EZCORP Inc (EZPW) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the EZCORP Fiscal 2016 first quarter earnings all. At this time all participants are in a listen-only mode. (Operator Instructions). I would now like to introduce your host for today's conference Mr. Jeff Christensen, Vice President of Investor Relations of EZCORP. Sir you may begin.

Thank you, Kayleigh and good morning everyone. Welcome to EZCORP's first quarter fiscal 2016 results conference call. Joining me today are Stuart Grimshaw, Chief Executive Officer of EZCORP and Mark Ashby Chief Financial Officer of EZCORP. During our prepared remarks, we will be referring to slides which are now available for download from our website at investors.ezcorp.com.

Before we begin I'd like to remind everyone 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 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 and a desire of our customers to pawn or sell their gold goods, changes to the regulatory environment, changing marketing 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, please see our annual quarterly and other reports filed with the SEC.

Now I would like to turn the call over to Mr. Grimshaw. Stuart?

Thanks Jeff, and good morning everyone. I hope it's not too early for you all. I'd like to start by turning to page three and bringing you up to date as to where we are with the strategy we announced in July 2015. As you'll recall those are the three areas we said we'd execute on -- focusing the organization, simplifying the organization, and optimizing the organization. If you turn firstly to the focus particularly in the pawn business we spent a lot of time looking at the service and set customer satisfaction recorded in the stores and in particular we initiated both video and phone mystery shopping which has been quite a proven training tool for us. We've seen around a 7% to 10% improvement in satisfaction scores over that period of time. And we continue to see benefits from using these measures of satisfaction particularly for our staff as they learn how to interact with their customers better.

We've also invested in talent to support the growth initiatives that we do have particularly in pawn, in our centralized functions -- particularly in accounting risk, and also in Grupo Finmart where we have appointed a new CEO, CRO, and CFO through that period of time. And overall when we look at the businesses we believe we have a very seasoned management team. And indeed we look at the US pawn business, the average tenure of our senior executives in that business is around nine years with experience in the pawn industry specifically. So we believe that the focus we're bringing in with bring us through the pawn results as bringing some very sound results.

In simplifying the organization we have rolled out a new incentive scheme, particularly for our pawn customers, which does support the mystery shopping initiatives as well which focuses on customer engagement. Previously we focused specifically on metrics which haven't actually evaluated the overall interaction we have had with the customer and we're seeing benefits from this and ensuring that the incentives are actually paid on timely basis, reinforcing the behaviors we're measuring.

We have completed the wind down of USFS on time and we have reached agreement with the CFPB so we have moved past that business now into focusing on the other businesses. And as we he highlighted in July we have centralized al procurement and we have identified $4 million of savings on annualized basis and this will be phased through the course of the year so the $4 million won't be fully in this year but will roll through the next year and coming through various quarters of this financial year.

In terms of optimizing as we disclosed again in July we're on track to realize $30 million in cost reductions by FY18. I will note that not all those will be coming through the corporate expense line. It will be through the various expense lines as well. We are targeting systems particularly on point of sale system in the pawnshops and actually streamlining that and as we streamline that platform we're finding ways we can improve process and get faster transaction times with our customers. And finally, we are reviewing strategic options for the Grupo Finmart business in light of some of the structural changes we've seen in the economy and within the industry itself over recent quarters, and I'll touch on that a little bit later on. But in the interim we have initiated a number of programs designed to actually save costs and actually get a bit of risk base structure around that business.

Turn over to page four and I'll focus briefly on the consolidated pawn business before passing to Mark. The concentrated focus that we've brought on the customer, we've starting to see the benefits coming through in some of the metrics. And if I touch on a few of the highlights of this slide you'll see the PLOs increased 6% to $160 million and same store line growth grew 3% and it's good to see that we're experiencing that same-store loan growth in a period of time where it has proven to be a little bit difficult through history.

I would say that the loan portfolio that we're growing we believe is a high quality as evidenced by the consistent pawn loan yield, steady interest rates, and the healthy merchandising margins that are being experienced. And if we look at the merchandise margin we increased that to 38.9% from 33.9% and Joe Rotunda will be the first to say it is the result of strong management skills, but it's actually the way that he's initiated disciplined loan valuations and effective product life cycle processing through the business and that discipline has been accepted well by the stores and we're seeing it through these results. And when we look to the aged inventory, which we highlighted before a problem or a looming problem over 12 months ago we've seen that reduced from 17% to 10%.

When we look at the annualized return on the assets we increased 151% from 142% and while pawn loan yield has remained relatively stable at 166%, inventory yields have strengthened to 132% through disciplined product pricing and we're fairly pleased with the way this business is tracking at this point in time.

With that, I'll pass it over to Mark for the consolidated results in the other division.

Thanks, Stuart. And good morning everybody. I'll take you through a few charts showing consolidated results of the business, which cover the pawn locations and the Canadian operation and with a couple charts on the Grupo Finmart business.

If we start on page five, the consolidated results for the quarter -- total revenues were down 7% on last year, core pawn revenue was flat, and we did experience growth in pawn service charges. As Stuart indicated there was some significant improvement, and merchandise gross margin increased to 39% from 33.9%. Scrap sales reduced as we focus more on pushing the jewelry through the retail method rather than actually just scrapping and there was a 48% decrement in scrap sales volume for the quarter.

Grupo Finmart. Grupo Finmart interest income was $11 million compared to $16 million last year and I'll touch on this in more detail but on a net revenue basis it was negative $1 million where reserving was higher, the bad debt reserving was actually higher than interest income for the quarter, on a comparison to $9 million for the same quarter last year.

Overall operating expenses, they invested -- the increase really is a result of investing in platform to growth. There were some new store acquisitions compared to Q1 last year. We invested in store teams and store structures to deliver the outcomes that we have started to see in the pawn business. (inaudible) costs, specifically in Latin America and some of the investment in the management team in Grupo Finmart and the commission structure which I'll also touch on a bit later.

On the corporate expense side, the increase was primarily due to the restatement and restructure costs at $4.3 million and there was a couple of large credits in last year's first quarter which didn't occur this year for comparative purposes. So by the time you take all that into consideration, the continuing ops net income for the quarter was a loss of $7 million compared to the profit last year of $5 million.

Turn to page six -- page six represents a normalized results, if you take out the effects of the restructure discrete costs and put it into constant currency and exclude Grupo Finmart for purposes of this chart. It gives you an underlying indication of the US pawn, Mexican pawn, Canadian pawn and investments, specifically in Australia. Clearly, the strong performance in the pawn business was what pulled foreign revenue up 3%. As anticipated and Stuart mentioned in merchandise margin increase to 38.9% from 33.9% and I'll give you more flavor on that as we move forward.

Operating expenses increased again based upon investing in the platform for growth. Again, the acquisition of stores in FY15, investment in the store teams, district managers, coaches and mentors and the running costs specifically in Latin America. As I mentioned before the comparative corporate expense which was affected by a large number of credit in the prior year but fundamentally was flat. We've put a cash flow down at the bottom of the chart to give an idea improvement of last year and it improved by 26% to $22 million and that's primarily as we look at and evaluate every piece of CapEx we put through the business to make sure the CapEx was designed to provide a return. We also did not capitalize on the same ways as last year. We now have changed to put more through the operating expense line of the P&L rather than having to let it sit on the balance sheet if we don't believe it's going to generate significant returns.

If we flip to page eight, you look at the US pawn business, the focus on the customer that Stuart mentioned earlier on is starting to be felt in the performance in the business. The core pawn revenue is up 3% and as you'll see in a couple of charts we had positive the same-store PLO growth at the end of the quarter. Net revenue was up 6% to $97 million despite the significant drop in scrap revenue, some $8 million for the quarter. Merchandise gross profit improved up to 39.7% from 34.5%, reflecting a reduction in aged inventory and also the way the model is set up for delivering product to the customer. Operating expenses increased due to the stores that we had acquired after Q1 FY15 and again the investment in the store chains. The cash generated on the US pawn business increased from $26 million to $33 million and also reflects sales, focusing again on income from capital.

We turn to page 9, the concentrated focus -- you see the PLO growth increased 4% underlying metrics actually support a high quality line growth. Slightly positive, same-store line growth for the quarter was 0.5%, supported by the number of new loans made being up 6% in total, 3% on same-store basis, constant redemption rates and increase in pawn service charges. Merchandise margin increases, we touched on before and you can see the exit inventory decreasing to 11% total inventory from 16% assisting in that.

Inventory turns were at 2.2 down from 2.4 last year reflecting the focus last year on clearing aged inventory. The annualized return on earning assets increased 150% from 141% a year ago with inventory yields and pawn loan yields both increasing.

The charts on page ten, just to give you a pictorial view of what we just discussed you can see in the chart on top of the corner the pawn loan balance. The trend was gradually improving over the last few quarters and has gone positive at the end of Q1 with 4% up on the pawn loan balance up to $143 million a year ago. On the right-hand side and we expect this this -- certainly when we did the year-end numbers we went from minus 11% to minus 6% at the end of last fiscal year in terms of same-store pawn line balances. We hit positive 0.5% at the end of Q1 which again now fuels the growth opportunities within the business.

The merchandise margin and aged inventory chart you can see the correlation between the two. As the aged inventory increased and we had the stuff on clearance, the gross margins declined and as aged inventory declined the gross margins start to do grow. So it was synchronized together.

The move to the Mexico pawn business on page 12, the constant currency view. Core pawn revenue was up 8% driven by very strong growth in PSA revenue and pawn service charges of 22%. Net revenue up 17%, operating expenses increased again as a result of investment into the platform for growth. Conversion of five concept stores to (inaudible) model stores are in progress. (inaudible). We will be investing in four large-scale de novo stores to open during the balance of FY16. And this is all part of my investment in store teams, again district managers on the same basis was invested into the US pawn business. Cash flow again improved in the Mexico pawn business in the first quarter.

Page 13 calls out similar metrics to what we saw in the US (inaudible) increased by 33% for the quarter. Same-store loan growth, 34% with six consecutive quarters of double-digit same-store loan grown. New loans, they were up, redemptions were constant, and pawn service charges increased by 22%. Merchandise gross margin improved up to 34.9% from 31%, reflecting the decrease in the aged inventory down to below 3% of the total inventory (inaudible) from last year. The annualized return on earning assets increased 158% from 149% last year, that's both with inventory yield improving to 124% and the pawn loan yield increasing to 194%.

The charts on page 14 show the correlation of those pawn loan balance to be consistently growing in percentage terms up to MXN251 million and this is all in local currency by the way. Full loan balance growth you can see the trend that show four of the six consecutive quarters of same store pawn loan balance growth and again the chart on the bottom shows the correlation between the merchandise margin and the aged inventory as we see an increase in the merchandise margins as we clear out the inventory.

We move to the Grupo Finmart business I'll hand it back to sturt on page 16.

Thanks, Mark. What we announced in the press release today is we're going to do a strategic review of the opportunities for Grupo Finmart and that's been driven by a number of key factors. We've seen some changes in the industry and particularly in terms of delays that we've experienced in payments as you'll see there under industry dynamics changing. Delays in payment have increased, 16% of outstanding in Q1 2016 from 11% in Q4 2015. Actually, that's been a major structural shift and we look at more the macro trends that we're seeing. Certainly the energy situations being spent through the markets as playing out in Mexican economy and if we look at Pemex, who provides a third of the tax revenues, their revenue stream is reducing substantially and we're starting to see the flow through that of the delays being experienced in the industry. As a result of that have, it's prudent for investors to step back and say, "Is this a structural shift that's going to be there for a while?" And we do think this is the case and as a result of that we need to review exactly how we manage the business going forward and look at all strategic opportunities that are available to us.

In the short term while we do that, we have initiated some steps designed to control the financial performance of the company such as reducing the overall G&A expenses by 20% and that's underway at the moment. We actually have had to refocus the originations onto the higher-quality (inaudible), those would he haven't experienced delays at the time. And initiating short-term loans and we have cut out some originating some of the longer tenures we previously did do. And we're looking at reengineering the collection process such this the collection performance continues to improve so that the cash coming into business is quite sustainable.

That's the overall background. I'll pass to Mark to run throw the financials and also just review the accounting policy around the bad debt expense.

Thanks Stuart. If you look at the Grupo Finmart results on page 17, we've given some of the highlights and try to give a little bit of color on how these are constructed. The interest income for the quarter was $13 million, the same quarter last year was $16 million. The bad debt expense as you can see for the quarter is $15 million versus last year same quarter of $8 million. The interesting dynamics that Stuart mentioned really effects the size of the reserve we're taking during this quarter. The Grupo Finmart nonperforming loans represent some 34% of the overall portfolio which was a 19% increase from last year. The majority of these loans and I'll cover this a bit more on the next page, represent apparently employed individuals we expect to receive funds from in future periods. So there's a differentiation between the (inaudible) and the way we are looking at it internally.

The interest expense was down slightly (inaudible) from $8 million last year. Our total expenses were up reflecting an increase in commissions and the investment, predominantly the investment in the management team which involved Chief Financial Officer, a new CEO, and Chief Risk Officer and appropriate support that we are invested in over the last six months. The profit before tax constant currency basis was minus $20 million compared to minus $8 million last year.

Originations were down from $22 million to $19 million, reflecting the refocusing that Stuart touched on earlier. Our gross loan balances were up but also the reserves were up. So on a net loan basis, the net loan -- net loan balance, sorry was $119 million last year with a net interest declining 21% from 26%.

We move to the analysis of the portfolio, page 18, we can see the reserve increased to $72 million from $42 million last year which is some 71% increase. If you look at the construction of that there's two major components. The first components is the in-payroll delay. I'll spend a little bit of time talking about that. The second time is the out of payroll. Out of payroll we wrote off 100 percent and we don't expect to receive future payment. We do have a small recovery rate ahead of payroll. In terms of the in-payroll delay -- the policies to reserve the loan to experience payment as we call that credit 180 days or is -- 180 days. So a 100% loan it's 180 days, consecutive days, a 100% reserve takes place. When we receive subsequent collections on the delayed loans, the loans do stay on a nonperforming basis. What happens is that actually reduces the bad debt expense going forward so the collections are applied against the reserve. Once the reserve for that particular loan has been fully recovered then it moves up into interest income. So it's a cost recovery method of accounting.

What we do notice is the collections on those delayed loans increases the similar rate as to what's in the payroll reserve. And you look in the chart above, it's in the collections from the percentage on the in-payroll reserve, and we annualize these numbers, it's been consistently about 16% so the collections do come back. What that does reflect is the timing and therefore the timing for how long it will take for those loans to be repaid.

So what are the key drivers of payment delays? Well the first is the ratification. Ratification, that's the time between the loan origination from the first payment, we'll call that administrative delay. The second is the agency delays, so the agency has deducted the payment from the employee but has not remitted the payment to Grupo Finmart. And the third is customer delays where there's no deduction made due to multiple reasons. We've quoted a couple -- indebtedness, leave of absence, or alimony. Those are the three main drivers of what we see on the in-payroll delay areas and you increase some 70% for the quarter which is the $18 million, the accounting treatment for all of that, if you take that all through the P&L. So we see an increase in bad debt expense.

So in summary, the cause of the negative profit and loss performance is because we have not received a substantial amount of loan payments for 180 consecutive days. From an accounting treatment perspective and we mentioned this before it is a very blunt instrument, it writes it off and then it works on a cost recovery basis going forward. It does not put those loans back in a performing state, despite the fact we do stand to recover quite a few of those loans.

So on that note, I'll hand it back to Stuart.

Thanks, Mark. What I would just like to do is probably summarize the five key points and then we'll open it up for questions.

I think as we've been through this, what we've seen is the concentrated focus on serving and satisfying our customers beyond their expectations is actually starting to work and we are seeing that coming through some of the key metrics. The building a platform for growth in the pawn business -- we are investing in talents, we are investing in system,s and as you have seen we have done a couple of acquisitions to continue to bolster our representation in areas which we want to strengthen.

The execution mentioned above is running well. PLO balance is up 6% year on year and 3% on a same-store basis. Redemption rates (inaudible). The merchandise margins up 500 basis points to 38.9%. Return on earning assets is up 900 basis points to 151%. Net revenues are up 7%, free cash flow up $22 million, 27% increase. Our overall strong fundamentals and it's tracking well. We are in the early stages of a three year strategic program but the indicators we mentioned slightly ahead of the expectations we have set internally.

And finally, as we've just been through the recent structure would change the Mexican economy and the payroll lending industry is forcing a review of strategic options and opportunities for Grupo Finmart. So with that, I'll open it up for questions.

(Operator Instructions). Our first question comes from the loan of John Hecht with Jefferies. Your line is open.

Thanks, guys and I guess congratulations on making a lot of progress on the business plan here. First question I guess is related to expenses in the quarter and then maybe expenses going forward -- forward excuse me. I know you highlighted $1.6 million or $1.7 million of kind of nonrecurring expenses this quarter. But Im wondering is there anything else elevated just whether it's accounting or anything as you kind of work through some of the restructuring that we should think about? So I guess the first question, expenses.

The second, Stuart, you mentioned ongoing cost base. Can you just maybe give us a little sense for what the kind of expectations over the course of the next five or six quarters would be per quarter in terms of cost base and is that going to come in the admin or opex side?

I'll do my one. What we always work to is to work to try to reduce the cost base each quarter. The procurement savings that we indicated around $4 million, we'd probably expect to achieve something around 70% of those savings through the course of this year with the other 30% being reflected into next year. We have made a commitment that we would try and get $13 million off the expense line within the three years, and we think we're on plan to achieve that.

The -- I think the way, obviously, there's a reasonable amount that will come through in the back end from 18 months onward as we get the full benefit of some of the initiatives that we are saving so I think you'll see it will be more step up than a straight line from here on. On a quarterly basis we don't really analyze it on that way so I'll just give you those indications and you can work your models through that.

Okay. Mark do you want to add a little bit to what Stuart was saying?

In terms of the quarter I think we call that normalized yield what that number would be if you take the restatement/restructure costs that have been the discrete items and basically I think if you boil it back down would be somewhat flattish. Stuart mentioned about procurement savings and we said we would target that would be better each quarter on quarter. We're also quite conservative thinking about some of the accounting treatments in terms of expensing items that may be in the past would have been capitalized. We've changed some internal accounting policies on that but we expect to absorb that into the numbers that we're providing.

So you should see the G&A probably go down by year three to match some of the potential short-term increases which might come through. But as we said, we try to manage the cost base from flat to slightly negative on a quarterly basis.

Okay. Some of these savings -- are they spread through admin or are they concentrated in one line item versus another?

some will come through the store expenses and some had come through the admin. I'm not sure. But there will be a mix.

Okay. And then moving to the strategic review on Groupo Finmart, I'm just trying to understand what the -- it's an ongoing business. Do you have commitments to the unions down there? You're the servicer I assume. So if you were to dispose of this, I assume you have to dispose of the whole thing. And can you shut it down if that becomes the only option? I'm trying to understand what your range of options are.

the range of options at the moment is to try to get the company back on what we would term as a normal footing where the bad debt expense starts actually behaving on a flat line basis. So any accounting policy makes that difficult as you originate more with the delays we're having. All options are open but there are risks in every option you do take. For instance, if shutdown was one of the options, and I don't think that would be an option to follow but if it was I think your ability to collect is somewhat limited from there on as you signify a departure from the industry. And it's not something we would rapidly entertain because we think there are better options in terms of managing the business or even looking at partnerships.

The one thing we've said that if it's -- if businesses arent meeting the cost of capital then we have to be fairly strong about the way we look at the options and move in a way that maximizes shareholder value. So I think if you use -- we have to convince ourselves by being the whole we can get the cost of capital return. If not, then we have to move into areas which could be -- of any of the options that I'm sure you're aware of.

Okay. And final question, the equity income line, I know there's -- you're in some asset sale sales and it's been volatile in the recent quarters because of this. How do we think about -- can you give us how to think about that equity income line, whether it's seasonally adjusted or just on a quarterly basis going forward?

I think the -- part of it is the equity income from cash converted in Australia. They will be releasing there and they will be releasing on a half yearly basis not a quarterly. So we take an estimate to a degree had we think that contribution could be and then it will be firmed up in this quarter when they announce half yearly switches in about three weeks' time.

In your opinion is that business fairly consistent now or is there still some volatility in it?

They're undertaking strategic review. What we do is we look at the analyst forecasts and take a line in the sand from what the analysts are projecting from the earnings and then true it up once we get final results. Their undertaking of the strategic review at this point looking at some of the options in businesses they have and we'll see what the outcomes of those are.

Okay. Great. Thank you very much.

Thanks, John.

Our next question comes from the loan of Bill Armstrong with CL King. Your line is open.

Good morning, gentlemen. I want to do talk about the retail margins. They were up pretty nicely, and you talked about the lack of aged inventory markdowns being part of that. Were there any other drivers there, maybe mixed either between jewelry and general merchandise and what you're seeing within those categories?

In our slight shift to jewelry what we found is that we're actually pricing better the loans and when we're doing the loans we're actually pricing much better which takes us up with success with the cycle the pawn cycle that runs from there. So that when the inventory does drop, it's actually the price that we can achieve the margins on. And as we mentioned before that's why we referred it as a quality loan portfolio because we haven't seen an increase in redemptions, yields remain the same margins have been healthy. So it's actually the discipline I talked about before and the marking of the product through the product life cycle. And the customer metrics that we're seeing in supporting everything we're doing. So there's no simple solution what we find is getting the discipline right at the start, it sets us up for success all the way through.

And even with that more disciplined pricings, your same store balances in the US were up a little bit year over year. Do you see that continuing to stay in positive territory as we move forward?

Is this the P&L you're talking about?

Yes. The same store for US.

Well, if you look at the last couple of quarters, we had some very good momentum coming through and, obviously, as management it's our intention to continue to grow those balances. However, in this quarter we'll probably see them come off due to the large retail and tax refunds coming through. But on an average basis our intention is to continue that trajectory.

Got it. Thank you.

Thanks, Bill.

Our next question comes from the loan of Vincent Caintic with Macquarie. Your line is open.

Hey, good morning. Your question is pawn loan growth. You had demonstrated strong growth in both US and Mexico. I was wondering if you could give us a view on how that's going to shape up for 2016, particularly I think some investors are concerned about energy prices and how that might impact loan growth. Thanks.

One of the things -- continue to improve the pawn loan balances which means that we've got to keep focused on the customer, the storefront level. So we're committed to that. We haven't put any gross targets out there Vincent but I'll give you a bit of a sense of -- most of our customers actually adjust quite rapidly to what's happening to their hip pocket and we find they can adjust pretty much within a 45 to 60 day period. So while we get this initial sticker shock or whatever it is we actually adjust the whole pattern to that. Typically the energy prices may provide a bit more cash in their pocket but their underlying behavior, their need for cash is still there. What we find with our customers by staying close to them, they still actually come back to buy our retail or buy pawn but we don't expect that to be a major driver of any change in our approach to running the business. We believe that the management initiatives we are taking at the store level focusing on the customer sort of removes some of the macro impacts from what we see at the time. And the role we have to ensure we grow the business at a rate which is sustainable and takes account at the macro impact.

Got it. Great. And then touching on that, you've grown stores this year as well and I was wondering what your appetite is for opening more stores or buying more stores. Thanks.

As we (inaudible) to Mexico, we're going to do (inaudible) stores. In the US, we might do some -- we might just do some of if the opportunity is right. What we don't want to do is pursue acquisitions for the sake of it but where it makes sense we will do it. But really as you'll see, it's nice to do bolt-ons where it makes sense but really the focus of investing our money has to be back into the talent we have at the store level and the district manager level. And we know we can get some really immediate returns by investing smartly there. So most of the money will be invested back in the store level and there will be opportunistic acquisitions if they do come up

Okay. Great. Thank you, Stuart.

Thanks.

Our next question comes from the loan of John Segal with Highbridge. Your line is open.

Hey guys how are you?

Good John thanks.

Congratulations on what we would argue is a very strong set of results. Clearly your plan is working. Quick question for you going through this morning, saw there was substantial repayment of indebtedness, $29 million or so. Just curious when that relates to and if holding company capital is going down to the Grupo Finmart entities.

It's actually the net for amortization of net portfolio in Grupo. You'll see in for the bearer holders' trust, I think there's about $12 million drop in that. One that's just natural amortization of those facilities.

Very good. That was my question. Thank you.

Thanks, John.

(Operator Instructions). Our next question comes from the loan of Alex with Cannon Asset Management. Your line is open.

Thank you gentlemen one of my questions has already been answered. If you could just talk about general liquidity management going forward. You mentioned potential opportunistic acquisitions but if you could talk about how low you're comfortable with your cash balance, et cetera, that would be great. Thank you.

Yes. I mean we watch liquidity on a daily basis. At the moment we're probably coming in probably a peak liquidity season, whereas the tax refund checks to start hitting our customer's accounts, and they do hit our stores, they pay down their loans and purchase stock. So we're in the peak liquidity. So we do see internal buffers that we don't disclose to market. But we do do is look at give you a sense of how we look at it -- we do look at the loan growth out for the next 12 months. We look at the intended sales and we actually probably vary those on a daily basis based on stores. So if it's the comfort you need around liquidity, we do watch it very seriously and we continue to retain the conservativism around this. So if an acquisition did arise which would breach one of the buffers that we do set we wouldn't undertake that acquisition.

Thank you.

Thank you and I'm showing no further questions at this time. Yes, I do like to turn the call bacl over to management for closing remarks.

Thanks very much for your time and once again I apologize for the early hour of the morning particularly if you're on the West Coast. We'll be available for calls through this week and we will be visiting a number of cities next week so we look forward to meeting with you and discussing the results and thanks again for listening.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day. Thank you.