Press Release Details

View all Investor News

EZCORP Reports 31% Increase in Earnings per Share for Second Quarter and Raises Guidance for Fiscal 2011

Apr 21, 2011

AUSTIN, Texas, April 21, 2011 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced results for its second fiscal quarter ended March 31, 2011.

(Logo: http://photos.prnewswire.com/prnh/20090713/EZCORPLOGO)

Commenting on the results, President and Chief Executive Officer, Paul Rothamel, said, "We had another quarter of great performance with all segments delivering robust results. Our diversified growth initiatives and innovative product changes, coupled with solid core business metrics, were key to our success. The underlying demand for our products and services remains strong."

Highlights for the quarter include:

Financials - Three months ended March 31, 2011 versus the prior year quarter

    --  Diluted earnings per share of $0.63, an increase of 31%.
    --  Net income of $31.8 million, up 34%.
    --  Net revenues of $131.0 million, up 19%.  Same store revenue increased
        12%.
    --  Store level operating income of $64.9 million, up 26% with margins
        improving 260 bps to 50%.
    --  Consolidated operating income of $44.9 million (operating margin of 34%)
        compared with operating income of $34.1 million (operating margin of
        31%).
    --  Pre-tax contribution from strategic affiliates of $4.7 million, up 42%.

Key Operating Metrics - Three months ended March 31, 2011 versus the prior year quarter

    --  US Pawn:
        --  Same store revenue growth of 11% driven by same store growth in
            merchandise sales, scrap sales and pawn service charge of 8%, 17%
            and 12%, respectively.
        --  Store level operating income increased 28% to $46.4 million with a
            390 bps improvement in margin to 51%.
    --  Empeno Facil:
        --  Same store revenue growth of 23% driven by same store growth in
            merchandise sales, scrap sales and pawn service charge of 22%, 15%
            and 37%, respectively.
        --  Store level operating income increased 82% to $1.6 million with a
            margin of 25% compared to 26%, despite the impact from opening 68
            new stores in the past 12 months.
    --  EZMONEY:
        --  Same store revenue was up 13% driven by increases in signature loan
            fees and auto title loan fees of 9% and 44%, respectively.
        --  Bad debt as a percentage of fees was 14%, compared with 13% in the
            prior year quarter primarily due to product mix.
        --  Store level operating income increased 17% to $16.9 million with a
            130 bps improvement in margin to 49%.
    --  Balance Sheet:
        --  Pawn loan balance at March 31 of $106.5 million, an increase of
            $17.5 million over a year ago.  Pawn loan balances increased 11% on
            a same store basis.
        --  The combined signature and auto title loan balances at March 31 of
            $11.9 million increased 30% over the prior year quarter.
        --  At March 31, 2011, cash and cash equivalents were $59.8 million with
            debt outstanding of $20.0 million compared with net cash of $21.2
            million a year ago.

Strategic Initiatives

    --  US Pawn acquired five stores for a total cost of $17.8 million and
        opened two greenfield stores in the second quarter.  Including the three
        greenfield stores opened and the four stores acquired in the first
        quarter, the total US Pawn store count at March 31, 2011 was 403.
    --  Empeno Facil opened 15 greenfield stores in the second quarter. 
        Including the 17 greenfield stores opened in the first quarter, the
        total Empeno Facil store count at March 31, 2011 was 147.
    --  EZMONEY opened 5 greenfield stores, all in Canada, in the second fiscal
        quarter.  Including the five stores opened in Canada in the first fiscal
        quarter, the total EZMONEY store count at March 31, 2011 was 507.
    --  In April, the Company acquired the Cash Converters franchise rights for
        Canada, including rights to receive fees from 13 stores operated by
        franchisees in Canada.  The Company plans to convert the majority of its
        existing Cashmax stores into the Cash Converters brand and add the Cash
        Converters buy / sell model to its existing non-collateralized loan
        model.
    --  Also in April, the Company signed an agreement to acquire 15 pawn stores
        from Mister Money for $18.5 million, including assumption of debt.  The
        stores are located in Iowa, Wisconsin, and Illinois and will bring the
        number of states in which EZCORP operates pawn shops to 15 compared to
        12 at this time last year.  The acquisition is pending shareholder
        approval and is expected to close in May.
    --  The market test in Colorado and Wisconsin of EZCORP's "Change" card -
        the Company's general purpose integrated debit card - successfully
        concluded in the second fiscal quarter.  As of March 31, 2011,
        approximately 14,000 Change cards have been issued to EZCORP customers. 
        The product is being rolled into the Company's Texas stores, both US
        Pawn and EZMONEY, in the second half of the year.

Cash Converters International Limited (CCV.ASX)

    --  In March 2011, EZCORP and Cash Converters announced a proposed global
        strategic alliance with two key elements:
        --  EZCORP plans to purchase 30% of Cash Converters' shares the Company
            does not already own for a total cost of approximately $70 million,
            taking its ownership interest in Cash Converters to 53%; and
        --  EZCORP and Cash Converters plan to establish two joint ventures,
            under which the two companies will roll out a suite of financial
            services products globally under the Cash Converters brand.
    --  The joint ventures are conditional upon the share purchase which, in
        turn, requires the approval of Cash Converters' shareholders.
    --  The transaction is expected to close in the fourth quarter.

Outlook for fiscal 2011

The Company also announced that it expects fiscal 2011 earnings per share, excluding the first quarter one-time charge related to the retirement of the former Chief Executive Officer, to increase 30% year-over-year to $2.55 ($2.41 on a GAAP basis). This is an increase from the Company's previous estimate of $2.40 per share ($2.26 on a GAAP basis). The revised guidance includes the acquisition of the Cash Converters franchise rights in Canada which closed on April 8(th) and the acquisition of the 15 Mister Money stores expected to close in early May. Pending the Cash Converters shareholder vote, it does not yet include the impact of the proposed global strategic alliance with Cash Converters International Limited.

Rothamel concluded, "Without losing focus or momentum in our core businesses, we were able to continue driving our key growth initiatives to seize opportunities and reduce risks to our business long term. Our US and Mexico growth remain on track, we are very optimistic about our new growth strategy in Canada, and we are similarly excited about our future in Australia, the United Kingdom, Europe, and beyond."

About EZCORP

EZCORP is a leading provider of specialty consumer financial services. It provides collateralized non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans, including payday loans, installment loans and auto title loans, or fee-based credit services to customers seeking loans. At its pawn stores, the company also sells merchandise, primarily collateral forfeited from its pawn lending operations.

EZCORP operates more than 1,000 stores, including over 500 pawn stores in the U.S. and Mexico and over 500 short-term consumer loan stores in the U.S. and Canada. The company also has significant investments in Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a worldwide network of over 600 stores in 21 countries that provide financial services and sell pre-owned merchandise, and Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 140 stores.

Special Note Regarding Forward-Looking Statements

This announcement contains certain forward-looking statements regarding the Company's expected operating and financial performance for future periods, including expected future earnings. These statements are based on the Company's current expectations. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including changes in the regulatory environment, changing market conditions in the overall economy and the industry, consumer demand for the Company's services and merchandise, and actions of third parties who offer services and products in the Company's locations. For a discussion of these and other factors affecting the Company's business and prospects, see the Company's annual, quarterly and other reports filed with the Securities and Exchange Commission.

Change to Presentation and Reclassification of Prior Year Comparatives

The Company has historically included fees from its Product Protection Plan and Jewelry VIP Program as well as layaway fees in "Other revenue" in its Consolidated Statements of Operations and its Operating Segment Results. Beginning in the second fiscal quarter of 2011 the Company has included these fees in "Merchandise sales" on the basis that fees from these products are incidental to sales of merchandise. Prior year figures have been reclassified to conform to this presentation and margins have been recalculated accordingly.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP net income and non-GAAP earnings per share for the six-month period ended March 31, 2001, as well as non-GAAP expected earnings per share for fiscal 2011. The only difference between the presented non-GAAP measures and the most closely comparable GAAP measures is the exclusion of a one-time charge related to the retirement of the Company's former Chief Executive Officer and the related tax benefit included in the quarter ended December 31, 2011. The Company's management uses these non-GAAP financial measures to understand its financial performance from period to period. Management does not believe that the excluded one-time charge is reflective of underlying operating performance. The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the corresponding GAAP measures, but rather are provided to facilitate an enhanced understanding of the Company's actual and expected performance and to enable more meaningful period-to-period comparisons. A reconciliation of the non-GAAP financial measures to the most closely comparable GAAP financial measures is provided in the accompanying financial schedules.

EZCORP Investor Relations(512) 314-2220

                                    EZCORP, Inc.
          Highlights of Consolidated Statements of Operations (Unaudited)
                 (in thousands, except per share data and percents)
                                        Three Months Ended
                                             March 31,
                                        ------------------
                                         2011          2010
                                         ----          ----

    Revenues:
      Merchandise sales               $77,773       $66,308
      Jewelry scrapping sales          47,995        36,228
      Pawn service charges             46,769        38,306
      Signature loan fees              35,103        31,642
      Auto title loan fees              5,369         3,956
      Other                               245           144
                                          ---           ---
        Total revenues                213,254       176,584

    Cost of goods sold:
      Cost of merchandise sales        44,639        39,081
      Cost of jewelry scrapping
       sales                           31,925        23,081
                                       ------        ------
        Total cost of goods sold       76,564        62,162

    Bad debt:
      Signature loan bad debt           5,438         4,397
      Auto title loan bad debt            302           320
                                          ---           ---
        Total bad debt                  5,740         4,717
                                        -----         -----

    Net revenue                       130,950       109,705

    Operations expense                 66,045        58,205
    Administrative expense             15,733        13,483
    Depreciation and amortization       4,466         3,573
    (Gain) /loss on sales /
     disposal of assets                  (178)          356
                                         ----           ---

      Operating income                 44,884        34,088

    Interest income                       (11)           (8)
    Interest expense                      300           395
    Equity in net income of
     unconsolidated affiliates         (4,691)       (3,306)
    Other                                   4            12
                                          ---           ---

    Income before income taxes         49,282        36,995
    Income tax expense                 17,444        13,222


    Net income                        $31,838       $23,773
                                      =======       =======

    Net income per share, diluted       $0.63         $0.48
                                        =====         =====

    Weighted average shares,
     diluted                           50,362        49,558

    OTHER DATA:
    -----------
    Gross margin on merchandise
     sales                               42.6%         41.1%
    Gross margin on jewelry
     scrapping sales                     33.5%         36.3%
    Gross margin on total sales          39.1%         39.4%

    Signature loan bad debt as
     percent of fees                     15.5%         13.9%
    Auto title loan bad debt as
     percent of fees                      5.6%          8.1%

                                       Six Months Ended March
                                                 31,
                                      -----------------------
                                          2011           2010
                                          ----           ----

    Revenues:
      Merchandise sales               $149,653       $130,924
      Jewelry scrapping sales           98,660         73,670
      Pawn service charges              96,579         79,103
      Signature loan fees               75,169         70,320
      Auto title loan fees              11,613          7,058
      Other                                406            260
                                           ---            ---
        Total revenues                 432,080        361,335

    Cost of goods sold:
      Cost of merchandise sales         85,950         78,345
      Cost of jewelry scrapping
       sales                            64,180         46,387
                                        ------         ------
        Total cost of goods sold       150,130        124,732

    Bad debt:
      Signature loan bad debt           15,484         13,187
      Auto title loan bad debt           1,284            780
                                         -----            ---
        Total bad debt                  16,768         13,967
                                        ------         ------

    Net revenue                        265,182        222,636

    Operations expense                 130,549        116,386
    Administrative expense              41,871         25,780
    Depreciation and amortization        8,645          6,929
    (Gain) /loss on sales /
     disposal of assets                   (171)           567
                                          ----            ---

      Operating income                  84,288         72,974

    Interest income                        (14)           (16)
    Interest expense                       600            760
    Equity in net income of
     unconsolidated affiliates          (8,058)        (4,589)
    Other                                  (57)            (3)
                                           ---            ---

    Income before income taxes          91,817         76,822
    Income tax expense                  32,550         27,342


    Net income                         $59,267        $49,480
                                       =======        =======

    Net income per share, diluted        $1.18          $1.00
                                         =====          =====

    Weighted average shares,
     diluted                            50,243         49,486

    OTHER DATA:
    -----------
    Gross margin on merchandise
     sales                                42.6%          40.2%
    Gross margin on jewelry
     scrapping sales                      34.9%          37.0%
    Gross margin on total sales           39.5%          39.0%

    Signature loan bad debt as
     percent of fees                      20.6%          18.8%
    Auto title loan bad debt as
     percent of fees                      11.1%          11.1%

                          EZCORP, Inc.
           Highlights of Consolidated Balance Sheets
                         (in thousands)
                                         March 31,            September
                                        (unaudited)               30,
                                         -----------     ----------
                                     2011         2010            2010
                                     ----         ----            ----
    Assets:
      Current assets:
        Cash and cash
         equivalents              $59,785      $51,192         $25,854
        Pawn loans                106,525       89,040         121,201
        Signature loans, net        9,926        7,287          10,775
        Auto title loans, net       2,022        1,939           3,145
        Pawn service charges
         receivable, net           19,976       16,353          21,626
        Signature loan fees
         receivable, net            4,841        4,607           5,818
        Auto title loan fees
         receivable, net            1,185          850           1,616
        Inventory, net             70,275       56,403          71,502
        Deferred tax asset         23,319       15,673          23,208
        Federal income taxes
         receivable                 1,427       13,414               -
        Prepaid expenses and
         other assets              20,045       15,625          17,427
                                   ------       ------          ------
          Total current assets    319,326      272,383         302,172

      Investments in
       unconsolidated
       affiliates                 112,364       90,854         101,386
      Property and equipment,
       net                         70,105       54,044          62,293
      Deferred tax asset,
       non-current                      -        5,318              60
      Goodwill                    143,404      101,456         117,305
      Other assets, net            23,694       22,223          23,196

          Total assets           $668,893     $546,278        $606,412
                                 ========     ========        ========

    Liabilities and
     stockholders' equity:
      Current liabilities:
        Current maturities of
         long term debt            10,000       10,000          10,000
        Accounts payable and
         other accrued expenses    44,754       38,592          49,663
        Customer layaway
         deposits                   6,844        4,487           6,109
        Federal income taxes
         payable                        -            -           3,687
                                      ---          ---           -----
          Total current
           liabilities             61,598       53,079          69,459

      Long-term debt, less
       current maturities          10,000       20,000          15,000
      Deferred tax liability        1,192            -               -
      Deferred gains and
       other long-term
       liabilities                  2,314        2,735           2,525
      Total stockholders'
       equity                     593,789      470,464         519,428


        Total liabilities and
         stockholders' equity    $668,893     $546,278        $606,412
                                 ========     ========        ========

    Other Data:
    -----------
    Pawn loan balance per
     ending pawn store               $194         $198            $240
    Inventory per ending
     pawn store                      $128         $125            $142
    Book value per share           $11.89        $9.57          $10.55

                                               EZCORP, Inc.
                                   Operating Segment Results (Unaudited)
                                     (in thousands, except  percents)
                      Three Months Ended March 31,
                      ----------------------------
                                US Pawn
                                -------
                            2011             2010
                            ----             ----

    Revenues:
      Merchandise
       sales             $72,420          $63,049
      Scrap sales         44,058           34,414
      Pawn service
       charges            43,073           36,256
      Signature
       loan fees             407              434
      Auto title
       loan fees             347              427
      Other                  142              144
                             ---              ---
        Total
         revenues        160,447          134,724

    Merchandise
     cost of
     goods sold           41,484           37,058
    Scrap cost of
     goods sold           28,687           21,483
    Signature
     loan bad
     debt                     93              101
    Auto title
     loan bad
     debt                    (20)              52
                             ---              ---

      Net revenue         90,203           76,030

    Operations
     expense              43,817           39,912


      Store
       operating
       income            $46,386          $36,118
                         =======          =======

    OTHER DATA
    ----------
    Gross margin
     on
     merchandise
     sales                  42.7%            41.2%
    Gross margin
     on scrap
     sales                  34.9%            37.6%
    Gross margin
     on total
     sales                  39.8%            39.9%
    Signature
     loan bad
     debt as
     percent of
     fees                   22.9%          23.3%
    Auto title
     loan bad
     debt as
     percent of
     fees                   -5.8%          12.2%
    Operating
     income
     margin                 51.4%            47.5%

                      Three Months Ended March 31,
                      ----------------------------
                              Empeno Facil
                              ------------
                            2011             2010
                            ----             ----

    Revenues:
      Merchandise
       sales              $5,353           $3,259
      Scrap sales          3,644            1,762
      Pawn service
       charges             3,696            2,050
      Signature
       loan fees               -                -
      Auto title
       loan fees               -                -
      Other                   25                -
                             ---              ---
        Total
         revenues         12,718            7,071

    Merchandise
     cost of
     goods sold            3,155            2,023
    Scrap cost of
     goods sold            3,077            1,574
    Signature
     loan bad
     debt                      -                -
    Auto title
     loan bad
     debt                      -                -
                             ---              ---

      Net revenue          6,486            3,474

    Operations
     expense               4,849            2,573


      Store
       operating
       income             $1,637             $901
                          ======             ====

    OTHER DATA
    ----------
    Gross margin
     on
     merchandise
     sales                  41.1%            37.9%
    Gross margin
     on scrap
     sales                  15.6%            10.7%
    Gross margin
     on total
     sales                  30.7%            28.4%
    Signature
     loan bad
     debt as
     percent of
     fees                    N/A            N/A
    Auto title
     loan bad
     debt as
     percent of
     fees                    N/A            N/A
    Operating
     income
     margin                 25.2%            25.9%

                    Three Months Ended March 31,
                    ----------------------------
                                EZMONEY
                                -------
                            2011             2010
                            ----             ----

    Revenues:
      Merchandise
       sales                  $-               $-
      Scrap sales            293              $52
      Pawn service
       charges                 -                -
      Signature
       loan fees          34,696           31,208
      Auto title
       loan fees           5,022            3,529
      Other                   78                -
                             ---              ---
        Total
         revenues         40,089           34,789

    Merchandise
     cost of
     goods sold                -                -
    Scrap cost of
     goods sold              161               24
    Signature
     loan bad
     debt                  5,345            4,296
    Auto title
     loan bad
     debt                    322              268
                             ---              ---

      Net revenue         34,261           30,201

    Operations
     expense              17,379           15,720


      Store
       operating
       income            $16,882          $14,481
                         =======          =======

    OTHER DATA
    ----------
    Gross margin
     on
     merchandise
     sales                   N/A              N/A
    Gross margin
     on scrap
     sales                  45.1%            53.8%
    Gross margin
     on total
     sales                  45.1%            53.8%
    Signature
     loan bad
     debt as
     percent of
     fees                   15.4%          13.8%
    Auto title
     loan bad
     debt as
     percent of
     fees                    6.4%           7.6%
    Operating
     income
     margin                 49.3%            47.9%


                                       Six Months Ended March 31,
                                       --------------------------
                                                 US Pawn
                                                 -------
                                            2011           2010
                                            ----           ----

    Revenues:
      Merchandise sales                 $138,725       $124,311
      Scrap sales                         91,064         71,237
      Pawn service charges                89,509         75,197
      Signature loan fees                    916            987
      Auto title loan fees                   740            902
      Other                                  259            260
                                             ---            ---
        Total revenues                   321,213        272,894

    Merchandise cost of goods sold        79,681         73,964
    Scrap cost of goods sold              58,225         44,307
    Signature loan bad debt                  258            287
    Auto title loan bad debt                  41            122
                                             ---            ---

      Net revenue                        183,008        154,214

    Operations expense                    87,013         80,111


      Store operating income             $95,995        $74,103
                                         =======        =======

    OTHER DATA
    ----------
    Gross margin on merchandise sales       42.6%          40.5%
    Gross margin on scrap sales             36.1%          37.8%
    Gross margin on total sales             40.0%          39.5%
    Signature loan bad debt as
     percent of fees                        28.2%          29.1%
    Auto title loan bad debt as
     percent of fees                         5.5%          13.5%
    Operating income margin                 52.5%          48.1%


                                       Six Months Ended March 31,
                                       --------------------------
                                              Empeno Facil
                                              ------------
                                            2011           2010
                                            ----           ----

    Revenues:
      Merchandise sales                  $10,928         $6,613
      Scrap sales                          7,106          2,369
      Pawn service charges                 7,070          3,906
      Signature loan fees                      -              -
      Auto title loan fees                     -              -
      Other                                   28              -
                                             ---            ---
        Total revenues                    25,132         12,888

    Merchandise cost of goods sold         6,269          4,381
    Scrap cost of goods sold               5,715          2,049
    Signature loan bad debt                    -              -
    Auto title loan bad debt                   -              -
                                             ---            ---

      Net revenue                         13,148          6,458

    Operations expense                     9,127          4,737


      Store operating income              $4,021         $1,721
                                          ======         ======

    OTHER DATA
    ----------
    Gross margin on merchandise sales       42.6%          33.8%
    Gross margin on scrap sales             19.6%          13.5%
    Gross margin on total sales             33.5%          28.4%
    Signature loan bad debt as
     percent of fees                         N/A            N/A
    Auto title loan bad debt as
     percent of fees                         N/A            N/A
    Operating income margin                 30.6%          26.6%


                                       Six Months Ended March 31,
                                       --------------------------
                                                 EZMONEY
                                                 -------
                                            2011           2010
                                            ----           ----

    Revenues:
      Merchandise sales                       $-             $-
      Scrap sales                            490             64
      Pawn service charges                     -              -
      Signature loan fees                 74,253         69,333
      Auto title loan fees                10,873          6,156
      Other                                  119              -
                                             ---            ---
        Total revenues                    85,735         75,553

    Merchandise cost of goods sold             -              -
    Scrap cost of goods sold                 240             31
    Signature loan bad debt               15,226         12,900
    Auto title loan bad debt               1,243            658
                                           -----            ---

      Net revenue                         69,026         61,964

    Operations expense                    34,409         31,538


      Store operating income             $34,617        $30,426
                                         =======        =======

    OTHER DATA
    ----------
    Gross margin on merchandise sales        N/A            N/A
    Gross margin on scrap sales             51.0%          51.6%
    Gross margin on total sales             51.0%          51.6%
    Signature loan bad debt as
     percent of fees                        20.5%          18.6%
    Auto title loan bad debt as
     percent of fees                        11.4%          10.7%
    Operating income margin                 50.2%          49.1%

                           EZCORP, Inc.
                        Store Count Activity
                           Three Months Ended March 31, 2011
                           ---------------------------------

                                        Empeno
                          US Pawn        Facil
                          -------      -------

     Beginning of
      period                  402           132
       New openings             2            15
       Acquired                 5             -
       Sold, combined or
        closed                  -             -


     End of period            409           147
                              ===           ===

                           Three Months Ended March 31, 2011
                           ---------------------------------

                          EZMONEY        Consolidated
                          -------        ------------

     Beginning of
      period                   498              1,032
       New openings              5                 22
       Acquired                  -                  5
       Sold, combined or
        closed                  (2)                (2)


     End of period             501              1,057
                               ===              =====

                           Six Months Ended March 31, 2011
                           -------------------------------

                                        Empeno
                          US Pawn        Facil
                          -------      -------

     Beginning of
      period                  396           115
       New openings             5            32
       Acquired                 9             -
       Sold, combined or
        closed                 (1)            -


     End of period            409           147
                              ===           ===

                           Six Months Ended March 31, 2011
                           -------------------------------

                          EZMONEY        Consolidated
                          -------        ------------

     Beginning of
      period                   495              1,006
       New openings             10                 47
       Acquired                  -                  9
       Sold, combined or
        closed                  (4)                (5)


     End of period             501              1,057
                               ===              =====

                 Reconciliation of GAAP to Non-GAAP Results (Unaudited)
                         (in thousands, except  per share data)

    The following tables provide a reconciliation of the differences
     between the reported or projected non-GAAP financial measures for
     the periods indicated and the most comparable GAAP financial
     measures.  The non-GAAP financial measures presented may not be
     directly comparable to similarly titled measures reported by other
     companies and their usefulness for such purposes are therefore
     limited.  EZCORP management believes presentation of the non-GAAP
     financial measures enhances investors' ability to analyze the
     Company's operating results.  However, non-GAAP financial measures
     are not an alternative to GAAP financial measures and should be read
     only in conjunction with financial measures presented on a GAAP
     basis.

                                     Three Months Ended March 31, 2011
                                     ---------------------------------
                                                Non-GAAP
                               GAAP            Adjustments         Non-GAAP
                               ----            -----------         --------
    Net revenue                $130,950             -                $130,950

    Operations expense           66,045                   -            66,045
    Administrative expense       15,733                   -            15,733
    Depreciation and
     amortization                 4,466                   -             4,466
    (Gain) / loss on sale/
     disposal of assets            (178)                  -              (178)
                                   ----                 ---              ----

        Operating income         44,884                   -            44,884

    Interest income                 (11)                  -               (11)
    Interest expense                300                   -               300
    Equity in net income of
     unconsolidated affiliates   (4,691)                  -            (4,691)
    Other                             4                   -                 4
                                    ---                 ---               ---

    Income before income taxes   49,282                   -            49,282
    Income tax expense           17,444                   -            17,444


    Net income                  $31,838                  $-           $31,838
                                =======                 ===           =======

    Net income per share,
     diluted                      $0.63                  $-             $0.63
                                  =====                 ===             =====
    Weighted average shares,
     diluted                     50,362                   -            50,362

                               Six Months Ended March 31, 2011
                               -------------------------------
                                          Non-GAAP
                               GAAP       Adjustments        Non-GAAP
                               ----       -----------        --------
    Net revenue                 $265,182                       $265,182

    Operations expense           130,549                        130,549
    Administrative expense        41,871       (10,945)          30,926
    Depreciation and
     amortization                  8,645                          8,645
    (Gain) / loss on sale/
     disposal of assets             (171)                          (171)
                                    ----                           ----

        Operating income          84,288        10,945           95,233

    Interest income                  (14)                           (14)
    Interest expense                 600                            600
    Equity in net income of
     unconsolidated affiliates    (8,058)                        (8,058)
    Other                            (57)                           (57)
                                     ---                            ---

    Income before income taxes    91,817        10,945          102,762
    Income tax expense            32,550         3,831           36,381


    Net income                   $59,267        $7,114          $66,381
                                 =======        ======          =======

    Net income per share,
     diluted                       $1.18         $0.14            $1.32
                                   =====         =====            =====
    Weighted average shares,
     diluted                      50,243             -           50,243


                              Projected Year Ending September 30, 2011
                              ----------------------------------------
                          Projected          Non-GAAP           Projected
                            GAAP            Adjustments         Non-GAAP
                            ----            -----------         --------


    Net income per share,
     diluted                   $2.41               $0.14             $2.55
                               =====               =====             =====

SOURCE EZCORP, Inc.

Photo:http://photos.prnewswire.com/prnh/20090713/EZCORPLOGO
http://photoarchive.ap.org/

SOURCE: EZCORP, Inc.

EZCORP Reports 31% Increase in Earnings per Share for Second Quarter and Raises Guidance for Fiscal 2011

PR Newswire

AUSTIN, Texas, April 21, 2011 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced results for its second fiscal quarter ended March 31, 2011.

(Logo:  http://photos.prnewswire.com/prnh/20090713/EZCORPLOGO)

Commenting on the results, President and Chief Executive Officer, Paul Rothamel, said, "We had another quarter of great performance with all segments delivering robust results.  Our diversified growth initiatives and innovative product changes, coupled with solid core business metrics, were key to our success.  The underlying demand for our products and services remains strong."

Highlights for the quarter include:

Financials – Three months ended March 31, 2011 versus the prior year quarter

  • Diluted earnings per share of $0.63, an increase of 31%.
  • Net income of $31.8 million, up 34%.
  • Net revenues of $131.0 million, up 19%.  Same store revenue increased 12%.
  • Store level operating income of $64.9 million, up 26% with margins improving 260 bps to 50%.
  • Consolidated operating income of $44.9 million (operating margin of 34%) compared with operating income of $34.1 million (operating margin of 31%).
  • Pre-tax contribution from strategic affiliates of $4.7 million, up 42%.

Key Operating Metrics – Three months ended March 31, 2011 versus the prior year quarter

  • US Pawn:
    • Same store revenue growth of 11% driven by same store growth in merchandise sales, scrap sales and pawn service charge of 8%, 17% and 12%, respectively.
    • Store level operating income increased 28% to $46.4 million with a 390 bps improvement in margin to 51%.
  • Empeno Facil:
    • Same store revenue growth of 23% driven by same store growth in merchandise sales, scrap sales and pawn service charge of 22%, 15% and 37%, respectively.
    • Store level operating income increased 82% to $1.6 million with a margin of 25% compared to 26%, despite the impact from opening 68 new stores in the past 12 months.
  • EZMONEY:
    • Same store revenue was up 13% driven by increases in signature loan fees and auto title loan fees of 9% and 44%, respectively.
    • Bad debt as a percentage of fees was 14%, compared with 13% in the prior year quarter primarily due to product mix.
    • Store level operating income increased 17% to $16.9 million with a 130 bps improvement in margin to 49%.
  • Balance Sheet:
    • Pawn loan balance at March 31 of $106.5 million, an increase of $17.5 million over a year ago.  Pawn loan balances increased 11% on a same store basis.
    • The combined signature and auto title loan balances at March 31 of $11.9 million increased 30% over the prior year quarter.
    • At March 31, 2011, cash and cash equivalents were $59.8 million with debt outstanding of $20.0 million compared with net cash of $21.2 million a year ago.

Strategic Initiatives

  • US Pawn acquired five stores for a total cost of $17.8 million and opened two greenfield stores in the second quarter.  Including the three greenfield stores opened and the four stores acquired in the first quarter, the total US Pawn store count at March 31, 2011 was 403.
  • Empeno Facil opened 15 greenfield stores in the second quarter.  Including the 17 greenfield stores opened in the first quarter, the total Empeno Facil store count at March 31, 2011 was 147.
  • EZMONEY opened 5 greenfield stores, all in Canada, in the second fiscal quarter.  Including the five stores opened in Canada in the first fiscal quarter, the total EZMONEY store count at March 31, 2011 was 507.
  • In April, the Company acquired the Cash Converters franchise rights for Canada, including rights to receive fees from 13 stores operated by franchisees in Canada.  The Company plans to convert the majority of its existing Cashmax stores into the Cash Converters brand and add the Cash Converters buy / sell model to its existing non-collateralized loan model.
  • Also in April, the Company signed an agreement to acquire 15 pawn stores from Mister Money for $18.5 million, including assumption of debt.  The stores are located in Iowa, Wisconsin, and Illinois and will bring the number of states in which EZCORP operates pawn shops to 15 compared to 12 at this time last year.  The acquisition is pending shareholder approval and is expected to close in May.
  • The market test in Colorado and Wisconsin of EZCORP's "Change" card – the Company's general purpose integrated debit card – successfully concluded in the second fiscal quarter.  As of March 31, 2011, approximately 14,000 Change cards have been issued to EZCORP customers.  The product is being rolled into the Company's Texas stores, both US Pawn and EZMONEY, in the second half of the year.

Cash Converters International Limited (CCV.ASX)

  • In March 2011, EZCORP and Cash Converters announced a proposed global strategic alliance with two key elements:
    • EZCORP plans to purchase 30% of Cash Converters' shares the Company does not already own for a total cost of approximately $70 million, taking its ownership interest in Cash Converters to 53%; and
    • EZCORP and Cash Converters plan to establish two joint ventures, under which the two companies will roll out a suite of financial services products globally under the Cash Converters brand.
  • The joint ventures are conditional upon the share purchase which, in turn, requires the approval of Cash Converters' shareholders.
  • The transaction is expected to close in the fourth quarter.

Outlook for fiscal 2011

The Company also announced that it expects fiscal 2011 earnings per share, excluding the first quarter one-time charge related to the retirement of the former Chief Executive Officer, to increase 30% year-over-year to $2.55 ($2.41 on a GAAP basis).  This is an increase from the Company's previous estimate of $2.40 per share ($2.26 on a GAAP basis).  The revised guidance includes the acquisition of the Cash Converters franchise rights in Canada which closed on April 8th and the acquisition of the 15 Mister Money stores expected to close in early May.  Pending the Cash Converters shareholder vote, it does not yet include the impact of the proposed global strategic alliance with Cash Converters International Limited.

Rothamel concluded, "Without losing focus or momentum in our core businesses, we were able to continue driving our key growth initiatives to seize opportunities and reduce risks to our business long term.  Our US and Mexico growth remain on track, we are very optimistic about our new growth strategy in Canada, and we are similarly excited about our future in Australia, the United Kingdom, Europe, and beyond."

About EZCORP

EZCORP is a leading provider of specialty consumer financial services.  It provides collateralized non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans, including payday loans, installment loans and auto title loans, or fee-based credit services to customers seeking loans.  At its pawn stores, the company also sells merchandise, primarily collateral forfeited from its pawn lending operations.

EZCORP operates more than 1,000 stores, including over 500 pawn stores in the U.S. and Mexico and over 500 short-term consumer loan stores in the U.S. and Canada.  The company also has significant investments in Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a worldwide network of over 600 stores in 21 countries that provide financial services and sell pre-owned merchandise, and Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 140 stores.

Special Note Regarding Forward-Looking Statements

This announcement contains certain forward-looking statements regarding the Company's expected operating and financial performance for future periods, including expected future earnings.  These statements are based on the Company's current expectations.  Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including changes in the regulatory environment, changing market conditions in the overall economy and the industry, consumer demand for the Company's services and merchandise, and actions of third parties who offer services and products in the Company's locations.  For a discussion of these and other factors affecting the Company's business and prospects, see the Company's annual, quarterly and other reports filed with the Securities and Exchange Commission.

Change to Presentation and Reclassification of Prior Year Comparatives

The Company has historically included fees from its Product Protection Plan and Jewelry VIP Program as well as layaway fees in "Other revenue" in its Consolidated Statements of Operations and its Operating Segment Results.  Beginning in the second fiscal quarter of 2011 the Company has included these fees in "Merchandise sales" on the basis that fees from these products are incidental to sales of merchandise.  Prior year figures have been reclassified to conform to this presentation and margins have been recalculated accordingly.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP net income and non-GAAP earnings per share for the six-month period ended March 31, 2001, as well as non-GAAP expected earnings per share for fiscal 2011.  The only difference between the presented non-GAAP measures and the most closely comparable GAAP measures is the exclusion of a one-time charge related to the retirement of the Company's former Chief Executive Officer and the related tax benefit included in the quarter ended December 31, 2011.  The Company's management uses these non-GAAP financial measures to understand its financial performance from period to period.  Management does not believe that the excluded one-time charge is reflective of underlying operating performance.  The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the corresponding GAAP measures, but rather are provided to facilitate an enhanced understanding of the Company's actual and expected performance and to enable more meaningful period-to-period comparisons.  A reconciliation of the non-GAAP financial measures to the most closely comparable GAAP financial measures is provided in the accompanying financial schedules.

EZCORP Investor Relations
(512) 314-2220

EZCORP, Inc.

Highlights of Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data and percents)














Three Months Ended March 31,


Six Months Ended March 31,




2011


2010


2011


2010











Revenues:









Merchandise sales

$ 77,773


$ 66,308


$ 149,653


$ 130,924


Jewelry scrapping sales

47,995


36,228


98,660


73,670


Pawn service charges

46,769


38,306


96,579


79,103


Signature loan fees

35,103


31,642


75,169


70,320


Auto title loan fees

5,369


3,956


11,613


7,058


Other

245


144


406


260



Total revenues

213,254


176,584


432,080


361,335











Cost of goods sold:









Cost of merchandise sales

44,639


39,081


85,950


78,345


Cost of jewelry scrapping sales

31,925


23,081


64,180


46,387



Total cost of goods sold

76,564


62,162


150,130


124,732











Bad debt:









Signature loan bad debt

5,438


4,397


15,484


13,187


Auto title loan bad debt

302


320


1,284


780



Total bad debt

5,740


4,717


16,768


13,967











Net revenue

130,950


109,705


265,182


222,636











Operations expense

66,045


58,205


130,549


116,386

Administrative expense

15,733


13,483


41,871


25,780

Depreciation and amortization

4,466


3,573


8,645


6,929

(Gain) / loss on sales / disposal of assets

(178)


356


(171)


567












Operating income

44,884


34,088


84,288


72,974











Interest income

(11)


(8)


(14)


(16)

Interest expense

300


395


600


760

Equity in net income of unconsolidated affiliates

(4,691)


(3,306)


(8,058)


(4,589)

Other


4


12


(57)


(3)











Income before income taxes

49,282


36,995


91,817


76,822

Income tax expense

17,444


13,222


32,550


27,342











Net income

$ 31,838


$ 23,773


$   59,267


$   49,480











Net income per share, diluted

$     0.63


$     0.48


$       1.18


$       1.00











Weighted average shares, diluted

50,362


49,558


50,243


49,486











OTHER DATA:








Gross margin on merchandise sales

42.6%


41.1%


42.6%


40.2%

Gross margin on jewelry scrapping sales

33.5%


36.3%


34.9%


37.0%

Gross margin on total sales

39.1%


39.4%


39.5%


39.0%











Signature loan bad debt as percent of fees

15.5%


13.9%


20.6%


18.8%

Auto title loan bad debt as percent of fees

5.6%


8.1%


11.1%


11.1%



EZCORP, Inc.

Highlights of Consolidated Balance Sheets

(in thousands)














March 31, (unaudited)


September 30,





2011


2010


2010

Assets:







Current assets:








Cash and cash equivalents

$   59,785


$   51,192


$            25,854



Pawn loans

106,525


89,040


121,201



Signature loans, net

9,926


7,287


10,775



Auto title loans, net

2,022


1,939


3,145



Pawn service charges receivable, net

19,976


16,353


21,626



Signature loan fees receivable, net

4,841


4,607


5,818



Auto title loan fees receivable, net

1,185


850


1,616



Inventory, net

70,275


56,403


71,502



Deferred tax asset

23,319


15,673


23,208



Federal income taxes receivable

1,427


13,414


-



Prepaid expenses and other assets

20,045


15,625


17,427




Total current assets

319,326


272,383


302,172











Investments in unconsolidated affiliates

112,364


90,854


101,386


Property and equipment, net

70,105


54,044


62,293


Deferred tax asset, non-current

-


5,318


60


Goodwill

143,404


101,456


117,305


Other assets, net

23,694


22,223


23,196













Total assets

$ 668,893


$ 546,278


$          606,412










Liabilities and stockholders' equity:







Current liabilities:








Current maturities of long term debt

10,000


10,000


10,000



Accounts payable and other accrued expenses

44,754


38,592


49,663



Customer layaway deposits

6,844


4,487


6,109



Federal income taxes payable

-


-


3,687




Total current liabilities

61,598


53,079


69,459











Long-term debt, less current maturities

10,000


20,000


15,000


Deferred tax liability

1,192


-


-


Deferred gains and other long-term liabilities

2,314


2,735


2,525


Total stockholders' equity

593,789


470,464


519,428












Total liabilities and stockholders' equity

$ 668,893


$ 546,278


$          606,412










Other Data:






Pawn loan balance per ending pawn store

$        194


$        198


$                 240

Inventory per ending pawn store

$        128


$        125


$                 142

Book value per share

$     11.89


$       9.57


$              10.55



EZCORP, Inc.

Operating Segment Results (Unaudited)

(in thousands, except  percents)


















Three Months Ended March 31,




US Pawn


Empeno Facil


EZMONEY




2011


2010


2011


2010


2011


2010















Revenues:













Merchandise sales

$       72,420


$       63,049


$         5,353


$         3,259


$                 -


$                 -


Scrap sales

44,058


34,414


3,644


1,762


293


$              52


Pawn service charges

43,073


36,256


3,696


2,050


-


-


Signature loan fees

407


434


-


-


34,696


31,208


Auto title loan fees

347


427


-


-


5,022


3,529


Other

142


144


25


-


78


-



Total revenues

160,447


134,724


12,718


7,071


40,089


34,789















Merchandise cost of goods sold

41,484


37,058


3,155


2,023


-


-

Scrap cost of goods sold

28,687


21,483


3,077


1,574


161


24

Signature loan bad debt

93


101


-


-


5,345


4,296

Auto title loan bad debt

(20)


52


-


-


322


268
















Net revenue

90,203


76,030


6,486


3,474


34,261


30,201















Operations expense

43,817


39,912


4,849


2,573


17,379


15,720
















Store operating income

$       46,386


$       36,118


$         1,637


$            901


$       16,882


$       14,481















OTHER DATA












Gross margin on merchandise sales

42.7%


41.2%


41.1%


37.9%


N/A


N/A

Gross margin on scrap sales

34.9%


37.6%


15.6%


10.7%


45.1%


53.8%

Gross margin on total sales

39.8%


39.9%


30.7%


28.4%


45.1%


53.8%

Signature loan bad debt as percent of fees

22.9%


23.3%


N/A


N/A


15.4%


13.8%

Auto title loan bad debt as percent of fees

-5.8%


12.2%


N/A


N/A


6.4%


7.6%

Operating income margin

51.4%


47.5%


25.2%


25.9%


49.3%


47.9%
































Six Months Ended March 31,




US Pawn


Empeno Facil


EZMONEY




2011


2010


2011


2010


2011


2010















Revenues:













Merchandise sales

$     138,725


$     124,311


$       10,928


$         6,613


$                 -


$                 -


Scrap sales

91,064


71,237


7,106


2,369


490


64


Pawn service charges

89,509


75,197


7,070


3,906


-


-


Signature loan fees

916


987


-


-


74,253


69,333


Auto title loan fees

740


902


-


-


10,873


6,156


Other

259


260


28


-


119


-



Total revenues

321,213


272,894


25,132


12,888


85,735


75,553















Merchandise cost of goods sold

79,681


73,964


6,269


4,381


-


-

Scrap cost of goods sold

58,225


44,307


5,715


2,049


240


31

Signature loan bad debt

258


287


-


-


15,226


12,900

Auto title loan bad debt

41


122


-


-


1,243


658
















Net revenue

183,008


154,214


13,148


6,458


69,026


61,964















Operations expense

87,013


80,111


9,127


4,737


34,409


31,538
















Store operating income

$       95,995


$       74,103


$         4,021


$         1,721


$       34,617


$       30,426















OTHER DATA












Gross margin on merchandise sales

42.6%


40.5%


42.6%


33.8%


N/A


N/A

Gross margin on scrap sales

36.1%


37.8%


19.6%


13.5%


51.0%


51.6%

Gross margin on total sales

40.0%


39.5%


33.5%


28.4%


51.0%


51.6%

Signature loan bad debt as percent of fees

28.2%


29.1%


N/A


N/A


20.5%


18.6%

Auto title loan bad debt as percent of fees

5.5%


13.5%


N/A


N/A


11.4%


10.7%

Operating income margin

52.5%


48.1%


30.6%


26.6%


50.2%


49.1%



EZCORP, Inc.

Store Count Activity












Three Months Ended March 31, 2011












US Pawn


Empeno Facil


EZMONEY


Consolidated










Beginning of period

402


132


498


1,032


New openings

2


15


5


22


Acquired

5


-


-


5


Sold, combined or closed

-


-


(2)


(2)










End of period

409


147


501


1,057














Six Months Ended March 31, 2011












US Pawn


Empeno Facil


EZMONEY


Consolidated










Beginning of period

396


115


495


1,006


New openings

5


32


10


47


Acquired

9


-


-


9


Sold, combined or closed

(1)


-


(4)


(5)










End of period

409


147


501


1,057



Reconciliation of GAAP to Non-GAAP Results (Unaudited)

(in thousands, except  per share data)


The following tables provide a reconciliation of the differences between the reported or projected non-GAAP financial measures for the periods indicated and the most comparable GAAP financial measures.  The non-GAAP financial measures presented may not be directly comparable to similarly titled measures reported by other companies and their usefulness for such purposes are therefore limited.  EZCORP management believes presentation of the non-GAAP financial measures enhances investors' ability to analyze the Company's operating results.  However, non-GAAP financial measures are not an alternative to GAAP financial measures and should be read only in conjunction with financial measures presented on a GAAP basis.





Three Months Ended March 31, 2011


Six Months Ended March 31, 2011





Non-GAAP






Non-GAAP





GAAP


Adjustments


Non-GAAP


GAAP


Adjustments


Non-GAAP

Net revenue

$ 130,950


-


$ 130,950


$    265,182




$ 265,182














Operations expense

66,045


-


66,045


130,549




130,549

Administrative expense

15,733


-


15,733


41,871


(10,945)


30,926

Depreciation and amortization

4,466


-


4,466


8,645




8,645

(Gain) / loss on sale/disposal of assets

(178)


-


(178)


(171)




(171)














   Operating income

44,884


-


44,884


84,288


10,945


95,233














Interest income

(11)


-


(11)


(14)




(14)

Interest expense

300


-


300


600




600

Equity in net income of unconsolidated affiliates

(4,691)


-


(4,691)


(8,058)




(8,058)

Other

4


-


4


(57)




(57)














Income before income taxes

49,282


-


49,282


91,817


10,945


102,762

Income tax expense

17,444


-


17,444


32,550


3,831


36,381














Net income

$   31,838


$                -


$   31,838


$      59,267


$       7,114


$   66,381














Net income per share, diluted

$       0.63


$              -


$       0.63


$          1.18


$         0.14


$       1.32

Weighted average shares, diluted

50,362


-


50,362


50,243


-


50,243

























Projected Year Ending September 30, 2011



Projected


Non-GAAP


Projected



GAAP


Adjustments


Non-GAAP








Net income per share, diluted

$       2.41


$          0.14


$       2.55



SOURCE EZCORP, Inc.

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

Categories: Press Releases
View all Investor News