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8-K - FORM 8-K - EZCORP INC | d79116e8vk.htm |
Exhibit 99.1
EZCORP CONTINUES ROBUST EARNINGS GROWTH
- All Segments Post Double-Digit Operating Income Gains
- All Segments Post Double-Digit Operating Income Gains
AUSTIN, Texas (January 20, 2011) EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty
consumer financial services, today announced results for its first fiscal quarter ended December
31, 2010. Highlights include:
| Non-GAAP earnings per share of $0.69, up 33% over prior year quarter; GAAP earnings per share of $0.55, up 6% over prior year quarter. | ||
| Non-GAAP net income of $34.5 million, up 34%; GAAP net income of $27.4 million, up 7%. | ||
| Total revenues of $218.8 million, up 18% over prior year quarter. | ||
| Non-GAAP consolidated operating income of $50.3 million (38% of net revenue), up 29% over prior year quarter; GAAP consolidated operating income of $39.4 million (29% of net revenue), up 1% over prior year quarter. | ||
| Store level operating income up $11.6 million in U.S. Pawn, $1.6 million in Empeño Fácil and $1.8 million in EZMONEY. | ||
| Pre-tax contribution from strategic affiliates of $3.4 million, up from $1.3 million in prior year quarter. |
Non-GAAP results exclude a previously announced one-time charge related to the retirement of the
Companys former Chief Executive Officer.
Commenting on these results, President and Chief Executive Officer, Paul Rothamel, stated, We are
excited to get the new fiscal year off to a great start, with 13% same store revenue growth and all
segments posting double-digit operating income growth. Accentuating the ability to leverage our
expense structure through increased scale, our team members turned an 18% total revenue increase
into a 34% growth in net income excluding the one-time charge.
Rothamel added, Our geographic diversification continued this quarter with 29 new stores in
Mexico, Canada and domestic areas outside Texas. As a benefit of this diversification and
continued growth in our newer products, U.S. payday lending, while remaining strong, now represents
16% of our total revenues compared to 20% a year ago.
The Company also announced that it expects fiscal 2011 earnings per share, excluding the one-time
charge described above, to increase 22% year-over-year to $2.40 ($2.26 on a GAAP basis). This is
an increase from its previous estimate of $2.35 per share ($2.21 on a GAAP basis).
Page 1 of 7
About EZCORP
EZCORP is a leading provider of specialty consumer financial services. It provides collateralized
non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans,
including payday loans, installment loans and auto title loans, or fee-based credit services to
customers seeking loans. At its pawn stores, the company also sells merchandise, primarily
collateral forfeited from its pawn lending operations.
EZCORP operates more than 1,000 stores, including over 500 pawn stores in the U.S. and Mexico and
over 500 short-term consumer loan stores in the U.S. and Canada. The company also has significant
investments in Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.s largest pawnbroking
businesses with over 130 stores, and Cash Converters International Limited (CCV.L and CCV.AUS),
which franchises and operates a worldwide network of over 500 stores that provide financial
services and sell pre-owned merchandise.
Special Note Regarding Forward-Looking Statements
This announcement contains certain forward-looking statements regarding the Companys expected
operating and financial performance for future periods, including expected future earnings. These
statements are based on the Companys current expectations. Actual results for future periods may
differ materially from those expressed or implied by these forward-looking statements due to a
number of uncertainties and other factors, including changing market conditions in the overall
economy and the industry, consumer demand for the Companys services and merchandise, actions of
third parties who offer services and products in the Companys locations and changes in the
regulatory environment. For a discussion of these and other factors affecting the Companys
business and prospects, see the Companys annual, quarterly and other reports filed with the
Securities and Exchange Commission.\
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting
principles (GAAP), the Company has provided non-GAAP net income, non-GAAP consolidated operating
income and non-GAAP earnings per share for the current period, as well as non-GAAP expected
earnings per share for fiscal 2011. The only difference between the presented non-GAAP measures
and the most closely comparable GAAP measures is the exclusion of a one-time charge related to the
retirement of the Companys former Chief Executive Officer and the related tax benefit. The
Companys management uses these non-GAAP financial measures to understand the Companys financial
performance from period to period. Management does not believe that the excluded one-time charge
is reflective of underlying operating performance. The non-GAAP financial measures are not meant
to be considered in isolation or as a substitute for the corresponding GAAP measures, but rather
are provided to facilitate an enhanced understanding of the Companys actual and expected
performance and to enable more meaningful period-to-period comparisons. A
Page 2 of 7
reconciliation of the
non-GAAP financial measures to the most closely comparable GAAP financial measures is provided in
the accompanying financial schedules.
For additional information, contact Investor Relations at (512) 314-2220.
Page 3 of 7
EZCORP, Inc.
Highlights of Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data and percents)
Highlights of Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data and percents)
Three Months Ended December 31, | Increase | Percent | ||||||||||||||
2010 | 2009 | (Decrease) | Change | |||||||||||||
Revenues: |
||||||||||||||||
Merchandise sales |
$ | 67,730 | $ | 62,476 | $ | 5,254 | 8.4 | |||||||||
Jewelry scrapping sales |
50,665 | 37,442 | 13,223 | 35.3 | ||||||||||||
Pawn service charges |
49,810 | 40,797 | 9,013 | 22.1 | ||||||||||||
Signature loan fees |
40,066 | 38,678 | 1,388 | 3.6 | ||||||||||||
Auto title loan fees |
6,244 | 3,102 | 3,142 | 101.3 | ||||||||||||
Other |
4,311 | 2,256 | 2,055 | 91.1 | ||||||||||||
Total revenues |
218,826 | 184,751 | 34,075 | 18.4 | ||||||||||||
Cost of goods sold: |
||||||||||||||||
Cost of merchandise sales |
41,311 | 39,264 | 2,047 | 5.2 | ||||||||||||
Cost of jewelry scrapping sales |
32,255 | 23,306 | 8,949 | 38.4 | ||||||||||||
Total cost of goods sold |
73,566 | 62,570 | 10,996 | 17.6 | ||||||||||||
Bad debt: |
||||||||||||||||
Signature loan bad debt |
10,046 | 8,790 | 1,256 | 14.3 | ||||||||||||
Auto title loan bad debt |
982 | 460 | 522 | 113.5 | ||||||||||||
Total bad debt |
11,028 | 9,250 | 1,778 | 19.2 | ||||||||||||
Net revenue |
134,232 | 112,931 | 21,301 | 18.9 | ||||||||||||
Operations expense |
64,504 | 58,181 | 6,323 | 10.9 | ||||||||||||
Administrative expense |
26,138 | 12,297 | 13,841 | 112.6 | ||||||||||||
Depreciation and amortization |
4,179 | 3,356 | 823 | 24.5 | ||||||||||||
Loss on sale/disposal of assets |
7 | 211 | (204 | ) | (96.7 | ) | ||||||||||
Operating income |
39,404 | 38,886 | 518 | 1.3 | ||||||||||||
Interest income |
(3 | ) | (8 | ) | 5 | (62.5 | ) | |||||||||
Interest expense |
300 | 365 | (65 | ) | (17.8 | ) | ||||||||||
Equity in net income of unconsolidated affiliates |
(3,367 | ) | (1,283 | ) | (2,084 | ) | 162.4 | |||||||||
Other |
(61 | ) | (15 | ) | (46 | ) | | |||||||||
Income before income taxes |
42,535 | 39,827 | 2,708 | 6.8 | ||||||||||||
Income tax expense |
15,106 | 14,120 | 986 | 7.0 | ||||||||||||
Net income |
$ | 27,429 | $ | 25,707 | $ | 1,722 | 6.7 | |||||||||
Net income per share, diluted |
$ | 0.55 | $ | 0.52 | $ | 0.03 | 5.7 | |||||||||
Weighted average shares, diluted |
50,119 | 49,400 |
Amount or | ||||||||||||||||
Percentage Point (ppt) | ||||||||||||||||
OTHER DATA: | Increase (Decrease) | |||||||||||||||
Gross margin on merchandise sales |
39.0 | % | 37.2 | % | 1.8 | ppts | ||||||||||
Gross margin on jewelry scrapping sales |
36.3 | % | 37.8 | % | (1.5 | ) | ppts | |||||||||
Gross margin on total sales |
37.9 | % | 37.4 | % | 0.5 | ppts | ||||||||||
Signature loan bad debt as percent of fees |
25.1 | % | 22.7 | % | 2.4 | ppts | ||||||||||
Auto title loan bad debt as percent of fees |
15.7 | % | 14.8 | % | 0.9 | ppts | ||||||||||
Annualized inventory turnover |
3.8 | 3.7 | 0.1 | |||||||||||||
Operating income margin |
29.4 | % | 34.4 | % | (5.0 | ) | ppts |
Page 4 of 7
EZCORP, Inc.
Highlights of Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data and store counts)
Highlights of Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data and store counts)
December 31, | ||||||||
2010 | 2009 | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 23,908 | $ | 17,032 | ||||
Pawn loans |
124,388 | 103,446 | ||||||
Signature loans, net |
11,953 | 8,934 | ||||||
Auto title loans, net |
3,307 | 2,110 | ||||||
Pawn service charges receivable, net |
24,068 | 19,662 | ||||||
Signature loan fees receivable, net |
6,141 | 6,044 | ||||||
Auto title loan fees receivable, net |
1,600 | 827 | ||||||
Inventory, net |
77,677 | 63,515 | ||||||
Deferred tax asset |
23,248 | 15,671 | ||||||
Prepaid expenses and other assets |
20,724 | 20,654 | ||||||
Total current assets |
317,014 | 257,895 | ||||||
Investments in unconsolidated affiliates |
108,959 | 90,455 | ||||||
Property and equipment, net |
66,641 | 52,378 | ||||||
Deferred tax asset, non-current |
| 5,011 | ||||||
Goodwill |
128,181 | 101,134 | ||||||
Other assets, net |
24,252 | 19,931 | ||||||
Total assets |
$ | 645,047 | $ | 526,804 | ||||
Liabilities and stockholders equity: |
||||||||
Current liabilities: |
||||||||
Current maturities of long-term debt |
$ | 10,000 | $ | 10,000 | ||||
Accounts payable and other accrued expenses |
48,986 | 39,692 | ||||||
Customer layaway deposits |
5,950 | 2,697 | ||||||
Federal income taxes payable |
5,267 | 6,480 | ||||||
Total current liabilities |
70,203 | 58,869 | ||||||
Long-term debt, less current maturities |
12,500 | 22,500 | ||||||
Deferred tax liability |
1,619 | | ||||||
Deferred gains and other long-term liabilities |
2,419 | 2,840 | ||||||
Total stockholders equity |
558,306 | 442,595 | ||||||
Total liabilities and stockholders equity |
$ | 645,047 | $ | 526,804 | ||||
Pawn loan balance per ending pawn store |
$ | 236 | $ | 235 | ||||
Inventory per ending pawn store |
$ | 147 | $ | 144 | ||||
Book value per share |
$ | 11.18 | $ | 9.08 | ||||
Tangible book value per share |
$ | 8.29 | $ | 6.68 | ||||
Pawn store count end of period |
528 | 440 | ||||||
Signature loan store count end of period |
504 | 480 | ||||||
Shares outstanding end of period |
49,923 | 48,732 |
Page 5 of 7
EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands, except store counts and percents)
Operating Segment Results (Unaudited)
(in thousands, except store counts and percents)
U.S. Pawn | Empeño | EZMONEY | ||||||||||||||
Three months ended December 31, 2010: | Operations | Fácil | Operations | Consolidated | ||||||||||||
Revenues: |
||||||||||||||||
Merchandise Sales |
$ | 62,341 | $ | 5,389 | $ | | $ | 67,730 | ||||||||
Scrap Sales |
47,006 | 3,462 | 197 | 50,665 | ||||||||||||
Pawn service charges |
46,436 | 3,374 | | 49,810 | ||||||||||||
Signature loan fees |
509 | | 39,557 | 40,066 | ||||||||||||
Auto title loan fees |
393 | | 5,851 | 6,244 | ||||||||||||
Other |
4,081 | 189 | 41 | 4,311 | ||||||||||||
Total revenues |
160,766 | 12,414 | 45,646 | 218,826 | ||||||||||||
Merchandise cost of goods sold |
38,197 | 3,114 | | 41,311 | ||||||||||||
Scrap cost of goods sold |
29,538 | 2,638 | 79 | 32,255 | ||||||||||||
Signature loan bad debt |
165 | | 9,881 | 10,046 | ||||||||||||
Auto title loan bad debt |
61 | | 921 | 982 | ||||||||||||
Net revenues |
92,805 | 6,662 | 34,765 | 134,232 | ||||||||||||
Operations expense |
43,196 | 4,278 | 17,030 | 64,504 | ||||||||||||
Store operating income |
$ | 49,609 | $ | 2,384 | $ | 17,735 | $ | 69,728 | ||||||||
Gross margin on merchandise sales |
38.7 | % | 42.2 | % | N/A | 39.0 | % | |||||||||
Gross margin on scrap sales |
37.2 | % | 23.8 | % | 59.9 | % | 36.3 | % | ||||||||
Gross margin on total sales |
38.1 | % | 35.0 | % | 59.9 | % | 37.9 | % | ||||||||
Annualized inventory turnover |
3.7 | 4.1 | N/A | 3.8 | ||||||||||||
Signature loan bad debt as percent of fees |
32.4 | % | N/A | 25.0 | % | 25.1 | % | |||||||||
Auto title loan bad debt as percent of fees |
15.5 | % | N/A | 15.7 | % | 15.7 | % | |||||||||
Store operating income margin |
53.5 | % | 35.8 | % | 51.0 | % | 51.9 | % | ||||||||
Pawn store count end of period |
396 | 132 | | 528 | ||||||||||||
Signature loan store count end of period |
6 | | 498 | 504 | ||||||||||||
Three months ended December 31, 2009: |
||||||||||||||||
Revenues: |
||||||||||||||||
Merchandise Sales |
$ | 59,211 | $ | 3,265 | $ | | $ | 62,476 | ||||||||
Scrap Sales |
36,823 | 607 | 12 | 37,442 | ||||||||||||
Pawn service charges |
38,941 | 1,856 | | 40,797 | ||||||||||||
Signature loan fees |
553 | | 38,125 | 38,678 | ||||||||||||
Auto title loan fees |
475 | | 2,627 | 3,102 | ||||||||||||
Other |
2,167 | 89 | | 2,256 | ||||||||||||
Total revenues |
138,170 | 5,817 | 40,764 | 184,751 | ||||||||||||
Merchandise cost of goods sold |
36,906 | 2,358 | | 39,264 | ||||||||||||
Scrap cost of goods sold |
22,824 | 475 | 7 | 23,306 | ||||||||||||
Signature loan bad debt |
186 | | 8,604 | 8,790 | ||||||||||||
Auto title loan bad debt |
70 | | 390 | 460 | ||||||||||||
Net revenues |
78,184 | 2,984 | 31,763 | 112,931 | ||||||||||||
Operations expense |
40,199 | 2,164 | 15,818 | 58,181 | ||||||||||||
Store operating income |
$ | 37,985 | $ | 820 | $ | 15,945 | $ | 54,750 | ||||||||
Gross margin on merchandise sales |
37.7 | % | 27.8 | % | N/A | 37.2 | % | |||||||||
Gross margin on scrap sales |
38.0 | % | 21.7 | % | 41.7 | % | 37.8 | % | ||||||||
Gross margin on total sales |
37.8 | % | 26.8 | % | 41.7 | % | 37.4 | % | ||||||||
Annualized inventory turnover |
3.7 | 3.9 | N/A | 3.7 | ||||||||||||
Signature loan bad debt as percent of fees |
33.6 | % | N/A | 22.6 | % | 22.7 | % | |||||||||
Auto title loan bad debt as percent of fees |
14.7 | % | N/A | 14.8 | % | 14.8 | % | |||||||||
Store operating income margin |
48.6 | % | 27.5 | % | 50.2 | % | 48.5 | % | ||||||||
Pawn store count end of period |
370 | 70 | | 440 | ||||||||||||
Signature loan store count end of period |
6 | | 474 | 480 |
Page 6 of 7
Supplemental Non-GAAP Financial Measures
The following tables provide a reconciliation of the differences between the reported or projected
non-GAAP financial measures for the periods indicated and the most comparable GAAP financial
measures. The non-GAAP financial measures presented may not be directly comparable to similarly
titled measures reported by other companies and their usefulness for such purposes are therefore
limited. EZCORP management believes presentation of the Non-GAAP financial measures enhances
investors ability to analyze the Companys operating results. However, non-GAAP financial
measures are not an alternative to GAAP financial measures and should be read only in conjunction
with financial measures presented on a GAAP basis.
EZCORP, Inc.
Reconciliation of Non-GAAP Consolidated Financial Measures (Unaudited)
(in thousands, except per share data and percents)
Reconciliation of Non-GAAP Consolidated Financial Measures (Unaudited)
(in thousands, except per share data and percents)
Three Months Ended December 31, 2010 | ||||||||||||
Non-GAAP | ||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||
Net revenue |
134,232 | | 134,232 | |||||||||
Operations expense |
64,504 | | 64,504 | |||||||||
Administrative expense |
26,138 | (10,945 | ) | 15,193 | ||||||||
Depreciation and amortization |
4,179 | | 4,179 | |||||||||
Loss on sale/disposal of assets |
7 | | 7 | |||||||||
Operating income |
39,404 | 10,945 | 50,349 | |||||||||
Interest income |
(3 | ) | | (3 | ) | |||||||
Interest expense |
300 | | 300 | |||||||||
Equity in net income of unconsolidated affiliates |
(3,367 | ) | | (3,367 | ) | |||||||
Other |
(61 | ) | | (61 | ) | |||||||
Income before income taxes |
42,535 | 10,945 | 53,480 | |||||||||
Income tax expense |
15,106 | 3,831 | 18,937 | |||||||||
Net income |
$ | 27,429 | $ | 7,114 | $ | 34,543 | ||||||
Net income per share, diluted |
$ | 0.55 | $ | 0.14 | $ | 0.69 | ||||||
Weighted average shares, diluted |
50,119 | | 50,119 |
Projected Year Ending September 30, 2011 | ||||||||||||
Projected | Non-GAAP | Projected | ||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||
Net income per share, diluted |
$ | 2.26 | $ | 0.14 | $ | 2.40 | ||||||
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