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EZCORP Announces Third Quarter Fiscal 2017 Results

Earnings per share from continuing operations up 100% year-over-year to $0.10

AUSTIN, Texas, July 31, 2017 (GLOBE NEWSWIRE) -- EZCORP, Inc. (NASDAQ:EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its third quarter ended June 30, 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 THIRD QUARTER FISCAL 2017

The company produced its sixth consecutive quarter of year-over-year (YOY) earnings and profit growth with earnings per share up 100% to $0.10 and income from continuing operations before income taxes up 133% to $8.9 million.

Market leading same store pawn loans outstanding (PLO), the most influential driver of revenue and profitability, up 4% in the U.S. and 16% in Mexico. The same store PLO increase in Mexico was 13% when calculated on a constant currency basis1.

Unrestricted cash balance at the end of the quarter was up 287% YOY to $113.7 million. Shortly after the end of the quarter, the company also completed its $143.8 million offering of convertible senior notes due 2024, further strengthening its balance sheet and liquidity, as well as paying off its higher rate secured term debt and retiring a portion of its cash convertible senior notes due 2019.

CEO COMMENTARY AND OUTLOOK

Stuart Grimshaw, EZCORP's Chief Executive Officer, said: “We are delighted with our results this quarter. We doubled our earnings from continuing operations, reflecting our continued focus on meeting the needs of our customers and enhancing their experience as well as leveraging our expense structure. That focus continues to produce market leading same store PLO growth in the U.S. and Mexico, which is the main driver of future profitability.

“The quarter’s results reflect the continued, disciplined execution of our three year strategic plan announced in 2015.  We delivered significant earnings growth in both the U.S. and Mexico this quarter, highlighting the value of that continued focus.  We further strengthened our balance sheet and liquidity position through strong operating results and the convertible bond issuance just after the quarter-end. While we continue to focus on and invest in our core pawn business, this strong cash position enhances our ability to consider attractive acquisitions.

“We are confident that our current strategic initiatives - including store refurbishment and other investments in customer experience; product and customer analytics; team member training, coaching and mentoring; and storefront expansion - will continue to provide a robust platform for further profitable growth."

CONSOLIDATED RESULTS

Three Months Ended June 30, 2017

  • Same store pawn loans outstanding (PLO) was up 4% in U.S. and 16% in Mexico (up 13% in Mexico on a constant currency basis).

  • Total revenue increased 8% to $183.6 million. On a constant currency basis, total revenue was up 8% to $184.4 million.

  • Net revenue improved 5% to $105.6 million (up 6% to $106.0 million on a constant currency basis), due largely to a 5% increase in pawn service charge (PSC) revenue and a 4% increase in merchandise sales (PSC revenue up 6% and merchandise sales up 5% on a constant currency basis).

  • The merchandise sales gross margin was consistent with the prior-year quarter at 36%, and was within our target range of 35-38%.

  • Operations expenses increased 1% to $74.2 million (up 2% to $74.5 million on a constant currency basis) due to investment in customer facing labor and higher benefit claims.

  • Corporate expenses decreased 3% to $14.1 million. The company remains on track to reduce corporate expenses to no more than $50 million in FY18.

  • This was the sixth consecutive quarter of YOY earnings per share increase, with earnings per share from continuing operations up 100% to $0.10.

  • Shortly after the end of the quarter, the company completed its offering of convertible senior notes due 2024 with a 2.875% coupon. This unsecured convertible note issuance strengthens the balance sheet and liquidity, and locks in an attractive fixed interest rate for a seven-year term. The proceeds were used to retire all remaining obligations under a secured credit facility which had a far higher cost of funds, retire $35 million of existing cash convertible senior notes due 2019, and for additional capital to potentially add to our earnings capacity as the company considers attractive acquisition opportunities.

Nine Months Ended June 30, 2017

  • Total revenue increased 4% to $565.9 million. On a constant currency basis, total revenue was up 5% to $574.4 million.

  • Net revenue was up 2% to $327.4 million (up 3% to $331.9 million on a constant currency basis), as a 5% increase in PSC revenue was offset by a lower merchandise sales gross margin (PSC revenue up 6% on a constant currency basis).

  • The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.

  • Operations expenses increased 2% to $226.4 million (up 4% to $229.4 million on a constant currency basis).

  • Corporate expenses decreased 18% to $41.3 million, in line with the company's continued focus to control corporate expenses.

  • Earnings per share from continuing operations increased 156% to $0.41.

  • 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 $23.3 million in principal on those notes during the current fiscal year, and expects to collect an additional $24.4 million during the remainder of the fiscal year (for a total of $47.7 million in FY17), $24.4 million in FY18 and $18.3 million in FY19. In July 2017, the company received $6.1 million including early payment of $5.2 million.

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.

OPERATING METRICS

U.S. Pawn Segment

Three Months Ended June 30, 2017

  • This was the seventh consecutive quarter of YOY same store PLO growth, up 3% this quarter in total and 4% on a same store basis, to $148.8 million.

  • PSC increased 4% in total and 5% on a same store basis to $56.8 million.

  • Merchandise sales increased 4% in total and on a same store basis. The merchandise sales gross margin of 37% was consistent with the prior-year quarter and within our target range of 35-38%.

  • Inventory aged over one year improved to 11% from 12% in Q2FY17.

  • Operations expenses increased 1% to $63.6 million.

  • The segment contribution was up 18% to $23.8 million.

  • Initiatives are underway to continue improving net revenue and profitability in the long-term, including investments in upgrading our point of sale system and enhancing product and customer data analytics, as well as enhancing our customer experience with a store refurbishment program.

Nine Months Ended June 30, 2017

  • PSC increased 5% in total and 4% on a same store basis to $177.5 million.

  • Merchandise sales increased 2% in total and 3% on a same store basis. The merchandise sales gross margin of 37% is within our target range of 35-38%.

  • Operations expenses increased 4% to $194.5 million, due to investment in customer facing labor and higher benefit claims.

  • Segment profit was up 3% to $80.7 million.

Mexico Pawn Segment

Three Months Ended June 30, 2017

  • PLO increased 19% to $19.4 million (up 16% to $18.9 million on a constant currency basis).

  • PSC increased 13% to $9.1 million (up 16% to $9.4 million on a constant currency basis).

  • Merchandise sales increased 7% in total and 5% on a same store basis (up 10% in total and 7% in same stores on a constant currency basis). The 33% merchandise sales gross margin was consistent with the prior-year quarter.

  • Inventory aged over one year of 6% was consistent with Q2FY17.

  • Net revenue was up 12% with a smaller 2% increase in operations expenses, yielding a 100% increase in segment contribution (segment contribution was up 104% to $5.5 million on a constant currency basis).

Nine Months Ended June 30, 2017

  • PSC increased 4% to $24.5 million (up 15% to $27.2 million on a constant currency basis).

  • Merchandise sales increased 3% in total and 2% on a same store basis (up 15% in total and 13% in same stores on a constant currency basis). Merchandise margin was 32%, 100bps lower than the prior-year nine-months.

  • Net revenue increased 3% and operations expenses were 9% lower, yielding a 107% increase in segment profit to $12.9 million (up 127% to $14.1 million on a constant currency basis).

CONFERENCE CALL

EZCORP will host a conference call on Tuesday, August 1, 2017, at 7:30am Central Time to discuss third quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 57788640, 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. We also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers. EZCORP is a member of the Russell 2000 Index, S&P SmallCap 600 Index, S&P 1000 Index and Nasdaq Composite Index.

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 June 30,   Nine Months Ended June 30,
  2017   2016   2017   2016
               
  (Unaudited)
  (in thousands, except per share amounts)
Revenues:              
Merchandise sales $ 97,921     $ 94,014     $ 319,672     $ 311,941  
Jewelry scrapping sales 17,641     11,230     37,658     33,631  
Pawn service charges 65,878     62,473     201,983     193,197  
Other revenues 2,193     2,433     6,572     7,151  
Total revenues 183,633     170,150     565,885     545,920  
Merchandise cost of goods sold 62,615     60,140     204,840     194,731  
Jewelry scrapping cost of goods sold 15,010     9,110     32,195     28,271  
Other cost of revenues 453     506     1,433     1,549  
Net revenues 105,555     100,394     327,417     321,369  
Operating expenses:              
Operations 74,246     73,172     226,352     221,446  
Administrative 14,095     14,481     41,305     50,085  
Depreciation and amortization 5,843     6,274     18,246     20,422  
Loss (gain) on sale or disposal of assets 17     (41 )   11     641  
Restructuring             1,910  
Total operating expenses 94,201     93,886     285,914     294,504  
Operating income 11,354     6,508     41,503     26,865  
Interest expense 5,654     3,936     16,847     12,014  
Interest income (2,053 )   (50 )   (6,909 )   (66 )
Equity in net income of unconsolidated affiliate (1,047 )   (1,694 )   (3,768 )   (5,626 )
Other (income) expense (99 )   500     (294 )   815  
Income from continuing operations before income taxes 8,899     3,816     35,627     19,728  
Income tax expense 3,432     1,038     13,663     11,224  
Income from continuing operations, net of tax 5,467     2,778     21,964     8,504  
Loss from discontinued operations, net of tax (265 )   (9,133 )   (1,868 )   (99,068 )
Net income (loss) 5,202     (6,355 )   20,096     (90,564 )
Net loss attributable to noncontrolling interest (58 )   (666 )   (352 )   (6,589 )
Net income (loss) attributable to EZCORP, Inc. $ 5,260     $ (5,689 )   $ 20,448     $ (83,975 )
               
Basic earnings per share attributable to EZCORP, Inc. — continuing operations $ 0.10     $ 0.05     $ 0.41     $ 0.16  
Diluted earnings per share attributable to EZCORP, Inc. — continuing operations $ 0.10     $ 0.05     $ 0.41     $ 0.16  
               
Weighted-average basic shares outstanding 54,295     53,980     54,247     54,574  
Weighted-average diluted shares outstanding 54,367     54,192     54,310     54,690  
               
Net income from continuing operations attributable to EZCORP, Inc. $ 5,525     $ 2,904     $ 22,316     $ 8,954  
Net loss from discontinued operations attributable to EZCORP, Inc. (265 )   (8,593 )   (1,868 )   (92,929 )
Net income (loss) attributable to EZCORP, Inc. $ 5,260     $ (5,689 )   $ 20,448     $ (83,975 )
                               


EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
  June 30,
 2017
  June 30,
 2016
  September 30,
 2016
           
  (Unaudited)    
Assets:          
Current assets:          
Cash and cash equivalents $ 113,729     $ 29,380     $ 65,737  
Pawn loans 168,262     160,269     167,329  
Pawn service charges receivable, net 30,585     29,643     31,062  
Inventory, net 135,053     130,368     140,224  
Notes receivable, net 22,024         41,946  
Current assets held for sale     157,554      
Prepaid expenses and other current assets 31,993     26,577     35,845  
Total current assets 501,646     533,791     482,143  
Investment in unconsolidated affiliate 41,725     56,843     37,128  
Property and equipment, net 53,022     61,201     58,455  
Goodwill 254,469     254,273     253,976  
Intangible assets, net 32,551     30,569     30,681  
Non-current notes receivable, net 41,253         41,119  
Deferred tax asset, net 36,506     34,170     35,303  
Other assets, net 9,145     18,950     44,439  
Total assets $ 970,317     $ 989,797     $ 983,244  
           
Liabilities, temporary equity and equity:          
Current liabilities:          
Accounts payable, accrued expenses and other current liabilities $ 64,830     $ 63,242     $ 84,285  
Current liabilities held for sale     130,261      
Customer layaway deposits 11,091     11,201     10,693  
Total current liabilities 75,921     204,704     94,978  
Long-term debt, net 260,414     211,421     283,611  
Other long-term liabilities 9,680     9,548     10,450  
Total liabilities 346,015     425,673     389,039  
Commitments and contingencies          
Temporary equity:          
Redeemable noncontrolling interest     (2,378 )    
Total temporary equity     (2,378 )    
Stockholders’ equity:          
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued and outstanding: 51,326,582 as of June 30, 2017; 51,019,332 as of June 30, 2016; and 51,129,144 as of September 30, 2016 513     510     511  
Class B Voting Common Stock, convertible, par value $.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171 30     30     30  
Additional paid-in capital 322,559     316,565     318,723  
Retained earnings 340,256     316,577     319,808  
Accumulated other comprehensive loss (37,921 )   (66,974 )   (44,089 )
EZCORP, Inc. stockholders’ equity 625,437     566,708     594,983  
Noncontrolling interest (1,135 )   (206 )   (778 )
Total equity 624,302     566,502     594,205  
Total liabilities, temporary equity and equity $ 970,317     $ 989,797     $ 983,244  
                       


EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Nine Months Ended June 30,
  2017   2016
       
  (Unaudited)
  (in thousands)
Operating activities:      
Net income (loss) $ 20,096     $ (90,564 )
Adjustments to reconcile net income (loss) to net cash flows from operating activities:      
Depreciation and amortization 18,246     21,432  
Amortization of debt discount and deferred financing costs 8,595     8,864  
Amortization of prepaid commissions     10,684  
Accretion of notes receivable discount (2,898 )    
Consumer loan loss provision 1,434     24,157  
Deferred income taxes (871 )   (14,234 )
Impairment of goodwill     73,244  
Other adjustments (48 )   (2,002 )
(Gain) loss on sale or disposal of assets 11     641  
Stock compensation 5,145     3,206  
Income from investment in unconsolidated affiliate (3,768 )   (5,626 )
Changes in operating assets and liabilities:      
Service charges and fees receivable 604     8,363  
Inventory 1,470     (1,349 )
Prepaid expenses, other current assets and other assets 1,261     (4,983 )
Accounts payable, accrued expenses and other liabilities (29,464 )   (20,497 )
Customer layaway deposits 288     781  
Income taxes receivable and payable, current, net of excess tax benefit from stock compensation 9,873     51,990  
Payments of restructuring charges     (8,367 )
Dividends from unconsolidated affiliate     2,197  
Net cash provided by operating activities 29,974     57,937  
Investing activities:      
Loans made (472,676 )   (497,255 )
Loans repaid 288,833     324,478  
Recovery of pawn loan principal through sale of forfeited collateral 187,819     173,710  
Additions to property and equipment (9,340 )   (6,470 )
Acquisitions, net of cash acquired     (6,000 )
Principal collections on notes receivable 23,336      
Net cash provided by (used in) investing activities 17,972     (11,537 )
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     2,710  
Proceeds from borrowings, net of issuance costs     16,442  
Payments on borrowings     (63,994 )
Net cash used in financing activities (767 )   (67,910 )
Effect of exchange rate changes on cash and cash equivalents 813     (6,506 )
Net increase (decrease) in cash and cash equivalents 47,992     (28,016 )
Cash and cash equivalents at beginning of period 65,737     59,124  
Cash and cash equivalents at end of period $ 113,729     $ 31,108  
Non-cash investing and financing activities:      
Pawn loans forfeited and transferred to inventory $ 182,682     $ 179,394  
Dividend reinvestment acquisition of additional ownership in unconsolidated affiliate 1,153      
           


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
   
  Three Months Ended June 30, 2017
  U.S. Pawn   Mexico
Pawn
  Other
International
  Total
Segments
  Corporate
Items
  Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 82,714     $ 15,207     $     $ 97,921     $     $ 97,921  
Jewelry scrapping sales 17,257     384         17,641         17,641  
Pawn service charges 56,774     9,104         65,878         65,878  
Other revenues 50     179     1,964     2,193         2,193  
Total revenues 156,795     24,874     1,964     183,633         183,633  
Merchandise cost of goods sold 52,488     10,127         62,615         62,615  
Jewelry scrapping cost of goods sold 14,674     336         15,010         15,010  
Other cost of revenues         453     453         453  
Net revenues 89,633     14,411     1,511     105,555         105,555  
Segment and corporate expenses (income):                      
Operations 63,593     8,898     1,755     74,246         74,246  
Administrative                 14,095     14,095  
Depreciation and amortization 2,210     619     44     2,873     2,970     5,843  
Loss (gain) on sale or disposal of assets 20     (3 )       17         17  
Interest expense     2         2     5,652     5,654  
Interest income     (480 )       (480 )   (1,573 )   (2,053 )
Equity in net income of unconsolidated affiliate         (1,047 )   (1,047 )       (1,047 )
Other income (5 )   (24 )   (68 )   (97 )   (2 )   (99 )
Segment contribution $ 23,815     $ 5,399     $ 827     $ 30,041          
Income from continuing operations before income taxes             $ 30,041     $ (21,142 )   $ 8,899  
                                   


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
   
  Nine Months Ended June 30, 2017
  U.S. Pawn   Mexico
Pawn
  Other
International
  Total
Segments
  Corporate
Items
  Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 273,125     $ 46,547     $     $ 319,672     $     $ 319,672  
Jewelry scrapping sales 35,158     2,500         37,658         37,658  
Pawn service charges 177,480     24,503         201,983         201,983  
Other revenues 157     457     5,958     6,572         6,572  
Total revenues 485,920     74,007     5,958     565,885         565,885  
Merchandise cost of goods sold 173,235     31,605         204,840         204,840  
Jewelry scrapping cost of goods sold 30,114     2,081         32,195         32,195  
Other cost of revenues         1,433     1,433         1,433  
Net revenues 282,571     40,321     4,525     327,417         327,417  
Segment and corporate expenses (income):                      
Operations 194,499     26,439     5,414     226,352         226,352  
Administrative                 41,305     41,305  
Depreciation and amortization 7,487     1,910     144     9,541     8,705     18,246  
Loss (gain) on sale or disposal of assets (54 )   65         11         11  
Interest expense     7         7     16,840     16,847  
Interest income     (889 )       (889 )   (6,020 )   (6,909 )
Equity in net income of unconsolidated affiliate         (3,768 )   (3,768 )       (3,768 )
Other income (14 )   (61 )   (28 )   (103 )   (191 )   (294 )
Segment contribution $ 80,653     $ 12,850     $ 2,763     $ 96,266          
Income from continuing operations before income taxes             $ 96,266     $ (60,639 )   $ 35,627  
                                   


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
   
  Three Months Ended June 30, 2016
  U.S. Pawn   Mexico
Pawn
  Other
International
  Total
Segments
  Corporate
Items
  Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 79,826     $ 14,187     $ 1     $ 94,014     $     $ 94,014  
Jewelry scrapping sales 10,918     312         11,230         11,230  
Pawn service charges 54,395     8,078         62,473         62,473  
Other revenues 39     157     2,237     2,433         2,433  
Total revenues 145,178     22,734     2,238     170,150         170,150  
Merchandise cost of goods sold 50,586     9,554         60,140         60,140  
Jewelry scrapping cost of goods sold 8,845     265         9,110         9,110  
Other cost of revenues         506     506         506  
Net revenues 85,747     12,915     1,732     100,394         100,394  
Segment and corporate expenses (income):                      
Operations 62,733     8,744     1,695     73,172         73,172  
Administrative                 14,481     14,481  
Depreciation and amortization 2,888     720     56     3,664     2,610     6,274  
Loss on sale or disposal of assets (51 )   (13 )       (64 )   23     (41 )
Interest expense     25         25     3,911     3,936  
Interest income (1 )   (23 )       (24 )   (26 )   (50 )
Equity in net income of unconsolidated affiliate         (1,694 )   (1,694 )       (1,694 )
Other expense (income)     759         759     (259 )   500  
Segment contribution $ 20,178     $ 2,703     $ 1,675     $ 24,556          
Income from continuing operations before income taxes             $ 24,556     $ (20,740 )   $ 3,816  
                                   


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
   
  Nine Months Ended June 30, 2016
  U.S. Pawn   Mexico
Pawn
  Other
International
  Total
Segments
  Corporate
Items
  Consolidated
                       
  (in thousands)
Revenues:                      
Merchandise sales $ 266,560     $ 45,376     $ 5     $ 311,941     $     $ 311,941  
Jewelry scrapping sales 32,117     1,493     21     33,631         33,631  
Pawn service charges 169,630     23,567         193,197         193,197  
Other revenues 281     231     6,639     7,151         7,151  
Total revenues 468,588     70,667     6,665     545,920         545,920  
Merchandise cost of goods sold 164,288     30,442     1     194,731         194,731  
Jewelry scrapping cost of goods sold 27,033     1,222     16     28,271         28,271  
Other cost of revenues         1,549     1,549         1,549  
Net revenues 277,267     39,003     5,099     321,369         321,369  
Segment and corporate expenses (income):                      
Operations 187,518     28,961     4,967     221,446         221,446  
Administrative                 50,085     50,085  
Depreciation and amortization 9,489     2,285     163     11,937     8,485     20,422  
Loss on sale or disposal of assets 502     116         618     23     641  
Restructuring 982     543     202     1,727     183     1,910  
Interest expense 125     103         228     11,786     12,014  
Interest income (2 )   (23 )       (25 )   (41 )   (66 )
Equity in net income of unconsolidated affiliate         (5,626 )   (5,626 )       (5,626 )
Other expense     808     3     811     4     815  
Segment contribution $ 78,653     $ 6,210     $ 5,390     $ 90,253          
Income from continuing operations before income taxes             $ 90,253     $ (70,525 )   $ 19,728  
                                   


EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
   
  Three Months Ended June 30, 2017
  Company-owned Stores
  U.S. Pawn   Mexico Pawn   Other
International
  Consolidated
               
As of March 31, 2017 517     240     27     784  
New locations opened     4         4  
Locations sold, combined or closed (2 )           (2 )
As of June 30, 2017 515     244     27     786  
                       


  Three Months Ended June 30, 2016
  Company-owned Stores
  U.S. Pawn   Mexico Pawn   Other
International
  Consolidated
               
As of March 31, 2016 522     237     27     786  
New locations opened     1         1  
As of June 30, 2016 522     238     27     787  
                       


  Nine Months Ended June 30, 2017
  Company-owned Stores
  U.S. Pawn   Mexico Pawn   Other
International
  Consolidated
               
As of September 30, 2016 520     239     27     786  
New locations opened     6         6  
Locations sold, combined or closed (5 )   (1 )       (6 )
As of June 30, 2017 515     244     27     786  
                       


  Nine Months Ended June 30, 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     1         1      
Locations acquired 6     1         7      
Locations sold, combined or closed (6 )   (1 )       (7 )   (1 )
As of June 30, 2016 522     238     27     787      
                             

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 June 30, 2017 and 2016 was 18.0 to 1 and 18.6 to 1, respectively. The approximate average exchange rate for the three months ended June 30, 2017 and 2016 was 18.6 to 1 and 18.1 to 1, respectively. The approximate average exchange rate for the nine months ended June 30, 2017 and 2016 was 19.6 to 1 and 17.6 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 nine months ended June 30, 2017.

Miscellaneous Non-GAAP Financial Measures

  U.S. Dollar
Amount
  Percentage
Change YOY
       
  (in millions)    
Mexico Pawn same store PLO $ 19.0     16%
Currency exchange rate fluctuations (0.6 )    
Constant currency Mexico Pawn same store PLO $ 18.4     13%
       
Consolidated revenue (three months ended June 30, 2017) $ 183.6     8%
Currency exchange rate fluctuations (three months ended June 30, 2017) 0.8      
Constant currency consolidated revenue (three months ended June 30, 2017) $ 184.4     8%
       
Consolidated net revenue (three months ended June 30, 2017) $ 105.6     5%
Currency exchange rate fluctuations 0.4      
Constant currency consolidated net revenue (three months ended June 30, 2017) $ 106.0     6%
       
Consolidated PSC revenue (three months ended June 30, 2017) $ 65.9     5%
Currency exchange rate fluctuations 0.2      
Constant currency consolidated PSC revenue (three months ended June 30, 2017) $ 66.1     6%
       
Consolidated merchandise sales (three months ended June 30, 2017) $ 97.9     4%
Currency exchange rate fluctuations 0.4      
Constant currency consolidated merchandise sales (three months ended June 30, 2017) $ 98.3     5%
       
Consolidated operations expenses (three months ended June 30, 2017) $ 74.2     1%
Currency exchange rate fluctuations (three months ended June 30, 2017) 0.3      
Constant currency consolidated operations expenses (three months ended June 30, 2017) $ 74.5     2%
       
Consolidated revenue (nine months ended June 30, 2017) $ 565.9     4%
Currency exchange rate fluctuations (nine months ended June 30, 2017) 8.5      
Constant currency consolidated revenue (nine months ended June 30, 2017) $ 574.4     5%
       
Consolidated net revenue (nine months ended June 30, 2017) $ 327.4     2%
Currency exchange rate fluctuations 4.5      
Constant currency consolidated net revenue (nine months ended June 30, 2017) $ 331.9     3%
       
Consolidated PSC revenue (nine months ended June 30, 2017) $ 202.0     5%
Currency exchange rate fluctuations 2.6      
Constant currency consolidated PSC revenue (nine months ended June 30, 2017) $ 204.6     6%
       
Consolidated operations expenses (nine months ended June 30, 2017) $ 226.4     2%
Currency exchange rate fluctuations (nine months ended June 30, 2017) 3.0      
Constant currency consolidated operations expenses (nine months ended June 30, 2017) $ 229.4     4%
       
Mexico Pawn PLO $ 19.4     19%
Currency exchange rate fluctuations (0.5 )    
Constant currency Mexico Pawn PLO $ 18.9     16%
       
Mexico Pawn PSC revenue (three months ended June 30, 2017) $ 9.1     13%
Currency exchange rate fluctuations (three months ended June 30, 2017) 0.3      
Constant currency Mexico Pawn PSC revenue (three months ended June 30, 2017) $ 9.4     16%
       
Mexico Pawn merchandise sales (three months ended June 30, 2017) $ 15.2     7%
Currency exchange rate fluctuations (three months ended June 30, 2017) 0.4      
Constant currency Mexico Pawn merchandise sales (three months ended June 30, 2017) $ 15.6     10%
       
Mexico Pawn same store merchandise sales (three months ended June 30, 2017) $ 14.8     5%
Currency exchange rate fluctuations (three months ended June 30, 2017) 0.4      
Constant currency Mexico Pawn same store merchandise sales (three months ended June 30, 2017) $ 15.2     7%
       
Mexico Pawn segment profit before tax (three months ended June 30, 2017) $ 5.4     100%
Currency exchange rate fluctuations (three months ended June 30, 2017) 0.1      
Constant currency Mexico Pawn segment profit before tax (three months ended June 30, 2017) $ 5.5     104%
       
Mexico Pawn PSC revenue (nine months ended June 30, 2017) $ 24.5     4%
Currency exchange rate fluctuations (nine months ended June 30, 2017) 2.7      
Constant currency Mexico Pawn PSC revenue (nine months ended June 30, 2017) $ 27.2     15%
       
Mexico Pawn merchandise sales (nine months ended June 30, 2017) $ 46.5     3%
Currency exchange rate fluctuations (nine months ended June 30, 2017) 5.5      
Constant currency Mexico Pawn merchandise sales (nine months ended June 30, 2017) $ 52.0     15%
       
Mexico Pawn same store merchandise sales (nine months ended June 30, 2017) $ 45.2     2%
Currency exchange rate fluctuations (nine months ended June 30, 2017) 5.3      
Constant currency Mexico Pawn same store merchandise sales(nine months ended June 30, 2017) $ 50.5     13%
       
Mexico Pawn segment profit before tax (nine months ended June 30, 2017) $ 12.9     107%
Currency exchange rate fluctuations (nine months ended June 30, 2017) 1.2      
Constant currency Mexico Pawn segment profit before tax (nine months ended June 30, 2017) $ 14.1     127%
           

 

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

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