EZCORP Inc (EZPW) 2010 Q4 法說會逐字稿

Welcome to the EZCORP, Inc. fiscal 2010 fourth quarter conference call. My name is John and I'll be your operator for today's call. At this time all participants are in listen-only mode. Later we will conduct a question and answer session. Please note that this conference is being recorded.

I will now turn the call over to Danny Chism, EZCORP's Chief Accounting Officer. Mr. Chism, you may begin.

Thanks, John, and good afternoon, everyone. This call will address our fourth quarter and 2010 year-end results. We issued a press release earlier this afternoon and it's available on our website at www.ezcorp.com.

I'd like to remind everyone that this conference call will contain certain forward-looking statements including statements about our expected financial and operating performance in future periods. These statements are based on our current expectations. Actual results in future periods may differ materially from current expectations due to a number of risks, uncertainties and other factors which are discussed in our press release and in our filings with the Securities and Exchange Commission.

On the call with me today is Paul Rothamel, our President and Chief Executive Officer, and Stephen Stamp, our Chief Financial Officer. Paul will make a few opening remarks and discuss some details around the business segments.

I'll then cover the consolidated results before we open the line for Q&A. Now [proudly] turn the call over to Paul. Paul?

Thank you, Danny, and good afternoon, everyone. I'd like to thank you for joining us today and for your support of EZCORP.

Before I jump into the results I'd like to take a minute to introduce our new Chief Financial Officer, Stephen Stamp. Stephen joined us two days ago and brings over 27 years experience at both public and private companies in the US and the UK. Over the years Stephen has led a variety of finance organizations and has managed numerous complex activities. He has proven himself to be a successful finance and operational leader and a valuable strategic partner. I'm delighted to have Stephen as part of my executive leadership team. He will be spending the next several weeks in our stores learning our business from the ground up and you'll be hearing a lot more from him in the future. For today he's in listen-only mode.

Moving on to the results. The September quarter was another great quarter for the Company and a nice finish to another great year. For the quarter we delivered exceptional results with net income growing to $27.9 million, an increase of almost $7 million and 33% over last year. Diluted earnings per share also grew 33% to $0.56 from $0.52 a year ago. For the full year, net income grew 42% to $97.3 million with diluted earnings per share of $1.96.

We're very pleased with the results of all three of our segments for the quarter and the year as well as the performance of our strategic affiliates. The keys to our successful year were driving strong top line revenue growth, further leveraging our expense base to enhance margins, effectively managing bad debt to record lows, and a strong quality growth in our earning assets.

Our consolidated pawn loan portfolio is up 19% over last year and our EZMONEY loan portfolio is up 26%. The strong growth in these portfolios will be a nice start to our new fiscal year.

Our team members also did an outstanding job serving our customers by providing products and services to help meet their immediate financial needs.

Moving into a more detailed discussion of our business segments, I'll begin with our largest U.S. Pawn, which you can see on page 6 of the press release. U.S. Pawn had another strong quarter, producing store level operating income of $41 million -- (technical difficulty) --while our scrap cost of gold increased 31%. Combined, scrap gross profit improved $4 million or 24% with a margin of 36%. This is a slight decrease from this quarter last year and is due to our buying and lending programs designed to be competitive in the marketplace and maximize our overall bottom line performance.

Combining both merchandise sales and jewelry scrap sales on a same-store basis, we are up 13% for the quarter. Product protection and jewelry VIP have continued to be well-received by our customers, and delivered an additional $1.4 million in revenue over last year's quarter. Also during the quarter we acquired an additional three stores, two in Texas and one in Nevada. Both of these markets are limited access and these acquisitions support our strategy to enter into new or hard to access markets. This brings our total count of stores acquired for the year to 16 and they are performing in line with our expectations.

We opened an additional five U.S.Pawn greenfield locations during the quarter, bringing the total U.S.Pawn greenfields to seven for the year. As you might recall, these are the first U.S.Pawn greenfields in over a decade. While it's still early in each of their life cycles, we have been quite satisfied with their initial results.

Looking at the full year, U.S.Pawn's performance was equally impressive by generating $549 million in total revenues. Store level operating income increased 37% to $150 million with a 400 basis point improvement in operating income margin.

The second segment of our business is our pawn segment in Mexico, Empeno Facil. It's growth in both store count and contribution make it our fastest growing business segment and we're excited about the results. For the quarter operating income was up 43% to $1.3 million over the prior year quarter. On a constant currency basis operating income improved 39%. These are remarkable results considering that nearly 50% of our ending store locations have been open less than a year.

We also saw tremendous revenue growth. This rapidly growing segment generated 102% increase in total revenue and a 45% increase in same-store revenue over the prior year quarter. The growth in same-store revenue is driven primarily by pawn service charge revenue and merchandise sales across our 62 comp stores.

Strong pawn loan growth generated an 85% increase in total pawn service charge revenue and a 52% increase on a same-store basis. Comp merchandise sales are up 26% this quarter. We also saw an increase in total merchandise sales gross profit which was driven by both sales volume and margin. In fact, we saw a 600 basis point improvement in gross margin over the prior year quarter to 43%.

Scrap sales gross profit was up approximately $400,000 as a result of an increase in volume from our jewelry-only pawn stores. Scrap margins were 22% which are well within our expectations for this model.

During the quarter we opened 16 new stores in Mexico equally split between jewelry-only and full-line. This gives us a total ending store count of 115 locations at year-end, 78 of which are full-line and 37 are jewelry-only.

We like our diversified footprint in Mexico and feel that we have a good balance between the jewelry-only and full-line format, both of which are performing at our expectations.

For the full year, Empeno Facil contributed store level operating income of $4.4 million or an 11% increase over last year. On a comp store basis, the increase in store level operating income is over 50%.

Our third major business segment is EZMONEY which includes our signature loan operations in both the US and Canada. Operating income grew 36% to $15 million with the operating income margin at 47%, a 500 basis point improvement over the same quarter last year. These results, inclusive of the drag associated with the 50 CASHMAX stores opened in Canada this fiscal year were driven by strong revenue growth, excellent bad debt management and leveraging our expense structure.

EZMONEY's total revenues were up 16% or $6 million driven primarily by an increase in auto title loan revenue as well as installment loan revenue as we continue to see these products ramp. Revenues from signature loans were also up slightly from the prior year quarter. Our combined EZMONEY loan portfolio as of the end of the year was up 26% over last year.

Our bad debt performance continued to improve during the quarter. Bad debt measured as a percentage of fees was 25% versus 29% for the same quarter last year. This is our strongest fourth quarter performance in EZMONEY history.

We opened an additional 17 stores in Canada during the quarter for a total of 51 locations at year-end. For the entire year EZMONEY generated $154 million in total revenues, an increase of 15% and contributed operating income of $56 million, an increase of almost 40%.

I'd like to recognize all of our teammates who did an excellent job of serving and satisfying our customers. Collectively, they generated same-store revenue growth of 16% over last year. In addition, they did a nice job of managing their operating expenses and drove a 60% flow-through of incremental net revenue to store level operating level, even after the drag of new stores.

Lastly, I'd like to comment briefly on the results of our strategic affiliates, Albemarle & Bond and Cash Convertors. Collectively for the quarter they added $3.2 million in pretax contribution and $10.8 million for the full fiscal year. This represents an increase of $1.4 million and $5.7 million, respectively. Both Albemarle & Bond and Cash Convertors recently reported their fiscal year ending results as of June 30. Each of them reported record earnings with increases of over 30%.

Danny will now spend some time discussing our consolidated numbers. Danny?

Thanks, Paul. You can see our consolidated financial results on page three of the press release. All results are discussed in comparison to the prior year's quarter unless otherwise noted. Keep in mind that I am reviewing our consolidated financials while Paul mainly covered our segment results. So some of the metrics for segments that he discussed will be different than similar metrics I discuss for our consolidated results.

Total revenue increased 20% to $198.2 million. On a same-store basis total revenues were up 16% overall, with U.S.Pawn up 15%, Empeno Facil up 45% and EZMONEY up 17%. We saw a 9% increase in merchandise sales to $52.7 million with same-store merchandise sales up 5%. Complementing this was a 130 basis point improvement in gross margin over the prior year.

Scrap gross profit increased $4 million or 27% to $18.8 million as a result of higher gold values net of higher cost. Scrapping volume was relatively flat between the two quarters at 2.9 million grams of gold jewelry in both periods. Scrap proceeds include approximately $1.7 million in liquidated diamonds in the current quarter compared to $500,000 in the prior year quarter. This increase was driven by both volume and price per carat.

Pawn service charges increased 21% to $45.2 million with same-store service charges up 16%. This resulted in an annualized yield of 152% compared to 150% a year ago. The net revenue from our signature and auto title loans increased 22% to $32 million, mainly as a result of the increased revenue from product diversification and an overall improvement in bad debt.

Signature and auto title loan bad debt measured as a percent of related fee revenue improved 370 basis points to 25.1%. As a percent of loans originated, signature and auto title loan bad debt was 5.3% versus 5.8% during the prior year period.

Operating expenses and depreciation and amortization are up this quarter primarily as a result of additional greenfield stores and incentive compensation related to our strong performance. Higher administrative expense is primarily due to higher incentive compensation related to the strong performance, investments made in infrastructure to support our growth, and acquisition-related costs.

Our revenue growth continues to outpace our total expense increases as we further leverage our infrastructure and fixed costs. This is reflected in our 32% increase in operating income to $40.1 million. while our operating income margin improved 260 basis points to 33.4% of net revenue from 30.8% this quarter last year.

Next let's take a look at our equity and the net income of unconsolidated affiliates. Our two strategic affiliates are Albemarle & Bond in the United Kingdom and Cash Convertors based in Australia. Our equity interest in the net income of our unconsolidated affiliates increased 74% to $3.2 million for the quarter due primarily to the addition of Cash Convertors this fiscal year.

After a slight reduction in net interest expense and a 35.3% effective tax rate for the quarter net income increased 33% to $27.9 million or $0.56 per share.

Now I'll provide a quick summary of our balance sheet as you can see on page 5 of the written release. As of the end of the quarter we had $25.9 million of cash of which $17.1 million was nonoperating. At that date we had $25 million of term debt outstanding with no borrowings outstanding on our $80 million revolving line of credit. This gives us ready access to significant liquidity to be able to capitalize on opportunities as they arise.

Our pawn loan balance was $121.2 million, a 19% increase over the same time last year. Pawn loan balances increased 15% on a same-store basis. U.S.Pawn segment had total pawn loan growth of $15.8 million or 16% with 13% same-store growth. The same-store increase was driven by growth in both general merchandise as well as jewelry. Empeno Facil had pawn loan growth of $3.7 million. On a same-store basis Empeno Facil's pawn loan balance grew $2.2 million or 62%.

Consolidated signature and auto title loans combined on our balance sheet is $13.9 million. Not included in that balance are $29.8 million of loans brokered with unaffiliated lenders. Taken in total, these loans, including those brokered with unaffiliated lenders, increased 24% over the prior year to $43.7 million.

Inventory was $71.5 million at quarter end after a valuation allowance of $5.7 million or 7% which is a 100 basis point improvement over the prior year. Inventory over one year old also improved to 11% from 15% last year.

On a same-store basis the quarter ending inventory increased 5% to $67 million or $159,000 per store. We turned our inventory four times versus 3.6 times this quarter last year. Our strategic investments in Albemarle & Bond and Cash Convertors are carried on our balance sheet at $101.4 million. Collectively, they had a September 30 market value of $145.5 million. This represents unrecognized appreciation of nearly $44 million.

Let me wrap up with a quick recap of our store counts as of September 30. At the end of the quarter we had 505 pawn locations, including 115 in Mexico and 501 signature loan locations, including 51 in Canada. We offer auto title loans in 448 locations and installment loans in 415 locations.

I'll now turn the call back over to Paul for some closing remarks. Paul?

Thanks, Danny. I'll finish our prepared remarks with a brief review of fiscal 2010, our outlook for the future and then we'll move on to questions.

We're very pleased with the outstanding performances this year from each of our business segments. We made, brokered, extended or renewed over $2 billion in loans. That's 22% more than last year. Total revenues grew 23% to $733 million. Net income grew 42% to $97 million and EPS grew 38% to $1.96. Our commitment to domestic and international growth is demonstrated by the 111 stores greenfielded this year in addition to the 16 stores acquired. These additions provide us entry into or solidify our positions in attractive markets where we are confident we can grow and develop further.

We also acquired a 33% equity interest in Cash Convertors who have over 500 owned or franchise locations worldwide with significant concentrations in Australia, the United Kingdom, Spain, South Africa and France. Our strategic focus on new store growth as well as product and geographical diversification can be seen in the increased contributions from U.S.Pawn, new products and our foreign operations. In addition, the contribution from our strategic affiliates provides further diversification of our bottom line results.

In a year of significant transition at the top of the organization, the EZCORP team members delivered another outstanding performance. As we look toward the future our long-term strategy to drive earnings growth includes continued geographic diversification through greenfields and acquisitions, continued development of additional new products and services, and the exploration of digital strategies that will allow us the ability to offer our products and services in the most convenient and effective manner for our customers.

Specifically for the coming year, in U.S.Pawn we are anticipating low double-digit same-store growth in revenues with modest increases in expenses. We also plan to greenfield approximately ten domestic pawn shops during the year and continue to look for attractive acquisitions that support our growth strategy. In Empeno Facil we plan to add 55 to 65 new stores during the year with about 70% being full-line pawn shops. While we expect this to create some drag, we still anticipate solid growth and contributions from this segment.

In US EZMONEY we anticipate modest single-digit growth in revenues as we continue to focus on leveraging our existing storefronts with continued growth in products such as auto title and installment loans, as well as testing of additional products.

And in Canada we plan to add 35 to 40 stores during fiscal 2011. With all Canadian stores being relatively new, we still expect Canada to be an overall drag to earnings. However, the increased store base provides for greater earnings potential in future years.

With all that said, we expect our fiscal 2011 earnings per share to increase approximately 20% to $2.35 excluding a previously announced one-time charge. This first quarter charge relates to the retirement of our former Chief Executive Officer, Joe Rotunda, and will be approximately $10.8 million before tax. After taxes the charge will be approximately $7 million or $0.14 per share resulting in expected earnings per share of approximately $2.21 on a GAAP basis.

John, we're ready for questions.

Thank you. We will now begin the question and answer session. (Operator instructions). Standing by for questions. Our first question comes from Liz Pierce from Roth Capital Partners, please go ahead.

Thanks, congratulations and welcome, Stephen. I know you're on listen-only. I was curious in Mexico, so you're going to do -- you said the mix about 70%, right, is going to be the large format versus the jewelry only? But I thought you said earlier you're pleased with the performance of both. So you're not really backing away? Is this just because real estate has become available?

Right, so we opened 50 stores this year and I think our openings were like 65/35 full versus smaller format. Next -- and today we sit at about 70% of our current -- at the quarter end we had 115 stores, I think we had -- 115 stores, 70% are full-line, 30% are the smaller stores. And we think that makes a lot of sense going forward. And yes, to some degree -- so we're happy with both formats. So if you're 70/30 on store count, obviously our bigger stores throw off more profitability in the models and out years, so your profitability is probably more like 85% to 15%, big stores to small stores. But the small stores work in certain areas where you can't get a big store in.

Okay. And what are you seeing in terms of the competitive landscape in Mexico? I think you've talked in previous calls it's very, very, competitive. You get a lot of single operators really being very aggressive on price. And I'm wondering have we reached a point where they're just kind of running out of the working capital to be competitive?

They may be. So yes, in the jewelry-only format which is the vast majority of locations in -- pawn shops in Mexico are some form of a jewelry or jewelry and small electronics or something like that. There's a lot of them out there. We've said that we felt like we could compete very well in that fragmented market, again, because of our systems, because of our processes and because of our people.

As an example, if you remember, if you look at our most recent results, I think our jewelry margins in Q2 were 11%. Down there they grew to 15% last quarter and now they're at 22% which is actually slightly ahead of where we projected them. So we're -- we believe, yes, we can compete very well in the marketplace. And the most competitive portion is the jewelry-only. So the full size is less competitive. Obviously, First Cash has a very nice footprint down there in the full-size format. But the vast majority of the stores are jewelry-only.

Are you seeing some fall-out?

I would say yes or kind of to your point, there is some fallout and there's also some unevenness, I guess -- or inconsistency in the lending, right. So you -- if you hang the price that you're going to pay 90%of the value for a long time it's tough to stay profitable.

Right. And then maybe just give us an update on both Colorado and Wisconsin. I think you were going to close some stores in the quarter and kind of introduce new products. Are you happy with that decision? Anticipating any more closures in those states because of the change in the laws?

So in Colorado we did close eight stores -- I'm sorry, three. Three in Colorado, eight in Wisconsin. So the three stores that we closed in Colorado we took advantage of the change of law provision and closed three underperforming stores. We -- we're -- the product itself if you remember went from a payday product to an installment product and it's a six-month installment product. We're about two and a half months into that product and we are, frankly, happy, very happy with what's going on there. Our loan balances are where we expected them to be and our bad debt is actually slightly better than where we expected it to be.

So so far it looks like this -- that one makes sense to us. And in Wisconsin, same way, we closed eight stores in Wisconsin. That law goes into effect January 1 and we are positioned, we believe, to continue to operate in the state with our remaining stores.

Okay, I'll get back in the queue. Thanks, guys, good luck.

Our next question comes from David Burtzlaff from Stephens. Please go ahead.

Good afternoon, guys, and congratulations on a great quarter. Couple of questions here. Can you tell us what price you've locked in gold for the upcoming quarter?

Yes, for the first quarter we've locked about 70% of the expected volume at about $1,300 an ounce with the rest of it floating.

Okay, and what was the average selling price during the fourth quarter?

I believe we ended up at about $1,200 per ounce.

Okay. And Paul, can you kind of talk about maybe some of your digital initiatives or what you want to do there bringing the company up digitally?

Yes, happy to. So we have kind of talked about this a little bit before. I'll give you a framework. So when I got here 13 months ago Joe and I -- Joe Rotunda and I engaged some outside expertise to work with our inside IT folks on kind of a blank slate of how we would take a look at all the opportunities, digital opportunities out there. And I kind of look at them in two ways employee facing and customer facing. In employee facing it's really all about how can we help our employees to be more productive, make their lives a little easier and make it better for them as they interact with our customers. We've got several initiatives going there including probably the biggest one is really a business intelligence roll-out which is an exception-based system for our folks to get at data a whole lot easier and a whole lot better. And that actually is rolling out on the pawn side of the business as we speak and our money side of the business will roll out yet in this quarter. So that's a big positive for our field folks and our store managers.

And there's some other things that we're working on store level to improve, again, their productivity.

And on the customer facing issues, I always look at it two ways -- we're trying to improve the experience or we're trying to generate additional revenue streams. So a couple of quick examples on the improving experience. We've rolled out debit card payments in Canada, for instance, in the last quarter and we're seeing significant usage by our customers in paying us with a debit card. We've run some testing on the use of text and emails to communicate either collections or marketing initiatives to our customers with some pretty good early response so we're encouraged by that and we're going to continue those tests.

And those are just a couple of examples. And then we're looking at the gambit from social media to online opportunities. So today you're well aware that in this space we don't generate any revenue streams either online or through mobile devices and those are all on the table now as we look. So I'm hoping that, really, 12 to 36 months I can sit here in front of you and talk about how those revenue streams are affecting positive to the company.

Okay, and those online opportunities, is that domestic or you think more international?

I would say we're -- it's in the exploratory stage and we're exploring really all those opportunities.

Okay, all right. And finally, Canada, have any of your stores reached breakeven there? I know you said collectively they're still a drag. Does the model work a little differently in terms of breakeven, things like that?

So in Canada we had -- our breakeven point, I think, is about 12 months, we think. And so 12 months compares to the US greenfield pawn at about 12 months and Mexico is a little faster at about 10 months. So at the end of the year at quarter end -- at the end of the fourth quarter we did not have any stores that had crossed over. And part of that was related to just as we've historically done when we've gone into new states. In the United States, for instance, our bad debt is much higher when we go in and then it's coming down. We're seeing that trend come down. So we expect several of our stores to be in the black this first quarter of this year.

Okay, thank you very much.

Our next question comes from John Rowan from Sidoti & Company. Please go ahead.

Good afternoon.

Hi, John.

What are you guys really going to look to do with cash? Obviously, once you get through the December quarter and into the March quarter you don't have a whole lot of debt to pay down. You're sitting on $17 million worth of nonoperating cash. Can you give me an idea of what the acquisition pipeline is like or if you've thought about other uses of your cash?

John, we -- as you know we continually look at the right use or capital allocation of where we use that cash. And there are constantly a number of different acquisitions or potential investments that we look at, some of which can be quite large, some of them on the smaller range as we saw this quarter. So our -- I guess as a matter of policy we don't really talk about specific deals looking forward, but we remain active in the space of looking for good opportunities.

Have you considered a buyback or a dividend?

That's one that our Board periodically does consider. It has not been not been one that we've made a decision to do either of those at this point.

Okay. This next question, I know you guys said you did about 70% lock on gold at $1,300. What is the assumption for the unhedged portion in your guidance?

Yes, so we've looked at and we've built in basically the current market prices, we've put that into our projections going forward but as you look at that, too, it's not just directly scalable. So as you see the expected proceeds to go up with that the cost basis, obviously, will be adjusting what we loan and what we pay to buy that merchandise as well. And then also the volumes may be affected somewhat as that price goes up. So certainly some inter-dependency between those but I'd say current market prices are already considered in the projection we put out.

Okay, and just one last question. I know there is a little bit of forecasting that has to go into the equity from unconsolidated affiliate line. Now you guys obviously said that Cash Convertors and Albemarle & Bond had these strong gains in the -- basically the six month periods that they reported. Is all of that included in the $3.2 million or is there -- that type of run rate for the quarter -- or is there more to come potentially in the December quarter?

I guess I'm not completely clear on the question. If you can clarify?

Well, obviously the -- that line item came up to $3.2 million but I was wondering if that's kind of a good run rate to go or if that can even move up based on the comments that you guys said about the -- what their most recent reports were.

Yes, a lot of that really is just looking at trends of their earnings over time and the earnings improvement. One thing I would point out in kind of looking to the future is that Cash Convertors for the current year was only in our numbers for about seven and a half, eight months of the year. So there will be some step-up from a full year contribution this next year. And we also increased our ownership percentage there from 30% or just under 30% to just under 33% in, I believe it was May. So that -- recognizing that on a three-month lag it really only affected the last couple of months of the year.

Thank you.

There will be some increase from that as well as well as just kind of their normal organic growth.

Okay, thanks.

Our next question comes from Jason Weaver from Sterne Agee. Please go ahead.

Good afternoon. Just had one clarification to ask and I believe you detailed this. For the U.S.Pawn segment what were the same-store sales increases for both general merchandise and jewelry?

So general merchandise was plus 1% in the quarter. Jewelry was plus 5% for a blended 4%.

For 4%. Okay and also just a follow-up. Did you provide a 1Q guidance as well or is it just the 2011 year-end number?

Just the annual guidance.

All right, thank you.

Our next question comes from Bill Armstrong from CL King & Associates. Please go ahead.

Good afternoon. Most of my questions were answered but one question on ORO down in Mexico. Obviously, some of your competitors have struggled a little bit with jewelry-only concept. You guys seem to be ramping up with higher sales per store on the gold side as well as better margins. Are you doing something differently than your competitors or have you changed operations or do you see the environment improving maybe? I was just wondering if you could just flesh that out for us a little bit.

I guess I'd probably say, Bill, I think the environment we were talking -- when Liz asked earlier, the environment has been fairly volatile with people coming in, coming out, inconsistent in their lending and it's just a very -- best I can describe or the best view we have of it. It's been a fairly fragmented market with a lot of independent operators. And the one thing that -- two things actually, we never hung the price that we were going to pay in the window which gave us flexibility to do that, even when others were doing it. And we were focused on service and trust levels and consistency and we think that -- which is very similar to what they've done here in the US for many years. So I think that that played a part.

I think the other thing in Mexico that's worked for us is we have invested in infrastructure, so we've got a regional office in Queretaro for the Director General for the country and a full complement of folks underneath him and that are all Mexican nationals. And we've also -- we're a year later in the process and we've got a whole lot more experience with our field people down there. So I think all that is part of the reason that it seems to be working for us.

Okay, and then just to clarify the 55 to 60 new stores you'll open in Mexico in the coming year, that's about a 70/30 ratio between full-line and gold only?

Yes, yes.

70/30? Okay.

Yes.

All right, thank you very much.

Thank you, Bill.

Our next question comes from Chuck Ruff from Insight Investments. Please go ahead.

Hi. Can you talk a little bit about what you see on the horizon for state regulatory issues with payday loan? Are there any states we should be paying particular attention to?

The two most active have already occurred which is Wisconsin and Colorado. We certainly track activity in every state that we do business. We don't -- I would say there's nothing out of the ordinary. Eighteen months ago we would have said Wisconsin and Colorado were slightly out of the ordinary and they went the wrong direction on us. But there's nothing imminent, there's nothing pending right now in the states where we do business.

Okay. And secondly, with the new management team should we be expecting any sort of change in direction? It sounds a lot like kind of business as usual going forward, but just want to confirm that.

Sure. I think your assessment is correct. We -- this company has done a lot of things very well for a long, long time. It's a credit to Joe Rotunda and the previous senior management team, many of which are still here. So I think we've tried to be very cognizant, meaning some of the new players coming in be very cognizant of the strengths of the organization. And we're trying to figure out how to keep those things rolling and maybe add a few things to it like some of the digital strategies we talked about before that hopefully just make us a little faster, a little smarter and a little better. So that's our intent.

Okay, thank you.

Our next question comes from Alan Brochstein from AB Analytical Services. Please go ahead.

Hi, thanks for taking my call and I just had a question. I know that your new CFO, one of the attributes that you cited was his international experience. And clearly you've become a more international firm. I'm just wondering, besides Mexico, Canada and your two JV's, might this be a source of expansion or are you where you want to be here?

Yes, I think Danny touched on it. We're -- we absolutely think that the opportunity is worldwide and we think that there are opportunities outside of the countries that we do business. So we are in discovery phase on what that looks like and we look at that against all of our other investment opportunities, whether they be domestic or in countries that we're already in. But we're certainly looking beyond where we do business today.

And if I could follow up, Paul, I believe that you guys were able to put two people on the Board of A&B if I'm not mistaken. I thought one of them was Mr. Rotunda. I'm just wondering if you could update us on who are the representatives from EZPAWN going forward?

So right now on the Board, Sterling Brinkley who is our Chairman of the EZCORP Board is on the Albemarle & Bond board. Tom Roberts who is the lead director for EZCORP is on Albemarle & Bond, and Joe Rotunda continues in his capacity as the Director of the Board there.

And do you have Board representation for Cash Convertors as well?

We do, and that is Bill Love, one of our independent directors from EZCORP, and Joe Beal who is also an independent director for EZCORP Board.

Okay, thank you very much.

I'd just point out on that one that those two seats represent two of their five seats. As well where Albemarle & Bond I think it's three of their nine seats.

Okay, thank you.

Our next question comes from Brian Popiel from Craig-Hallum Capital. Please go ahead.

Hi, guys, I was just curious if you can comment on the bad debt on the signature loan side. Obviously it came down pretty substantially this quarter. And I'm just curious to know whether -- what do you think that's attributable to and is that as good as it gets or can you continue to push that down?

I would say a couple of things. I think we've certainly spent a lot of time on our underwriting which always has a positive impact if you underwrite well. The other thing you always should -- need to look at is the mix. So as inside of signature loan we've got installment product and we have a payday loan product. We also have not inside signature but next to it is auto title and as our auto title business has grown and our installment business has grown and payday is a slightly smaller portion of that business, that also positively impacts our rate-- excuse me, our bad debt because those two products generally run less or lower bad debt ratios.

To your question about can it get better -- it can. One of the things we're always wrestling with is how good do we want it to be because we want to make sure that we're being aggressive on the revenue generation side. So we're constantly tweaking and running sensitivities around driving revenue and bad debt and that kind of thing. But yes, it can still move lower. And one of the things will be, in fact, if in fact auto title and installment continue to grow at the rates their growing which they should for some time.

And I can sort of figure out a percentage for bad debt for auto title based on the numbers, but can you share maybe what the installment loan business looks like in terms of bad debt as a percentage of total loans?

No, we don't normally break that out between the two.

Okay, great, thanks. That's it.

Thank you.

Our next question comes from Liz Pierce from Roth Capital Partners. Please go ahead.

Thanks. Just a follow-up question on the share count for next year. I just wanted to make sure I'm using the right number.

Yes, we've not put out the specific number. However, as you're aware we just had a significant vesting for Joe Rotunda as part of his retirement which will increase the outstanding shares a bit. However, the total shares, just over 750,000 was -- it was a net share settlement so it actually the outstanding a little over 400,000. I'd estimate the -- using that the weighted average diluted shares would be right round 50 million for the year.

Great, thanks.

Our next question comes from Gary Steiner from Huber Capital Management. Please go ahead.

Yes, I was just wondering on your auto title business, is that product now in all of the stores that you want it to be in? And do you see the opportunity to continue to grow the fees that you're generating beyond what you generated in the fourth quarter?

So we're looking at -- the auto title is today in -- I believe we have it in --

448 stores.

Yes, so it's in -- I wanted to make sure we have that right. So it's 440?

448.

Yes, which is the -- in our current store base that's as far as we can go. We are exploring other opportunities for that product or family of products.

One thing I would point out with that, too, though is some of those rolled -- that product rolled into those some of those stores later in the year so I would not at all say we're at full ramp on that yet. There's still some pretty good opportunity even in those.

Okay, great. And then just another question on US payday. I am not sure if you gave this number before, I apologize if you did. But did you comment on what sort of the same-store US payday fees were. In other words, excluding Canada and excluding auto title, kind of what the base US signature loan fees were?

No, we've not disclosed the US separately from Canada. That includes -- those numbers all include Canada. Although on a same-store basis for that segment, for EZMONEY as a total, their total revenue ended up at 16% same-store growth. That's the one bit that we have broken out.

Sorry, the -- you're saying the signature loan fees same-store are up 16% or that's including auto title?

No, that was total revenue for same stores in the EZMONEY segment. We've not broken out same-store revenues just for the payday loan piece in that.

Okay, can you say if that is growing, if the signature loan fees domestically are on a same-store basis growing?

I'd say we've seen a fair leveling in that business specifically, particularly with the switch in Colorado to installment loans where we've picked up some volume in the installment loans as opposed to payday loans by themselves. And really that's somewhat why we look at them together as well because we know as we introduce the installment loan in some of those stores, some of that payday loan balance will come down as well as we're servicing that same customer.

Got it. Okay, thanks very much.

Intentional, by the way. So the fact of the matter is the customer is voting that they like choices and so we're giving them those choices. And I think we said our combined is up 26% in the quarter. Yes, for the full portfolio.

Thank you.

We have no further questions at this time.

Thank you.

Great. We appreciate everybody's participation on the call.

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