EZCORP, Inc.

Joe Rotunda - President and CEO Dan Tonissen - CFO

Daniel O'Sullivan - Utendahl Capital Management Dennis Telzrow - Stephen Inc.

Thank you, Lisa. Good afternoon, thank you for joining ustoday.

With me is Dan Tonissen, our Chief Financial Officer. We'll beaddressing our fourth quarter and fiscal year 2007 results.

I am going to begin with a high level overview of thequarter and the year; Dan will follow with a more in-depth review of thefinancials; and we'll conclude with guidance for the new fiscal year. 2007 has been a busy and productive year for us.

In June, wecompleted the largest acquisition in our history: the 15 store chain of JumpingJack Cash pawnshops in Colorado.In August, we entered into an agreement to make the most strategic acquisitionin our history: the 20 store Mister Money pawn operation in Mexico. We just closed this deal in October, a few weeks in to thenew fiscal year.

By year-end we opened a 100 new EZMONEY stores, and we grewour chain to 731 stores, compared to 614 stores a year ago. And that doesn'tinclude the Mexicoacquisition.

We additionally surpassed, for the first time in ourcompany's history, $1 billion in loans made or brokered in a fiscal year, andwe maintained a strong balance sheet completing all these actions and stillending fiscal year 2007 debt free. As a sequel to our financial performance, we also recordedour 21st consecutive quarter and seventh consecutive fiscal year of earningsimprovements.

In fact, after more than doubling quarter four income last year,we are very pleased to report further strong year-on-year improvement in thesame quarter this year. Our fourth quarter net income was $11.2 million, an increaseof 22% on top of the 150% earnings growth achieved in the same quarter a yearago.

Our diluted earnings per share were $0.26, and that compares to $0.21 lastyear. For the full 2007 fiscal year, net income grew by 29% to$37.09 million, and our diluted earnings per share grew by 28% to $0.88 ashare.

All business segments continue to contribute to this earnings growth. Our EZPAWN segment recorded net revenue growth of 13% in thefourth quarter, and there were three primary drivers.

The first was our pawnportfolio growth. It grew 13% on a same store basis, and additionally reflectedan improving redemption rate.

This provided significant growth in the resultand pawn service charge revenue. The second was the integration of Jumping Jack Cash into ouroperations for the full quarter.

The revenue from these stores, which was allincremental the last year, provided approximately half of the pawn segmentsgrowth in net revenues. The third driver was our gross profit from the sale offorfeited collateral, which was up 7%.

The gross profit generated by jewelryscrapping was, however, down about $300,000 the last year fourth quarter. During the current year, we increased our lending on goldjewelry twice, to keep pace with changes in gold market values, and thecompetitive environment.

This drove increases in our pawn service charges, butalso decreased the margins on jewelry scrapping as the collateral fromdefaulted jewelry loans was scrapped. Our melt price for the period averaged $675 announced, whichwe locked in at the beginning of the quarter, before the gold market shot up inSeptember.

With operating expenses well managed, the flow-through of theincremental revenues was strong. The resultants to operating income in our pawnsegment grew by 24% over last year for the quarter.

For the entire year, pawn grew 9% net revenues and 19%, $10million in store operating income. All in all it was a solid performance in EZPAWN.

Our EZMONEY signature loan segment recorded net revenuegrowth after bad debt of 31% in the fourth quarter. We ended quarter four withsegment [P/E] growth of 40% compared to 38% in the same period a year ago.

Our same-store [P/E] growth for all stores over one year ofage reflected considerable strength and grew at 23% over the same quarter ayear ago. Overall, this is strong growth in a quarter, that's seasonally theweakest growth quarter of the year in payday lending.

Our bad debt was 31% of fees and this compares to 38% in thepreceding quarter and 26% in the same quarter a year ago. Seasonally, theSeptember quarter is one of the highest periods of bad debt.

In fact,historically, it's been either the highest or second highest level of bad debtof fees for our entire time in payday lending. The result of the store operating income and our EZMONEYsignature loans segment grew by 16% this quarter over last year.

Also want totake a moment and touch on new products in the EZMONEY segment. As reported last quarter, we rolled out our installment loanproduct to 13 Texasstores and have been testing and fine tuning the product.

Obviously, with thefive-month term, it takes some time to understand consumer payment behaviorthroughout the entire loan cycle. We expanded a total of 37 stores last month and we are nowin a process of adding installment loans to an additional 60 locations nextweek.

We will continue to rollout installment loans in a controlled manner in Texas with plans of offering this product within a 125 Texas stores by the endof the fiscal year. Our rollout will be focused on stores located in marketswith higher income demographics.

In addition, we plan to move installment loanproduct beyond the State of Texas,sometime during 2008. Our biggest challenge with this product has been fine tuningor underwriting.

After several modifications we reached a comfort zone with abad debt experience associated with this product. I want to share someinteresting data on the installment loan with you.

The average loan is over $2,000. The average income of aninstallment loan customer is between $60,000 and $70,000 a year, and thethreshold to qualify for installment loan is individual income of $46,000.Approximately one in six of the customers qualifying for this product is brandnew, having never received a loan from us in the past.

Obviously, we feel installment loans provide a significantopportunity to expand our customer base and add incremental revenue. We alsointroduced a second new product last quarter, our debit card with overdraftprotection.

This was introduced in 15 stores and we've been modifying andreading this product since its introduction. For various reasons including aless-than-expected initial demand for the product, we have yet to expand it toadditional stores.

One of the obstacles is the need for the customer to committo direct deposit to the debit card account in order to qualify for theoverdraft feature. We will continue to read and chart our path forward withthis product based on consumer acceptance.

For the entire year our EZMONEYsegment grew 42% in net revenues after bad debt and 31% in store operatingincome. Our third segment is Albemarleand Bond, A&B is a UKbased operator of jewelry only pawn, payday loans, and check cashing stores.Last quarter we announced A&B's acquisition of UK's third largest pawn operator,Herbert Brown & Son Limited.

The addition of the 26 Northern England storesbrought in A&B's geographical reach and brought their total store count to112 locations, the largest by far in the United Kingdom. We maintained our position as the largest shareholder andhave increased our ownership to just under 30% by investing an additional $13.4million in A&B's recent offering.

During fiscal 2007 A&B contributed$2.9 million to our pre-tax earnings from our equity interests. In addition, werealized $1.3 million in cash flow from dividends.

Since we report A&B's contribution on a quarter-likebasis; our current year's earnings do not reflect the impact of the HerbertBrown acquisition. However, you can see the public market impact on theappreciation of our investment in A&B.

The public market value of our ownership at September endwas approximately $90 million. At that same point in time our balance sheetreflected the asset at approximately $36 million.

That's approximately $54million in unrecorded appreciation over our book value. If you see over the years, our share ownership in A&Bhas proven itself to be an excellent strategic investment.

Our importantbusiness segment is EZPAWN Mexico. Although, the results of the four stores weopened are folded in to the EZPAWN results.

I thought, I'd provide some coloron the acquisition and our new store pro forma expectations. As I mentionedearlier, we closed on the Mister Money deal last month.

For approximately $15 million, we acquired 20 storesconcentrated in Central Mexico, eight in an around Mexico City, seven in Veracruz, Jalapa, and five in the [Bahio]area. The total pawn loan balance is just over $3 million US, with an inventoryof approximately $1 million.

Store level operating income was approximately$2.7 million. The stores range in age, from just under two years to onethat opened in 1998, nine years ago.

We are really excited about thisacquisition, because we believe these stores have additional growth potentialwith excellent locations and a solid management team in place. Additionally,these stores would generate inventory, we can use to see new stores openings inMexico.

Combining what we've learned from the four stores that we operatein Greenfieldourselves, and as well as the history with Mister Money stores, we areconfident in the potential for new store development. We believe a new storewill ramp up the loan portfolio, approximately $90,000 US at the end of thefirst 12 months of operation, and develop a matured portfolio, sometime duringyear two with modest growth in subsequent years.

We anticipate a yield of approximately 135% and a margin onthe sale forfeited collateral of approximately 35%. Breakeven will occur onaverage between months six and eight, and we anticipate CapEx of between$75,000 and $100,000 to open a new store depending on the size and the facilitycharacteristics.

So with that, I will turn it over to Dan for a little moredetail on the numbers in the quarter and the year.

Thanks Joe. Joe gave you an overview of some of the numbers,and I'll give you a little more detail, starting with our statement ofoperations, on page 3 of the earnings announcements.

Now, I will start with thefew comments on pawn net revenue. For the quarter our pawn net revenues comprised of salesgross profit, which is lines 2 plus 3, less line 11.

Pawn service charges,which you see on line 4 and other revenues on line 6, increased $5 million or14% to $41.3 million. Merchandise sales, line 2, increased $3.1 million or justover 10% to $33.1 million.

Same-store sales growth for the quarter wasapproximately 3%. After a 1 percentage point margin improvement, merchandisegross profit.

Line 2 minus line 9 increased $1.5 million or just under 13% to$13.5 million. Scrap gross profit, line 3 less line 10, decreased $264,000or roughly 5% to $5.4 million.

During the quarter, we scrapped approximately$1.7 million grams of gold jewelry, a decrease of roughly 2% from the prioryear quarter. Our proceeds per gram increased 7% to $10.08, while our cost pergram increased 13% to $7.16.

Included in jewelry scrapping sales is approximately$460,000 from the sale of loose diamonds. This is comparable to the proceedsfrom the sale of loose diamonds in the prior year quarter.

We typically forward contract our gold scraping, 30 to 90days in advance, and as a result we only realized benefit from the run up inthe gold market that we experience starting in September. For the quarter we turned our inventory 3.5 times, and thatcompares to 3.3 times a year ago.

Inventory levels per ending store at the endof the quarter were flat with prior year quarter at a $127,000. Fund service charge revenues, line 4, increasedapproximately $3.7 million or 20% to just under $22.1 million.

Same-store pawnservice charge revenue increased 9%. Our annualized yield and our pawn loanbalance improved one percentage points to a 145%, and our ending pawn loanbalance was up 21% from the prior, 13% on a same-store basis.

Now let me just talk about the signature loan side of ourbusiness. For the quarter our signature loan contribution which line 5 lessline 15 improved 30% to $20.8 million.

The benefit of a 38% increase in oursignature loan fee revenue line 5 was partially reduced by higher levels ofsignature loan bad debt related fees. Signature loan bad debt expense which you see in line 15,measure as a percent of signature of loan fee revenues, line 5, increased to31% compared to 27% for the prior year quarter.

However this is 7 percentagepoints lower than the June quarter. Looking at bad debt levels relative to loans originated inthe quarter, our net defaulted principal as a percent loans originated came inat approximately 6% and this compares to 5.2% for the prior quarter.

Loanoriginations for the quarter were up approximately 40% to $155.7 million. Afterhigher levels of operation expense, line 14 administrative expense line 16, anddepreciation and amortization line 17, operating income increased 28% to $16.7million.

Increases in operations expense and depreciation andamortization are primarily due to new stores. The increase in administrativeexpense is primarily due to stock compensation, additional administrativestaffing to support our growth, and inflationary increases.

Included in operating expense is an out-of-period charge, astore rent expense of $349,000 due to an error we discovered during the quarterin our lease accounting. Most of this out of period run expense is in ourEZMONEY segment and $284,000 of that should have been applied to an earlierfiscal year.

These amounts were not material in the current quarter orany of the prior periods that would have been impacted. Operating incomemargins as percent of net revenues improved 1 percentage points, 1 point to23.4% due to our pawn operations performance and lower levels of administrativeexpense relative to our net revenues.

Now, if you turn to page 6 of our earnings announcement fora couple of comments on our segment reporting, the EZPAWN operations segmentand the EZMONEY operations segment. Starting with the EZPAWN; after a 13% increase in our EZPAWNnet revenues and a 6% increase in EZPAWN operations expense, our EZPAWN storelevel operating income which you see on line 15 increased 24% to $19.1 million.

Our operating income margins for our EZPAWN operationsimproved almost 4% points to just over 45% of net revenues. The 15 formerJumping Jack stores generated operating income of just over $800,000.

Aftersome incremental administrative expense and depreciation and amortization, wehave realized an approximate $0.01 per share benefit from this acquisition inthe quarter. After a 31% increase in our EZMONEY signature loancontribution, which is line 4 less line 13, and increases in our EZMONEYoperating expense line 12.

Our EZMONEY store level operating income line 35,improved 29% to $8.5 million. The primary reason for the increase in EZMONEYoperations expense is the 99 net new locations.

This is EZMONEY result, include an approximate $1.4 milliondrag from new stores, which was flat with the prior year quarters' new storedrag. Operating income margins for EZMONEY operations decreased 6percentage points to just under 29% of EZMONEY net revenues, line 9.

That'sprimarily due to the higher levels of bad debt, compared to the prior yearperiod and the auto period run charge that I mentioned. For the quarter, ourEZPAWN segment made up approximately 69% of our store level operating income.

Now a few comments on the balance sheet on page five, theearnings announcement. You can see that we have approximately $22.5 million ofcash which you see on line 3, on our balance sheet.

Roughly, $17.2 million ofthis amount is non-operating. You can see that our payday loan balance on line 5, almostdoubled in the last 12 months to $4.8 million.

Not included on our balancesheet is $23.3 million of loans brokered with an unaffiliated lender. These brokered loans increased 28% in the last 12 months.Our investment in Albemarleand Bond or A&B is carried on our September 30 balance sheet that's justunder $35.7 million and you see this on line 14.

This includes our additionalinvestment of $13.4 million, which we announced on July 11. Using September's ending closing price on Albemarle and Bond'sstock of 2.68 pounds, and an exchange rate of $2.05 per pound, our 16.3 millionshares, including the shares acquired in July, would have a market value ofjust under $89.6 million.

This represents approximately a $1.31 on a reportedbook value per share. You see on lines 35 and 36 that we ended the quarter with298 pawn locations and 433 signature loan locations.

Now let me give you alittle bit more, a couple more data points on the Mexico acquisition. You know, as Joe mentioned we closed on the acquisition onMonday, October 22nd.

We acquired 20 operating locations which were located inCentral Mexico, as well as the headquarters which is in Queretaro. The transaction was an assetpurchase and we acquired $3.2 million of pawn loans, roughly a $160,000 perstore and about $1.2 million in inventory, including the inventory which isinlay it was.

The total consideration in closing cost was expected to beapproximately $15.4 million, including just over $1 million in non-recoverable [EVA]or bad tax on a portion of the transaction. In the next 12 months, we expect these stores to generateapproximately $3.5 million of store level operating income before depreciationand amortization and approximately $2.2 million after administrative expense.This would represent approximately $0.03 per share.

As Joe mentioned, we view this as a strategic investment,which will give us the infrastructure and scale to accelerate our growth in Mexico. Now, let me turn the call back over to Joe.

Thank you, Dan. Looking forward, we will maintain the sameintensity on growing the business, improving profitability, and strengtheningour balance sheet as we have over the past seven years, and we continue toexpect all business segments to contribute with year-on-year growth andimprovements in earnings contribution.

In our EZPAWN Operations, our guidance incorporatessame-store mid-to-high single-digit growth in net revenues. Included in this isan average market price of gold at $750 an ounce for the year.

In addition, theJumping Jack Cash acquisition's layered in incrementally for the first threequarters of the year. For our EZMONEY signature loan segment, we are planning tocontinue our strong growth trend.

Organically, we'd expect significantdouble-digit same-store loan growth. We expect our bad debt to be in the rangeof 26% to 29% for the new year, fluctuating seasonally by quarter.

Our guidance on store growth is to add approximately 100 newEZMONEY stores. The new store builds will be in our existing 11 states plus theaddition of Missouriduring 2008.

In our Mexicopawn segment, we're going to focus on assimilating the 20 acquired stores in toour infrastructure during the first quarter. We will follow this immediatelywith the integration of our four existing Mexican stores in to theiroperations.

During the new year, we plan to add between seven and 10 newpawnshops in Mexico,and in 2008 with a store count in the range of 31 to 34 locations. All-in-all, we're providing guidance for fiscal 2008 of $1.12in diluted earnings per share versus 2007s $0.88, an improvement of 27%.

Weexpect first quarter EPS of $0.28 as compared to last years' $0.23, animprovement of 22%. While we were pleased with what we've accomplished over thepast several years, and this past year in particular, our excitement grows aswe contemplate the potential we still have in front of us.

That concludes our prepared comments for today. Dan, ifyou'll read the safe harbor, we'll go on to questions.

This conference call and earnings announcement containscertain forward-looking statements regarding EZCORP's expected performance forfuture periods, including but not limited to new store expansion, expectedfuture benefits of acquisitions and investments, and expected future earnings. Actual results for these periods may materially differ fromthese statements.

Such forward-looking statements involve risk anduncertainties, such as changing market conditions in the overall economy andthe industry, consumer demands for the company's products and services, actionsof third parties who offer services and products in the company's locations,changes in the regulatory environment, and other factors periodically discussedin the company's annual, quarterly, and other reports filed with Securities AndExchange Commission. Lisa we'll now open up the call to questions

Yes. Hi Joe and Dan, thanks for taking my questions.

Greatquarter guys.

Thanks Dan.

Quick question. Out of the entire group, I have to say youguys actually came right in line with my last expectations.

Most othercompanies are little bit higher. May you can expand ….

We lost you, Dan. Lisa

Can you guys hear me now?

Yeah

Okay, great, sorry about that. Yeah I was asking about loanlosses.

I made a comment that you guys came in right in line with what I waslooking for during the quarter as opposed to some others in this space, whichwere higher. So wondering, if you guys may be have tweaked the underwriting oryour collections, what are your thoughts on loan losses for the quarter?

We did basically what we talked about last quarter. And, ifyou recall, in quarter three we saw that is an opportunity to expand marketshare and we reduced, we adjusted some of our underwriting.

We were veryaggressive at the beginning of the quarter, and as we saw our losses, our baddebt, began to increase, all we did was adjust our underwriting. We thought we brought it back in line as we moved throughthe end of the June quarter, and it was pretty much on projection with in apoint or so of where we thought it would be this quarter.

Okay.

Basically we just followed it through with what we said wewere doing.

Great. Do you guys feels like you picked up some marketshare in Texas?

Texasperformance has been good. What was really encouraging for us in the quarterwas the growth that we had in fees was actually higher than the same growth wehad in this quarter a year ago, we were a couple of points higher.

And when you consider the fact that we added about the samenumber of stores through the quarter end and through the year, a 100 stores onthe basis today of 400 stores that will give you the same lift that a 100 storesdoes on a basis of 300 a year ago or 200 a year before that. So, we werepleased with the performance we had in the growth of business now.

As far as taking away from our competitors or peers, I amnot sure about that. I believe, as I stated so many times before, this isprobably $100 billion marketplace, and our industry is only scratching thesurface.

We still have (inaudible).

Okay. Well, I mean, if we take a look at the Texas market,in particular, there is a lot of focus out there that as of way I have beenmentioning more competition and saturation in that market.

What your thoughtsthere?

Basically, as I said in past I don't know believe we areanywhere near saturation and I think, I said on the last earnings call or theone before that, we could probably add another a couple 100 stores in Texas andcontinue to grow the marketplace.

Okay. And Joe, I am sorry, there is (inaudible) just a fewcouple of minutes of the conference call at beginning.

Did you talk about yourconsumer loan product and how that's ramping up?

I talked about the installment loan.

Okay.

We are quite pleased with that and we believe we have armsaround the underwriting and managing the bad debt and we are continuing toexpand it. We will throughout Texas and windupwith 125 stores by the end of fiscal year '08 in Texas and we will take it outside of thatstate as well.

And the debit card with overdraft protection, the customertake up hasn't been near where we thought it would be and I believe that theprimary obstacle or issue we have there is that requires the customer to committhe direct deposit of their income into the debit card account and that seemsto be some what of the hindrance on growing it as we thought we would but we'recontinuing to watch it.

Okay. And one last question just given where we think goldprices over the last few weeks have you guys been opportunistic and maybe scrapit little more than you normally would?

Yeah that scrapping more we have sort of locking in someprices, so we would get out in November, December.

Okay. And how does that impact the loan to value ratio?

Haveyou yet to move that up, I mean, there has been competition in that area?

We haven't, we are still watching that we haven't made anychanges in the last 30 days, we've made several changes, as you know, duringthis past, latter half of this past fiscal year and with that we've been quitepleased because we build our portfolio nicely and our redemptions have beengood and the yield's been very good. We haven't had the forfeitures that we've had in the pastand we haven't been scrapping with the kind of growth that we've had inscrapping in the past.

We are continuing to watch it, we haven't been much moreaggressive with pricing at loan [value share].

Okay. And one last quick one, given where the stock has beenand you guys are sitting at almost $23 million in cash down in September, if youguys can give any consideration through a buyback, has the Board discussed thata lot?

We've discussed a lot of different alternatives, Dan and westill believe that the long-term benefit to our shareholders is best served bycontinuing to invest in earning assets and that's what we are continuing tolook for.

Okay. So, that wouldn't preclude acquisitions in 08 then?

No, we are very interested in acquisitions that make goodeconomic sense.

Okay, great. Again nice performance this quarter guys,thanks.

Thank you.

Good afternoon, Joe and Dan.

Hi Dennis.

Joe on installment loan product, refresh my memory on whatright were charging there and how's that structured?

It's a five-month product, if you use an APR to calculatethe type of rate that's associated with it. It's about 70% or 75% of the rateson a traditional payday loan.

Okay. And the [pawn] rate there is too soon to tell wherethey sort of go out, I guess, you haven't had it out there long enough?

We have quite a few loans that are out there, but they arelayered with the different levels of underwriting we had, because again it's afive-month loan and as we measured the customers' behavior. In last quarter I actually covered with you all two thingsthat we did to adjust the underwriting and one of which was going to adifferent type of evaluation, a more thorough evaluation of the customer witheven quasi scoring model, and then moving in to direct ACH debit as a convenienceto the customer on their payday or the installment payments, and those are thetwo of the major tweaks that we made in that.

We have with those three layers of different types ofunderwriting that we were watching, and that's what's given us the confidenceas we have seen the evolution of the customer's behavior, as those changes thathave been made to move forward with the product now. And it probably would be slightlyhigher than the typical payday loan.

Loss rate would be as a percent of these.

And you mentioned possibly going to other states, obviouslythose would have to be states that have an appropriate law or I guess or has aCSO is that correct?

That is correct. We would certainly do it under the auspicesof the appropriate regulations that will allow us to do it.

And Dan, from a cash flow standpoint, how much free cashflow do you think you throw off in '08 excluding any acquisitions obviously?

Well, if you look at the trailing EBITDA, probably about $65million, maintenance CapEx is going to be at the probably around $5 million to$6 million, and then the growth in 100 stores that's roughly $50,000 to $60,000each, and then limited expansions, limited capital used in Mexico. It will besubstantial; I would say in excess of $40 million.

$40 million in excess in free cash flow

Yeah.

Right. Okay.

And Joe obviously the challenge in Mexico isbuilding inventories, it just takes maturity to stores for that to happen Iguess?

It does. And I think that we could probably expand a littlefaster to first year, except we are going to go through the pain ofassimilation of the business.

We are going to change the operating systems inthe stores that are in Mexicoto our EZ system here. There are a lot of features that [Jose Manuel Fernandez]who runs the business there has found very attractive that will enhance theperformance of the stores there.

When you will change the operating system and you have to gothrough the entire organization and teach them how to use it, a littledifferent approach to loan values and so forth. It's going to command a lot ofattention for the first three or four months, and we are going to begin slowlythen after that to expand.

We think there will probably be enough inventory to do whatwe need to do, because most of the stores, most of the inventory there isgeneral merchandise, and jewelry is the one category of goods that we can movein as long as it's NAFTA identified product, we can move into Mexico. We think that the first year we will start a little slow andthen we will accelerate it after there, and we think the inventory issue willbe taken care of.

Okay. Thank you very much.

Okay. Well, thank you all.

We really appreciate your timeand your continued interest in EZCORP.