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EZCORP Announces 32% Earnings Growth for Second Quarter

Apr 20, 2005

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its second fiscal quarter and six month period, which ended March 31, 2005.

For the quarter ended March 31, 2005, EZCORP's net income improved 32% to $3,969,000 (twenty-nine cents per share) compared to $3,007,000 (twenty-three cents per share) for the prior year period. Total revenues for the second fiscal quarter increased 8% to $63,098,000 compared to $58,289,000 for the prior year second fiscal quarter. After higher cost of goods sold, due to higher levels of sales, and higher operating expense, operating income improved 31% to $5,847,000. Operating income margins for the quarter, measured as a percent of net revenues, improved approximately three percentage points to 15%.

For the six months ended March 31, 2005, EZCORP generated net income of $8,918,000 (sixty-six cents per share) compared to $5,997,000 (forty-six cents per share) for the same six month period a year ago. Total revenues increased 11% to $124,726,000 while operating income increased 48% to $13,496,000. Operating income margins for the six months, measured as a percent of net revenue, improved approximately four percentage points to 17%.

Commenting on these results, President and Chief Executive Officer, Joe Rotunda, stated, "Our results for the quarter continued our trend of strong year-over-year earnings growth with net income up 32% over the prior year quarter. Once again, payday loans were the strongest contributor to this growth with payday loan service charges up 54%, while our payday loan bad debt and direct transaction expenses increased only 16%. Modest increases in pawn service charge revenue and gross profit on the sale of forfeited collateral also contributed to our performance."

Rotunda continued, "While we believe our performance to date has been outstanding, our results are overshadowed by the potential impact on our payday loan business of the FDIC's payday loan guideline change. As we work to understand the full effect of this change, we also are working on several fronts to mitigate any adverse financial impact the changes may have. These fronts include new loan products as well as programs to enhance our pawn business when these changes are implemented. We also are cautiously optimistic about the passing of Texas payday loan legislation."

Rotunda concluded, "Given the uncertainty surrounding the FDIC's changes and the impact on our business, we are broadening our range of earnings guidance for the year to $0.95 to $1.05. To the extent that the timing and circumstances surrounding the implementation of the revised guideline are more or less favorable, we would expect to be at the upper or lower end of this earnings guidance range. Until the timing and circumstances of the guideline change are resolved, the potential earnings impact cannot be fully determined."

EZCORP meets the short-term cash needs of the cash and credit constrained consumer by offering convenient, non-recourse loans collateralized by tangible personal property, commonly known as pawn loans, and short-term non- collateralized loans, often referred to as payday loans. The Company also sells merchandise, primarily collateral forfeited from its pawn lending operations, to consumers looking for good value. As of March 31, 2005, the Company operated 280 EZPAWN and 192 EZMONEY Payday Loan stores, 135 of which adjoin an EZPAWN location.

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 20, 2005 at 3:30 pm Central Time. The conference call can be accessed over the Internet (or replay it at your convenience) at the following address. http://phx.corporate-ir.net/playerlink.zhtml?c=69434&s=wm&e=1050585

  For additional information, contact Dan Tonissen at (512) 314-2289.


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

                                             Three Months Ended March 31,
                                                 2005           2004
  1 Revenues:
  2    Merchandise sales                       $33,293        $33,188
  3    Jewelry scrapping sales                   6,966          5,186
  4    Pawn service charges                     14,682         14,488
  5    Payday loan service charges               7,828          5,072
  6    Other                                       329            355
  7      Total revenues                         63,098         58,289
  8 Cost of goods sold:
  9    Cost of merchandise sales                18,961         18,858
  10   Cost of jewelry scrapping sales           4,940          3,659
  11     Total cost of goods sold               23,901         22,517
  12 Net revenues                               39,197         35,772
  13
  14 Operations expense                         23,988         21,775
  15 Bad debt and other payday loan
      direct expenses                            1,495          1,286
  16 Administrative expense                      5,796          6,378
  17 Depreciation and amortization               2,071          1,865
  18    Operating income                         5,847          4,468
  19
  20 Interest expense, net                         275            373
  21 Equity in net income of unconsolidated
      affiliate                                   (636)          (496)
  22 Loss on sale/disposal of assets                 6            ---
  23 Income before income taxes                  6,202          4,591
  24 Income tax expense                          2,233          1,584
  25 Net income                                $ 3,969        $ 3,007
  26
  27 Net income per share, assuming dilution   $  0.29        $  0.23
  28
  29 Weighted average shares - assuming
      dilution                                  13,755         13,209



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

                                             Six Months Ended March 31,
                                                 2005           2004
  1 Revenues:
  2    Merchandise sales                       $65,311        $64,250
  3    Jewelry scrapping sales                  11,272          7,679
  4    Pawn service charges                     31,351         30,040
  5    Payday loan service charges              16,118          9,933
  6    Other                                       674            701
  7      Total revenues                        124,726        112,603
  8 Cost of goods sold:
  9    Cost of merchandise sales                37,741         36,441
  10   Cost of jewelry scrapping sales           8,073          5,349
  11     Total cost of goods sold               45,814         41,790
  12 Net revenues                               78,912         70,813
  13
  14 Operations expense                         46,691         42,552
  15 Bad debt and other payday loan direct
      expenses                                   3,104          3,125
  16 Administrative expense                     11,663         12,240
  17 Depreciation and amortization               3,958          3,780
  18   Operating income                         13,496          9,116
  19
  20 Interest expense, net                         614            821
  21 Equity in net income of unconsolidated
      affiliate                                 (1,096)          (861)
  22 Loss on sale/disposal of assets                43            ---
  23 Income before income taxes                 13,935          9,156
  24 Income tax expense                          5,017          3,159
  25 Net income                                $ 8,918        $ 5,997
  26
  27 Net income per share, assuming
      dilution                                 $  0.66        $  0.46
  28
  29 Weighted average shares - assuming
      dilution                                  13,542         13,101


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

                                                   As of March 31,
                                                 2005           2004
  1 Assets:
  2   Current assets:
  3     Cash and cash equivalents              $ 1,405        $   202
  4     Pawn loans                              40,081         42,079
  5     Payday loans, net                        7,711          4,643
  6     Pawn service charges receivable, net     7,720          7,825
  7     Payday loan service charges receivable,
         net                                     1,573            928
  8     Inventory, net                          26,967         29,492
  9     Deferred tax asset                       9,711          8,163
  10    Prepaid expenses and other assets        5,418          3,054
  11      Total current assets                 100,586         96,386
  12  Investment in unconsolidated affiliate    17,094         15,417
  13  Property and equipment, net               26,132         24,642
  14  Deferred tax asset, non-current            4,946          4,391
  15  Other assets, net                          3,914          5,366
  16      Total assets                        $152,672       $146,202
  17 Liabilities and stockholders' equity:
  18  Current liabilities:
  19    Accounts payable and other
         accrued expenses                     $ 13,359       $ 11,668
  20    Customer layaway deposits                1,848          1,842
  21    Federal income taxes payable               271            771
  22      Total current liabilities             15,478         14,281
  23
  24  Long-term debt                             6,825         15,000
  25  Deferred gains and other long-term
       liabilities                               3,778          4,139
  26      Total long-term liabilities           10,603         19,139
  27  Total stockholders' equity               126,591        112,782
  28      Total liabilities and stockholders'
           equity                             $152,672       $146,202
  29
  30 Pawn loan balance per ending pawn store  $    143       $    150
  31 Inventory per ending pawn store          $     96       $    105
  32 Book value per share                     $  10.19       $   9.25
  33 Tangible book value per share            $   9.99       $   9.04
  34 Pawn store count - end of period              280            280
  35 Mono-line payday loan store count
      - end of period                              192             55
  36 Shares outstanding - end of period         12,428         12,198

SOURCE: EZCORP, Inc.

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

Web site: http://www.ezcorp.com/
http://phx.corporate-ir.net/playerlink.zhtml?c=69434&s=wm&e=1050585

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