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| 8-K - 8-K - EZCORP INC | a2017-q3earningsrelease8k.htm |
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) — 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.
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). |
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.
• | 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. |
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.
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 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 | % | ||