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EZCORP Announces Third Quarter Results

Jul 21, 2003

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its third fiscal 2003 quarter and the nine month period, which ended June 30, 2003.

For the three months ended June 30, 2003, net income increased to $53,000 ($0.00 per share) compared to a net loss of $513,000 ($0.04 per share) for the comparable prior year period. These earnings are at the upper end of the Company's publicly announced estimate of $0.00 to a loss of $0.02 per share for this period. Total revenues for the three month period increased 9% to $46,903,000.

For the nine months ended June 30, 2003, income before the cumulative effect of an accounting change increased to $3,836,000 ($0.31 per share) compared to $1,953,000 ($0.16 per share) for the comparable prior year period. Total revenues for the nine month period increased 5% to $153,124,000. 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 $4,201,000 for the nine month period.

Commenting on these results, Joseph L. Rotunda, President and Chief Executive Officer, said, "Results for our third fiscal quarter continue to be in line with our expectations. For the quarter, our pawn lending was especially strong with pawn service charge revenue up six percent from the same period last year, primarily due to a six percentage point improvement in our annualized yield on pawn loans. We also realized three percent same store sales growth; however, this came at a cost of lower margins as we aggressively pushed to reduce aging inventory levels. Inventory turnover was very strong at 2.7 times compared to 2.2 times for the same period a year ago.

"Our payroll advance product continues to mature with payroll advance finance charges up fifty-six percent to just over three-million dollars for the quarter and our end of period loan balance up seventy-five percent from June 2002 to $3,116,000. As we generated this growth, we also lowered our net defaults on payroll advance loans one percentage point, compared to the third fiscal 2002 quarter, to 4.8%."

Mr. Rotunda continued, "We are also excited about opening our first two payroll advance stores: one is a stand-alone store that offers payroll advances and the other is a 'store within a store' with the payroll advance operation separated from the adjoining EZPawn. We believe both models offer significant growth opportunity in the future."

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 fourth quarter, the Company estimates earnings to be between four and nine cents per share compared to two cents per share for the fiscal 2002 fourth quarter. Seasonally, the Company's fourth quarter earnings are expected to be the second weakest of the quarters (after the third quarter) due mainly to lower sales levels. The Company's preliminary earnings guidance for its fiscal 2004 is fifty to fifty-five cents per share.

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, 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 July 22, 2003 at 10:00am Central Time. The conference call can be accessed over the Internet (or replay at your convenience) at the following address.

      http://www.firstcallevents.com/service/ajwz383995606gf12.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 June 30,
                                                   2003              2002

   1 Total revenues                              $46,903           $43,140
   2 Cost of goods sold                           19,714            17,601
   3 Net revenues                                 27,189            25,539
   4 Operating expenses                           24,832            22,804
   5   Operating income before
        depreciation and amortization              2,357             2,735
   6 Depreciation and amortization                 2,179             2,501
   7   Operating income                              178               234
   8 Interest expense, net                           403               972
   9 Equity in net income of
      unconsolidated affiliate                      (333)             (110)
  10 Loss on sale of assets                           27               186
  11 Income (loss) before income taxes                81              (814)
  12 Income tax expense (benefit)                     28              (301)
  13 Income (loss) before cumulative
      effect of a change in accounting
      principle                                      $53             $(513)
  14 Cumulative effect of adopting a
      new accounting principle, net of
      tax                                            ---               ---
  15 Net income (loss)                               $53             $(513)
  16
  17 Income (loss) per share, assuming
      dilution:
  18   Income (loss) before cumulative
        effect of a change in
        accounting principle                        $---            $(0.04)
  19   Cumulative effect of adopting a
        new accounting principle, net
        of tax                                       ---               ---
  20   Net income (loss)                            $---            $(0.04)
  21
  22 Weighted average shares - assuming
      dilution                                    12,528            12,148
  23 Store count - average for period                280               280
  24
  25
  26 Pro forma results, as if the new
      accounting principle were in
      effect for all periods:
  27   Net income (loss) as reported                 $53             $(513)
  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 (loss)                    $53             $(347)
  32
  33   Per share amounts - assuming
        dilution:
  34     Net income (loss) as
          reported                                  $---            $(0.04)
  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 (loss)                 $---            $(0.03)


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

                                                Nine Months Ended June 30,
                                                  2003              2002

   1 Total revenues                             $153,124          $145,202
   2 Cost of goods sold                           63,708            60,591
   3 Net revenues                                 89,416            84,611
   4 Operating expenses                           76,381            70,272
   5   Operating income before
        depreciation and amortization             13,035            14,339
   6 Depreciation and amortization                 6,636             7,631
   7   Operating income                            6,399             6,708
   8 Interest expense, net                         1,534             3,711
   9 Equity in net income of
      unconsolidated affiliate                    (1,062)             (422)
  10 Loss on sale of assets                           26               319
  11 Income before income taxes                    5,901             3,100
  12 Income tax expense                            2,065             1,147
  13 Income before cumulative effect of
      a change in accounting principle            $3,836            $1,953
  14 Cumulative effect of adopting a
      new accounting principle, net of
      tax                                         (8,037)              ---
  15 Net income (loss)                           $(4,201)           $1,953
  16
  17 Income (loss) per share, assuming
      dilution:
  18   Income before cumulative effect
        of a change in accounting
        principle                                  $0.31             $0.16
  19   Cumulative effect of adopting a
        new accounting principle, net
        of tax                                    $(0.65)              ---
  20   Net income (loss)                          $(0.34)            $0.16
  21
  22 Weighted average shares - assuming
      dilution                                    12,474            12,275
  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             $(4,201)           $1,953
  28   Add back:  goodwill and pawn
        license amortization, net of
        tax                                          ---               285
  29   Add back:  amortization of
        goodwill related to equity
        investee, net of tax                         ---               214
  30   Add back:  cumulative effect of
        adopting a new accounting
        principle, net of tax                      8,037               ---
  31   Adjusted net income                        $3,836            $2,452
  32
  33   Per share amounts - assuming
        dilution:
  34     Net income (loss) as
          reported                                $(0.34)            $0.16
  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                       ---              0.02
  37     Add back:  cumulative effect
          of adopting a new
          accounting principle, net
          of tax                                    0.65               ---
  38     Adjusted net income                       $0.31             $0.20


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

                                                       As of June 30,
                                                   2003              2002
   1  Assets:
   2    Current assets:
   3      Cash and cash equivalents                 $248            $1,418
   4      Pawn loans                              48,149            47,648
   5      Payroll advances                         3,116             1,784
   6      Pawn service charges receivable,
           net                                     8,806             8,253
   7      Payroll advance service charges
           receivable, net                           611               382
   8      Inventory, net                          28,853            32,634
   9      Deferred tax asset                       6,418             6,434
   10     Federal income taxes receivable            683               ---
   11     Prepaid expenses and other assets        2,209             2,359
   12       Total current assets                  99,093           100,912
   13   Investment in unconsolidated
         affiliates                               15,113            13,932
   14   Property and equipment, net               27,141            34,214
   15   Deferred tax asset, non-current            1,948               ---
   16   Other assets                               5,348            16,252
   17       Total assets                        $148,643          $165,310
   18 Liabilities and stockholders' equity:
   19   Current liabilities:
   20     Current maturities of long-term
           debt                                     $---           $43,445
   21     Accounts payable and other
           accrued expenses                        9,186            10,666
   22     Customer layaway deposits                1,471             1,811
   23       Total current liabilities             10,657            55,922
   24   Long-term debt, less current
         maturities                               33,000               ---
   25   Deferred tax liability                       ---             1,193
   26   Deferred gains and other long-
         term liabilities                          4,408             4,200
   27       Total long-term liabilities           37,408             5,393
   28 Total stockholders' equity                 100,578           103,995
   29 Total liabilities and
       stockholders' equity                     $148,643          $165,310
   30
   31 Pawn loan balance per ending store            $172              $170
   32 Inventory per ending store                    $103              $117
   33 Book value per share                         $8.25             $8.55
   34 Tangible book value per share                $8.03             $7.41
   35 Store count - end of period                    280               280
   36 Basic shares outstanding - end of
       period                                     12,188            12,167
Audio: http://www.firstcallevents.com/service/ajwz383995606gf12.html

SOURCE: EZCORP, Inc.

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

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

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