EZCORP Inc (EZPW) 2011 Q1 法說會逐字稿

Welcome to the EZCORP, Inc. fiscal 2011 first-quarter conference call. My name is Christine, and I will be your operator for today's conference. At this time, all participants are in a 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 Stephen Stamp, Chief Financial Officer. Mr. Stamp, you may begin.

Thank you, Christine, and good afternoon, everyone. This call will address our first-quarter fiscal 2011 results. We issued a press release earlier today, and it is available on our website, 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. Paul will make a few opening remarks and discuss some details around our business segments. I will then cover our consolidated results before we open the lines to Q&A.

I will now turn the call over to Paul Rothamel. Paul?

Thank you, Stephen. Good afternoon, everyone. I would like to thank you for joining us today and for your continued support of EZCORP.

The December quarter was another strong quarter for our Company and a great start to the new fiscal year. Continuing our trend of consecutive year-on-year earnings growth, our diluted earnings per share grew 33% to $0.69 per share, excluding a previously announced one-time charge related to the retirement of our former Chief Executive Officer.

On a GAAP basis, our earnings per share grew to $0.55 from $0.52 this quarter last year.

We are pleased with the results of all three of our segments for the quarter, as well as the performance of our strategic affiliates. We enjoyed healthy growth during the quarter in our existing stores, which delivered a 13% increase in same-store revenue. We continued domestic and international growth with the addition of 29 new stores through both greenfield and acquisition, and we maintained a healthy balance sheet, growing our earning assets by 22% while reducing debt.

Once again, I'd like to recognize our team members on the excellent way in which they serve our customers every day.

As I move into a detailed discussion of our business segments, you'll notice a trend throughout of robust topline revenue growth and further leveraging of our expense structure. I will begin with our largest segment, US Pawn, which you can see on page 6 of the press release.

US Pawn delivered another strong quarter, with store-level operating income of $50 million. This represents a 31% increase compared to the same period last year. Strong revenue growth coupled with modest increases in overall expenses led to a 400-basis-point improvement in operating income margin to 53%. Same-store revenue increased 12%, driven primarily by an increase in pawn service charge revenue and scrap sales, which I will discuss shortly.

The increase in pawn service charge revenue is due to strong double-digit pawn loan growth, coupled with a healthy redemption rate. Our redemption rates improved 80 basis points to just over 80%, which demonstrates our continued focus on quality loan growth.

Inventory purchases are up 38% compared to the same quarter last year and represent 32% of total additions to inventory, not including acquisitions. In the prior-year quarter, purchases represented 28% of inventory additions. This growth is important because by qualifying our customers more accurately, we are able to sell our scrapping merchandise sooner with better margins. This improves our ability to drive revenue and turn our inventory faster.

Total sales, including merchandise and jewelry scrap, on a same-store basis were up 9% for the quarter. Sales of general merchandise drove an increase of 1% from the prior-year quarter in same-store merchandise sales or retail sales. The increase in sales was complemented nicely by a margin improvement of 100 basis points over last year.

As you can see by the increase in customer deposits on our balance sheet, the changes we made to our layaway program in the prior fiscal year continue to be well received by our customers and should positively impact sales in future quarters as those layaways are completed.

Jewelry scrap revenue increased $10 million or 28%, while our scrap cost of sales increased 29%. Combined scrap gross profit improved 3.9 -- excuse me, $3.5 million or 25%, with a margin of 37%.

Our product protection and jewelry VIP offerings continued to nicely complement our retail sales and delivered an additional $1.5 million in revenue over last year's quarter.

During the quarter, we acquired four stores, three in the Chicago area and one in Georgia. Just last week, we closed on another five stores in South Florida. We're excited about these acquisitions as they solidify our position in attractive areas. It was only six months ago that we entered the Chicago metro area, and now we are the second-largest pawn provider. We expect these acquisitions will be accretive immediately.

We also opened three US Pawn greenfield locations during the quarter and are on track to open a total of 10 US greenfields this fiscal year. We're happy with the results that we're seeing from our greenfield and acquisition strategies.

Second segment of our business is our pawn segment in Mexico, Empeno Facil. We have continued our rapid expansion in this segment by adding another 17 stores during the quarter. Once again, we are excited about our results.

For the quarter, operating income of $2.4 million was nearly triple that of the prior year's quarter of $800,000. Even with nearly 50% of our ending store locations having been opened within the past 12 months, we improved operating income margins 830 basis points to 36%. This operating income margin improvement was fueled by tremendous growth in total revenue, with all revenue streams contributing nicely over the prior year, while leveraging the overall expense base. Same-store revenue increased 56%, driven primarily by scrap and merchandise sales, as well as pawn service charge revenue.

Strong pawn loan growth generated an 82% increase in total pawn service charge revenue and a 48% increase on a same-store basis. Comp merchandise sales are up 32% this quarter. Total merchandise sales gross profit was up 150%, driven by a strong increase in sales volume coupled with a 1400-basis-point improvement in margin.

As you may remember, the high cost of goods in the prior year was due to a concentrated effort to move aged inventory in Q1 of fiscal 2010.

Scrap sales gross profit was up approximately $700,000 as a result of an increase in volume coupled with an improvement in margin. Increased gold purchases in our jewelry-only pawn stores at lower costs contributed to scrap gross margins of 24%.

As I previously mentioned, we opened 17 new stores during the quarter in Mexico, five jewelry-only and 12 full-line, and we are on track to open a total of 55 to 60 new stores by year-end.

We ended the quarter with 132 locations, 90 of which are full-line, 42 are jewelry-only.

Moving on to EZMONEY, which is our third major business segment -- and as a reminder, this segment includes our signature loan operations in both the US and Canada and our auto title loan business in the United States. Operating income grew 11% to $18 million, with the operating income margin at 51%, an improvement of 100 basis points over the same quarter last year.

These results, inclusive of the drag associated with the newer Cash-Max locations open in Canada, were driven by healthy revenue growth and a well-contained expense structure.

EZMONEY's total revenues were up 12% or $5 million, due primarily to an increase in auto title loan revenue and installment loan revenue as these products continue to mature. Our combined EZMONEY loan portfolio as of the end of the quarter was up 19% over the prior year.

Our bad debt measured as a percentage of fees increased 170 basis points from the prior-year quarter to just under 24%. This performance is within our seasonal expectations for this quarter, particularly given the current product mix and the rollout of our current products to new stores.

We opened an additional five stores in Canada during the quarter for a total of 56 locations at quarter year-end. Currently, all stores are in the Ontario province. However, we plan to move to other provinces during the later part of this fiscal year.

We plan to open a total of 35 to 40 Canadian locations this fiscal year. With the aggressive rollout of our Cash-Max stores, we still expect Canada to be an overall drag to earnings this fiscal year. However, the increased store base provides for greater earnings potential in future years. In fact, there's already a number of stores that we've crossed over breakeven.

Last but not least, our strategic affiliates, Albemarle & Bond and Cash Converters, collectively added $3.4 million in pretax contribution for the quarter. This represents an increase of $2.1 million over the prior-year quarter, which did not include any contribution from Cash Converters.

I would now like to turn the call over to Stephen, who will spend some time discussing our consolidated numbers. Stephen?

Thank you, Paul. You can find our consolidated financial results on page 4 of the press release. Full results are discussed in comparison to the prior year's quarter unless otherwise noted.

Please remember that I am reviewing our consolidated financials, while Paul mainly covered our segment results. Therefore, some of the segment metrics he discussed with different than similar metrics I discuss for our consolidated results.

Total revenue increased 18% to $218.8 million. On a same-store basis, total revenues dropped 13% overall, with US Pawn up 12%, Empeno Facil up 56% and EZMONEY up 11%. We saw an 8% increase in merchandise sales to $67.7 million, with same-store merchandise sales up 3%. Complementing this very nicely was an 180-basis-point improvement in gross margin over the prior year.

Scrap gross profit increased $4.3 million or 30% to $18.4 million as a result of higher gold values net of higher cost. Scrapping volume was up approximately 4% over the prior-year quarter. Scrap proceeds include approximately $700,000 in liquidated diamonds in the current quarter compared to $300,000 in the prior-year quarter.

Pawn service charges increased 22% to $49.8 million, with same-store pawn service charges up 16%. This resulted in an annualized yield of 162% compared to 160% a year ago.

The net revenue from our signature and auto title loans increased 8% to $35.3 million, driven by growth in our installment and auto title products. Signature and auto title loan bad debt, measured as a percent of related fee revenue, was 24% compared to 22% in the prior period. As a percent of loans originated, signature and auto title loan bad debt was 5.5% versus 4.6% during the prior-year period.

As Paul already mentioned, our bad debt performance is within our seasonal expectations for this quarter, particularly given the current product mix and the rollout of our current products to new stores.

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 the previously announced pretax charge of $10.9 million related to the retirement of our former Chief Executive Officer.

This charge included $3.4 million attributable to cash payments and $7.5 million attributable to the accelerated vesting of restricted stock. Excluding this charge, administrative expense increased $2.9 million as a result of additional investments made in infrastructure to support our growth.

Our revenue growth continues to outpace our total expense increases as we further leverage our infrastructure and fixed costs. Excluding the retirement charge just mentioned, our operating income increased 29% to $50.3 million, with an operating income margin of 37.5%, a 300-basis-point improvement over the prior-year quarter.

Next, let's look at our equity in net income of unconsolidated affiliates. As a reminder, our two strategic affiliates are Albemarle & Bond in the United Kingdom and Cash Converters based in Australia.

Our equity interest in the income of our unconsolidated affiliates increased to $3.4 million for the quarter, due primarily to the addition of Cash Converters in November 2010. As you may remember, we account for our portion of the earnings of our affiliates on a three-month lag. Therefore, we will begin to comp this investment during the March quarter.

After a slight reduction in net interest expense and a 35.5% effective tax rate for the quarter, net income increased 7% to $27.4 million or $0.55 a share. Excluding the retirement charge, EPS increased 33% over the prior-year quarter to $0.69.

Now I will provide a quick summary of our balance sheet as seen on page 5 of the written release. As of the end of the quarter, we had $23.9 million of cash, of which $12.3 million was nonoperating. At that date, we had $22.5 million of term debt outstanding and no borrowings outstanding on our $80 million revolving line of credit.

Our pawn loan balance was $124.4 million, a 20% increase over the same time last year. Pawn loan balances increased 14% on a same-store basis.

The US Pawn segment had total pawn loan growth of [$18.3] million or 18%, with same-store growth of 13%. These increases were driven by strong growth in both general merchandise and jewelry.

Empeno Facil had pawn loan growth of $2.7 million. Again, on a same-store basis, Empeno Facil pawn loan balance grew $1 million or 24%.

Consolidated signature and auto title loans combined on our balance sheet is $50.3 million. Not included in this balance are $32.7 million of loans brokered with unaffiliated lenders. Taken in total, these loans, include those brokered to unaffiliated lenders, increased 18% over the prior year to $48 million.

Inventory was $77.7 million at quarter end after a valuation allowance of $6.4 million or 7.6%, which is an 80-basis-point improvement over the prior year. Inventory of 12 months old also improved to 11% from 15% last year.

On a same-store basis, the quarter-ending inventory increased 13% to $71.5 million or approximately $165,000 per store. On an annualized basis, we turned our inventory 3.8 times versus 3.7 times last year.

Our strategic investments in Albemarle & Bond and Cash Converters are carried on our balance sheet at $109 million. Collectively, they had a December 31 market value of $170.1 million. This represents unrecognized [appreciation] of just over $61 million.

Let me wrap up with a quick recap of our store counts. As of December 31, we had 528 pawn locations, including 132 in Mexico, and 504 signature loan locations, including 56 in Canada. We offer title auto title loans in 447 locations and installment loans in 415 locations.

I will now turn it back over to Paul for some closing remarks. Paul?

Thanks, Stephen. Before we move on to questions, I would like to conclude our prepared remarks with an update to our earnings guidance for the full fiscal year.

We are increasing our full-year guidance to $2.40 per share, excluding the one-time charge. This is up from our previous estimate of $2.35 per share, represents a 22% increase over last fiscal year.

We're very happy with the results from our new and existing stores and the performance of our team members. They produced double-digit growth in operating income in each of our three segments. Also, through our diversification strategies, we continue expanding storefronts across three countries, as well as expanding our suite of loan offerings.

With that, Christine, we are ready for questions.

(Operator Instructions). John Hecht, JMP Securities.

Congratulations, and thanks for taking my questions. First question is, can you -- you might have mentioned this in the call, but can you give us same-store sales for both general merchandise and jewelry again?

We didn't mention it in the call, but that's okay. Our same-store sales in general merchandise was just about 4% up, and jewelry was essentially flat, I think at 0.7% down (multiple speakers).

And is that just because gold is getting -- you know, you're still obviously making good return on gold, but it's becoming less of a consumer item as much as it is a wholesale item?

Yes, that's a good -- yes. Two things I would say. I think that's absolutely true, John. I think the second thing is, because it is so attractive for us to scrap, we're fairly aggressive. So we probably aren't giving it quite as much opportunity in the cases that we would at lower prices. So it's a positive for your scrap and it's slightly negative for your retail sales. But as we said, all in, wholesale retail, we were plus 9% on a comp-store basis.

Okay, thanks for the color there. And I know this was a relatively small amount, but you talked about the growth in the diamond sales during the quarter. And I'm wondering, is there some new opportunity that's emerging there, either because of the way the market is going or because of the geographies you are in, that may enable that portion of the revenue contribution to grow?

I would say we're seeing -- the last several quarters, we've certainly seen -- let me answer it this way. It's generally been a positive trend for us as -- over the last several quarters. The last two quarters, we've had a very nice pop.

At store level, we have made that a priority, is that we are trying to get our teammates to buy as much gold as they can, and with that, we have in our system, we're pretty good with diamonds. And I don't know how that compares to some of the other players in the marketplace, but it would appear that the customers give us credit for that.

Okay. And then just in terms, for a modeling perspective, can you highlight -- I know that Wisconsin and Colorado are going to I guess be kind of full-period impacts after this. And I know Wisconsin might be a moving target in terms of legislative potential changes to the -- or I guess repeals to the law.

But maybe how much of the revenues of last quarter were from those two states, so we just kind of incorporate -- and I know this is also incorporated into your guidance, but how much of the quarter should we expect to get impacted by that?

Yes, it is in our guidance, and we don't normally talk specifically about state-by-state numbers. You know that, obviously, Colorado changed regulatory situation on us four months ago on Wisconsin this month. It's in the guidance. I don't frankly have it in front of me anyway, but we don't normally get into that level of detail.

Okay. And then last question, I think you mentioned, you referred to about 10 stores that you either bought subsequent to quarter end or in the last quarter and are immediately accretive. Is there anything going on where you give us color in the acquisition opportunities are -- are you seeing more of them? Are you seeing more of them in certain regions? Is it going to be an increasing component of your strategy going forward?

Well, I think we did talk about, we just did four the last quarter. We just closed five last week. I think since June of last year, we've closed on 25, so a fairly sizable number in a short period of time.

We continue to look. There's -- I wouldn't say there's more or less activity since we've started kind of down this road in trying to buy attractive independents. We do have a two-pronged strategy as well. So a fair amount of those 25, if you went back and looked at what we've said publicly, a fair amount of them are in Florida, which obviously is a very advantageous state to us. And we've also done some in Texas. The one in Georgia was a new one for us, but we are in Georgia. And then of course, we are excited about Chicago because it was a new market to us as of June, a significant metropolitan market that we weren't in. So I guess I would tell you we'll continue to look in our own backyard and look for some key metro markets.

Anything going on with pricing that you -- are the sellers changing their perspective, or is it pretty just attractive pricing across the board?

I would say of all the -- we have done a multitude now of them. They have generally been accretive. I wouldn't say there is any real changes in the pricing, though. There's no movement in the market that we're seeing.

Okay, great. Well, thanks for answering my questions.

Liz Pierce, ROTH Capital Partners.

Congratulations, nice job. I just want to touch a little bit on the bad debt. I know you said that it was within your -- seasonally within your kind of parameters. And just kind of looking back at when you added all the additional stores right between I think the June and September that offered the installment loans as well as a spike in the auto title loans, so what is the thought process in terms of just is this digestion in trying to get some new credit metrics? Because you had a real good run a couple quarters ago with the loss provisions being pretty low.

This is Stephen. I'll take a first stab at this, Liz. If you break it up into its two component parts, auto title and signature loans, the auto title bad debt quarter to quarter increased from 15% to 16%

Right.

And that was largely a function of being more aggressive on the underwriting, which was pretty successful driving the fee base from $3.1 million to $6.2 million. So we were -- for 100% growth in fees, we'd give out 1% on bad debt all day long.

Got it, got it.

On the signature loan side of things, it's a little more complicated because that comprises payday and installment products. So it's largely a function of product mix and what I would call new business strain.

So what has happened here is that -- and as you know, in Colorado, we've been migrating customers from the payday loan to the installment loan. And if you think about the accounting for that, particularly of the installment loan, we recognize the fees and interest over the five- or six-month period of the loan, and yet we recognize bad debt as soon as we get and accelerate the entire balances, as soon as we get two consecutive defaults.

So when you have a new portfolio that is growing, relatively few defaults can have a pretty damaging effect on a very small fee base. And that will normalize as we reach a steady state for that portfolio. So I can tell you that in Wisconsin and Colorado, where we're doing this migration, we are within our pro formas, and we do expect the bad debt ratios to stabilize once we reach that steady state.

Okay, that's helpful. So if you kind of stripped that out, it might be kind of the levels on the signature loan product that we have seen before?

We would hope so.

Yes.

Okay. And then, in terms of what is going on in Mexico with gold, are you seeing -- on how much you are loaning, how stiff is the competition? At what price are you having to deal with in terms of loan-to-value?

Yes, actually, what is interesting, we came in at 24% on margin. And we talked a little bit about this last time, and you guys are well aware of it, but it is a more competitive marketplace. On a combined basis, we were around 37% margin. In Mexico, we were at 24%, which frankly was the best performance we have ever had. But it's been climbing over the last several quarters.

Q2 of last year, our gold margins were 11%. Our scrap margins out of Mexico were 11%. So our models are built around 20%. So we have had very nice improvement over the last literally almost four -- well, four quarters, Q2, Q3, Q4, and now the first quarter, went from 11% to 15% to 22% to 24%.

It's interesting that I think what's going on -- we think what's going on is that we almost hit a crescendo there in the middle of last year, where everybody was posting prices in the window, causing the customers to shop. We keep hanging our hat -- we don't do that, and we hang our hat on service, and we hang our hat on the fact that we loan more if they need a loan.

So we generally think that approach has worked, and also, we believe we are pretty consistent in the marketplace along the lines of service, no lines and some of those kind of things.

So we feel good around -- we were pleasantly surprised at 24%, frankly. We'd be happy with anything above 20%. But we had good performance in both our jewelry-only stores and our full-size stores.

Okay, that's really helpful. And on the 55 to 60 that you are opening this year, can you break that out? Or did you, and I just missed it between the two concepts?

We've basically said 70/30. That is our strategic intent, is to be about 70/30. And I think that's -- I think coming into the year, we were right in that range. I know we were in that range. So we will probably do the same this year.

Okay. And then moving north to Canada, so are you willing to kind of give us any kind of -- I realize it's probably in the guidance -- to how much of a drag it is for some of these stores breaking over and what you think -- like, how many more might break into positive -- or breakeven this year?

Yes. Again, we don't want to get into those kind of numbers on the individual basis in that country. But here's what I'll tell you in Canada. We opened -- we came into the year with 51 stores, I think. We're up to 56 now. We only opened five in the first quarter.

There is a bit of method to the madness here. All of our stores are in Ontario, which I said it takes a bit of work to get in the infrastructure to move beyond a pretty condensed bunch of stores. So that's why we were a little slow -- that's how we planned this thing, was to be a little slower in the front half, a little heavier in the back half as we go into other provinces.

I would just say all I can tell you is, best way for you to think about it is, we think -- we are thinking about Canada the same way that Mexico is occurring. We're going to have some period of drag, and Canada will drag this year. But as we get enough size and scale, we will turn the corner here, maybe not in the first part of -- not in next year, even, because we've got a fairly aggressive multiyear rollout schedule. But certainly by 2013, we would be positive earnings -- operating income coming out of Canada.

By fiscal '13?

Yes.

Okay. And have you said which territory is next?

We are looking at Alberta and British Columbia primarily.

Okay.

We would [go to] Saskatchewan if there were a few more people there.

Okay. Thanks. Good luck.

David Burtzlaff, Stephens Inc.

Great quarter. Most of my questions have been answered, but just kind of for housekeeping, what was the average gold price for the quarter, for kind of your scrap sales?

Hang on a second.

We're looking. You got another one we can answer?

Well, I guess it was kind of a follow-on. What have you locked in for the second-quarter gold prices?

I know we have given out percentages on locks and things in the past. And frankly, what I would tell you, we are -- we're locking less than we have historically locked, in part -- but we are doing it on a three-part interplay here. So we're looking at -- we're a little more aggressive, meaning we are letting a little more float. And it's worked very well over the last six to nine months for us, with the gold prices the way it's moved. We're very comfortable with our guidance based on what we have locked, the amount of ounces in our forecast, and certainly the cost structure that we have in our forecast.

Okay.

You originally asked --

Kind of what was your selling price for the quarter, blended?

$1284.

$1284. Okay, thank you very much.

John Rowan, Sidoti & Company.

The change in the redemption rate or the uptick in the overall redemption rate, is that more of a function of moving into Mexico more so, or is that representative of any type of pricing change?

I touched on it. It is not just Mexico, by the way. It is in the US as well. And we think it's really because we're qualifying better on the front end. So we're buying more on the front end, generally buying lower-priced goods, which then gives us better redemption on the higher-priced goods when people truly make the decision not to sell it to us, but to take out a loan.

Okay. And -- well, a couple more. But the segmented results, those don't include the expense for Joe's retirement, right?

No.

Okay. I just wanted to make sure I have an accurate number on that. And just, did I write this down right? Same-store revenue growth in Mexico is 56% year over year?

Yes.

Now, are you seeing strength more so in the gold-only stores, or are you seeing more strength in the general merchandise stores?

We're actually seeing -- we don't -- I'm trying to think if we even technically have any gold-only stores in our comp stores yet. We only have one maybe, right? Just a few. So that's in our general merchandise stores. Now, remember, in those general merchandise stores, we do gold as well. So, that is part. So were very happy, frankly, with both.

Okay. And then the store openings for the year, you said -- did I hear you right? 55 to 60 on the pawn side?

Yes, so, right. Mexico is 55 to 60, yes.

Oh, that's just Mexico? What is the total number for the year?

On US Pawn, we'll greenfield 10. And in Canada, we're still talking about 35 to 40.

Are you a little behind schedule in Canada? Because obviously you only opened up three stores during the first quarter.

Five. We opened five in the first quarter. And I touched on that, that we planned it that way. We planned to be a little slower in the front half because we're building infrastructure to go into two other provinces.

Okay, and just one last question. Any light you can shed maybe on the acquired product that you guys plan to offer in the US?

I'm sorry?

Any light you guys can shed on a card product that you plan to offer in the US?

Yes.

I saw the advertisements in the stores.

I know you did. Yes, no, look, it's in test phase. We are testing what I would call -- we call it the IDC card. It's an integrated debit card. That is new for us. And it's in test phase right now. I would say it's a similar type that you see across the marketplace. We of course wouldn't test anything that we didn't think was best in class.

So we are right now in the process of testing that in a group of stores. And it's very early, but it's encouraging, and we're playing with it. And we think, as many of our other tests that are running right now, we have high hopes for it.

Well, is it tied to an advance product, or is it fully prepaid?

I'm not sure I understand that question.

Well, would you be advancing money onto the card, or is it more just --

That's one of the features that we are testing, yes.

Okay. Thank you very much.

(Operator Instructions). Bill Armstrong, CL King & Associates.

Nice quarter. On the bad debt expense, I think you mentioned a mix shift a little bit between payday and auto loans, but was there also an increase within those categories, specifically the payday category?

I would say that there was a slight uptick in payday, frankly, that was immaterial. And without boring you with the details, we know why, and we are quite comfortable with why. And as Stephen said, we're quite comfortable with our ability to control bad debt as we move forward.

Okay. You mentioned on the administrative side the administrative expenses of some additional infrastructure investments. Can you just flesh that out for us a little bit? What sort of investments are we looking at?

Well, we've obviously added some technical expertise as we are gearing up for some of the digital type things that we've been testing. And so there is that, and there's some other things related to growth, obviously, in Mexico, Canada, those kind of things. So really, it's just to support all the things we've been talking about.

There are no additional questions at this time. Please go ahead with any final remarks.

I'd just finish, say we're very pleased with how we are executing our growth strategies through excellent performance in our existing stores and through geographic and product diversification. Based on what we see both here in the US and internationally, we believe that we have exciting opportunities to continue that growth. And we appreciate your interest and support. Thank you.

Thank you for participating in the EZCORP, Inc. fiscal 2011 first-quarter conference call. This concludes the conference for today. You may all disconnect at this time.