 2%. Same-store sales growth in both the U.S. and Latin America slowed partially due to our system issues as well as some social welfare programs recently instituted in Mexico.

Overall merchandise margins declined to 33% for the quarter as a result of our focus on reducing aged inventory year-over-year from 8% to 6% optimizing loan-to-value ratios and improving the cash-to-cash cycle. Turning to scrap.

Sales and gross profits during the fiscal fourth quarter were both up strongly year-over-year on a step-up in related volumes. That said our scrap gross margin ticked down due to liquidating older merchandise with a higher cost basis as well as lower diamond prices and higher processing fees in Mexico partially offset by higher gold prices.

Adjusted corporate expenses of $12.1 million were 12% lower than the prior-year quarter on a reduction in incentive compensation and an unrelated $800,000 benefit I would not expect to repeat.

For the quarter, EBITDA was down year-over-year, primarily reflecting lower sales gross profits, higher operating expenses, higher loan loss provision at Cash Max and an $800,000 reduction in income from cash converters. Adjusted EBITDA was up 2% for the full year compared to fiscal 2018.

The adjusted effective tax rate for the quarter was 20% leading to an overall tax rate for the year of 27%. Looking ahead, I expect the tax rate to be in the low to mid 30% range for fiscal 2020. Turning to the U.S. Pawn highlights for the quarter on slide 11. Same-store loan growth came in at 1% for the quarter with ending pawn balances up 2%.

In turn PSC increased by 1% as growth in the average PLO balance for the quarter was partially offset by 170 basis point downtick in yields. Merchandise sales in the U.S. were flat year-over-year, while related margins softened 320 basis points to 35%. Given the incremental discounting to move aged merchandise.

Aged general merchandise stands now at 6% down meaningfully from 9% at the end of fiscal 2018 reflecting the effectiveness of our inventory management. At a high level, operating expenses remained well-managed in U.S. pawn which should drive margin expansion overtime assuming reaccelerating revenue growth.

More tactically fiscal fourth quarter expenses were skewed by $0.5 million workers compensation charge from a single large claim compared to an $800,0000 credit in the prior year quarter. While segment EBITDA was down year-over-year mostly reflecting lower merchandise sales gross profits and higher labor costs, full year EBITDA in the U.S.

was up 1% versus fiscal 2018. Now focusing on Latin America on slide 12. PSC was up 3%, compared to the prior-year period on a higher average loan balance for the quarter and more favorable yields.

In addition merchandise sales were up 11% and same-store sales were up 8% though merchandise margins declined as we remain focused on optimizing loan-to-value ratios, reducing aged inventories and maximizing sales gross profits.

To support the company's efforts to reduce inventory and improve the cash-to-cash cycle, the Latin America segment conducted a deeper jewelry pull than in the past. While this creates some margin headwind in the quarter, it increased the cash generated from jewelry scrapping sales by $1.9 million or 56%.

The ending PLO which will affect the pawn service charges in the beginning of fiscal 2020 was down 1% year-over-year and the same-store balance was down 3%.

The ending PLO reflects recent social welfare programs in Mexico meeting the cash needs of some of our customers and the May to July system issues previously discussed with same-store Latin America loan balances up 2% outside Mexico.

Turning to expenses, Latin America operating costs were up 15% reflecting store licensing requirements enacted in Mexico, higher labor-related and rent expenses, cost-related to new relocated and expanded stores and an increase in robbery losses and related security costs.

Looking ahead we recently hired a new Latin America Divisional CFO partly to enhance oversight and refined focus on improving operating efficiencies. For the fiscal fourth quarter segment EBITDA was down year-over-year primarily driven by lower merchandise sales gross profits and higher operating expenses.

Full-year EBITDA in Latin America was up 5% versus fiscal 2018. Finally, I wanted to provide some perspective as we enter fiscal 2020. At a high level it will take a few additional quarters to begin to realize the full benefits of our investments in technology distribution and customer service.

That said we remain confident, our strategic initiatives will drive long-term growth of free cash flows and higher returns on earning assets overtime.

More specifically the flatter trajectory of PLO growth more recently partially driven by recent system issues combined with the social benefit programs in Mexico will likely continue to pressure PSC and related earnings in the near-term.

Our ongoing focus on reducing aged inventory on our balance sheet likely remains a headwind for merchandise sales and margins in the coming quarters. Turning to expenses. We believe the system issues are now behind us after mid-July, but we're still working and are making additional investments to ensure these do not occur.

That said as Stuart mentioned we recently completed the rollout of our new point-of-sale system providing a solid foundation to improve lending decisions thereby driving higher yields, PSC and net revenues overtime and enhancing our team members' ability to provide excellent customer service.

While it's still early in the stores that have had the system a bit longer, we've already seen some improvement in yields versus stores that got it later. We remain focused on controlling expenses, enhancing productivity and optimizing leadership structures in the field, which we believe will drive higher margins and EBITDA growth longer-term.

But these will take a bit of time to work through the system. From a cash flow perspective, receipts from the Alpha Credit notes receivable will reduce substantially in fiscal 2020 from the $30 million to $34 million we've received annually over the last three years. The total remaining balance due was down to $8 million at the end of fiscal 2019.

With that I will turn the call back over to Stuart..

Thanks Dan. And we will now open it up for questions..

[Operator Instructions] Your first question comes from John Hecht from Jefferies..

Afternoon guys thanks very much. Just trying to get a sense for some of these onetime questions. You talked about RDC the call option that maybe -- I am not aware of what that is. Can you tell us some background on that..

Yeah. It is a Rich Data Corporation. We have got about 13% interest in that. That's facilitated a lending platform that goes with our Canadian operations. Later the capital raise during the year and we had a call option that it was attached to it which expired. And that was just the theoretical value of that call option being written off..

Okay. And then I understand the upcoming charge with cash converters settle the lawsuit, but there were some discrete items charge this quarter.

What's the background of that?.

Yeah. Those were some that actually cash converters took on their books. So they recently got a new CEO in their wrote-off a bit of software. They had increased a reserve on some loans receivable, a number of other things that I think it was about AUD12 million total that they took a charge.

So I is five or six unique items that you specifically called out in their earnings pre-announcement..

And then the final one is that the digital platform. There's a discretionary investments.

How are those aside from this -- I guess how are they discrete or different from some of the investments in the point-of-sale stuff?.

Yes. So, primarily around Lana, I think is what exactly you are asking about. Some of the discrete investments in technology is where we're investing what we've traditionally called the Evergreen. That now is branded as Lana..

I see. So you're -- it just simply because of discretionary you're doing it as a one-off expense not a recurring expense.

Is that the way to think about it?.

Yes we've adjusted Lana throughout the year for the adjusted financials..

Okay. And then where will the stores -- sorry..

Sorry. By the way John on that, I just want to let you know we will -- going into this next year we would not plan on adjusting for Lana. So that's one that it will -- it should start producing revenue here fairly shortly, that we'll either put that into the other segment that we've gotten now reported as a separate segment probably.

But I would not expect that to be an adjustment going forward..

Okay.

And then you might have mentioned this in the call, but the locations of store openings that you're expecting next year?.

They'll be in Latin America with the majority being and Mexico..

And then last question and appreciate you guys addressing all these. We have heard about the impact is driven social welfare programs in the Latin America from your peers. So that's not terribly surprising.

But I'm wondering if you can give us a sense for how long you think this would be sustained based on your knowledge of the political environment down in Mexico?.

Yes. We're a little surprised to the social welfare programs coming to place. As was the management team down there. I am sure up here as we're also. We're still seeing cash in the economy. So those programs are still working with new way through and it's coming up to bonus time for most of the workers.

So we'll see sustained cash probably through January, February of next year. We -- I'm not an expert on Mexican politics and how AMLO thinks. We think it should run its course by then. But as we were surprised by these programs I couldn't give you comfort, but they will not reappear again John..

Okay. Thank you guys very much..

Thank you..

Your next question comes from the line of Vincent Caintic from Stephens..

Hi. Thanks. Good afternoon. Actually continuing on that line of thought of the social welfare programs. If you could -- is there a way to size perhaps the impact that that's had to this quarter's results and maybe an idea if you can help us on how to think about that into the next quarter, what you're seeing so far.

And then maybe just taking a step back. So I know first guy just discussed this as well. But just in your words if you could describe, exactly what's going on? And if one of the debates as whether or not this is a one-time payment or an ongoing payment.

I'm not sure if you could maybe elaborate on that?.

Yes. It continues to be a little bit more ongoing payment right now. So the question Stuart was alluding to is how long do they continue to do it. I mean, if President Lopez Obrador wants to continue it, it could continue for a good while. But I think a lot of that is probably an initial impact that they're looking for.

As far as sizing and that's a little bit more difficult to isolate it. But that was one of the things that I tried to call out as well. I know it's a little tough to parse it out. But we saw a 3% decrease in same-store loan balance in Latin America overall.

But when I look at Latin American territories excluding Mexico, it was actually a positive 2% same-store loan growth. So that doesn't tell you directly the income statement impact, but gives you an idea of kind of the impact on the portfolio that flows through the pawn service charges..

Okay. Got you. And then on the flip side. So you have the pawn business and you have the retail business. So more of your customers have cash in their pockets. Have you seen maybe an offset somewhere on the retail side and do you see your customers having the propensity to spend more..

Yeah. We've seen a little bit of that. It's the nice balance in the business that you generally see is exactly that. So it's been nice to see that they -- when they do have cash they are actually spending a bit on merchandise. I would not say I see it as a complete offset but we've seen a bit of an offsetting improvement there..

Okay got you. Okay shifting gears a bit to the Lana platform. So maybe two questions. So the discretionary strategic investment. I guess that’s an ongoing investment and maybe the size of that kind of stays.

Should we expect that sort of $1 million per month to continue along that rate and then going forward now you're going to have to have revenues associated with that?.

Yes I would expect the spend probably to slow a bit on that Vincent. Last year the total spend was about $13.6 million; about $6 million of that was CapEx and the rest of it flowed-through OpEx. I would expect next year the CapEx to slow fairly substantially probably closer in $1 million range or so for the year.

Depending on responsiveness from the customer whatever we or introduction and development of new products we may accelerate that some. But that's kind of current trajectory current plan. And I would expect the OpEx to be somewhere around probably a $7 million to $8 million total spend.

So in total probably $6 million to $7 million spend versus the $13.6 million last year..

Okay got you. And has the product offering changed much from when it was called Evergreen.

So it's going to be like online sort of virtual pawn capability? Is that still similar? Is there any differences from what Lana is now?.

It still is writing. It's got a bank account with the debit card attached to it. And there's no minimum balance on the bank account. So in the beta trials it had some very strong feedback and we can also extend loans, extend the pawn loans without having to be in the store that's developed in beta trials as well.

It will continue to rollout functionality as we see how our customers react to the offerings. But as I said in my comments we believe it's actually a really huge move to renew the pawn loans of that being in the store. And we think it will also attract new customers to the business just through the bank account offerings..

Okay got you. Last one quickly for me. So on cash converters, it's nice to see that stock has improved a bit. Your stock is declined. I’m just wondering how you're thinking similar to a question to maybe what I had last quarter.

But how you're thinking about your ownership of cash converters as a core long-term owning for you or is it something that the stock has appreciated maybe if this stuff has now been settled and you've got to buy back on your own or maybe we can switch over to buying your stock.

Is there any thoughts?.

Well the Board look at pretty much every quarter and assess it. We have a reasonably significant holding in that stock. We think the business model they have is actually a reasonably sound business model.

The risks that we had seen in the business sitting around the class action have all been mitigated, so we would actually we're looking to see how that stock performs before rushing in and thinking about it in a way.

But the one thing I will tell you is that our Board is having quarterly updates on this and assessing the usage of that capital in line with everything else that we do as well..

Okay understood. Thank you..

Vincent the one other I would mention to you on the numbers on Lana also is I would just point out I would expect as we put that asset into use we will start depreciating that. So I would expect about $1.2 million $1.3 million of depreciation that come through on that is next year as well..

Okay, thanks for the detail..

Your next question comes from the line of Greg Pendy from Sidoti..

Thanks for taking my questions.

Can you just remind us what the cadence throughout the year on the digital line item was? Was it front-loaded or was it roughly $2.5 million to $3 million per year -- per quarter?.

It was pretty much a fixed charge of about $1 million a month that was pretty fixed all the way through. We had a little bit at the start of the year, we're about $2.1 million in the first quarter that was all OpEx and then it ran through about $1 million a month and 65% of that was pretty much expensed..

Yes. Alright. Okay that's helpful.

And then can you just give us a little bit of color? I guess it's on track to launch Evergreen by year-end? Is that going to be throughout the US or is that going to be both U.S., Latin America? And is it going to expected to be integrated with all your stores or is it just a grad -- is there going to be some gradual?.

It'll be a gradual rollout. We are looking at Texas and Florida stocks, so that's 60% of our U.S. stores. We haven't put it into Mexico as yet. We're looking at that but we want to make sure that we have a fully functioning platform before any further migration that we've got a little bit of a trial going on at the moment in the beta stages.

And we'll continue to roll out during the course of the next calendar year..

Okay. And will it go product-by-product or is it going to be I guess all products or ….

Yeah. As the platform continues to develop its functionality, rollout as the functionality keeps improving. So as it stands will be rolled out across the states that apply and as we add new states there won't be a different offering unless there is some legislative requirements of the state that needs changes..

Okay that's helpful..

[Operator instructions] Your next question comes from Scott Buck from B. Riley..

Hey good afternoon guys. Just a few for me. Back on the social welfare programs in Mexico. At what point do those extend far enough that you start to reassess Mexico as an area of increased investment interest versus maybe the rest of Latin America or even appear in the states..

Yeah. I mean we've got a long term commitment to Mexico. So there is always when you operate in Latin America there's always a degree of volatility as electrical cycles change. But it does still revert to the basics that these customers do have a need for cash over the long term. And they will come and go as they have cash that will use it.

So one of the potential unintended consequences of social welfare programs as we may get enough. Customers will have a higher need for cash as they will have to adjust the living standards. So we think there is potential unintended consequences that could benefit us. But we still see Mexico is a very attractive fundamental environment.

There is still up right within as we do in other Latin American countries too..

And I'd say our changes that we saw is more in the rate of growth or the rate of earnings. But it still represents a pretty significant earnings for us, earnings and cash flow..

Great. I appreciate that color. Moving north now to Canada.

Can you give us an update on where you are with Cash Max? And what you're thinking is there? It looks like we've gone a quarter now without any kind of store consolidation or are you happy with the footprint and what maybe the longer-term opportunity there?.

Yeah. Scott, I mean it's 22 stores a bit of a rounding error in the statements, we're down from 27 earlier. So we have consolidated some of the stores. It operates reasonably well. It's not something cold. We just keep it running. We tried to do look at it a while ago as to whether there is any opportunity to rationalize further.

At this stage just in a bit of a holding pattern and we will probably end up reviewing its relevance over the next 12 months..

Okay. Perfect. Last one.

Any other kind of CapEx investments for 2020 or areas of increased investment besides what's already been noted between Lana and the new store openings?.

Some of CapEx we're doing a fair bit of work on the infrastructure of the company. We've got a quite a legacy environment which we are using our microservices strategy to migrate ourselves off from a very old environment. We're trying to keep all that CapEx within the similar trend to what we've had for the last year or so.

So it's more a reallocation into fixing the infrastructure. It is exactly the right thing to do. We don't believe it will impact our business..

Okay, perfect guys. Thanks a lot.

Your next question comes from the line of Aaron English from 22 Northwest..

Hey guys thanks for the time here. I guess.

Can you just walk through what the Board's thought process was on the buyback and whether you guys intend to use that in the near-term?.

We just -- as we have outlined before we've been looking at acquisitions over the past two years or so. And what we found is that the multiples and if we applied capitalized multiples didn't provide a very efficient return for what we believe was the appropriate risk that will be taken.

As the Board looked at the alternatives they determine that probably the best effective use of the capital at this stage would be to have share purchase program..

So, the thought process is that EZCORP stock is now extremely undervalued which seems to be objectively true because it trades under the valuation multiple that are traded in 2009 largely through self-inflicted issues referring to the multiple convertible offerings that were widely aided by your equity holders still returning to Board which alone reduced the market cap by a nine figure, announced the ongoing disaster, a cash [indiscernible].

Why not just aggressively tender for $60 million of stock right now and then instead of potentially using the buyback over three years and arguably missing the window for stock trades up, you can reward your equity holders who have been just destroyed by the governance and management mishaps for this company?.

That's very long statement there and I'm not sure I can get around to all of it..

[indiscernible] livestock right out. That's the question..

Well, one of the reasons is we're in a blackout, so we can't do that..

Okay. I mean come on guys, it's one excuse after another. You guys have destroyed the stock. It's just lot pass the value.

And where's the shareholder value orientation of this company?.

That's why the company is -- the Board are looking at the investment opportunities. And like I have said the share repurchase program is a priority for them. We're there to support the Board and the Board have a continent place and I will determine the appropriate strategies around that..

What if it looks like to everyone on the outside that the Board is not aligned with the rest of the equity holders, because that's really the problem you guys have here at the credibility problems. And announcing a buyback and then not using it or using it tepidly will not improve the governance or perceived governance problems at this company..

Strategy of that as determined is to how to embark on the buyback program is actually one that we don't -- we wouldn't disclose openly to the market and we're doing it rationally. We're using resources and we're doing it appropriately.

My discussions with shareholders have been that they have been bang the table that they believe the most efficient use of capital would've been a share buyback program of which the Board have determined as an appropriate course. So I would be surprised if the shareholders were disappointed by the Board's action..

And I would add to that Aaron that the Board's discussion there was not, hey let's announce a plan and then not do any trades, right? It's not lip service on that. It's an attention actually..

Well, I understand that Danny. And I'm also aware that this is not your decision nor Stuart's alone in order to execute the buyback. But what I would say is your shareholders are looking for action. And if the shares cannot be purchased at this valuation then I don't know when you guys have ever used the buybacks.

So hopefully, we get real action on that front. Thank you..

Yeah. No. They are all good points Aaron..

And your next question comes from the line of Gary Steiner from Huber Capital Management..

Hi, Stuart and Danny. I just maybe wanted to follow-up on the last question. So I've covered you guys a long time. And I don't think you guys have ever announced a share repurchase authorization of the magnitude that you just announced, so that's obviously positive.

During the quarter, though you did have some costs related to an acquisition that you've considered. And it was not an immaterial amount. So I assume that the size of the acquisition wasn't immaterial either.

So I guess maybe you're saying you can do both acquisitions and buybacks at the same time, but I guess I'm just getting a bit of a mixed picture as to what the priority of capital is. And it would be hard for me to imagine that whatever you looked at would be cheaper than the EZCORP stock.

So maybe you could just clarify that so I understand with the intentions of the Board is with regards to capital allocation?.

Yeah. I mean the Board obviously would be looking at the best use of those free cash resources. Sometimes the time horizons that can be a little bit different. Some of the acquisitions really even look at a five-year to seven-year horizon rather than a one-year horizon.

So while a number of holders look at potentially at quarter to six months to 12 months. Some of these acquisitions can actually be quite attractive over longer period of time. So the Board look at different time horizons as well. We do look at acquisitions all the time.

The one as you rightly pointed out was an acquisition of some size given the phase of the due diligence cost we had. But the right thing was determined that it wasn't the appropriate course of action to follow through on. So that we will continue to look at opportunities, but at this point of time the share repurchase program has the priority..

That's great.

So can you confirm that once you're out of the couple of day period after the earnings report that you will no longer be in a quiet period?.

After the -- I think we're in blackout natural [ph] Q1 we held steady..

Yeah. It typically -- current purchase that we would go in the blackout is generally a month before quarter end. And we are within a month of the next quarter end. So that would black us out for this period. Stuart and I have talked about potentially needing to reassess the timeframes that we self-assess or self-impose the blackout periods.

But that would typically be from that point until I believe 48 hours after we announced earnings..

Got it. Thank you..

And that was our last question. At this time I will turn the call back over to the presenters for closing comments..

Thanks everyone for being on the call. We will be obviously liaising with many of the buy-and-sell-sides over the next step 48 hours or so and we look forward to those discussions. Thanks very much..

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may now disconnect..