Good morning, ladies and gentlemen, and welcome to EZCORP First Quarter Fiscal Year 2018 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Jeff Christensen, Vice President of Investor Relations for EZCORP. Please go ahead, Jeff.

Thank you. And good morning, everyone. During our prepared remarks, we will be referring to slides, which are available for viewing or download from our website at investors.ezcorp.com. Before we begin, I'd like to remind everyone that this conference call, as well as the presentation slides contains certain forward-looking statements, regarding the Company's expected operating and financial performance for future periods. These statements are based on the Company's current expectations. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements, due to a number of risk and other factors that are discussed in our annual, quarterly, and other reports filed with the Securities and Exchange Commission. Now, I would like to turn the call over to Mr. Stuart Grimshaw. Stuart?

Thanks Jeff. Good morning everyone, and I'd like to welcome you to the first quarter results presentation. As some of you have probably clicked through the slides already, it's been an exceptionally pleasing first quarter and really continues the momentum that we've been building on over the past few years. As we go through the slides, you will also see that we have a very strong operating metrics across all lines of business. And as we turn to Slide 3, we can actually see how this is played out. Firstly with the - most importantly when adjusted EPS which is up 73% year-over-year. Obviously there is some tax noise that fits around that but if you go to the profit before tax line, you’ll see the adjusted profit before taxes up 59% and 52% on a GAAP basis. That's a very strong performance over that period of time. It was also highlighted by a strong growth in our PLO which was up 9% and from the PLO rising that much to PSC was up 11%. There was strong margin improvement particularly in the U.S. where we saw a very good return on the sales that had occurred. And as we look through into Latin American pawn business, we can see that the PLO growth story continues with a more than doubling of the effect of having some terrific management plus increased store account with profit before taxes doubled with PLO but even on a same-store in Latin America you will see there was a strong double-digit growth which will come to which is continuously strong compounding effect that we have seen. The U.S. pawn story is a very good one as well with profit before tax up 4% despite the continuing impacts of Hurricanes Harvey and Irma on the PLO,…

Thanks Stuart. Good morning everyone. Let's move to Slide 8. As Stuart mentioned, this is a very good quarter for EZCORP despite lingering effects of the Q4 hurricanes on our U.S. pawn loan balance. The 53% increase in diluted earnings per share came from several sources. We delivered growth in all areas of the operations and successfully executed the acquisition of 133 pawn stores in Latin America. This represents the eighth consecutive quarter of year-on-year earnings growth. The 9% rise in pawn loans outstanding was a significant accomplishment delivering a similar increase in net revenue. We further leveraged this into a 52% improvement in profit before tax to just under $20 million. Included in those results is a healthy improvement in interest income following the September restructuring and the notes receivable related to Grupo Finmart. We continue to receive timely principal and interest payments in accordance with the terms of the notes. The widely publicized U.S. tax reform act was signed into law December 22 and became effective January 1. At the risk of putting everyone to sleep this early in the morning, I do want to provide some color around this as it will have a material positive impact on our earnings moving forward but does have one-time impact this quarter and some anomalies later in the year. Among other things that changes the maximum federal tax rate from 35% to 21% as a company with September 30 fiscal year-end that straddles the effective date were required to apply a blended 24.5% federal rate to our earnings this entire fiscal year. The 21% federal rate will apply beginning October 1, the first ever fiscal 2019. Partially offsetting the benefit of the lower rate is a significant reduction in the deductibility of performance-based compensation, a smaller federal benefit on state…

Thanks Danny. Turning to Slide 14. As we discussed at the Investor Day, we will continue to work on improving the customer and employee experience and the three boxes on the slide gives you insight as to how we're looking at the operations. Firstly with the advantage in customer experience leadership and PLO growth, the upgrading of the point-of-sale system continues. We’re now in 206 stores with 25 of those being in Mexico. We have an analytic and customer behavior team that actually looks at all the transactions and assist the storm data managing the customer experience with relevant live data. We continuously look at customer experience and we brought the feedback to our teams, so obviously great learning experience. And we have a lot of training, coaching and mentoring which we can see through the way that we have organized the pawn business with our district and regional managers and the spans of control which typically average for district management around seven stores. The second one is transforming the customer and team member experience, particularly with best-in-class systems and we are currently migrating our legacies environment into the cloud-based infrastructure. That involves moving up service which are either 12 years old, so that will give us a more efficient platform to work on which enables us to integrate acquisitions much more smoothly than would have been in the past. Training is actually is enhanced, speed to market is enhanced and we can plug and play with the various applications that we do want to bring in. And finally the acceleration of growth via district and acquisitions had new stores and as Danny has mentioned we've seen the shift in the balance of our stores towards Latin America and the geographic diversification as you see is enhancing the earnings profile…

[Operator Instructions] Your first question comes from the line of John Hecht with Jefferies. Please go ahead.

First one. Dan you talked about sort of consolidated retail margin trends or gross margin trends. I’m wondering can you give us your trends by channel as you think we should think about them in the next three to four quarters, and what I mean by that is U.S. retail versus Mexico retail and then the wholesale margins as well?

Yes, I wouldn't put a whole lot on the wholesale margins or the scrap margins that’s more just kind of run-of-the-mill activity and we don't typically hedge that position so that’s just moving through us that comes in, but there are larger driver the retail margins. In the U.S. I do expect those margins to revert back into probably the 35% to 38% range that we typically target. I think we probably get a little overly disciplined in our discounting in this quarter and that's why the inventory turns a little bit. I do expect that to moderate back into that 35% to 38% range in the remainder of the year in the U.S. we are at 39% this quarter. In Mexico, I'd expect or in Latin America I’d expect similar margins to what we saw this quarter. Obviously that will change a little bit over time as we introduce more and more general merchandise in the acquired stores in GuatePrenda, but I wouldn't expect substantial movements in those margins beyond that.

And then maybe for Stuart, any customer trends domestically that - Mexico is obviously very strong but domestic customers current pointing out is the U.S. customer, yes, then we had change in gold prices a little bit but we've also had some wage inflation potentially in this segment. Are you guys seeing anything different in terms of new customer, recurring customer trends?

No I think John the biggest trend we're probably seen similar hurricane affected areas where the government payouts are continued longer than we have. I think we'll see a return to normality once the tax credits start coming through and it’s still bit early to see but the indications are its going to be delayed beyond last year both are not so far a lot of days but any delay will change those trends for instance. Our customers use to have cash at Valentine's Day, they don’t have the cash anymore. So, that’s change fundamentally some of the sales profile we've had over the last 12 months but typically our customers react to cash in hand pretty quickly and spend it and readjust their patent so there is nothing macro coming through that we've seen that’s impacting the business.

And then final question is again you give some specific details around the tax rate but clearly a big savings for you guys this year overall. How do you guys see that rolling to DC, is that mostly going to flow to the bottom line. Do you anticipate using some of those savings to further invest in the business more rapidly anything worth noting there?

I’m not sure I should say that we changed the strategy investing. Yes, obviously we always look at our capital structure and make sure we’re putting in place what we need to continue to fuel growth. I don’t think that’s dependent on pulling the taxes. It will have a net positive impact on us moving forward if you look historically that the effective tax rate has been more in the kind of 36% to 38% range. I expect this year to be again excluding the discrete items that introduce a little bit of noise, I’d expected it to be in probably the 32% to 33% range and then 30% to 31% moving forward. So pretty substantial improvement in the overall rate and the reason that doesn’t go all the way down to the federal rate obviously you got to the impact of state taxes, foreign taxes, nondeductible items those types of things. I’m impressed you stayed away during the tax section this early morning.

We’re up and out here.

Nice jump.

[Operator Instructions] Your next question comes from the line of Michael Cohen with Opportunistic. Please go ahead.

Quickly just an update - you guys noted I think around 206 stores on the new POS just maybe if you can provide a little bit more color commentary on how some of the stores who had it longer, long guest are performing and the lifts that it's providing you and the learnings that you’ve had so far?.

We probably introduced the majority of it in about October. We had a big down light on it. Still pretty early but the - what we’re finding is the transaction times are improving. The ability to process loans is improving. So, on a productivity basis it's working. It's still too early given the noise around the hurricane there is a lot of draw any conclusions as to how that works is most of the rollout occurred in the Texas and Florida stores who are impacted by the natural disasters that did occur. So I think by the end of this quarter, we'll have be in a better position to get some learnings. The one thing I would say is that, we probably overestimated the amount of time it takes to train people on the system. It's quite intuitive. So we’ve been able to pretty much half the time to train these people. So we’ll probably have to report a bit more by the end of this quarter.

And then just back to the tax not to sort to beat a dead horse here, if anything that you guys could do potentially to strategy that you can employ to minimize the leakage in terms of things that are nondeductible. I think he was sort of implied certain types of employee competition, is there a way to structure that differently such that you capture the tax benefit?

Yes, we’re looking at everything. It's still pretty early. I think in this space it’s probably good to be a fast follower than a market leader. So we’ll probably watch what's happening across the board and see how it works to us doing the same thing is trying to understand how you can actually get the best advantage from the Act that’s being past. So we’ll be watching it very closely.

[Operator Instructions] Your next question comes from the line of Henry Coffey with Wedbush. Please go ahead.

I've sort of been watching this from the sidelines and the developments have been extremely impressive. So one of your competitors reported this morning their legacy stores hit same-store sales of three in the U.S. you're talking about 3% same-store sales. I know world had a kind of much higher revenue quarter after the whole progression of difficult quarters? Is there something going on in the alternative loan market that's putting a little more life into it, is it easy comps from prior periods or just really hard work at the store level?

We actually - we’re a bit different, we don’t look at our competitors on the legacy, we look on an overall basis and their number are much stronger. What we're saying is that I think the consumer had choice with cash in their hands and I think both themselves and I am sure first cash will start seeing some more positive numbers coming through as the customer stops to want to cash leading up to the tax credit system. So I think it's a mature market and as such you know going to experience the same growth rates we’re seeing in the Latin American areas. We always - I think if you look at our performance over the last three years, we’ve outperformed substantially on a comparative basis to what we’re doing. And I don’t think you’re going to get super strong growth numbers out of the U.S. in the short-term but the budgets we set we try to stretch management to achieve it, but it is a mature market and as such we got to be close to a customer watch our expenses.

I guess I'm looking at it differently and saying 2% or 3% same-store sales growth or even one or 2% same-store sales growth in the U.S. in the alternative loan market would be a huge improvement over what we’ve seen so?

Yes, what we’re trying to do is use the leverage because we’ve got the hard fixed cost base some of the alternative loan markets running on a much lower fixed cost high variable cost basis particularly online maintenance for example. Their depositions are probably a little bit different. So when you look at the alternative loan market in particular in the unsecured I don’t know and that's the order I talk in I am secured. The charger ratio is what you’re going to look at, what pull through to the bottom line. Our bad debts what we sell in the store and we’re getting some pretty margin on that. So, I think our business model is actually very sustainable compared to some of the other.

And I am showing no further questions at this time. I would now like to turn the conference back to Mr. Grimshaw for his closing comments.

Thanks very much, and thank you for everyone who is on the line. We appreciate the interest in our company. We thank you for your support. We've had a very strong quarter. We started to drive the earnings really low, but Danny and Jeff are available for questions later on this morning but once again thank you and have a great day.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.