Good afternoon, ladies and gentlemen, and welcome to the EZCORP Second Quarter of Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at time. As a reminder, this call may be recorded. I would now like to turn the conference over to Michael Keim, Investor Relations. Please go ahead, Michael.

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 would like to remind everyone that this conference call, as well as the presentation slides, contain 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 risks or other factors that are disclosed in our annual, quarterly and other reports filed with the Securities and Exchange Commission. And as noted in the presentation materials and unless otherwise identified, results are presented on an adjusted basis to remove the effect of foreign currency fluctuations and other discrete items. Now I'd like to turn the call over to Mr. Stuart Grimshaw. Stuart?

Thanks, Michael, and good morning, everyone. As we do this presentation remotely, it reminds us that we are in unprecedented territory. I hope that all of you and your families are safe and healthy. These are difficult times for our people, our customers, the communities we are in, and for all of us, as we try to understand and manage the impacts of the COVID-19 pandemic. I would like to express my deepest anticipation to the healthcare professionals, first responders, and other essential workers, who are doing their job every day to keep all of us safe. I would also like to thank the members of the EZCORP family who have responded to this crisis with admirable professionalism and empathy, providing unbelievable service to our customers in the most trying of times. Since mid-March, the focus of the company has been on serving and supporting our people and customers as they try to make sense of this very unsettling period. We provide critical and unique services to our customers, and our operations are considered essential services in nearly all states. At this time, we have 99% of our stores open in the U.S. and Mexico with many of our Lat Am stores operating under reduced hours, restricted operating activities, or environments with no or limited public transportation. All stores are adhering to the CDC sanitary guidelines, including the provision of gloves and masks, as well as all U.S. stores having thermal thermometers for the safety of our team members and customers. With an unemployment rate just sitting under 15%, something completely unimaginable some three months ago, we know that our customers are facing challenging times. It is through these challenging times that we're here to help them when other institutions will not. As shown on Slide 4, we're committed to…

Thanks, Stuart. Good afternoon, everyone. Just to start, I'm very excited to join the EZCORP team, and I'm looking forward to continuing to work with Stuart and the team to drive the company forward. To begin, as Stuart mentioned, we recorded a non-cash pre-tax impairment charge of $47.1 million or $0.85 per diluted share in our fiscal second quarter. These primarily related to the impairment of goodwill in our U.S. pawn and Latin America reporting units. While the bulk of our stores have remained open, many of the stores in our GPMX countries have been closed. Prior to the store closures in March, the GPMX business was performing well with profits before tax ahead of plan. As Michael mentioned in the introduction, results in this discussion are presented on an adjusted basis. So the impact of the non-cash impairment charges added back in order to better reflect our core operating performance in the quarter. Before getting into more detail on the financial results, I wanted to provide a bit of context on how the quarter played out in light of the COVID-19 pandemic and how we're positioned going forward. Retail sales have remained strong throughout our fiscal second quarter, offsetting a delay in demand for pawn loans that continued into April, largely reflecting the impact of tax refund season followed by the uncertainty of the current crisis and eventually by the distribution of the first stimulus checks. You can see this reflected in the ending PLO down 5% year-over-year. In April, the decline in PLO continued with U.S. bond PLO down approximately 30% versus April 2019 and Latin America PLO down just under 20% on a constant currency basis. We expect to see accelerating loan demand post the stimulus. And in April, retail sales volumes have continued to be strong…

Thank you. [Operator instructions] And our first question comes from the line of Greg Pendy from Sidoti & Company. Your line is open.

My question. Just real quick, how should we think about the rise in gold prices? Because it would look like customers may be choosing to just outright sell over pawn in order to take advantage of the prices. So do you think that's a positive or somewhat negative that gold prices have risen?

Thanks, Greg. I'll take it. It's Stuart. We're not seeing as much gold coming through on the loan basis as we have in the past, but the scrap margins have improved, which means we've captured a bit of that gold price rise through the scrap. A lot of our jewelry content actually involves small diamonds as well. So it's not outright gold. I think people are just holding off at the moment due to the fact they've got stimulus checks in their pockets. There's no real rush for them to come in and pawn, as we've seen with the decline in balances as they have surplus cash in their hands. So at this stage, I think, there is a bit of just waiting to see from our customers when they run out of cash, we may see a bit more gold coming to us. But at this moment, we haven't seen the rush as perhaps we saw back in 2008, '09, when there were less stimulus and people, were quite active in bringing their jewelry to us to either loan or purchase.

Great. That's helpful. And then just one more, just on Lana, on the rollout. Have you guys rolled out that with mobile functions? And is there more to come? Where are you on that front?

Sorry. What do you mean by in terms of mobile functions, Greg?

I believe you had some mobile capabilities that you were looking to roll out at some point? I may be mistaken on that.

Yes. I'm not sure whether you got it right. I mean, it's all on the phones, it's a web-enabled app, which you can use on the phone pretty easily, and we are increasing the utility of that function. But I'm not sure whether that specifically answers your question.

And our next question comes from the line of Scott Buck from B. Riley FBR. Your line is open.

Good morning, guys. I was hoping you might be able to provide a little bit of a history lesson. Curious, if we look back to the '08, '09 financial crisis, where PLO peaked versus pre-crisis levels and sort of what was the cadence of that ramp during that period?

Scott, I'll have a crack and then I'll see Jason can add to it. This is a bit of a different scenario. What we're seeing here is a bit of an unemployment-led recession, whereas, in '08, '09, unemployment was a bit of a lag. And there certainly wasn't the stimulus payments. So what we're seeing is a rapid pay down of the loan balances rather than the slow increase in the loan balances. So '08 and '09 aren't really representative of what we're seeing today. I think the closest that we've tried to understand is whether something like the hurricanes that we saw through Houston and in Miami, earlier last year, could provide some of the insight. And we saw it with the FEMA payments, it took a couple of months before we started seeing the loan activity growing back. And in that case, it probably took around up to 12 months for the loan balances to come back. We're not sure how exactly to model, which I'm sure is what you're looking at as well, Scott, is given the stimulus that is in the economy at the moment, and if you look at some of the most recent reports, it seems to suggest that workers in half of the states that are receiving the unemployment benefits from the federal and the state are probably getting paid more than they would to work. So if that starts winding down, we think we'll see it come back. But probably the added advantage or disadvantage for some of our customers is that with the unemployment rate as high as it is, we may see an increase in the population that are looking to the pawn loan industry, given that the payday is probably shrinking and given the lack of employment, from which they base the payday loans on. So we think there might be an increase in the potential population who would use our loans. But we still think it's probably a couple of months before we'll start seeing the tick up back to normal levels of loan demand that we've seen. Jason, would you add anything to that?

Yes. Just briefly, we have a new slide this quarter Slide 6, that goes through some of the economic trends that Stuart just mentioned and he also mentioned in some of the prepared remarks. But what's important about that is we sort of know how the story sort of plays out. Right now, the stimulus checks are driving the behavior that they're driving. But we know, at some point, our consumers are going to need cash. And so that's where you see some similarities to maybe prior periods of stress. The comparison to the hurricanes is something we've been talking about a lot internally, as Stuart mentioned. But the nice thing for our business for now, while the cash is strong, we're benefiting on the retail side, particularly as people are buying goods for working and schooling from home, coming to us to buy things they need to spend more time with their family, game consoles, TVs, those kinds of things and laptops. And then when the cash begins to sort of not be as strong and the loan demand picks up, we're positioned to be able to meet those needs and to be there for our customers as we continue to build our cash balances.

Appreciate that, guys. Thank you, Stuart.

[Operator Instructions] I would like to turn the call back over to Stuart Grimshaw for closing remarks.

Thanks very much. And I know this is a tough time and everyone is fairly busy, so we appreciate the time that you've taken to listen to the call. And Jason and I are around to obviously take some calls later on through the next few days. But stay safe, and we look forward to talking soon. Thanks very much.

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