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| 8-K - 8-K - EZCORP INC | a2017-q2earningsrelease8k.htm |
EZCORP Announces Second Quarter Fiscal 2017 Results
Earnings per share from continuing operations up 200% year-over-year to $0.15
Austin, Texas (May 3, 2017) — 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.
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%. |
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.
• | 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. |
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.
Contact:
Jeff Christensen
Vice President, Investor Relations
Email: jeff_christensen@ezcorp.com
Phone: (512) 437-3545
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 | % | ||