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EZCORP Announces Fiscal 2009 First Quarter Results

Jan 22, 2009

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its fiscal first quarter, which ended December 31, 2008.

For the quarter ended December 31, 2008, EZCORP's net income increased 18% to $14,828,000 ($0.33 per share) compared to $12,555,000 ($0.29 per share) for the quarter ended December 31, 2007. Included in the quarter is an unusual pre-tax charge of $1,110,000 ($0.02 per share) related to a 1998 stock option grant, as described below. Excluding this charge, the Company earned $0.35 per share compared to $0.29 in the prior year quarter, an increase of 21%.

In the quarter, EZCORP completed two acquisitions. On November 13, 2008, the Company acquired eleven Las Vegas pawn stores for $34,388,000, comprised of the issuance of approximately 1,117,000 shares of EZCORP Class A Non-voting Common Stock and $17,138,000 of cash and transaction costs.

On December 31, 2008, the Company acquired 67 stores from Value Financial Services for $107,812,000. The total purchase price was comprised of the issuance of approximately 4,072,000 shares of EZCORP's Class A Non-voting Common Stock valued at $64,830,000, $13,384,000 of cash paid to Value Financial shareholders, the assumption of $28,975,000 of debt net of cash acquired, and transaction costs of $623,000. These amounts exclude any contingent consideration payable under the terms of the acquisition, which depends on the price Value Financial shareholders sell their EZCORP shares, should they choose to sell, in the 125 days following the acquisition.

Commenting on the quarter's results, President and Chief Executive Officer, Joe Rotunda, stated, "Our first quarter was a good quarter for the Company and represents our 26th consecutive quarter of year over year earnings improvement. Not reflected in the quarter's results is the earnings impact of the 67 Value Pawn stores acquired on December 31, 2008."

Rotunda continued, "With the closing of our acquisition of Value Pawn, we also closed on a new credit facility with a $40 million term loan and an $80 million revolving line of credit. Following the acquisition, the $80 million revolving line of credit remains untouched. This unused revolving credit line, combined with our non operating cash balance and ongoing operating cash flow, provides us with significant capital to continue investing in our business and to pursue other high quality acquisition opportunities."

Rotunda concluded, "We anticipate another solid result in our March quarter, with earnings growth in same stores as well as contributions from the two acquisitions we completed in the December quarter. For the March quarter, we expect earnings per share of approximately $0.36, compared to $0.30 for the same period a year ago. For our 2009 fiscal year ending September 30, we expect earnings per share of approximately $1.52 per share, including the benefit of the two acquisitions. Excluding the unusual charge in the December quarter, our annual guidance is at the upper end of our previously provided guidance. For the full year, we believe we are still on target to open approximately 30-35 new EZMONEY locations and 30-35 Empeno Facil pawn locations in Mexico."

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 its pawnshops, 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 its signature loan stores and some pawnshops, the Company offers short-term non-collateralized loans, often referred to as payday loans, or fee based credit services to customers seeking loans.

As of December 31, 2008, EZCORP operated a total of 889 locations in the U.S. and Mexico (including the locations acquired from Value Financial Services on December 31, 2008) consisting of 412 pawnshops in the U.S. (371) and Mexico (41) and 477 U.S. signature loan stores.

Explanation of Unusual Charge & Reconciliation of non-GAAP to GAAP earnings per share:

The $1,110,000 unusual pretax charge in the quarter relates to a 1998 stock option grant to two executives. EZCORP will realize cash tax savings of $1,110,000 with the exercise of the options. Stock option accounting rules require this savings be recorded as an addition to stockholders' equity rather than a reduction to income tax expense. Terms of the grant require the company to pay a cash bonus to the executives equal to the cash tax savings realized by the company (no other stock option grants contain this term). The December quarter includes the $1,110,000 pre-tax charge to administrative expense for this cash bonus. While the tax savings and bonus are cash neutral to the Company, the required accounting reduced after-tax income by $748,000, or $0.02 per share. Non-GAAP earnings per share, excluding the impact of the bonus, were $0.35.

Included in the statements above is a non-GAAP earnings per share figure removing the effect of a bonus based on tax savings not recognized in income. The Company believes this to be a meaningful number as the cash income tax savings and cash bonus equal to the cash tax savings are recorded differently, resulting in a net income decrease of $748,000 although they are cash neutral. Below is a reconciliation of the non-GAAP earnings per share figure to the GAAP-basis earnings per share figure:

  Pre-tax bonus due based on cash tax savings to EZCORP         $1,110,000
  Tax benefit related to cash bonus                                362,000
                                                                   -------
  Reduction of net income resulting from cash bonus               $748,000
                                                                  ========
  Reduction of EPS related to bonus                                  $0.02
  GAAP-basis diluted EPS reported                                     0.33
                                                                      ----
  Non-GAAP diluted EPS presented above                               $0.35
                                                                     =====
  Weighted average diluted shares outstanding                   44,692,000

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, capital availability 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 January 22, 2009 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=54992

  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 December 31,
                                                      -----------------
                                                        2008      2007
                                                        ----      ----
   1 Revenues:
   2     Merchandise sales                            $44,795  $40,499
   3     Jewelry scrapping sales                       19,785   15,008
   4     Pawn service charges                          26,381   22,908
   5     Signature loan fees                           36,000   33,528
   6     Auto title loan fees                             221        -
   7     Other                                          1,433      363
                                                        -----      ---
   8         Total revenues                           128,615  112,306
   9 Cost of goods sold:
  10     Cost of merchandise sales                     27,166   24,251
  11     Cost of jewelry scrapping sales               13,259    9,290
                                                       ------    -----
  12         Total cost of goods sold                  40,425   33,541
  13 Bad debt:
  14     Signature loan bad debt                        9,484    9,670
  15     Auto title loan bad debt                           7        -
                                                            -        -
  16         Total bad debt                             9,491    9,670
                                                        -----    -----
  17 Net revenue                                       78,699   69,095
  18
  19 Operations expense                                43,494   38,536
  20 Administrative expense                            10,411    8,440
  21 Depreciation and amortization                      3,066    2,827
  22 (Gain) / Loss on sale/disposal of assets            (284)     162
                                                         ----      ---
  23     Operating income                              22,012   19,130
  24
  25 Interest income                                     (126)     (57)
  26 Interest expense                                     165       81
  27 Equity in net income of unconsolidated affiliate    (941)  (1,047)
  28 Other                                                 25        -
                                                           --        -
  29 Income before income taxes                        22,889   20,153
  30 Income tax expense                                 8,061    7,598
                                                        -----    -----
  31 Net income                                       $14,828  $12,555
                                                      =======  =======
  32
                                                        -----    -----
  33 Net income per share, diluted                      $0.33    $0.29
                                                        =====    =====
  34
  35 Weighted average shares, diluted                  44,692   43,273



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

                                                         As of December 31,
                                                           2008      2007
                                                           ----      ----
   1 Assets:
   2   Current assets:
   3     Cash and cash equivalents                        $41,595  $13,651
   4     Pawn loans                                        93,789   63,270
   5     Payday loans, net                                  8,246    6,169
   6     Pawn service charges receivable, net              16,888   10,710
   7     Auto title loans, net                              1,174        -
   8     Auto title loan finance charges receivable, net       92        -
   9     Signature loan fees receivable, net                5,968    7,217
  10     Inventory, net                                    64,563   41,788
  11     Deferred tax asset                                15,773    9,005
  12     Prepaid expenses and other assets                 12,284    8,121
                                                           ------    -----
  13           Total current assets                       260,372  159,931
  14
  15   Investment in unconsolidated affiliate              37,873   37,294
  16   Property and equipment, net                         46,674   37,308
  17   Deferred tax asset, non-current                      7,754    5,023
  18   Goodwill                                            98,300   24,591
  19   Other assets, net                                   18,693    5,089
                                                           ------    -----
  20         Total assets                                $469,666 $269,236
                                                         ======== ========
  21 Liabilities and stockholders' equity:
  22   Current liabilities:
  23     Current maturities of long-term debt             $10,000       $-
  24     Accounts payable and other accrued expenses       48,534   25,164
  25     Customer layaway deposits                          2,879    2,144
  26     Federal income taxes payable                       3,186    9,063
                                                            -----    -----
  27           Total current liabilities                   64,599   36,371
  28
  29   Long-term debt                                      30,337        -
  30   Deferred gains and other long-term liabilities       3,566    3,096
  31   Total stockholders' equity                         371,164  229,769
                                                          -------  -------
  32         Total liabilities and stockholders' equity  $469,666 $269,236
                                                         ======== ========
  33
  34 Pawn loan balance per ending pawn store                 $228     $198
  35 Inventory per ending pawn store                         $157     $131
  36 Book value per share                                   $7.67    $5.56
  37 Tangible book value per share                          $5.28    $4.87
  38 Pawn store count - end of period                         412      319
  39 Signature loan store count - end of period               477      448
  40 Shares outstanding - end of period                    48,417   41,343



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

                                EZPAWN      Empeno
    Three months ended       United States  Facil      EZMONEY
     December 31, 2008:       Operations  Operations Operations Consolidated
                              ----------  ---------- ---------- ------------

   1 Revenues:
   2   Sales                   $62,167      $2,413         $-      $64,580
       Pawn service
   3    charges                 24,884       1,497          -       26,381
       Signature loan
   4    fees                       686           -     35,314       36,000
       Auto title loan
   5    fees                       210           -         11          221
   6   Other                     1,433           -          -        1,433
                                 -----       -----      -----        -----
   7     Total revenues         89,380       3,910     35,325      128,615
   8
   9   Cost of goods sold       38,938       1,487          -       40,425
  10   Signature loan bad
        debt                       236           -      9,248        9,484
  11   Auto title loan bad
        debt                         6           -          1            7
                                 -----       -----      -----        -----
  12     Net revenues           50,200       2,423     26,076       78,699
  13
  14 Operations expense         26,678       1,284     15,532       43,494
                                ------       -----     ------       ------
  15     Store operating
          income               $23,522      $1,139    $10,544      $35,205
                               =======      ======    =======      =======
  16
  17  Pawn store count -
       end of period               371          41          -          412
  18  Signature loan store
       count - end of period         6           -        471          477
  19
  20   Three months ended
        December 31, 2007:
  21 Revenues:
  22   Sales                   $54,200      $1,307         $-      $55,507
       Pawn service
  23    charges                 21,990         918          -       22,908
       Signature loan
  24    fees                       809           -     32,719       33,528
       Auto title loan
  25    fees                         -           -          -            -
  26   Other                       361           2          -          363
                                  ----       -----      -----        -----
  27     Total revenues         77,360       2,227     32,719      112,306
  28
  29 Cost of goods sold         32,768         773          -       33,541
  30 Signature loan bad
      debt                         372           -      9,298        9,670
  31 Auto title loan bad
      debt                           -           -          -            -
                                ------      ------     ------       ------
  32     Net revenues           44,220       1,454     23,421       69,095
  33
  34 Operations expense         24,019         844     13,673       38,536
                                ------         ---     ------       ------
  35     Store operating
          income               $20,201        $610     $9,748      $30,559
                               =======        ====     ======      =======
  36
  37  Pawn store count -
       end of period              294           25          -          319
  38  Signature loan store
       count - end of period        6            -        442          448

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

Audio: http://www.videonewswire.com/event.asp?id=54992

SOURCE: EZCORP, Inc.

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

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

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