Welcome to the EZCORP F3Q 2013 Earnings Release. My name is Adrian and I will be your Operator for today’s call. (Operator instructions.) Please note that this conference is being recorded. I’ll now turn the call over to Mark Kuchenrither. Mark Kuchenrither, you may begin.

Thank you, Adrian, and good afternoon, everyone. I am Mark Kuchenrither, EZCORP’s Executive Vice President and Chief Financial Officer. On the call with my today is Paul Rothamel, our President and Chief Executive Officer. Before we begin I’d like to remind everyone that this 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 or 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 merchandise. For a discussion of these and other factors affecting the company’s business and prospects, see the company’s Annual, Quarterly and other reports filed with the Securities and Exchange Commission. Now on to the call. As many of you have noticed, we have not offered forward-looking guidance in our press release. We are continuing with our strategy of diversification and investment in our business and we make our decisions based on what is in the best interests of shareholders for the long term. These long-term decisions do not easily translate into short-term quarterly guidance. In addition, we and others in the industry have struggled to provide accurate and appropriate guidance in the face of the current volatility in the gold market. Gold is having an overriding impact on our earnings and in this environment we do not feel comfortable that we can provide guidance that gives an accurate forward view of the company’s financial metrics. Starting this quarter we are changing our traditional call format. We’re adding more content to our press release and adding supplemental information to our website so we can focus on questions and answers during the conference call. On our website you’ll find an analysis of US net revenues from loans excluding pawn, growth in earning assets by segment, and the impact of gold and jewelry scrap on earnings per share. For this additional content please go to www.investors.ezcorp.com and look under the heading “Investor Resources and Supplemental Information.” I encourage you to visit our website as we will continue to add content that helps explain in greater detail the significant factors that drive our business. Now, Paul Rothamel, our President and Chief Executive Officer, will present a brief commentary and then we’ll open the call to your questions. Paul?

Thank you, Mark, and good afternoon everyone. As Mark noted we added more content to our press release and our website this quarter so I’ll keep my comments brief. In the quarter we saw growth in all of our non-gold revenue streams. We took significant action to jettison several legacy businesses that were not contributing in the current environment and were not a part of our go-forward strategy. Finally and more importantly we continued to diversify our business according to our multi-year plan. These efforts are working as evidenced by our growth in revenue and earning assets, penetration of revenue and segment contribution coming from new businesses and geographies, and the growth of our second generation loan products in our storefronts and online. While consumer behavior is obviously changing due to the macroeconomic environment, customers continue to come to us to satisfy their cash needs. We are seeing more use of collateral other than gold and greater demand for our other financial services products. We planned for this transition and are offering the right solutions to fit our customers’ evolving needs. In fact, we believe we have significant competitive advantage in the marketplace due to our size, scale, and flexibility. We understand the consumer and are evolving rapidly to serve them best. We continue to enter new geographies where we believe we can be the market leader and we are growing other channels to complement our storefront businesses including online retailing and online lending. We are also developing new products, both storefront and online, that will help us maintain our leadership position. We still have much to do and we will continue to be prudent with our growth plans and our investments. We remain committed to providing our customers with the products and services they want, when they want them and how they want them. And with that we’ll take your questions.

Thank you. We’ll now begin the question-and-answer session. (Operator instructions.) And we have Bill Carache from Nomura online with a question. Please go ahead. Bill Carache – Nomura Securities: Thank you. Good afternoon, guys. I was hoping to maybe start off with some of the comments in the press release on the online business. You talked about your efforts there to increase marketing investments as you try to drive loan growth. I guess I’m just trying to get a sense of how comfortable you guys are that you can accelerate loan growth while keeping credit in check?

Sure. So I’ll answer that, Bill. Two things I guess I’d preface that with: our Cash Genie business in the United Kingdom has frankly crossed over into profitability and has been profitable for us now for the last six straight months. And the trajectory that we put in place in that business is frankly the trajectory that we’re putting that back into our US online business. We expect Cash Genie as an example, based on their loan growth and marketing things we’ve done there – and obviously that’s a different market than the United States but there’s certain basic underlying principles that work in any online business. So that, Cash Genie will flip from minor league accretive to earnings this year to being a positive material impact on earnings next year, and the US online business frankly is tracking on the same trajectory about nine months later which is about the time we made the purchase.

I’d say in addition to that the way we look at that business is the two variables to that business primarily is marketing expense and bad debt. And we feel very comfortable that our scorecards and our modeling allows us to underwrite appropriately. We’ve taken our time to make sure that those models are pressure tested, and that’s why we have accelerated the market spend on customer acquisition because we’re very confident that the underwriting is working appropriately. Bill Carache – Nomura Securities: Okay. And can you guys just remind us on Cash Genie’s standing with regulators? There currently are some players in the industry that have some outstanding issues. Is that not the case with Cash Genie? Are they kind of in good standing with regulators? Can you just remind us where they stand on that?

Sure, I’d be happy to answer that. You know, we made that investment mid-April of last year and we made a small amount of profit last fiscal year because we purposefully took the time to put in best practices and implement the best practices, which allowed us to grow a quality loan book albeit at a fuller rate than some of the competition in the UK. And the benefit of that is when the OFT has become more active the best practices that we have put in place are what the OFT is requiring from all competition in the marketplace. So the OFT actions have not impacted us at all to date. Most recently the Catholic Church is getting involved and looking at [WANGA]. We’re not sure what that, if there are any ramifications of that – if anything will happen to our business. But we feel very comfortable that we have continued to be one of the leaders in terms of best practices. Bill Carache – Nomura Securities: Okay, that’s very helpful. Switching gears to the jewelry scrap sales, the contribution to net revenues is now down this quarter to 4% of net revenues. It’s just pretty striking when looking at versus the peak when we were at 18% contribution to net revenues in the September quarter of 2011. I guess for modeling purposes, I understand that you guys aren’t giving specific guidance but how would you think about that? It’s a pretty big drop off that we’ve seen and I guess just going forward for modeling purposes, is it kind of reasonable to… Would you guys expect that relative contribution of 4% of net revenues to kind of be at a level where it’s kind of reasonable to expect it going forward? Or could there still be some… I guess in theory we could still go to zero but I just wonder what your perspective is for modeling purposes, how you’re thinking about it.

I think that’s a good question so let me try to answer it and break it down and answer it. So a big assumption is gold prices, or are gold prices going to remain stable? And if gold prices remain stable then we are, the outcome of that will be is that we will wholesale or retail approximately 65% to 70% of our gold gram volume. And the other 30% to 35% of gold will be scrapped because it’s truly scrapped items – broken items and things that are not in a condition to sell. If gold remains stable it will take us about three quarters to work through our pawn loan balances for collateral that was loaned on that had a previous valuation, for that to cycle through. And then at the point that those items drop into inventory, if those items aren’t redeemed and they’re dropped into inventory, inventory sales for jewelry is about one turn per year. So it will take another twelve months at that point for those items to move through our retail disposition channel. Now, if gold continues to drop then what’s going to… It will continue to impact us adversely because the lending that we’re doing today is based on gold pricing today. The impact of scrap will be minimal because there’s less exposure, but we’ll still have an impact to our PFC and our retail sales if scrap drops. We’ll have pressures on margin in our retail channel. Now we also have wholesale channels that we will continue to develop, and that will help us with inventory turns and to mitigate the transition from what was in effect a smoothing of profitability and cash flow that scrap provided to more of a seasonal-type of flow based on retail seasonality. And so building up the wholesale will help us mitigate some of that but it won’t help us mitigate all of it. Bill Carache – Nomura Securities: Okay, thank you. That is helpful color. If I may just one last one: there’s this notion out there that as everyone kind of shifts their focus more towards the retail channel, away from scrapping, the potential that you could see some margin pressure in that channel as competition increases – I wondered if you could comment on that, maybe give a little perspective on where you kind of see your LTVs in the industry relative to some of your competitors. Are they all pretty much kind of hovering around the same area or are there any standouts? If you could give any commentary on that, that’d be great.

Sure, I’ll answer that. So Bill, I’m going to answer it backwards to how you asked it. So the loan-to-value question you’re asking, we are extremely active in the marketplace, understanding the loan-to-value from independents to the other public chains that you all speak with. And remember that in the United States, the pawn industry is still highly fragmented so 85% of the industry is mom & pop as we like to refer to them, some of them very sophisticated. But what we’re seeing is that portion of the industry has dropped in loan-to-values dramatically so we are, with our probably public brethren, very competitive in the marketplace. Among the three of us across major markets we’ve seen a confluence over the last really 45 days of who’s loaning what in the marketplace and we’re very similar. And frankly, that is above spot price today just to give you a sense. So the question around 4% scrap, we see that for the foreseeable future as Mark described at these kinds of gold levels. And if they go down we’ll see that it’ll continue – we won’t be scrapping any harder which pushes it into your other question which is essentially a retail or wholesale discussion, primarily retail. I’ve been in the jewelry industry 25 years, and A.) good retailers, if they can’t fall out of bed getting 60% margins they’re not a very good jewelry retailer. In the pawn industry we accept lower margins than that because of the profitability of the PFC, and so therefore we give up retail margins to get that profitability on the frontend. I think that, and we just showed it in the quarter – our inventories, we allowed them to climb particularly in jewelry in F3Q a bit, it’s up about 6% on a same-store basis I think. But the fact is we were able to hold our margin rates at 42%. And it’s all about elasticity of the product and those kinds of things, but the fact of the matter is we feel comfortable that regardless of what happens in the marketplace we can get healthy margins here and they shouldn’t drop anywhere near where you’ve seen scrap margins go, from 40% down to 20% and now in the teens. We don’t see anything like that at all. So you’re talking about maybe 100 to 200 basis points depending on how aggressive you get with your marketing plans, your teammate incentives and those kinds of things. Bill Carache – Nomura Securities: Thank you very much, that’s really helpful. I appreciate it, guys.

And we have William Armstrong with CL King and Associates online with a question. Please go ahead. William Armstrong – CL King and Associates: Good afternoon. In Mexico I see you had zero scrap jewelry sales. Is there a change in policy down there or is it all going up into the US? What happened there?

Well, we had two things. One is we had, a big part of our gold business was part of our discontinued operations, and so part of what happened inside the quarter was we shut down our 57 locations, 52 of which were oro-only stores and so the inventory associated with those stores are part of discontinued operations. And so that was the majority of what was caught up in that quarter, and that really explains why we didn’t scrap during the quarter. William Armstrong – CL King and Associates: So even the full service stores didn’t generate any scrap jewelry?

We didn’t scrap it because of the cost associated with it. So and that’s a very small part of it, Bill, but that we’re frankly holding until we can see if we can get better pricing on it – if not we’ll retail it. Remember, in our Mexico stores we haven’t been retailing jewelry in any real way, shape, or form, so we’ve begun that but that’s why we’re not scrapping. We’re literally filling cases in stores, new cases in old stores to start to sell jewelry.

Yeah, so I want to clarify that, too. What we mean by holding is we’re not holding as a commodity strategy. What we’re doing is shifting from scrapping to retailing as the strategy. So we’re not holding gold in the effort of saying “Gee, if gold goes up we’re going to scrap it and play a commodity game,” that’s not our strategy at all. William Armstrong – CL King and Associates: Okay, good, alright. Operating expenses in F3Q was roughly flat with F2Q, down about $1 million. With the store closures and write downs, once the dust settles what kind of quarterly run rate should we be looking at in terms of operation expenses?

Well, I will tell you that we have taken out costs inside the quarter in our continuing operations but there are one-time severance costs associated with that that are inside the quarter. And really you won’t see the benefit of the run rate really until F1Q as those severance costs move out. In addition to that we’re going through our planning process now and we’ll be scrutinizing our overhead expense structure and adjusting it accordingly based on our planning process going forward. From a discontinued ops… I don’t know if I answered your question. In discontinued ops, inside the quarter there was about $1.7 million of pre-tax net income loss that was taken out of discontinued ops. William Armstrong – CL King and Associates: Right, and in terms of the run rate that we might start to see in F2014 operating expense, we’re $104 million for F3Q – how much lower do you think it might get on a quarterly basis?

Again, I’m not trying not to be transparent here but we’re going through our planning process and we haven’t determined that yet. What I will tell you is this, is that we’re in the middle of investing and diversifying. We’re diversifying channels, we’re investing in new products and we’re investing in new geographies, and that costs money to do that. And so we’re going to continue to commit to those strategies. We’ve built the variable costs component of that overhead in a way that as projects are completed we can strip out those costs and be very prudent in our spending. Obviously in this dynamic environment we are taking a look at everything we’re doing, again with a fresh set of eyes; and as we finish the planning process we’ll adjust accordingly. William Armstrong – CL King and Associates: Okay. And then my final question concerns installment loans which has been growing for you guys. I was wondering if you had these numbers – the percentage of originations that are refinancings rather than new loans to new customers.

We don’t have that in front of us, Bill. I guess can I ask why are you asking that question? William Armstrong – CL King and Associates: Well one of your public competitors, for example, about 75% of their loans, their originations are actually refinancings and they generate additional fee income from that. I was wondering if that was the way you’re approaching the installment loan business or if you have a different approach to that.

Yeah, so we would be dramatically lower than that number. And frankly we do have, and I guess I’ll answer this slightly differently – on our installment product our [refinancings] would be much, much lower than that. Now, having said that I will say that the fact that we’ve added additional products into existing storefronts and also we actually tie our storefronts to our online business in the United States, so there is some cannibalization going on among products – so payday customers go to installment loan or they go to auto title or vice versa. That’s why we generally look at our loan balances on a consolidated basis and you can see on our press release that they’re growing double-digit. But I would just say today our new customer activity is quite robust and quite healthy, and we’re happy with it.

You know what I think it is? I think what you’re, and I’m going to speculate on what you’re asking so let me try this as well. I think the online business, which for us over 75% of our online business is installment products now. The online business is much more dependent on customers refinancing and retaining existing customers because of the higher costs of customer acquisition relative to our store-based business. And our online business is a fraction of one of our major competitors’ business, and I will tell you that our online business I think is around 40% staying with the same customers that we have retained; and that business has a much higher percentage of retention I think than our store-based customers would be. William Armstrong – CL King and Associates: Okay, great. Thanks for that clarification.

And we have John Rowan with Sidoti online with a question. Please go ahead. John Rowan – Sidoti & Co.: Good afternoon, guys. One of your peers with the press release stated that they intentionally held a certain amount of gold versus selling it at the depressed margin at the end of the quarter. Is there a similar number for you guys? Obviously inventories were up but if gold [didn’t] weaken to the end of the quarter how much different would your scrapping sales have been?

Well John, I would refer you back to our press release where we talk about the impact of gold inside the press release. And if you look at the supplemental information that we put on the website for scrap and jewelry, you can see kind of the impact of scrap and jewelry year-over-year for the quarter is about $0.10 earnings per share. And you can see what we talk about in our press release and you can get an idea of what the impact is inside the quarter if prices were different. What I will tell you is that we are not holding any gold with the idea of scrapping it at a later date if the pricing changes. Our strategy is to dispose of the gold in a different channel which is primarily our retail channel or our wholesale channel versus our scrap disposition channels. John Rowan – Sidoti & Co.: Okay, let me ask it maybe in a different manner. You say that you’re going to scrap 30% to 35% of the grams that come in assuming that gold prices stay the same. Those are broken items I understand you can’t retail. How much has that changed? In the past how much were you scrapping that could have gone to the retail channels?

Okay, so we were scrapping between 70% and 80% of our gold gram volume on a quarterly basis that we chose to scrap through our scrap disposition channel. John Rowan – Sidoti & Co.: Okay. Moving on, so your US payday Lending Group obviously expanded its states. Are we still on track… What was the advantage you guys had given, something like 14 states I think by year end? Are we still moving towards that goal?

On the online or storefronts? John Rowan – Sidoti & Co.: Online.

Online I think we’re headed toward nine. We slowed that just a little bit frankly to go a little deeper in the states that we’re in, so we’re at nine. We’re legally set up to go into additional states, we’re ready to go – we just changed the timing a little bit on that. And some of that may occur in F4Q as we described when we go into a little heavier advertising, but frankly we’re going a little bit deeper into the markets we’re in first.

John, just a clarification – we don’t describe that as an online payday business. We’re primarily an installment loan business. We offer payday where it’s legal but primarily it’s an installment loan business. John Rowan – Sidoti & Co.: Okay, fair enough. And as far as guidance, obviously after last quarter you were [$2.55 to $2.80] for the year, then you came out less than a month ago and said gold was going to be $0.35 dilutive which kind of implied a range. What’s changed to cause you to not provide guidance? What in corporate planning has changed within the past few weeks that’s made providing a guidance unfeasible? I mean gold has improved since then – I just want to understand why the change now versus just a few weeks ago?

John, I’ll answer that. The early press release that we provided said $0.35 plus, so let’s make sure we understand it said $0.35 plus. What’s changing for us are a couple things. One is the $30 some odd increase in gold, or I think it was maybe $1275 and now it’s $1330, that $50 increase in gold we are already locked in for the quarter so that had no impact at all for us in the quarter. And quite frankly pricing inside F3Q didn’t have a material impact to us. What did change for us and what is changing is the gold volume – the volume of grams coming in is much lower than we were forecasting or anticipating. So for example purchases, direct purchases inside the quarter on average dropped over 33% year-over-year. In F2Q we were down about 10% year-over-year, so that significant decrease, we’re just not able to forecast that. The loan volume, the grams that we’ve loaned against has dropped 17.6% inside the quarter which is an increase quarter-over-quarter; and loan drops have decreased 17.0% so the gold is staying inside our loan book or being redeemed. So the first answer to your question is a gram volume shortfall. The second thing that we’re seeing is the general merchandise to jewelry transition is not one-to-one as we anticipated. Our general merchandise collateral is growing at a healthy rate but the loans aren’t offsetting each other on a one-to-one basis. Our average GM loan is about one-third the size of a jewelry loan which would mean we’d need three times as many GM loans to offset that one jewelry loan that we’re no longer getting in the door and we’re not seeing that. And the final thing is we did have additional expenses inside the quarter, primarily related to severance; and as we start to get our arms around what’s happening in the marketplace and bounce that off our long-term strategies we’re going to have to make adjustments accordingly. And those adjustments, we haven’t fleshed those things out yet. John Rowan – Sidoti & Co.: Okay, alright. Thank you.

And we have Robert Ramsey from FBR Capital Markets online with a question. Please go ahead. Robert Ramsey – FBR Capital Markets: Hey, good afternoon. I think before in the supplemental gold information you all provided the grams that had been scrapped. Maybe I’m mistaken and it doesn’t come until the 10(q) but I was curious if you had that number.

I don’t think we’ve changed the information we’ve provided. So in terms of the supplemental I don’t think we’ve changed the information we’ve provided in the supplemental information, but it will be provided in the 10(q). Robert Ramsey – FBR Capital Markets: Okay. And are you hedged at all on gold as you head into F4Q here?

We don’t have any formal hedging. We’ve done some [forward locking] but we’re about halfway. We’ve locked up about half of the quarter. Robert Ramsey – FBR Capital Markets: Okay. And roughly what price or what range of prices have you done those forward sales?

You know, I don’t have that in front of me, Bob. Robert Ramsey – FBR Capital Markets: Okay, that’s alright – I’m sure that’ll be in the 10(q) too. If I switch over to consumer loan fees, I do appreciate the new supplemental breakout where you give all the loans by sort of portfolio bucket. And I guess I was just a little curious to see that you had good growth in the non-pawn consumer loan fees, but fees you actually earned – consumer loan fees – were down very modestly but down quarter-over-quarter, which suggests that there’s a little bit of asset yield pressure or compression there. I’m just curious if you could provide any color on that.

That’s a great question and that’s one of the reasons why we provided that supplemental information, because our business is changing dramatically over the past three years as I think the entire sector is. And what’s happening is we’ve done a good job I believe of growing our earning assets. It’s grown at 20% year-over-year, but the mix of those assets are changing. And gone are the days of having a huge payday earning asset base that has a high yield. The assets that we’re growing are high-yield in nature but are lower-yield when compared to a payday loan. And they’re broader and more diversified and cover different geographic territories. And that’s what I wanted to show you was we have loan portfolio growth inside of channels, we have a loan portfolio that has been diversified across geographies and over product lines. And although those yields are lower they are still very attractive and we’re growing them at a high rate. Robert Ramsey – FBR Capital Markets: So is it fair then to say that the sort of shift in portfolio yield is related more to product mix than to say any declining yield within certain products?

I would say yes, it’s that and it’s customer preference in terms of which product they’re selecting; and it’s the mix inside, not the dropping of yield with the exception of auto title which has been… The auto title products have developed over time, I think much like the payday market did initially. Auto title a couple of years ago, everybody was at one price and the prices were generally a higher yield than what they are today. Now the auto title loans are based on quality of car and quality of the collateral and are priced very competitively in more of a tiered structure approach. Robert Ramsey – FBR Capital Markets: Okay, that’s helpful. I guess I have a good sense of sort of where single pay yields are and the payroll lending that you all do, where the yield are, but I don’t have as good a sense of sort of on a blended portfolio basis what the title loans and the installment loans are yielding. Can you give me some sort of range or color on those two products?

Well I can’t. I don’t have that in front of me or off the top of my head individually but overall the US, the non-pawn US business is blending out about 222% in yield. Robert Ramsey – FBR Capital Markets: Okay. And the expectation would be I guess that that comes down as you do more of the installment and lower-yielding products and less single pay proportionately, right?

Yeah, I don’t think it’ll come down precipitously but I think it will come down. Robert Ramsey – FBR Capital Markets: Okay, that’s helpful. And then last question: you all did see an acceleration in the consumer loan growth this quarter – I think balances were up 44% or something year-over-year. I’m just curious what you think is a good sort of run rate for this business. What do you think over sort of the near to intermediate term you can grow consumer loan balances?

I think actually our loan balances in the storefront were up about 22%. The 40% plus you referenced was for our new generation products. Actually the storefronts are up 19%; 22% is including online. So we’re up 19% in the storefronts. I can tell you in June right now we’re running up 17%, so this is the effect of those 55 [Denovo] stores that are in there along with nice growth because of new products in our existing stores. So I think those are I think mid-double digits, we would expect that for a period of time. Robert Ramsey – FBR Capital Markets: Okay, thank you.

We have no further questions at this time.

Alright, thank you all for joining us. We look forward to talking to you at the end of F4Q. Thank you.

We appreciate it.

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