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EZCORP Announces Third Quarter Earnings

Jul 23, 2002

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its third fiscal 2002 quarter and the nine month period, which ended June 30, 2002.

For the three months ended June 30, 2002, EZCORP is reporting operating income before depreciation and amortization of $2.7 million compared to $3.3 million in the prior year period. Included in operating expense for the quarter are approximately $0.7 million of additional rent expense from sale leasebacks completed in the last twelve months and approximately $0.3 million of non-capitalizable costs related to the upgrade of the Company's enterprise software. Excluding these two items, operating income before depreciation and amortization would be $3.7 million, 12% above the third fiscal 2001 quarter.

For the three and nine month periods, sale leasebacks of forty owned properties increased year over year rent expense, included in operating expense, by approximately $0.7 million and $1.3 million. This increased rent expense is offset by combined reductions in interest and depreciation expense of approximately the same amounts.

For the third quarter, the Company is reporting a net loss of $0.5 million ($0.04 per share) compared to a net loss of $0.4 million ($0.04 per share) for the same period a year ago. In the third fiscal 2001 quarter the Company had a $0.7 million credit to restructuring expense based on the decision not to close seven stores previously identified for closure. Excluding the non- capitalizable software upgrade in the third fiscal 2002 quarter, the Company would report a net loss of approximately $0.3 million compared to a net of loss of $0.8 million excluding the restructuring expense credit in the prior year period.

For the nine months ended June 30, 2002, operating income before depreciation and amortization was $14.3 million ($15.9 million excluding $1.3 million additional sale leaseback rent and $0.3 million non-capitalizable software upgrade costs) compared to $14.6 million for the prior year. Net income for the nine months is approximately $2.0 million ($0.16 per share) compared to net income of $0.6 million ($0.5 per share) in the nine month fiscal 2001 period.

Commenting on these results, Joseph L. Rotunda, President and Chief Executive Officer, said, "The third quarter reflects a continuation of the earnings improvement we saw during the first six months of the year. Last quarter, we pointed out that you should be aware of an expected third quarter charge for our enterprise software upgrade and a third fiscal 2001 credit to restructuring expense. Excluding these two elements, our net loss of $0.3 million for the third quarter decreased approximately $0.5 million to last year. For the nine months, our reported net income of just under $2.0 million is $1.3 million greater than the comparable fiscal 2001 period."

Mr. Rotunda added, "Our lending activities continue to be strong with same store pawn service charge growth of 4.1% for the first nine months and our payroll advance product contributing $4.8 million in incremental fees over the same period last year. We continue to efficiently manage the movement of pawn loan forfeitures. Annualized inventory turnover for the nine months was 2.5 times compared to 2.1 times last year. At the end of June our total debt of $43.4 million was 36% below last year. We expect to re-syndicate our credit facility in the fourth fiscal quarter."

Concluding, Mr. Rotunda stated, "We set out this year to significantly improve our earnings performance, to strengthen our balance sheet, and to build a foundation for our payroll advance product and other financial services for the cash and credit constrained consumer. Our results to date indicate we are on course. I expect our year over year earnings improvement to continue in our fourth quarter resulting in net income for the fiscal 2002 twelve month period of approximately $2.0 million versus a net loss of $0.6 million for fiscal 2001. With the stabilization of our core pawn business, continued growth of our payroll advance product, and the addition of other complementary products and services we expect substantial earnings growth over the next several years."

EZCORP offers consumers convenient, non-recourse loans collateralized by tangible personal property, and short-term non-collateralized 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 June 30, 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 at http://www.firstcallevents.com/service/ajwz363121885gf12.html . 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 Statement of Operations (Unaudited)
            (in thousands, except per share data and store count)
                                                Three Months Ended June 30,
                                                   2002              2001

   1  Total revenues                             $43,140           $43,100
   2  Cost of goods sold                          17,601            18,427
   3  Net revenues                                25,539            24,673
   4  Operating expenses                          22,804            21,355
   5   Operating income before depreciation and
        amortization                               2,735             3,318
   6  Depreciation and amortization                2,501             2,870
   7   Operating income                              234               448
   8  Interest expense, net                          972             2,028
   9  Equity in net income of
       unconsolidated affiliate                     (110)              (71)
   10 Loss on sale of assets                         186               166
   11 Restructuring expense                          ---              (696)
   12 Income before income taxes                    (814)             (979)
   13 Income tax expense                            (301)             (537)
   14 Net income                                   $(513)            $(442)
   15
   16 Net income per share                        $(0.04)           $(0.04)
   17 Weighted average shares - fully diluted     12,282            12,113
   18 Store count - average for period               280               289


                                                 Nine Months Ended June 30,
                                                   2002              2001

   1  Total revenues                            $145,202          $139,160
   2  Cost of goods sold                          60,591            57,960
   3  Net revenues                                84,611            81,200
   4  Operating expenses                          70,272            66,584
   5   Operating income before depreciation and
        amortization                              14,339            14,616
   6  Depreciation and amortization                7,631             8,118
   7   Operating income                            6,708             6,498
   8  Interest expense, net                        3,711             6,548
   9  Equity in net income of
       unconsolidated affiliate                     (422)             (208)
   10 Loss on sale of assets                         319               162
   11 Restructuring expense                          ---              (696)
   12 Income before income taxes                   3,100               692
   13 Income tax expense                           1,147                48
   14 Net income                                  $1,953              $644
   15
   16 Net income per share                         $0.16             $0.05
   17 Weighted average shares - fully diluted     12,275            12,094
   18 Store count - average for period               281               294


                                EZCORP, Inc.
            Highlights of Consolidated Balance Sheets (Unaudited)
            (in thousands, except per share data and store count)
                                                       As of June 30,
                                                   2002              2001
   1  Assets:
   2   Current assets:
   3    Cash and cash equivalents                 $1,418            $2,626
   4    Pawn loans                                47,648            47,199
   5    Short-term loans                           1,784               800
   6    Service charges receivable, net            8,635             8,007
   7    Inventory, net                            32,634            33,711
   8    Deferred tax asset                         6,434             7,081
   9    Federal income tax receivable                ---               ---
   10   Prepaid expenses and other assets          2,359             2,692
   11     Total current assets                   100,912           102,116
   12  Investment in unconsolidated affiliates    13,932            13,716
   13  Property and equipment, net                34,214            52,384
   14  Other assets                               16,252            18,436
   15     Total assets                          $165,310          $186,652
   16 Liabilities and stockholders' equity:
   17  Current liabilities:
   18   Current maturities of long-term debt     $43,445           $67,671
   19  Accounts payable and other accrued
        expenses                                  10,620             9,346
   20  Restructuring reserve                          46               481
   21  Customer layaway deposits                   1,811             2,045
   22     Total current liabilities               55,922            79,543
   23  Long-term debt, less current maturities       ---                91
   24  Deferred tax liability                      1,193               990
   25  Deferred gains and other long-
        term liabilities                           4,200             2,897
   26     Total long-term liabilities              5,393             3,978
   27 Total stockholders' equity                 103,995           103,131
   28 Total liabilities and stockholders'
       equity                                   $165,310          $186,652
   29
   30 Loan balance per ending store                 $177              $166
   31 Inventory per ending store                    $117              $117
   32 Book value per share                         $8.55             $8.50
   33 Tangible book value per share                $7.41             $7.29
   34 Store count - end of period                    280               289
   35 Shares outstanding - end of period          12,167            12,128


                            EZCORP, Inc. Valuation
                                                                   $ million
   1  Market capitalization (12.2M shares X closing price
       on 7/19/02 of $3.35)                                           $40.8
   2  Total debt                                                       43.4
   3  Enterprise value                                                 84.2
   4  Less value of EZCORP's investment in Albemarle & Bond
       Holdings PLC
   5  (13.3M shares X closing price on 7/19/02 0.70 British Pounds
       X $1.57 per British Pounds)                                     14.6
   6
   7  Net enterprise value ("NEV")                                    $69.6
   8
   9  Last twelve months EBITDA                                       $18.0
   10
   11 NEV to EBITDA                                                     3.9

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

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SOURCE: EZCORP, Inc.

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

Web site: http://www.ezcorp.com/

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