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EZCORP Announces 37% Increase in Second Quarter Earnings

Apr 22, 2003

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its second fiscal 2003 quarter and the six month period, which ended March 31, 2003.

For the three months ended March 31, 2003, net income increased 37% to $1,498,000 ($0.12 per share) compared to $1,094,000 ($0.09 per share) for the comparable prior year period. These earnings are above the Company's publicly announced estimate of $0.09 to $0.11 per share for this period. Total revenues for the three month period increased 12% to $53,022,000.

For the six months ended March 31, 2003, income before the cumulative effect of an accounting change increased 53% to $3,783,000 ($0.30 per share) compared to $2,466,000 ($0.20 per share) for the comparable prior year period. Total revenues for the six month period increased 4% to $106,221,000. Effective October 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 which deals with the accounting treatment of goodwill and other intangible assets. After a charge of $8,037,000 for the cumulative effect of adopting this new accounting principle, the Company realized a net loss of $4,254,000 for the six month period.

Commenting on these results, Joseph L. Rotunda, President and Chief Executive Officer, said, "We are pleased with our earnings and results for the quarter. Our business is comprised of three primary segments: pawn lending, payroll advance loans and selling merchandise which is comprised primarily of forfeited collateral. Each made a substantial contribution to our earnings performance. Our pawn service charge revenues increased 3% year over year while our average pawn loan balance was unchanged. Our payroll advance product continues to develop with year over year service charge increases of $1.1 million and an incremental contribution of approximately $0.8 million. As we expected, our sales were especially strong with same store sales up 8% for the quarter, largely due to the changes made to our layaway program. Gross profit on merchandise sales increased approximately $0.5 million."

Mr. Rotunda continued, "While our operating results confirm that we are on track with our plans to significantly improve earnings, our results also have contributed to a stronger balance sheet. During the last twelve months we have reduced our total debt, primarily from operating cash flows, by approximately $9.4 million to $28.0 million."

The Company estimates fiscal 2003 earnings (before the cumulative effect of the change in accounting principle) to be between thirty-five and forty cents per share compared to eighteen cents per share for fiscal 2002. For the fiscal 2003 third quarter, the Company estimates earnings to be between a loss of $0.02 and $0.00 per share compared to a loss of $0.04 per share for the fiscal 2002 third quarter. Seasonally, the Company's third quarter earnings are expected to be the weakest of the quarters due to lower sales levels and lower average loan balances.

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 March 31, 2003, 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, expected future earnings. 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 a conference call discussing these results on April 22, 2003 at 10:00 am Central Time. The conference call can be accessed over the Internet (or replay it at your convenience) at the following address.

      http://www.firstcallevents.com/service/ajwz377376791gf12.html
  For additional information, contact Dan Tonissen at (512) 314-2289.


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

                                                Three Months Ended March 31,
                                                   2003              2002

   1 Total revenues                              $53,022           $47,481
   2 Cost of goods sold                           22,672            19,820
   3 Net revenues                                 30,350            27,661
   4 Operating expenses                           25,807            22,666
   5   Operating income before
        depreciation and amortization              4,543             4,995
   6 Depreciation and amortization                 2,192             2,532
   7   Operating income                            2,351             2,463
   8 Interest expense, net                           474               996
   9 Equity in net income of
      unconsolidated affiliate                      (427)             (248)
  10 Gain on sale of assets                          ---               (22)
  11 Income before income taxes                    2,304             1,737
  12 Income tax expense                              806               643
  13 Income before cumulative effect of
      a change in accounting principle            $1,498            $1,094
  14 Cumulative effect of adopting a
      new accounting principle, net of tax           ---               ---
  15 Net income (loss)                            $1,498            $1,094
  16
  17 Income (loss) per share, assuming dilution:
  18   Income before cumulative effect
        of a change in accounting principle        $0.12             $0.09
  19   Cumulative effect of adopting a
        new accounting principle, net of tax         ---               ---
  20   Net income (loss)                           $0.12             $0.09
  21
  22 Weighted average shares - assuming dilution  12,513            12,276
  23 Store count - average for period                280               281
  24
  25
  26 Pro forma results, as if the new accounting
      principle were in effect for all periods:
  27   Net income (loss) as reported              $1,498            $1,094
  28   Add back:  goodwill and pawn
        license amortization, net of tax             ---                95
  29   Add back:  amortization of goodwill
        related to equity investee, net of tax       ---                71
  30   Add back:  cumulative effect of adopting
        a new accounting principle, net of tax       ---               ---
  31   Adjusted net income                        $1,498            $1,260
  32
  33   Per share amounts - assuming dilution:
  34       Net income (loss) as reported           $0.12             $0.09
  35       Add back:  goodwill and pawn
            license amortization, net of tax         ---              0.01
  36       Add back:  amortization of goodwill
            related to equity investee,
            net of tax                               ---               ---
  37       Add back:  cumulative effect
            of adopting a new accounting principle,
            net of tax                               ---               ---
  38       Adjusted net income                     $0.12             $0.10


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

                                                Six Months Ended March 31,
                                                  2003              2002

   1 Total revenues                             $106,221          $102,063
   2 Cost of goods sold                           43,992            42,990
   3 Net revenues                                 62,229            59,073
   4 Operating expenses                           51,549            47,468
   5     Operating income before
          depreciation and amortization           10,680            11,605
   6 Depreciation and amortization                 4,459             5,130
   7     Operating income                          6,221             6,475
   8 Interest expense, net                         1,131             2,739
   9 Equity in net income of
      unconsolidated affiliate                      (730)             (312)
  10 Loss on sale of assets                          ---               133
  11 Income before income taxes                    5,820             3,915
  12 Income tax expense                            2,037             1,449
  13 Income before cumulative effect of
      a change in accounting principle            $3,783            $2,466
  14 Cumulative effect of adopting a
      new accounting principle, net of tax        (8,037)              ---
  15 Net income (loss)                           $(4,254)           $2,466
  16
  17 Income (loss) per share, assuming dilution:
  18   Income before cumulative effect
        of a change in accounting principle        $0.30             $0.20
  19   Cumulative effect of adopting a
        new accounting principle, net of tax       (0.64)              ---
  20   Net income (loss)                          $(0.34)            $0.20
  21
  22 Weighted average shares - assuming dilution  12,438            12,174
  23 Store count - average for period                280               282
  24
  25
  26 Pro forma results, as if the new
      accounting principle were in
      effect for all periods:
  27   Net income (loss) as reported             $(4,254)           $2,466
  28   Add back:  goodwill and pawn
        license amortization, net of tax             ---               190
  29   Add back:  amortization of
        goodwill related to equity
        investee, net of tax                         ---               143
  30   Add back:  cumulative effect of
        adopting a new accounting
        principle, net of tax                      8,037               ---
  31   Adjusted net income                        $3,783            $2,799
  32
  33   Per share amounts - assuming dilution:
  34       Net income (loss) as reported          $(0.34)            $0.20
  35       Add back:  goodwill and pawn
            license amortization, net of tax         ---              0.02
  36       Add back:  amortization of
            goodwill related to equity
            investee, net of tax                     ---              0.01
  37       Add back:  cumulative effect
            of adopting a new accounting principle,
            net of tax                              0.64               ---
  38       Adjusted net income                     $0.30             $0.23


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

                                                       As of March 31,
                                                   2003              2002
   1  Assets:
   2   Current assets:
   3    Cash and cash equivalents                   $3,386            $1,224
   4    Pawn loans                                  41,218            40,152
   5    Payroll advances                             2,253             1,096
   6    Pawn service charges receivable, net         7,966             7,951
   7    Payroll advance service charges
         receivable, net                               442               236
   8    Inventory, net                              29,535            31,331
   9    Deferred tax asset                           6,418             6,105
   10   Prepaid expenses and other assets            2,456             2,044
   11     Total current assets                      93,674            90,139
   12  Investment in unconsolidated affiliates      15,124            14,066
   13  Property and equipment, net                  28,659            37,725
   14  Deferred tax asset, non-current               1,948               ---
   15  Other assets                                  5,477            16,504
   16     Total assets                            $144,882          $158,434
   17 Liabilities and stockholders' equity:
   18  Current liabilities:
   19   Current maturities of long-term debt          $---           $37,445
   20   Accounts payable and other accrued expenses 10,027             9,279
   21   Restructuring reserve                            3                93
   22   Customer layaway deposits                    1,731             2,005
   23   Federal income taxes payable                   443               ---
   24     Total current liabilities                 12,204            48,822
   25  Long-term debt, less current maturities      28,000               ---
   26  Deferred tax liability                          ---             1,193
   27  Deferred gains and other long-
       term liabilities                              4,019             3,871
   28     Total long-term liabilities               32,019             5,064
   29  Total stockholders' equity                  100,659           104,548
   30     Total liabilities and stockholders'
           equity                                 $144,882          $158,434
   31
   32 Pawn loan balance per ending store              $147              $143
   33 Inventory per ending store                      $105              $112
   34 Book value per share                           $8.26             $8.62
   35 Tangible book value per share                  $8.03             $7.46
   36 Store count - end of period                      280               280
   37 Basic shares outstanding - end of period      12,188            12,128
Audio: http://www.firstcallevents.com/service/ajwz377376791gf12.html

SOURCE: EZCORP, Inc.

CONTACT: Dan Tonissen of EZCORP, Inc., +1-512-314-2289

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

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