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EZCORP Announces Second Quarter Earnings

Apr 23, 2002

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its second fiscal 2002 quarter and the six month period, which ended March 31, 2002.

For the three months ended March 31, 2002, net income increased to $1.1 million ($0.09 per share) compared to $33,000 ($0.00 per share) for the comparable prior year period. Total revenues for the three month period decreased to $47.5 million from $48.8 million primarily due to 3% fewer stores and the change to our layaway program made in the Company's first fiscal 2002 quarter. Total revenues per store increased slightly to $169,000 compared to $168,000.

For the six months ended March 31, 2002, net income increased 127% to $2.5 million ($0.20 per share) compared to $1.1 million ($0.09 per diluted share) for the comparable prior year period. Total revenues for the six month period increased 6% to $102.1 million largely due to growth in service charges and fees from lending activities.

At the end of March, total debt was down 44% to $37.4 million and was approximately 2.1 times trailing twelve months EBITDA of $18.5 million. Of the total debt reduction of $29.4 million, $15.9 million was generated from the sale of assets, primarily thirty-one sale leaseback transactions. $13.5 million of the debt reduction was generated from operations, net of investments in the business, primarily short term loan growth and maintenance level capital expenditures.

The sale leasebacks increased rent expense, included in operating expense, by $0.5 million and $1.0 million for the three and six month periods and reduced depreciation and interest expense by approximately the same amounts. Excluding rent from these sale leaseback properties, operating income before depreciation and amortization increased approximately 8% and 12% from the prior year three and six month periods.

Commenting on these results, Joseph L. Rotunda, President and Chief Executive Officer, said, "We set out this year to significantly improve our earnings performance and strengthen our balance sheet. Our results to date indicate we are on course to accomplish this objective. Our lending business for the first six months is extremely strong with same store pawn service charges up 8% from last year and our short term loans, now offered in 217 locations, contributing approximately $1.5 million in operating income. At the same time we effectively managed our forfeited collateral for better cash generation. For the six month period, our inventory turned, on an annualized basis, 2.6 times compared to 2.1 times for the comparable period last year. At the end of the quarter, our inventory levels per store were $112,000 compared to $118,000 a year ago."

Mr. Rotunda continued, "Our affiliate Albemarle and Bond Holdings PLC, the largest operator of pawnshops in the United Kingdom, continues their strong performance. In their mid-year earnings announcement for the six months ended December 31, 2001, they reported a 53% increase in net income to approximately 1.3 million British Pounds. Their stock price reflects this strong performance. Today, the market value of our 29% ownership of Albemarle and Bond is approximately $15.9 million compared to our book value of approximately $13.0 million."

Mr. Rotunda concluded, "We are well underway with our plan to build a company with solid earnings and a sound balance sheet. Given our debt reduction and earnings improvement we will re-syndicate our bank credit facility later this fiscal year. For the balance of fiscal 2002, we expect to realize earnings improvement in our core business similar to what we have seen the first half of this fiscal year. As we introduce new products and services, like our short term loan product, we expect to further enhance the economics of our business as we enter fiscal 2003.

"Investors should be aware of one charge unrelated to our core business expected in our 2002 third fiscal quarter and a credit to restructuring expense which occurred in the 2001 third fiscal quarter.

  -- Due to an architectural change in our enterprise software, we are in
     the process of a major system upgrade.  Approximately $0.4 million of
     operating expense related to this upgrade will be recognized in the
     third fiscal 2002 quarter.  Another upgrade of this magnitude is not
     expected to occur for the next five years.
  -- In the 2001 third fiscal quarter we had a $0.7 million credit to
     restructuring expense due to our decision to not close seven stores,
     previously identified for closure, based on their improved operating
     performance.  A similar credit will not occur in the 2002 fiscal third

EZCORP offers consumers convenient, non-recourse loans collateralized by tangible personal property, and short-term loans, often referred to as payday loans. A secondary, but related, business activity is the selling of previously owned merchandise consisting primarily of forfeited collateral. At March 31, 2002, the Company operated 280 stores in eleven states.

This announcement contains certain forward-looking statements regarding the Company's expected performance for future periods including, but not limited to, the success of new products or services. Actual results for these periods may materially differ from these statements. Such forward-looking statements involve risks and uncertainties such as changing market conditions in the overall economy and the industry, consumer demand for the Company's services and merchandise, changes in regulatory environment, and other factors periodically discussed in the Company's annual, quarterly and other reports filed with the Securities and Exchange Commission.

You are invited to listen to the conference call that will be broadcast over the Internet on April 23 at 10 a.m. Central at . The conference call can be replayed at the same address. For additional information, contact Dan Tonissen at (512) 314-2220.

                               EZCORP, Inc.
     Highlights of Consolidated Statements of Operations (Unaudited)
          (in thousands, except per share data and store count)

                                                Three Months Ended March 31,
                                                   2002              2001

   1  Total revenues                             $47,481           $48,819
   2  Cost of goods sold                          19,820            21,435
   3  Net revenues                                27,661            27,384
   4  Operating expenses                          22,666            22,274
   5    Operating income before depreciation
         and amortization                          4,995             5,110
   6  Depreciation and amortization                2,532             2,814
   7    Operating income                           2,463             2,296
   8  Interest expense, net                          996             2,332
   9  Equity in net income of
       unconsolidated affiliate                     (248)             (110)
   10 (Gain) / loss on sale of assets                (22)               (1)
   11 Income before income taxes                   1,737                75
   12 Income tax expense                             643                42
   13 Net income                                  $1,094               $33
   15 Net income per share                         $0.09             $0.00
   16 Weighted average shares - fully diluted     12,276            12,087
   17 Store count - average for period               281               290

                                                 Six Months Ended March 31,
                                                    2002              2001

   1  Total revenues                             $102,063           $96,060
   2  Cost of goods sold                           42,990            39,533
   3  Net revenues                                 59,073            56,527
   4  Operating expenses                           47,468            45,229
   5    Operating income before depreciation
         and amortization                          11,605            11,298
   6  Depreciation and amortization                 5,130             5,248
   7    Operating income                            6,475             6,050
   8  Interest expense, net                         2,739             4,520
   9  Equity in net income of
       unconsolidated affiliate                      (312)             (137)
   10 (Gain) / loss on sale of assets                 133                (4)
   11 Income before income taxes                    3,915             1,671
   12 Income tax expense                            1,449               585
   13 Net income                                   $2,466            $1,086
   15 Net income per share                          $0.20             $0.09
   16 Weighted average shares - fully diluted      12,174            12,087
   17 Store count - average for period                282               296

                               EZCORP, Inc.
          Highlights of Consolidated Balance Sheets (Unaudited)
          (in thousands, except per share data and store count)

                                                      As of March 31,
                                                   2002              2001
   1  Assets:
   2    Current assets:
   3      Cash and cash equivalents               $1,224            $2,785
   4      Pawn loans                              40,152            40,477
   5      Short-term loans                         1,096               106
   6      Service charges receivable, net          8,187             7,220
   7      Inventory, net                          31,331            34,148
   8      Deferred tax asset                       6,105             6,135
   9      Federal income tax receivable              ---               ---
   10     Prepaid expenses and other assets        2,044             2,170
   11       Total current assets                  90,139            93,041
   12   Investment in unconsolidated affiliates   14,066            14,002
   13   Property and equipment, net               37,725            58,378
   14   Other assets                              16,504            18,061
   15       Total assets                        $158,434          $183,482
   16 Liabilities and stockholders' equity:
   17   Current liabilities:
   18     Current maturities of long-term debt   $37,445           $66,773
   19     Accounts payable and other
           accrued expenses                        9,279             8,815
   20     Restructuring reserve                       93               355
   21     Customer layaway deposits                2,005             2,486
   22       Total current liabilities             48,822            78,429
   23   Long-term debt, less current maturities      ---                94
   24   Deferred tax liability                     1,193               599
   25   Deferred gains and other long-term
         liabilities                               3,871               614
   26       Total long-term liabilities            5,064             1,307
   27   Total stockholders' equity               104,548           103,746
   28       Total liabilities and
             stockholders' equity               $158,434          $183,482
   30 Loan balance per ending store                 $147              $140
   31 Inventory per ending store                    $112              $118
   32 Book value per share                         $8.62             $8.58
   33 Tangible book value per share                $7.46             $7.39
   34 Store count - end of period                    280               289
   35 Shares outstanding - end of period          12,128            12,087

                          EZCORP, Inc. Valuation

                                                                   $ million
   1  Market capitalization (12.1M shares X closing price on
       4/22/02 of $4.65)                                              $56.3
   2  Total debt                                                       37.4
   3  Enterprise value                                                 93.7
   4  Less value of EZCORP's investment in
       Albemarle & Bond Holdings PLC
   5   (13.3M shares X closing price on 4/22/02
        0.83 pounds Sterling X $1.45 per pounds Sterling)              15.9
   7  Net enterprise value ("NEV")                                    $77.8
   9  Last twelve months EBITDA                                       $18.5
   11 NEV to EBITDA                                                     4.2

   Albemarle & Bond trades on the London Stock Exchange under the symbol ABM


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Contact: Dan Tonissen of EZCORP, Inc., +1-512-314-2220


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