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EZCORP Announces Second Quarter Fiscal 2017 Results

Earnings per share from continuing operations up 200% year-over-year to $0.15

AUSTIN, Texas, May 03, 2017 (GLOBE NEWSWIRE) -- EZCORP, Inc. (NASDAQ:EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its second quarter ended March 31, 2017.

/EIN News/ -- All amounts in this release are from EZCORP continuing operations and in conformity with U.S. generally accepted accounting principles ("GAAP") unless otherwise noted. Comparisons shown in this release are to the same period in the prior year unless otherwise noted.

HIGHLIGHTS FOR SECOND QUARTER FISCAL 2017

The company achieved its fifth consecutive quarter of year-over-year (YOY) earnings and profit increase with earnings per share up 200% to $0.15 and net income from continuing operations up 219% to $8.4 million.

The company continued to grow its pawn loans outstanding (PLO), the most influential driver to revenue and profitability, with PLO up 2% in the U.S. and 3% in Mexico. The PLO increase in Mexico was a strong 12% when calculated on a constant currency basis1.

The company exited the quarter with a much stronger balance sheet and liquidity position, with a cash balance at the end of the quarter up 68% YOY to $120.1 million. In addition, the company continues to have access to a further $50 million undrawn availability on its credit facility.

CEO COMMENTARY AND OUTLOOK

Stuart Grimshaw, EZCORP's Chief Executive Officer, said: "It is pleasing to see the continuing trend of strong profit growth after the strategic changes that were implemented over a year ago. We have devoted a lot of management attention and effort in focusing on the needs and experience of our customers. Our continued focus on and investment in satisfying our customers' need for cash whenever they want it drove the acceleration in earnings and sustained growth in pawn loans outstanding.

"We have improved our balance sheet and liquidity position, which provides strategic flexibility to continue our investment in the customer experience and expansion of the pawn loan portfolio to drive increased profit. We continue to invest in the core fabric of the pawn business, including commencement of our upgraded point of sale system rollout, which we expect to be completed in both the U.S. and Mexico this calendar year. We opened two new stores in Mexico this quarter and anticipate opening an additional eight in Mexico during the remainder of this fiscal year.

"We are confident that these initiatives, combined with further investments in product development and customer analytics, in sustained training, coaching and mentoring of our field team, and in disciplined acquisitions and de novo openings, will continue to provide a robust platform for further profitable growth."

CONSOLIDATED RESULTS

Three Months Ended March 31, 2017

  • Same store pawn loans outstanding (PLO): up 2% in U.S. and up 3% in Mexico (up 12% in Mexico on a constant currency basis).
  • Total revenue up 1% to $189.6 million. On a constant currency basis, total revenue was up 2% to $192.6 million.
  • Net revenue up 1% to $109.9 million, as a 5% increase in pawn service charge (PSC) revenue was offset by softer merchandise sales due to tax refund delays in the U.S, which adversely impacted consumers’ disposable income and our sales volume.
  • The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.
  • Operations expenses increased 3% to $74.5 million (up 5% to $75.6 million on a constant currency basis).
  • Corporate expenses decreased 15% to $13.3 million. The company remains on track to reduce corporate expenses to $50 million in FY18.
  • Fifth consecutive quarter of YOY earnings per share increase, with earnings per share from continuing operations up 200% to $0.15.

Six Months Ended March 31, 2017

  • Total revenue up 2% to $382.3 million. On a constant currency basis, total revenue was up 4% to $390.0 million.
  • Net revenue was consistent at $221.9 million, as a 4% increase in PSC revenue was offset by lower merchandise margin.
  • The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.
  • Operations expenses increased 3% to $152.1 million (up 4% to $154.9 million on a constant currency basis). The company expects operations expenses in the second half of FY17 to be similar to the second half of FY16.
  • Corporate expenses decreased 24% to $27.2 million.
  • Earnings per share from continuing operations up 182% to $0.31.
  • The company continues to receive regular payments on the promissory notes it received in connection with the sale of Grupo Finmart in September 2016. It has collected $15.1 million in principal on those notes during the first half of this fiscal year, and expects to collect an additional $30.8 million in the second half (for a total of $45.9 million in FY17), $26.1 million in FY18 and $18.2 million in FY19. Since the end of the second quarter, the company has received $5.2 million, which is part of the $30.8 million to be collected in the second half of this fiscal year.

OPERATING METRICS

U.S. Pawn Segment

Three Months Ended March 31, 2017

  • Six consecutive quarters of YOY positive same store PLO increase, with this quarter up 2%. Total PLO was up 2% to $125.4 million.
  • Pawn service charges (PSC) increased 5% to $59.7 million, up 5% on a same store basis.
  • Merchandise sales increased 1% in total and on a same store basis. The delay in tax refunds adversely impacted sales volume. The merchandise sales gross margin of 37% is within our target range of 35-38%.
  • Slight increase in aged inventory to 12% from 10% of total inventory from this time last year due to the previously mentioned delay in consumers’ tax refunds, which adversely impacted sales volume.
  • Operations expenses increased 4% to $63.6 million.
  • Segment profit was $29.7 million, similar to last year.
  • Initiatives are underway to improve net revenue and profitability in the long-term, including investments in upgrading our point of sale system and enhancing product and customer data analytics.

Six Months Ended March 31, 2017

  • PSC increased 5% to $120.7 million, up 4% on a same store basis.
  • Merchandise sales increased 2% in total and 2% on a same store basis. The merchandise sales gross margin of 37% is within our target range of 35-38%.
  • Operations expenses increased 5% to $130.9 million. The company expects operations expenses in the second half of FY17 to be similar to the second half of FY16.
  • Segment profit was 3% lower to $56.8 million.

Mexico Pawn Segment

Three Months Ended March 31, 2017

  • PLO increased 3% to $17.8 million (up 12% to $19.4 million on a constant currency basis).
  • PSC decreased 1% to $7.4 million, up 11% to $8.4 million on a constant currency basis.
  • Merchandise sales increased 1% in total and were flat on a same store basis (up 14% in total and 13% in same stores on a constant currency basis). Merchandise margin was 32%, 100bps higher than the prior-year quarter.
  • Looting of twelve stores in January impacted not only through increased expenses, but by reducing revenue through stolen pawn loan collateral and inventory affecting PSC and sales.
  • Net revenue was up 3% and operations expenses were 1% lower, yielding a 56% increase in segment profit (segment profit up 71% to $3.5 million on a constant currency basis). These results included $0.6 million in incremental expenses attributable to looting of twelve stores during January.

1In addition to the financial information prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), we provide certain financial information on a “constant currency” basis, which excludes the impact of foreign currency exchange rate fluctuations. For additional information about the constant currency calculations, as well as a reconciliation of the constant currency financial measures to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

Six Months Ended March 31, 2017

  • PSC decreased 1% to $15.4 million (up 15% to $17.8 million on a constant currency basis).
  • Merchandise sales were flat in total and on a same store basis (up 17% in total and 16% in same stores on a constant currency basis). Merchandise margin was 31%, 200bps lower than the prior-year six-months.
  • Net revenue was 1% lower and operations expenses were 13% lower, yielding a 112% increase in segment profit to $7.5 million (up 144% to $8.6 million on a constant currency basis).

CONFERENCE CALL

EZCORP will host a conference call on Thursday, May 4, 2017, at 7:30am Central Time to discuss second quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 15658600, international dialing (647) 788-4901. The conference call will be webcast simultaneously to the public through this link: http://investors.ezcorp.com/. A replay of the conference call will be available online at http://investors.ezcorp.com/ shortly after the call.

ABOUT EZCORP

EZCORP is a leading provider of pawn loans in the United States and Mexico. At our pawn stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.

FORWARD LOOKING STATEMENTS

This announcement contains certain forward-looking statements regarding the company’s strategy, initiatives and expected performance. These statements are based on the company’s current expectations as to the outcome and timing of future events. All statements, other than statements of historical facts, including all statements regarding the company's strategy, initiatives and future performance, that address activities or results that the company plans, expects, believes, projects, estimates or anticipates, will, should or may occur in the future, including future financial or operating results, are forward-looking statements. 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 operating risks, liquidity risks, legislative or regulatory developments, market factors or current or future litigation. For a discussion of these and other factors affecting the company’s business and prospects, see the company’s annual, quarterly and other reports filed with the Securities and Exchange Commission. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

 
EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended March 31,   Six Months Ended March 31,
  2017   2016   2017   2016
               
  (Unaudited)
  (in thousands, except per share amounts)
Revenues:              
Merchandise sales $ 110,238     $ 109,343     $ 221,751     $ 217,927  
Jewelry scrapping sales 10,219     12,780     20,017     22,401  
Pawn service charges 67,092     64,130     136,105     130,724  
Other revenues 2,079     1,959     4,379     4,717  
Total revenues 189,628     188,212     382,252     375,769  
Merchandise cost of goods sold 70,493     68,332     142,225     134,591  
Jewelry scrapping cost of goods sold 8,841     11,085     17,185     19,161  
Other cost of revenues 397     431     980     1,043  
Net revenues 109,897     108,364     221,862     220,974  
Operating expenses:              
Operations 74,460     72,256     152,106     148,274  
Administrative 13,283     15,621     27,210     35,604  
Depreciation and amortization 6,030     6,606     12,403     14,148  
Loss (gain) on sale or disposal of assets 71     649     (6 )   682  
Restructuring     218         1,910  
Total operating expenses 93,844     95,350     191,713     200,618  
   Operating income 16,053     13,014     30,149     20,356  
Interest expense 5,628     3,951     11,193     8,078  
Interest income (2,240 )   (7 )   (4,856 )   (16 )
Equity in net income of unconsolidated affiliate (1,243 )   (1,877 )   (2,721 )   (3,932 )
Other expense (income) 228     213     (195 )   315  
Income from continuing operations before income taxes 13,680     10,734     26,728     15,911  
Income tax expense 5,449     8,427     10,231     10,185  
Income from continuing operations, net of tax 8,231     2,307     16,497     5,726  
Loss from discontinued operations, net of tax (375 )   (78,250 )   (1,603 )   (89,935 )
Net income (loss) 7,856     (75,943 )   14,894     (84,209 )
Net loss attributable to noncontrolling interest (167 )   (5,131 )   (294 )   (5,923 )
Net income (loss) attributable to EZCORP, Inc. $ 8,023     $ (70,812 )   $ 15,188     $ (78,286 )
               
Basic earnings per share attributable to EZCORP, Inc. — continuing operations $ 0.15     $ 0.05     $ 0.31     $ 0.11  
Diluted earnings per share attributable to EZCORP, Inc. — continuing operations $ 0.15     $ 0.05     $ 0.31     $ 0.11  
               
Weighted-average basic shares outstanding 54,291     54,843     54,224     54,869  
Weighted-average diluted shares outstanding 54,346     54,936     54,278     54,943  
               
Net income from continuing operations attributable to EZCORP, Inc. $ 8,398     $ 2,630     $ 16,791     $ 6,049  
Net loss from discontinued operations attributable to EZCORP, Inc. (375 )   (73,442 )   (1,603 )   (84,335 )
Net income (loss) attributable to EZCORP, Inc. $ 8,023     $ (70,812 )   $ 15,188     $ (78,286 )


EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
  March 31,
 2017
  September 30,
 2016
       
  (Unaudited)    
Assets:      
Current assets:      
Cash and cash equivalents $ 120,099     $ 65,737  
Pawn loans 143,267     167,329  
Pawn service charges receivable, net 27,028     31,062  
Inventory, net 137,008     140,224  
Notes receivable, net 29,978     41,946  
Prepaid expenses and other current assets 31,011     35,845  
   Total current assets 488,391     482,143  
Investment in unconsolidated affiliate 38,334     37,128  
Property and equipment, net 53,630     58,455  
Goodwill 254,217     253,976  
Intangible assets, net 31,768     30,681  
Non-current notes receivable, net 40,319     41,119  
Deferred tax asset, net 37,134     35,303  
Other assets, net 18,174     44,439  
Total assets $ 961,967     $ 983,244  
       
Liabilities and equity:      
Current liabilities:      
Accounts payable, accrued expenses and other current liabilities $ 62,339     $ 84,285  
Customer layaway deposits 10,992     10,693  
   Total current liabilities 73,331     94,978  
Long-term debt, net 266,724     283,611  
Other long-term liabilities 8,448     10,450  
   Total liabilities 348,503     389,039  
Commitments and contingencies      
Stockholders’ equity:      
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of March 31, 2017 and September 30, 2016; issued and outstanding: 51,321,915 as of March 31, 2017 and 51,129,144 as of September 30, 2016 513     511  
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171 30     30  
Additional paid-in capital 321,531     318,723  
Retained earnings 334,996     319,808  
Accumulated other comprehensive loss (42,544 )   (44,089 )
   EZCORP, Inc. stockholders’ equity 614,526     594,983  
Noncontrolling interest (1,062 )   (778 )
   Total equity 613,464     594,205  
Total liabilities and equity $ 961,967     $ 983,244  


EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six Months Ended March 31,
  2017   2016
       
  (Unaudited)
  (in thousands)
Operating activities:      
Net income (loss) $ 14,894     $ (84,209 )
  Adjustments to reconcile net income (loss) to net cash flows from operating activities:      
  Depreciation and amortization 12,403     15,141  
  Amortization of debt discount and deferred financing costs 5,755     5,932  
  Amortization of prepaid commissions     7,754  
  Accretion of notes receivable discount (1,928 )    
  Consumer loan loss provision 980     18,662  
  Deferred income taxes (664 )   (12,635 )
  Impairment of goodwill     73,244  
  Other adjustments (63 )   (2,149 )
  (Gain) loss on sale or disposal of assets (6 )   682  
  Stock compensation 3,575     2,149  
  Income from investment in unconsolidated affiliate (2,721 )   (3,932 )
Changes in operating assets and liabilities:      
Service charges and fees receivable 4,151     10,140  
Inventory 708     (993 )
Prepaid expenses, other current assets and other assets 3,171     (10,795 )
Accounts payable, accrued expenses and other liabilities (30,120 )   (8,702 )
Customer layaway deposits 240     851  
Income taxes receivable and payable, current, net of excess tax benefit from stock compensation 7,590     51,300  
Payments of restructuring charges     (6,701 )
    Net cash provided by operating activities 17,965     55,739  
Investing activities:      
Loans made (300,604 )   (323,980 )
Loans repaid 199,080     225,138  
Recovery of pawn loan principal through sale of forfeited collateral 128,238     121,830  
Additions to property and equipment (5,293 )   (2,950 )
Acquisitions, net of cash acquired     (6,000 )
Principal collections on notes receivable 15,051      
    Net cash provided by investing activities 36,472     14,038  
Financing activities:      
Taxes paid related to net share settlement of equity awards (767 )    
Payout of deferred consideration     (14,875 )
Repurchase of redeemable common stock issued due to acquisitions     (11,750 )
Proceeds from settlement of forward currency contracts     3,557  
Change in restricted cash     6,519  
Proceeds from borrowings, net of issuance costs     14,302  
Payments on borrowings     (47,698 )
    Net cash used in financing activities (767 )   (49,945 )
Effect of exchange rate changes on cash and cash equivalents 692     (3,620 )
Net increase in cash and cash equivalents 54,362     16,212  
Cash and cash equivalents at beginning of period 65,737     59,124  
Cash and cash equivalents at end of period $ 120,099     $ 75,336  
Non-cash investing and financing activities:      
Pawn loans forfeited and transferred to inventory $ 125,165     $ 122,709  
Dividend reinvestment acquisition of additional ownership in unconsolidated affiliate 1,153      



EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
   
  Three Months Ended March 31, 2017
  U.S. Pawn   Mexico Pawn   Other
International
  Total Segments   Corporate Items   Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 95,550     $ 14,688     $     $ 110,238     $     $ 110,238  
Jewelry scrapping sales 9,056     1,163         10,219         10,219  
Pawn service charges 59,661     7,431         67,092         67,092  
Other revenues 56     147     1,876     2,079         2,079  
Total revenues 164,323     23,429     1,876     189,628         189,628  
Merchandise cost of goods sold 60,499     9,994         70,493         70,493  
Jewelry scrapping cost of goods sold 7,890     951         8,841         8,841  
Other cost of revenues         397     397         397  
Net revenues 95,934     12,484     1,479     109,897         109,897  
Segment and corporate expenses (income):                      
Operations 63,556     8,901     2,003     74,460         74,460  
Administrative                 13,283     13,283  
Depreciation and amortization 2,660     660     50     3,370     2,660     6,030  
Loss (gain) on sale or disposal of assets (3 )   74         71         71  
Interest expense     3         3     5,625     5,628  
Interest income     (342 )       (342 )   (1,898 )   (2,240 )
Equity in net income of unconsolidated affiliate         (1,243 )   (1,243 )       (1,243 )
Other expense (income) (4 )   (48 )   41     (11 )   239     228  
Segment contribution $ 29,725     $ 3,236     $ 628     $ 33,589          
Income from continuing operations before income taxes             $ 33,589     $ (19,909 )   $ 13,680  


 
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
  Six Months Ended March 31, 2017
  U.S. Pawn   Mexico Pawn   Other
International
  Total Segments   Corporate Items   Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 190,411     $ 31,340     $     $ 221,751     $     $ 221,751  
Jewelry scrapping sales 17,901     2,116         20,017         20,017  
Pawn service charges 120,706     15,399         136,105         136,105  
Other revenues 107     278     3,994     4,379         4,379  
Total revenues 329,125     49,133     3,994     382,252         382,252  
Merchandise cost of goods sold 120,747     21,478         142,225         142,225  
Jewelry scrapping cost of goods sold 15,440     1,745         17,185         17,185  
Other cost of revenues         980     980         980  
Net revenues 192,938     25,910     3,014     221,862         221,862  
Segment and corporate expenses (income):                      
Operations 130,906     17,541     3,659     152,106         152,106  
Administrative                 27,210     27,210  
Depreciation and amortization 5,277     1,291     100     6,668     5,735     12,403  
(Gain) loss on sale or disposal of assets (74 )   68         (6 )       (6 )
Interest expense     5         5     11,188     11,193  
Interest income     (409 )       (409 )   (4,447 )   (4,856 )
Equity in net income of unconsolidated affiliate         (2,721 )   (2,721 )       (2,721 )
Other (income) expense (9 )   (37 )   40     (6 )   (189 )   (195 )
Segment contribution $ 56,838     $ 7,451     $ 1,936     $ 66,225          
Income from continuing operations before income taxes             $ 66,225     $ (39,497 )   $ 26,728  


 
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
  Three Months Ended March 31, 2016
  U.S. Pawn   Mexico Pawn   Other
International
  Total Segments   Corporate Items   Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 94,740     $ 14,603     $     $ 109,343     $     $ 109,343  
Jewelry scrapping sales 11,599     1,181         12,780         12,780  
Pawn service charges 56,614     7,516         64,130         64,130  
Other revenues 49     (117 )   2,027     1,959         1,959  
Total revenues 163,002     23,183     2,027     188,212         188,212  
Merchandise cost of goods sold 58,241     10,090     1     68,332         68,332  
Jewelry scrapping cost of goods sold 10,128     957         11,085         11,085  
Other cost of revenues         431     431         431  
Net revenues 94,633     12,136     1,595     108,364         108,364  
Segment and corporate expenses (income):                      
Operations 61,240     9,024     1,992     72,256         72,256  
Administrative                 15,621     15,621  
Depreciation and amortization 3,042     764     56     3,862     2,744     6,606  
Loss on sale or disposal of assets 546     103         649         649  
Restructuring 91     215     (2 )   304     (86 )   218  
Interest expense 39     38         77     3,874     3,951  
Interest income                 (7 )   (7 )
Equity in net income of unconsolidated affiliate         (1,877 )   (1,877 )       (1,877 )
Other expense (income)     (79 )   6     (73 )   286     213  
Segment contribution $ 29,675     $ 2,071     $ 1,420     $ 33,166          
Income from continuing operations before income taxes             $ 33,166     $ (22,432 )   $ 10,734  


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
  Six Months Ended March 31, 2016
  U.S. Pawn   Mexico Pawn   Other
International
  Total Segments   Corporate Items   Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 186,734     $ 31,189     $ 4     $ 217,927     $     $ 217,927  
Jewelry scrapping sales 21,199     1,181     21     22,401         22,401  
Pawn service charges 115,235     15,489         130,724         130,724  
Other revenues 242     74     4,401     4,717         4,717  
Total revenues 323,410     47,933     4,426     375,769         375,769  
Merchandise cost of goods sold 113,702     20,888     1     134,591         134,591  
Jewelry scrapping cost of goods sold 18,188     957     16     19,161         19,161  
Other cost of revenues         1,043     1,043         1,043  
Net revenues 191,520     26,088     3,366     220,974         220,974  
Segment and corporate expenses (income):                      
Operations 124,785     20,217     3,272     148,274         148,274  
Administrative                 35,604     35,604  
Depreciation and amortization 6,602     1,565     107     8,274     5,874     14,148  
Loss on sale or disposal of assets 553     129         682         682  
Restructuring 982     543     202     1,727     183     1,910  
Interest expense 125     78         203     7,875     8,078  
Interest income (1 )           (1 )   (15 )   (16 )
Equity in net income of unconsolidated affiliate         (3,932 )   (3,932 )       (3,932 )
Other expense     49     3     52     263     315  
Segment contribution $ 58,474     $ 3,507     $ 3,714     $ 65,695          
Income from continuing operations before income taxes             $ 65,695     $ (49,784 )   $ 15,911  


EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
 
  Three Months Ended March 31, 2017
  Company-owned Stores
  U.S. Pawn   Mexico Pawn   Other
International
  Consolidated
               
As of December 31, 2016 517     239     27     783  
New locations opened     2         2  
Locations sold, combined or closed     (1 )       (1 )
As of March 31, 2017 517     240     27     784  


  Three Months Ended March 31, 2016
  Company-owned Stores    
  U.S. Pawn   Mexico Pawn   Other
International
  Consolidated   Franchises
                   
As of December 31, 2015 516     237     27     780     1  
New locations opened 6             6      
Locations sold, combined or closed                 (1 )
As of March 31, 2016 522     237     27     786      


  Six Months Ended March 31, 2017
  Company-owned Stores
  U.S. Pawn   Mexico Pawn   Other
International
  Consolidated
               
As of September 30, 2016 520     239     27     786  
New locations opened     2         2  
Locations sold, combined or closed (3 )   (1 )       (4 )
As of March 31, 2017 517     240     27     784  


  Six Months Ended March 31, 2016
  Company-owned Stores    
  U.S. Pawn   Mexico Pawn   Other
International
  Consolidated   Franchises
                   
As of September 30, 2015 522     237     27     786     1  
New locations opened 6     1         7      
Locations sold, combined or closed (6 )   (1 )       (7 )   (1 )
As of March 31, 2016 522     237     27     786      

Non-GAAP Financial Information (Unaudited)

In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we provide certain other non-GAAP financial information on a constant currency basis ("constant currency"). We use constant currency and ongoing segment contribution results to evaluate results of our Mexico Pawn operations, which are denominated in Mexican pesos, and believe that presentation of constant currency results are meaningful and useful in understanding the activities and business metrics of our Mexico Pawn operations and reflect an additional way of viewing aspects of our business that, when viewed with GAAP results, provide a more complete understanding of factors and trends affecting our business. We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. We use this non-GAAP financial information to evaluate and compare operating results across accounting periods. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Constant currency results reported herein are calculated by translating consolidated balance sheet and consolidated statement of operations items denominated in Mexican pesos to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate on a monthly basis during the appropriate period for statement of operations items. The end-of-period exchange rate as of March 31, 2017 and 2016 was 18.7 to 1 and 17.3 to 1, respectively. The approximate average exchange rate for the three months ended March 31, 2017 and 2016 was 20.4 to 1 and 18.0 to 1. The approximate average exchange rate for the six months ended March 31, 2017 and 2016 was 20.1 to 1 and 17.4 to 1, respectively, however our statement of operations constant currency results reflect the impact of monthly effects of exchange rates and so are not directly calculable from the above rates. Constant currency results, where presented, also exclude the foreign currency gain or loss and the related foreign currency derivative gain or loss impact.

The following information provides reconciliations of certain non-GAAP financial measures presented in this press release to the most directly comparable financial measures calculated and presented in accordance with GAAP as of and for the three and six months ended March 31, 2017.

Miscellaneous Non-GAAP Financial Measures

  U.S. Dollar
Amount
  Percentage
Change YOY
       
  (in millions)    
Consolidated revenue (three months ended March 31, 2017) $ 189.6     1%
Currency exchange rate fluctuations (three months ended March 31, 2017) 3.0      
Constant currency consolidated revenue (three months ended March 31, 2017) $ 192.6     2%
       
Consolidated revenue (six months ended March 31, 2017) $ 382.3     2%
Currency exchange rate fluctuations (six months ended March 31, 2017) 7.7      
Constant currency consolidated revenue (six months ended March 31, 2017) $ 390.0     4%
       
Consolidated operations expenses (three months ended March 31, 2017) $ 74.5     3%
Currency exchange rate fluctuations (three months ended March 31, 2017) 1.1      
Constant currency consolidated operations expenses (three months ended March 31, 2017) $ 75.6     5%
       
Consolidated operations expenses (six months ended March 31, 2017) $ 152.1     3%
Currency exchange rate fluctuations (six months ended March 31, 2017) 2.8      
Constant currency consolidated operations expenses (six months ended March 31, 2017) $ 154.9     4%
       
Mexico Pawn loans outstanding $ 17.8     3%
Currency exchange rate fluctuations 1.6      
Constant currency Mexico Pawn loans outstanding $ 19.4     12%
       
Mexico Pawn service charges (three months ended March 31, 2017) $ 7.4     (1)%
Currency exchange rate fluctuations (three months ended March 31, 2017) 1.0      
Constant currency Mexico Pawn service charges (three months ended March 31, 2017) $ 8.4     11%
       
Mexico Pawn service charges (six months ended March 31, 2017) $ 15.4     (1)%
Currency exchange rate fluctuations (six months ended March 31, 2017) 2.4      
Constant currency Mexico Pawn service charges (six months ended March 31, 2017) $ 17.8     15%
       
Mexico Pawn merchandise revenue (three months ended March 31, 2017) $ 14.7     1%
Currency exchange rate fluctuations (three months ended March 31, 2017) 1.9      
Constant currency Mexico Pawn merchandise revenue (three months ended March 31, 2017) $ 16.6     14%
       
Mexico Pawn merchandise revenue (six months ended March 31, 2017) $ 31.3     —%
Currency exchange rate fluctuations (six months ended March 31, 2017) 5.1      
Constant currency Mexico Pawn merchandise revenue (six months ended March 31, 2017) $ 36.4     17%
       
Mexico Pawn same store merchandise revenue (three months ended March 31, 2017) $ 14.3     —%
Currency exchange rate fluctuations (three months ended March 31, 2017) 1.9      
Constant currency Mexico Pawn same store merchandise revenue (three months ended March 31, 2017) $ 16.2     13%
       
Mexico Pawn same store merchandise revenue (six months ended March 31, 2017) $ 30.4     —%
Currency exchange rate fluctuations (six months ended March 31, 2017) 4.9      
Constant currency Mexico Pawn same store merchandise revenue (six months ended March 31, 2017) $ 35.3     16%
       
Mexico Pawn segment profit before tax (three months ended March 31, 2017) $ 3.2     56%
Currency exchange rate fluctuations (three months ended March 31, 2017) 0.3      
Constant currency Mexico Pawn segment profit before tax (three months ended March 31, 2017) $ 3.5     71%
       
Mexico Pawn segment profit before tax (six months ended March 31, 2017) $ 7.5     112%
Currency exchange rate fluctuations (six months ended March 31, 2017) 1.1      
Constant currency Mexico Pawn segment profit before tax (six months ended March 31, 2017) $ 8.6     144%

 

Contact:
                    Jeff Christensen
                    Vice President, Investor Relations
                    Email: jeff_christensen@ezcorp.com
                    Phone: (512) 437-3545

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