Kanen Wealth Management urges EZCORP board to authorize buyback program

David Kanen, president of Kanen Wealth Management, said, in part, “As long-term shareholders of EZCORP (EZPW), and owners of over 1.5% of the company’s outstanding shares, we write to urge the Board to immediately authorize and begin executing on a $100M share repurchase program. The company raised $300M in part to settle the convertible notes in cash. Instead, management opted to settle entirely in equity in Q4 2024, assuming the convertible note would remain out of the money. As the stock moved higher, this miscalculation resulted in unexpected and avoidable dilution-despite the company having both the intent and resources to avoid it. This misstep should now be addressed through a meaningful and accretive share repurchase. A buyback program is the clearest way to re-establish credibility-not only with shareholders, but also with employees, analysts, and the broader investment community, all of whom are increasingly questioning the company’s capital allocation discipline. We previously urged the company in December 2022 to begin executing on a $200M buyback over five years when the stock was trading at just $8.00 per share. At that valuation, aggressive repurchases would have been extremely accretive. Instead, EZCORP has repurchased only $33M in stock over 2.5 years-missing a clear, high-return opportunity. We now face a similar setup-but with stronger earnings momentum, a fortified balance sheet, and even more excess cash-much of which was explicitly earmarked for shareholder value preservation. EZCORP cannot afford to make the same mistake twice. Today, EZPW trades at approximately 4.5x LTM Adj. EBITDA, adjusting for its valuable minority stakes in Simple Management and Cash Converters International. By contrast, FirstCash trades at over 12x EBITDA-despite EZCORP’s more focused strategy and operational momentum. The disparity is glaring and reflects a serious credibility gap with the market-one that can only be resolved through meaningful, shareholder-aligned action. With $100M more in proceeds than initially anticipated from the capital raise, the company is in a strong position to correct course and act decisively. The time to act is now-not months from now, not after yet another ‘strategic review.’ Inaction at these levels would be a profound signal of weakness and indecision. We also strongly caution against a ‘balanced’ or ‘measured’ approach. These platitudes do nothing to repair the credibility lost from the convert settlement, nor do they instill confidence in the company’s governance. Why defer action when the stock trades at a multi-year valuation trough and there is a clear, high-return use of capital available? Assuming we can execute the repurchase at an average price of $13.75, the company could retire over 7M shares-more than offsetting the 6.1M shares issued to settle the convert. The downside of repurchasing shares at these levels is de minimis-this is not a business in distress, and we have plenty of excess cash for tuck-in M&A. This is a business generating strong free cash flow with a clear runway for continued growth. While the convert settlement was a misstep, you now have the chance to deliver a decisive, high-ROI action that course-corrects the narrative and reaffirms your commitment to shareholder value. Do not miss it. We urge you to act immediately.”