Ezcorp (EZPW) Q4 2026 earnings review
Ezcorp's pawn loans hit a record, but scrap margins drop
Ezcorp's pawn shops lent out record cash, even as lower gold prices reduced profits from melting unredeemed jewelry. Revenue excluding the newly acquired SMG chain rose 20% from a year ago, and profit per share excluding one-offs climbed 23% to $0.43. Chief executive Lachie Given credited strong borrowing demand and a 37% retail merchandise margin, which stayed inside management's target band.
| Revenue from businesses owned a year ago | +20% total revenue +33% to $447M |
|---|---|
| Same-store pawn loans outstanding | +16% total loans +31% to $403M |
| Profit per share, excluding one-offs | $0.43 +23% from a year ago |
| Jewelry scrap gross margin | 19% 29% a year ago and 26% in Q3 |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because booming Latin American loan demand and tight retail discipline offset the expected drop in gold scrap profits. The caution is that jewelry scrap margin dropped to 19% — and to 7% in Latin America — as gold cooled from third-quarter levels, while unsold shop inventory rose 44% and outpaced loan growth again.
The question now is whether US loan growth reflects more borrowers or just larger loans against costly gold jewelry, and whether the 27% jump in US same-store inventory will squeeze margins as gold cools. Either US borrower counts are rising and holiday shoppers clear the shelves, or loan growth slows with gold and unsold jewelry gets melted at low margins. Tomorrow's annual filing and call will show average loan sizes and early holiday turnover.
🐂 Bull Case
Loan Balances and Service Fees Keep Climbing
Ezcorp runs pawn shops in the United States, Latin America and the Caribbean, lending cash against personal items and jewelry. Pawn loans outstanding (PLO), the active loan book that generates monthly pawn service charges (PSC), rose 31% from a year ago to $402.8 million. Even excluding Simple Management Group (SMG), the Caribbean chain acquired in January, the loan book grew 20% by our math.
- Same-store loan growth: 16% company-wide, with 13% in the US and 24% in Latin America at constant exchange rates
- Pawn service charges: $162.7 million, up 29% total and up 18% excluding SMG by our math
- Store network: 1,590 shops across 15 countries after adding 230 net locations this year, including 190 bought from rivals
Latin America is doing the heavy lifting because strong borrowing demand and a shift toward jewelry loans lifted regional fees 25% at constant currency. By our math, the company added $15.6 million of net new loans since June, matching last year's fourth-quarter pace.
What to watch: first-quarter loan balances excluding SMG, which is the final quarter before the acquisition enters the year-ago comparison. Holding growth near 15% would confirm that newer stores in Mexico and Guatemala are adding borrowers rather than relying on acquired balances.
Retail Counter Discipline Lifted Store Margins
When a borrower does not repay a pawn loan, Ezcorp takes the pledged item and sells it in the shop. Retail gross margin on these merchandise sales rose 2 percentage points from a year ago to 37%, landing inside the 35% to 38% band management targets. Operating margin rose 1.6 percentage points to 12.6% because store operating costs fell by 3.2 percentage points of revenue.
US retail margins rose 1.6 percentage points to 39%, and Latin America margins climbed 4 percentage points to 36%. At the same time, general merchandise older than a year dropped 1.5 percentage points to 1.4% of stock, showing shops are clearing goods without heavy discounting.
What to watch: consolidated merchandise gross margin in the first quarter, when holiday shopping tests retail pricing. Staying above 36% while clearing the larger stock pile would show that counter pricing tools are holding up.
🐻 Bear Case
Falling Gold Prices Cut Scrap Profit
Ezcorp melts and sells unredeemed gold jewelry that does not sell in its shops, and it previously asked investors to look past gold swings. Yet the company said its 13% US same-store loan growth came from "higher average loan size, as rising gold prices resulted in higher jewelry collateral value". Meanwhile, scrap gross margin fell from 29% a year ago and 26% last quarter to 19%.
Scrap margin dropped "as the gold price declined from third quarter levels, compared to a sharp increase during the prior year quarter", the company said. That pushed jewelry scrap cost of goods sold up by 4.3 percentage points of revenue and lowered total gross margin by 1.7 percentage points. In Latin America, scrap margin fell from 27% to 7%, cutting scrap gross profit from $1.3 million to $0.8 million even though scrap sales more than doubled. In the US, larger jewelry loans also carry lower state interest rates, so fee growth of 12% trailed loan growth of 15%.
What to watch: second-quarter scrap gross profit, when the pawn operator compares against last winter's 38% scrap margin on $81.2 million of sales. A further drop toward 15% would create a direct profit headwind that store fee growth must cover.
Unsold Goods Still Grow Faster Than Loans
For a second straight quarter, merchandise sitting on shop shelves grew much faster than the loan book that feeds it. Net inventory jumped 44% from a year ago to $358.3 million, and rose 26% at existing stores, compared with 31% total loan growth and 16% same-store loan growth. Inventory turnover, which measures how many times a shop sells through its stock in a year, slipped from 2.3 times to 2.2 times.
In the US, same-store inventory rose 27% against 13% same-store loan growth, and turnover slowed from 2.1 times to 1.9 times. Because Ezcorp holds unsold jewelry for about a year before melting it for scrap, jewelry taken in when gold prices were higher now sits in stock and faces lower margins when scrapped.
What to watch: US inventory turnover and same-store inventory growth in the first quarter. If turnover falls below 1.9 times after holiday sales, shops will have to either cut retail prices or scrap more jewelry at lower margins.
New Caribbean Chain Earns Lower Margins
Ezcorp bought the remaining shares of SMG in July, giving it 100% ownership of 105 shops across the Caribbean and Central America. Chief executive Lachie Given said the team is now focused on "integrating the stores onto our systems and enhancing its culture and operating disciplines to elevate financial performance". Right now, SMG is much less profitable than the rest of the group and lifted corporate overhead by 30%.
- SMG pre-tax margin: 10.1% ($4.3 million on $42.3 million of revenue), down from 13.8% in the third quarter and well below 25.8% in US Pawn by our math
- SMG retail gross margin: 26% on merchandise sales, down from 31.4% in the third quarter and below 39% in the US
- Latin America store expenses: up 26% (+10% at existing stores in constant currency) on government minimum-wage hikes, while a stronger Mexican peso added $4.1 million to regional gross profit
What to watch: SMG's retail gross margin and segment contribution margin over the next two quarters as shops move onto Ezcorp's point-of-sale software. Margin staying near 10% would show that high regional operating costs are harder to fix than software.
💲 Other KPIs
Free cash flow — operating cash flow minus capital spending — rose 27.5% from a year ago by our math, even after $35.8 million of working-capital cash went into building shop inventory. Total cash on the balance sheet fell from $469.5 million to $295.1 million because Ezcorp paid off $134.2 million of SMG's high-cost debt and spent $41.0 million buying stores.
Customer layaway deposits — upfront cash payments shoppers make to hold retail items while paying in installments — rose 33.3% from a year ago and 6.4% from last quarter. Rising layaways support future retail sales, though a 10-month payment plan means goods sit in inventory longer before converting into completed sales.
Weighted-average diluted shares edged up 0.7% from a year ago and sit 36% above the 61.4 million basic share count because of convertible debt. The US pawn group spent $11.0 million buying back stock for the full year, including $3.0 million in the fourth quarter by our math, as management kept prioritizing store acquisitions over share repurchases.
❓ Key Questions
Did US loan count grow or shrink this quarter?
The release credits the 13% US same-store loan growth to larger loan sizes on gold jewelry, without giving average loan size or loan count. Last quarter, a 16% jump in loan size meant US loan volume was flat.
Why did SMG's retail margin drop to 26%?
SMG's merchandise gross margin fell from 31.4% in the third quarter to 26.0% in the fourth, and its pre-tax contribution fell from $5.9 million to $4.3 million. Investors need to know whether integration clearance sales caused the dip.
How much peak-gold jewelry still sits in inventory?
Same-store inventory is up 27% in the US while turnover fell to 1.9 times, and Latin America scrap margin just dropped to 7%. Management has not disclosed the cost basis of jewelry scheduled for scrapping in 2027.
How will Ezcorp settle 2029 convertible note redemptions?
The $230 million of 2029 convertible notes became eligible for holder conversion during the fourth quarter, accounting for most of the 22.4 million share gap between basic and diluted shares. The release does not state whether holders converted or whether cash will settle principal.