Good day ladies and gentlemen, and welcome to EZCORP’s Second Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this call may be recorded. I would now like to turn the conference call over to Jeff Christensen, Vice President of Investor Relations for EZCORP. Please go ahead, Jeff.

Thank you, Mathew, and good morning 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 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 risk and other factors that are discussed in our annual, quarterly, and other reports filed with the Securities and Exchange Commission. Now, I’d like to turn the call over to Mr. Stuart Grimshaw. Stuart?

Thanks Jeff. And thanks once again for everyone for joining us this morning, particularly from the west where now it’s very early. Second quarter has again provided a terrific bunch of numbers that’s really supported by our key strategies. Now, if you turn to Page 3 on the presentation, I’ll quickly run through the four key issues or the key points that have come out of the quarter. Firstly, the net income was up 47% to $12.3 million with basic EPS up 53% to $0.23 a share, and this represented our ninth consecutive quarter of year-on-year earnings growth. PLO importantly was up 11% to $159 million and PSC up by the same percentage to $74 million. The net revenue was strong and was supported by a great merchandise margin of 37%. And importantly, when you look at the balance sheet, you’ll see that liquidity of the company has been enhanced over the quarter. The second point is, the U.S. Pawn business continues to operate very strongly. It now represents 80% of all pawn profit and with an adjusted profit before tax up 5%. We continue to grow PLO to a great rate and certainly these store levels were 243,000 which is quite markedly ahead of our listed competitor, and this is despite the hurricane impacts. These are industry-leading numbers and if you look at the PSC that we’re driving out of the PLO we have it is quite instructive to see the benefits we’re getting from the strong management that is occurring at the store level. The third point is, Latin America continues to grow rapidly. Earnings this quarter more than doubled and we're getting growth from new acquisition in GuatePrenda and also Mexico is supporting it strongly. PLO is up 90% to $35 million. Same-store PLO is up 9%…

Thanks Stuart and good morning everyone. I’ll start with the consolidated GAAP results on Slide 5. As Stuart mentioned, this is an excellent quarter. With its scale and operating leverage, the U.S. Pawn segment generated significant cash flow and 80% of our pawn profit even as it continues recovery from the hurricanes last year. With U.S. Pawn as a sound base, the 47% improvement in net income came primarily from the acquisition of 133 pawn stores in Latin America in Q1, significant organic growth in that region, and lower U.S. corporate tax rate. This represents the ninth consecutive quarter of year-over-year earnings growth. The 11% rise in Pawn Loans Outstanding or PLO, delivered a similar increase in pawn service charges. This combined with an increase in merchandise sales and sales margins drove a strong 10% improvement in net revenues. Included in our consolidated results was a healthy increasing in interest income. This resulted from the September restructuring of the notes receivable related to the Grupo Finmart sale. We continue to receive timely principal and interest payments in accordance with the terms of those notes. In this quarter, we collected 6.3 million principal and 1.5 million interests. Operations expenses remained about 68% of net revenue but increased in dollar terms primarily due to acquired stores. Basic earnings per share increased 53% to $0.23. Diluted earnings per share showed a slightly smaller improvement as it assumes the hypothetical conversion of our 2024 convertible notes. Although, we believe it’s highly unlikely any bondholders would actually convert their bonds in the near-term with over six years left until maturity, the bonds are convertible in the June quarter based on the strong performance of our stock price in the quarter just ended. As a result, we classify the 2024 convertible bonds as a current liability…

Thanks Danny, and I’m going to turn to Slide 15. We’ve seen this slide before. One of the things I did want to bring out in this is that, a lot of what we're doing is trying to create the best store experience for our customers and our people, and we’ve talked to a fair bit about the point-of-sale system and we are currently in 206 stores of which 184 are in U.S. We’ve had a bit of a slowdown in the rollout, mainly due to the cloud migration we did earlier this year, where we have migrated completely to the cloud, which has enabled us to have a lot more flexibility in the in-house systems. We will be recommitting to the roll-out of the pause in the next few weeks and we’ve upgraded to first time include a lending analytics. To make it easier for our staff to deal with the customers and actually get a better understanding of the historical transactions that have occurred for which we can make some smart lending decisions. So, the use of data as we’ve talked about before started to become more prevalent through our systems. And if we could make it easier for our team members then it’s going to make it easier for our customers to deal with us. At the end of the day, we have got satisfied employees and customers that were on a very good recipe to success. And we’ve been looking to the, perhaps the third box on the side. This comes down to the fact that we have got the beachheads in the right place to grow and as Danny has outlined, the strength of performance from these businesses is actually really pleasing to see, and we have been fortunate in all the businesses we have.…

[Operator Instructions] Our first question comes from the line of Greg Pendy with Sidoti. Your line is open.

Hi, it’s Greg Pendy at Sidoti. Just one quick question, I just kind of wanted to understand, inventory I guess was a little bit high for the second quarter in a row, but you’re putting up really strong margins on that near the upper end of the range, so some of it might be self-inflicted, and I believe you mentioned on the call that going forward you might be getting a little bit more promotional, was some of this just related to the hurricane or kind of, can you just kind of help us out on how you're looking at the inventory, in balancing that with your margins?

Yes, sure. The tax credit system, probably lasted a lot longer than we thought it would, it was delayed by a couple of weeks and even up till the end of the quarter. We were still seeing cash coming into that customer's pocket. So, we held back on perhaps some of the inventory liquidation we might otherwise have done on a general merchandise basis, proportionately we’re not as concerned, because when you look at the number, lot of it is actually in jewelry and we will probably look to scrap a bit more as we go into the loan season. There is an active program as we go through this to run the inventory down a bit. However, the strength in the market is actually to the discipline of pricing we’ve had in the first two aged [ph] buckets where we have actually got very strong programs at the store level, which means that we are actually extracting very good margins out of those two buckets, which is important, the gross margin. I think your overview comment is actually quite a good one to the extent, if you look this in the cold light of day you could say that we have held margin up and that’s why our inventory has grown, but that’s actually not the case.

Okay, that’s helpful. Thanks.

[Operator Instructions] And we have a question from Jonathan [indiscernible], a Private Investor. Your line is open.

Good morning. Could you talk a little more about how you intend to cover the redemption of the 19 converts? I guess in particular the last time I checked you did not have any bank credit facilities, of course you have quite a bit of cash.

Well if you look at with the Alpha, the group payments that we’ve got coming in coupled with the cash, we felt like there is sufficient cash around, but it depends upon the opportunities we see at the same time. Like one of the advantages of being, a company of our size, Johnathan is that we do have opportunities to obtain banking lines, should be [indiscernible] we use the equity markets. At this stage, we will just see how it goes, as you will see the 19 trading at a premium [indiscernible]. We will watch that and manage it as we go through close to maturity.

Okay. Thank you.

There are no further questions at this time. I’ll turn the call back over to you.

Okay, thanks very much. We appreciate the interest you have in the company. Again, I like to readout this is a continued trend, we are going to have very strong results. We would like to thank everyone who dialed in. Danny and Jeff would be around later this morning for any questions. And this concludes our call. Thanks very much and have a great day.

This concludes today’s conference call. You may now disconnect.