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EZCORP Announces Fiscal 2008 Third Quarter Results

Jul 24, 2008

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its fiscal third quarter and nine-month period, which ended June 30, 2008.

EZCORP's net income for the quarter ended June 30, 2008 increased 60% to $10,827,000 ($0.25 per share) compared to $6,762,000 ($0.16 per share) for the quarter ended June 30, 2007. Total revenues for the quarter increased 24% over the prior year period to $108,070,000 with pawn service charges up 34%, total sales (merchandise and jewelry scrapping) up 26%, and signature loan revenues (payday loan and credit service fees) up 16%.

In EZCORP's U.S. EZPAWN operations, store level operating income improved 47% to $19,474,000; and in its EZMONEY operations, store level operating income improved 36% to $9,067,000. EZCORP's 30 store Empeno Facil operation contributed $931,000 compared to a slight loss in the prior year period. After administrative expense and depreciation and amortization, consolidated operating income for the quarter improved 78% to $16,584,000 (22% of net revenue) compared to $9,307,000 (15% of net revenue) for the prior year quarter.

EZCORP's net income for the nine-month period ended June 30, 2008 increased 36% to $36,398,000 ($0.84 per share) compared to $26,719,000 ($0.62 per share) for the prior year nine-month period. Operating income for the nine-months improved 43% to $55,669,000 (24% of net revenues) compared to $38,810,000 (21% of net revenues) for the prior year nine-month period.

Commenting on these results, President and Chief Executive Officer, Joe Rotunda, stated, "Overall, our third quarter was a great quarter for EZCORP and was our twenty-fourth consecutive quarter of year-over-year earnings growth. Particularly gratifying is that these results are after a two cents per share impact from two non-recurring charges. Once again our results were generated by solid contributions from each of our business segments -- EZPAWN and EZMONEY in the U.S. and Empeno Facil in Mexico."

Rotunda continued, "I think it's noteworthy to point out how we believe our business was impacted, both favorably and unfavorably, by the economic stimulus checks, which began distribution in May. During May and June, we realized a slightly lower than expected seasonal demand for loans; however, we saw a favorable impact on retail sales and loan redemptions in our EZPAWN locations and lower levels of bad debt in our EZMONEY locations. While difficult to quantify, we do believe these checks had a net favorable impact on our results in the quarter."

Rotunda concluded, "As announced on July 8th, we expect earning per share for our September quarter to be approximately $0.35 per share compared to $0.26 in the prior year period. Included in this guidance is an approximate one cent benefit from our pending Value Financial Services acquisition. This will give us earnings per share of approximately $1.19 for our fiscal 2008 compared to $0.88 for our fiscal 2007. For the fiscal year, we expect to open 70 EZMONEY locations, including 47 opened through June, and twelve Empeno Facil locations, including six opened through June."

EZCORP is primarily a lender or provider of credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. In 294 U.S. EZPAWN and 30 Mexico Empeno Facil locations open on June 30, 2008, the Company offers non-recourse loans collateralized by tangible personal property, commonly known as pawn loans. At these locations, the Company also sells merchandise, primarily collateral forfeited from its pawn lending operations, to consumers looking for good value. In 461 EZMONEY locations and 71 EZPAWN locations open on June 30, 2008, the Company offers short-term non-collateralized loans, often referred to as payday loans, or fee based credit services to customers seeking loans.

This announcement contains certain forward-looking statements regarding the Company's expected performance for future periods including, but not limited to, new store expansion, anticipated benefits of acquisitions and 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 the 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 24, 2008 at 3:30pm Central Time. The conference call can be accessed over the Internet or replayed at your convenience at the following address. http://www.videonewswire.com/event.asp?id=49784

  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 June 30,
                                               2008              2007
  1  Revenues:
  2    Merchandise sales                      $35,728           $30,607
  3    Jewelry scrapping sales                 17,907            12,069
  4    Pawn service charges                    22,691            16,978
  5    Signature loan fees                     31,223            27,024
  6    Other                                      521               315
  7      Total revenues                       108,070            86,993
  8  Cost of goods sold:
  9    Cost of merchandise sales               20,706            17,745
  10   Cost of jewelry scrapping sales         10,754             7,676
  11     Total cost of goods sold              31,460            25,421
  12 Net revenues                              76,610            61,572
  13
  14 Operations expense                        38,593            31,595
  15 Signature loan bad debt                    8,545            10,142
  16 Administrative expense                     9,807             8,033
  17 Depreciation and amortization              3,081             2,495
  18   Operating income                        16,584             9,307
  19
  20 Interest income                             (165)             (618)
  21 Interest expense                              72                67
  22 Equity in net income of unconsolidated
      affiliate                                  (997)             (720)
  23 (Gain) / loss on sale/disposal of assets     284              (155)
  24 Other                                         11                 -
  25 Income before income taxes                17,379            10,733
  26 Income tax expense                         6,552             3,971
  27 Net income                               $10,827            $6,762
  28
  29 Net income per share, diluted              $0.25             $0.16
  30
  31 Weighted average shares, diluted          43,325            43,482



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

                                            Nine Months Ended June 30,
                                              2008              2007
  1  Revenues:
  2    Merchandise sales                     $120,902          $107,993
  3    Jewelry scrapping sales                 49,570            33,695
  4    Pawn service charges                    67,384            51,496
  5    Signature loan fees                     94,917            74,132
  6    Other                                    1,228             1,007
  7      Total revenues                       334,001           268,323
  8  Cost of goods sold:
  9    Cost of merchandise sales               72,122            63,903
  10   Cost of jewelry scrapping sales         29,610            21,715
  11     Total cost of goods sold             101,732            85,618
  12 Net revenues                             232,269           182,705
  13
  14 Operations expense                       113,185            94,087
  15 Signature loan bad debt                   24,847            19,086
  16 Administrative expense                    29,541            23,528
  17 Depreciation and amortization              9,027             7,194
  18   Operating income                        55,669            38,810
  19
  20 Interest income                             (359)           (1,499)
  21 Interest expense                             228               214
  22 Equity in net income of unconsolidated
      affiliate                                (3,162)           (2,185)
  23 (Gain) / loss on sale/disposal of assets     527              (131)
  24 Other                                         11                 -
  25 Income before income taxes                58,424            42,411
  26 Income tax expense                        22,026            15,692
  27 Net income                               $36,398           $26,719
  28
  29 Net income per share, diluted              $0.84             $0.62
  30
  31 Weighted average shares, diluted          43,269            43,393



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

                                                           As of June 30,
                                                         2008          2007
  1  Assets:
  2    Current assets:
  3      Cash and cash equivalents                     $29,812       $31,686
  4      Pawn loans                                     68,022        58,053
  5      Payday loans, net                               6,598         4,514
  6      Pawn service charges receivable, net           10,061         8,150
  7      Signature loan fees receivable, net             5,086         5,439
  8      Inventory, net                                 39,444        33,641
  9      Deferred tax asset                              9,007         7,344
  10     Federal income taxes receivable                   454             -
  11     Prepaid expenses and other assets               5,622         5,197
  12       Total current assets                        174,106       154,024
  13
  14   Investment in unconsolidated affiliate           37,248        21,250
  15   Property and equipment, net                      38,661        31,895
  16   Deferred tax asset, non-current                   5,620         4,536
  17   Goodwill                                         24,779        16,211
  18   Other assets, net                                 5,585         3,448
  19       Total assets                               $285,999      $231,364
  20 Liabilities and stockholders' equity:
  21   Current liabilities:
  22     Accounts payable and other accrued expenses   $24,120       $21,658
  23     Customer layaway deposits                       2,254         1,888
  24     Federal income taxes payable                        -         1,255
  25       Total current liabilities                    26,374        24,801
  26
  27   Deferred gains and other long-term liabilities    2,909         2,977
  28   Total stockholders' equity                      256,716       203,586
  29       Total liabilities and stockholders' equity $285,999      $231,364
  30
  31 Pawn loan balance per ending pawn store              $210          $195
  32 Inventory per ending pawn store                      $122          $113
  33 Book value per share                                $6.19         $4.93
  34 Tangible book value per share                       $5.50         $4.47
  35 EZPAWN store count - end of period                    324           298
  36 EZMoney signature loan store count - end of period    461           390
  37 Shares outstanding - end of period                 41,441        41,300



                               EZCORP, Inc.
                   Operating Segment Results (Unaudited)
                    (in thousands, except store counts)

                               EZPAWN
                               United      EZPAWN
  Three months ended           States      Mexico     EZMONEY
   June 30, 2008:            Operations  Operations  Operations Consolidated
  1  Revenues:
  2    Sales                    $51,799     $1,836       $ -      $53,635
  3    Pawn service charges      21,378      1,313         -       22,691
  4    Signature loan fees          650          -    30,573       31,223
  5    Other                        521          -         -          521
  6      Total revenues          74,348      3,149    30,573      108,070
  7
  8  Cost of goods sold          30,301      1,159         -       31,460
  9      Net revenues            44,047      1,990    30,573       76,610
  10
  11 Operating expenses:
  12   Operations expense         24,371     1,059    13,163       38,593
  13   Signature loan bad debt       202         -     8,343        8,545
  14     Total direct expenses    24,573     1,059    21,506       47,138
  15     Store operating income  $19,474      $931    $9,067      $29,472
  16
  17   EZPAWN store count - end
        of period                    294        30         -          324
  18   EZMoney signature loan store
        count - end of period          6         -       455          461
  19
  20 Three months ended
      June 30, 2007:
  21   Revenues:
  22     Sales                   $42,623       $53       $ -      $42,676
  23     Pawn service charges     16,955        23         -       16,978
  24     Signature loan fees         782         -    26,242       27,024
  25     Other                       315         -         -          315
  26       Total revenues         60,675        76    26,242       86,993
  27
  28   Cost of goods sold         25,395        26         -       25,421
  29       Net revenues           35,280        50    26,242       61,572
  30
  31   Operating expenses:
  32     Operations expense       21,481       117     9,997       31,595
  33     Signature loan bad debt     559         -     9,583       10,142
  34         Total direct
              expenses            22,040       117    19,580       41,737
  35         Store operating
              income             $13,240      $(67)   $6,662      $19,835
  36
  37   EZPAWN store count - end
        of period                    295         3         -          298
  38   EZMoney signature loan store
        count - end of period          6         -       384          390



                                 EZCORP, Inc.
                    Operating Segment Results (Unaudited)
                     (in thousands, except store counts)

                                 EZPAWN
                                 United     EZPAWN
    Nine months ended            States     Mexico    EZMONEY
     June 30, 2008:            Operations Operations Operations Consolidated
  1    Revenues:
  2      Sales                   $165,749    $4,723       $ -     $170,472
  3      Pawn service charges      64,089     3,295         -       67,384
  4      Signature loan fees        2,131         -    92,786       94,917
  5      Other                      1,224         4         -        1,228
  6        Total revenues         233,193     8,022    92,786      334,001
  7
  8    Cost of goods sold          98,853     2,879         -      101,732
  9        Net revenues           134,340     5,143    92,786      232,269
  10
  11   Operating expenses:
  12     Operations expense        71,399     2,781    39,005      113,185
  13     Signature loan bad debt      741         -    24,106       24,847
  14       Total direct expenses   72,140     2,781    63,111      138,032
  15       Store operating income $62,200    $2,362   $29,675      $94,237
  16
  17   EZPAWN store count - end
        of period                     294        30         -          324
  18   EZMoney signature loan store
        count - end of period           6         -       455          461
  19
  20 Nine months ended
      June 30, 2007:
  21   Revenues:
  22     Sales                   $141,621       $67       $ -     $141,688
  23     Pawn service charges      51,464        32         -       51,496
  24     Signature loan fees        2,486         -    71,646       74,132
  25     Other                      1,006         1         -        1,007
  26       Total revenues         196,577       100    71,646      268,323
  27
  28   Cost of goods sold          85,583        35         -       85,618
  29       Net revenues           110,994        65    71,646      182,705
  30
  31   Operating expenses:
  32     Operations expense        64,641       243    29,203       94,087
  33     Signature loan bad debt    1,043         -    18,043       19,086
  34       Total direct expenses   65,684       243    47,246      113,173
  35       Store operating
            income                $45,310     $(178)  $24,400      $69,532
  36
  37   EZPAWN store count - end of
        period                        295         3         -          298
  38   EZMoney signature loan store
        count - end of period           6         -       384          390

First Call Analyst:
FCMN Contact: Sharon_Lemond@ezcorp.com

SOURCE: EZCORP, Inc.

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

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

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