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EZCORP Reports Record Revenue and Earnings

Nov 8, 2011

Fourth Quarter and Fiscal Year Net Income Increase 31% and 33%, Respectively

AUSTIN, Texas, Nov. 8, 2011 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced financial results for its fourth fiscal quarter and 2011 fiscal year ended September 30, 2011.

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

Commenting on the results, EZCORP's President and Chief Executive Officer, Paul Rothamel, said, "I'm pleased with our continued strong performance, All three of our business segments reported dramatic operating income growth for the fourth quarter as well as for the fiscal year. This performance reflects not only the strength of our business model but also the efforts of our team members in executing against our strategic initiatives, which include bolstering the core business, diversifying our geographic footprint, and integrating innovation into our service offerings."

Financials - Three months ended September 30, 2011 versus the prior year quarter

    --  Net income of $36.4 million, up 31%.
    --  Diluted earnings per share of $0.72, an increase of 29%.
    --  Total revenues of $234.1 million, up 18%, with same store revenue up 8%.
    --  Net revenues of $146.8 million, up 22%.
    --  Store level operating income of $77.0 million, up 33%, with margins up
        to 52%.
    --  Consolidated operating income of $52.7 million, up 31%, with operating
        margin improving 245 bps to 36%.
    --  Contribution from strategic affiliates of $4.1 million, an increase of
        26%.

Key Operating Metrics - Three months ended September 30, 2011 versus the prior year quarter

    --  US Pawn:
        --  Total revenue increased 16% to $170.2 million.
        --  Same store revenue growth of 6% driven by same store growth in
            merchandise sales, scrap sales and pawn service charges of 4%, 4%
            and 12%, respectively.
        --  Store level operating income increased 34% to $55.5 million with a
            499 bps margin improvement to 55%.
        --  US Pawn loan balance increased 18% to $134.5 million at September
            30, 2011 and grew 10% on a same store basis.
    --  Empeno Facil (Mexico pawn):
        --  Total revenue increased 87% to $17.9 million.
        --  Same store revenue growth of 32%, driven by same store growth in
            merchandise sales, scrap sales and pawn service charges of 37%, 24%
            and 31%, respectively.
        --  Store level operating income increased 214% to $4.2 million with an
            improvement in margin from 25% to 41%, despite the impact from
            opening 57 new stores in the past 12 months. At constant exchange
            rates, Empeno Facil recorded store level operating income of $4.0
            million, an increase of 201%.
        --  Empeno Facil's pawn loan balance increased 50% to $10.9 million at
            September 30, 2011 and grew 7% on a same store basis. At constant
            exchange rates, loan balances grew 61% and 14% on a same store
            basis.
    --  EZMONEY (US Financial Services and Cash Converters Canada):
        --  Total revenue increased 9% to $45.9 million.
        --  Same store revenue growth of 8% driven primarily by an increase in
            signature loan fees of 9%.
        --  Bad debt as a percentage of fees decreased to 24%, compared with 28%
            in the fiscal third quarter 2011 and 25% in the prior year quarter.
        --  Store level operating income increased 16% to $17.3 million.
        --  Total loan balances (including CSO lender balances) at September 30,
            2011 decreased 7% to $39.4 million.

Financials - Fiscal year ended September 30, 2011 versus the prior year

    --  Net income of $129.3 million, up 33% (non-GAAP). On a GAAP basis, net
        income was $122.2 million, up 26%.
    --  Diluted earnings per share of $2.57, an increase of 31% (non-GAAP) and
        $2.43, an increase of 24% (GAAP).
    --  Total revenues of $869.3 million, up 19%, with same store revenue up
        10%.
    --  Net revenues of $534.9 million, up 20%.
    --  Store level operating income of $267.9 million, up 27%, with a margin of
        50%, an increase of 297 bps.
    --  Consolidated operating income increased 30% to $184.9 million (non-GAAP)
        and 23% to $174.0 million (GAAP). Operating margin improving 285 bps to
        35%.
    --  Contribution from strategic affiliates of $16.2 million, an increase of
        51%.

Note: Non-GAAP financials and percentages are adjusted for the one-time pre-tax charge of $10.9 million ($7.1 million post-tax) related to the retirement of the former Chief Executive Officer recorded in the first quarter of fiscal 2011. A reconciliation of GAAP to non-GAAP results is provided at the end of this release for further reference.

Balance Sheet and Liquidity

    --  Combined pawn, signature and auto title loan balances (including CSO) at
        September 30 were $187 million, an increase of 13%.
    --  At September 30, cash and cash equivalents were $24.0 million, with debt
        outstanding of $17.5 million, compared with cash less debt of $0.9
        million a year ago.

Growth and Innovation Initiatives

US Pawn Growth

    --  During the fourth quarter, US Pawn added seven stores including five in
        the Chicago metropolitan area. With 14 stores added in 15 months, EZCORP
        has grown from having no presence to becoming one of the leading pawn
        operators in the Chicago area.
    --  During the whole of fiscal 2011, US Pawn added 44 stores on a base of
        396 (an 11% increase in footprint) and established a presence in three
        new states: Iowa, Utah and Wisconsin.
    --  In October, US Pawn acquired seven Cash Converters stores in Virginia
        and Pennsylvania. The Cash Converters buy / sell model allows the
        Company to meet the short-term cash needs of customers in markets and
        neighborhoods where the traditional pawn model may not be feasible.
    --  On November 4, US Pawn acquired 15 Money Mart stores in the San Antonio
        metropolitan area.  These stores bring the total in the San Antonio area
        to 37, solidifying EZCORP's position as the leading pawn operator in
        that area.

Empeno Facil Growth

    --  During the fourth quarter, Empeno Facil added 23 stores and entered the
        Mexican states of Hidalgo and Tlaxcala.
    --  For the whole of fiscal 2011, Empeno Facil added 63 stores on a base of
        115 (a 55% increase in footprint) and currently has a presence in over
        half of all Mexico states.

Cash Converters Canada Growth

    --  In April, EZCORP acquired the Cash Converters master franchise rights
        for Canada.  At September 30, the Company had 15 of its 64 Company owned
        stores operating under the Cash Converters brand. Including the 13
        franchise stores, the Cash Converters brand is represented in five of 10
        Canadian provinces.

Innovation

    --  During the fourth quarter, the Company established an eCommerce and Card
        Services division to further develop and market EZCORP's "Change" card
        as well as introduce online and mobile services to enhance the ease and
        efficiency with which customers can transact with the Company. As of
        September 30, 124,000 Change cards had been issued to EZCORP customers
        in nine states, covering 656 US Pawn and US Financial Services stores.

Rothamel concluded, "In total, strength in all markets and divisions, combined with operational execution on our strategic initiatives, drove our success, both in the fourth quarter and the 2011 fiscal year overall. Looking ahead, I'm confident we will reap additional rewards from our recent investments in talent and technology as we enhance our differentiated product offering. We will therefore be able to better serve our customers and position ourselves for continued growth."

Outlook for fiscal 2012

The Company expects fiscal 2012 earnings per share to be between $3.05 and $3.10. This represents an increase of approximately 20% over fiscal 2011 non-GAAP earnings per share and an increase of 27% over fiscal 2011 GAAP earnings per share.

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 1,100 pawn, buy/sell and personal financial services stores in the U.S., Mexico and Canada. The company also has significant investments in Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 160 full-line stores offering pawnbroking, jewelry retailing, gold buying and financial services; and in Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a worldwide network of over 600 stores that provide personal financial services and sell pre-owned merchandise.

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 and consumer demand for the Company's services and merchandise. 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 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, 2010. 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            Year Ended September
                                          September 30,                       30,
                                      -------------------           ---------------------
                                        2011          2010           2011           2010
                                        ----          ----           ----           ----

     Revenues:
       Merchandise
        sales                        $67,856       $56,252       $282,083       $240,454
       Jewelry
        scrapping
        sales                         63,048        53,968        212,479        171,411
       Pawn service
        charges                       56,191        45,168        201,135        163,695
       Signature
        loan fees                     40,886        36,699        150,250        139,315
       Auto title
        loan fees                      5,413         5,991         21,701         17,707
       Other                             691            90          1,669            463
                                         ---           ---          -----            ---
         Total
          revenues                   234,085       198,168        869,317        733,045

     Cost of goods
      sold:
       Cost of
        merchandise
        sales                         39,419        32,229        162,060        140,284
       Cost of
        jewelry
        scrapping
        sales                         36,943        35,176        133,560        110,838
                                      ------        ------        -------        -------
         Total cost of
          goods sold                  76,362        67,405        295,620        251,122

     Bad debt:
       Signature
        loan bad
        debt                          10,353         9,605         36,328         31,709
       Auto title
        loan bad
        debt                             611         1,119          2,431          2,735
                                         ---         -----          -----          -----
         Total bad
          debt                        10,964        10,724         38,759         34,444
                                      ------        ------         ------         ------

     Net revenue                     146,759       120,039        534,938        447,479

     Operations
      expense                         69,750        62,326        267,052        236,664
      Administrative
      expense                         19,020        13,384         75,270         52,740
     Depreciation
      and
      amortization                     5,020         3,973         18,344         14,661
     (Gain) /loss
      on sales /
      disposal of
      assets                             311           227            309          1,528
                                         ---           ---            ---          -----

       Operating
        income                        52,658        40,129        173,963        141,886

     Interest
      income                              (2)          (35)           (37)          (186)
     Interest
      expense                            504           314          1,690          1,385
     Equity in net
      income of
      unconsolidated
      affiliates                      (4,080)       (3,231)       (16,237)       (10,750)
     Other                                (4)           10           (164)           (93)
                                         ---           ---           ----            ---

     Income before
      income taxes                    56,240        43,071        188,711        151,530
     Income tax
      expense                         19,875        15,219         66,552         54,236


     Net income                      $36,365       $27,852       $122,159        $97,294
                                     =======       =======       ========        =======

     Net income
      per share,
      diluted                          $0.72         $0.56          $2.43          $1.96
                                       =====         =====          =====          =====

     Weighted
      average
      shares,
      diluted                         50,589        49,672         50,369         49,576

     OTHER DATA:
     -----------
     Gross margin
      on
      merchandise
      sales                             41.9%         42.7%          42.5%          41.7%
     Gross margin
      on jewelry
      scrapping
      sales                             41.4%         34.8%          37.1%          35.3%
     Gross margin
      on total
      sales                             41.7%         38.8%          40.2%          39.0%

     Signature
      loan bad
      debt as
      percent of
      fees                              25.3%       26.2%        24.2%        22.8%
     Auto title
      loan bad
      debt as
      percent of
      fees                              11.3%       18.7%        11.2%        15.4%

                                        EZCORP, Inc.
                          Highlights of Consolidated Balance Sheets
                                       (in thousands)

                                                        September 30, (unaudited)
                                                        -------------------------
                                                             2011                2010
                                                             ----                ----
     Assets:
       Current assets:
         Cash and cash equivalents                        $23,969             $25,854
         Pawn loans                                     145,318             121,201
         Signature loans, net                            11,389              10,775
         Auto title loans, net                            3,222               3,145
         Pawn service charges
          receivable, net                                26,455              21,626
         Signature loan fees
          receivable, net                                 5,348               5,818
         Auto title loan fees
          receivable, net                                 1,427               1,616
         Inventory, net                                  90,373              71,502
         Deferred tax asset                              18,125              23,208
         Federal income taxes
          receivable                                          -                   -
         Prepaid expenses and other
          assets                                         30,611              17,427
                                                         ------              ------
           Total current assets                         356,237             302,172

       Investments in unconsolidated
        affiliates                                      120,319             101,386
       Property and equipment, net                       78,498              62,293
       Deferred tax asset, non-
        current                                               -                  60
       Goodwill                                         173,206             117,305
       Other assets, net                                 28,190              23,196

           Total assets                                $756,450            $606,412
                                                       ========            ========

     Liabilities and stockholders'
      equity:
       Current liabilities:
         Current maturities of long
          term debt                                           -              10,000
         Accounts payable and other
          accrued expenses                               57,400              49,663
         Customer layaway deposits                        6,176               6,109
         Federal income taxes payable                       693               3,687
                                                            ---               -----
           Total current liabilities                     64,269              69,459

       Long-term debt, less current
        maturities                                       17,500              15,000
       Deferred tax liability                             8,331                   -
       Deferred gains and other
        long-term liabilities                             2,102               2,525
       Total stockholders' equity                       664,248             519,428


         Total liabilities and
          stockholders' equity                         $756,450            $606,412
                                                       ========            ========



     Other Data:
     -----------
     Pawn loan balance per ending
      pawn store                                           $238                $240
     Inventory per ending pawn
      store                                                $148                $142
     Book value per share                                $13.23              $10.55

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

                                                  Three Months Ended September 30,
                                                  --------------------------------

                                 US Pawn                        Empeno Facil                 EZMONEY
                                 -------                        ------------                 -------
                            2011             2010           2011           2010       2011         2010
                            ----             ----           ----           ----       ----         ----

     Revenues:
       Merchandise
        sales            $59,750          $52,364         $7,908         $3,888       $198           $-
       Scrap sales        58,055           51,007          4,634          2,839        359          122
       Pawn service
        charges           50,879           42,294          5,312          2,874          -            -
       Signature loan
        fees                 894              488              -              -     39,992       36,211
       Auto title
        loan fees            447              398              -              -      4,966        5,593
       Other                 214               77             88              -        389           13
                             ---              ---            ---            ---        ---          ---
         Total revenues  170,239          146,628         17,942          9,601     45,904       41,939

     Merchandise
      cost of goods
      sold                34,647           30,112          4,636          2,117        136            -
     Scrap cost of
      goods sold          33,788           32,896          3,004          2,226        151           54
     Signature loan
      bad debt               340              195              -              -     10,013        9,410
     Auto title
      loan bad debt           55               70              -              -        556        1,049
                             ---              ---            ---            ---        ---        -----

       Net revenue       101,409           83,355         10,302          5,258     35,048       31,426

     Operations
      expense             45,898           41,886          6,103          3,922     17,749       16,518


       Store
        operating
        income           $55,511          $41,469         $4,199         $1,336    $17,299      $14,908
                         =======          =======         ======         ======    =======      =======

     OTHER DATA
     ----------
     Gross margin
      on
      merchandise
      sales                 42.0%            42.5%          41.4%          45.6%      31.3%         N/A
     Gross margin
      on scrap
      sales                 41.8%            35.5%          35.2%          21.6%      57.9%        55.7%
     Gross margin
      on total
      sales                 41.9%            39.0%          39.1%          35.4%      48.5%        55.7%
     Signature loan
      bad debt as a
      percent of
      fees                  38.0%            40.0%           N/A            N/A       25.0%        26.0%
     Auto title
      loan bad debt
      as percent of
      fees                  12.3%            17.6%           N/A            N/A       11.2%        18.8%
     Operating
      income margin         54.7%            49.7%          40.8%          25.4%      49.4%        47.4%


                                                Year Ended September 30,
                                                ------------------------

                               US Pawn                    Empeno Facil               EZMONEY
                               -------                    ------------               -------
                            2011             2010           2011           2010       2011         2010
                            ----             ----           ----           ----       ----         ----

     Revenues:
       Merchandise
        sales           $256,643         $226,424        $25,237        $14,030       $203           $-
       Scrap sales       195,276          163,667         15,997          7,389      1,206          355
       Pawn service
        charges          184,234          154,505         16,901          9,190          -            -
       Signature loan
        fees               2,501            1,930              -              -    147,749      137,385
       Auto title
        loan fees          1,539            1,659              -              -     20,162       16,048
       Other                 634              442            122              -        913           21
                             ---              ---            ---            ---        ---          ---
         Total revenues  640,827          548,627         58,257         30,609    170,233      153,809

     Merchandise
      cost of goods
      sold               147,239          131,825         14,672          8,459        149            -
     Scrap cost of
      goods sold         120,767          104,531         12,205          6,137        588          170
     Signature loan
      bad debt               923              641              -              -     35,405       31,068
     Auto title
      loan bad debt          165              236              -              -      2,266        2,499
                             ---              ---            ---            ---      -----        -----

       Net revenue       371,733          311,394         31,380         16,013    131,825      120,072

     Operations
      expense            177,191          161,145         20,636         11,658     69,225       63,861


       Store
        operating
        income          $194,542         $150,249        $10,744         $4,355    $62,600      $56,211
                        ========         ========        =======         ======    =======      =======

     OTHER DATA
     ----------
     Gross margin
      on
      merchandise
      sales                 42.6%            41.8%          41.9%          39.7%      26.6%         N/A
     Gross margin
      on scrap
      sales                 38.2%            36.1%          23.7%          16.9%      51.2%        52.1%
     Gross margin
      on total
      sales                 40.7%            39.4%          34.8%          31.9%      47.7%        52.1%
     Signature loan
      bad debt as
      percent of
      fees                  36.9%            33.2%           N/A            N/A       24.0%        22.6%
     Auto title
      loan bad debt
      as percent of
      fees                  10.7%            14.2%           N/A            N/A       11.2%        15.6%
     Operating
      income margin         52.3%            48.3%          34.2%          27.2%      47.5%        46.8%

                                                                      EZCORP, Inc.

                                                                   Store Count Activity

                                                                                     Three Months Ended September 30, 2011
                                                                                    -------------------------------------

                                                                                     Company-owned Stores                           Franchises
                                                                                    --------------------                            ----------
                                                                US Pawn       Empeno Facil        EZMONEY        Consolidated
                                                                -------       ------------        -------        ------------

       Beginning of period                                           432               155             496              1,083               12
                                     New openings                      5                17               4                 26                1
                                     Acquired                          2                 6               -                  8                -
                                     Sold, combined or closed          -                 -              (6)                (6)               -


       End of period                                                 439               178             494              1,111               13
                                                                     ===               ===             ===              =====              ===

                                                                                     Year Ended September 30, 2011
                                                                                    -----------------------------
                                                                                  Company-owned Stores                        Franchises
                                                                                  --------------------                        ----------

                                                                US Pawn       Empeno Facil        EZMONEY        Consolidated
                                                                -------       ------------        -------        ------------

       Beginning of period                                           396               115             495              1,006                -
                                     New openings                     10                57              15                 82                1
                                     Acquired                         34                 6               -                 40               13
                                     Sold, combined or closed         (1)                -             (16)               (17)              (1)


       End of period                                                 439               178             494              1,111               13
                                                                     ===               ===             ===              =====              ===





                                                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 September 30,
                                                                                     2011                              Year Ended September 30, 2011
                                                                      ---------------------------------                -----------------------------
                                                                                Non-GAAP                                             Non-GAAP
                                                                  GAAP        Adjustments        Non-GAAP            GAAP          Adjustments       Non-GAAP
                                                                  ----        -----------        --------            ----          -----------       --------
      Net revenue                                               $146,759            -             $146,759           $534,938           -             $534,938

      Operations expense                                          69,750                 -          69,750            267,052                -         267,052
      Administrative expense                                      19,020                 -          19,020             75,270          (10,945)         64,325
      Depreciation and amortization                                5,020                 -           5,020             18,344                -          18,344
      (Gain) / loss on sale/disposal of assets                       311                 -             311                309                -             309
                                                                     ---               ---             ---                ---              ---             ---

          Operating income                                        52,658                 -          52,658            173,963           10,945         184,908

      Interest income                                                 (2)                -              (2)               (37)               -             (37)
      Interest expense                                               504                 -             504              1,690                -           1,690
      Equity in net income of unconsolidated
       affiliates                                                 (4,080)                -          (4,080)           (16,237)               -         (16,237)
      Other                                                           (4)                -              (4)              (164)               -            (164)
                                                                     ---               ---             ---               ----              ---            ----

      Income before income taxes                                  56,240                 -          56,240            188,711           10,945         199,656
      Income tax expense                                          19,875                 -          19,875             66,552            3,831          70,383


      Net income                                                 $36,365                $-         $36,365           $122,159           $7,114        $129,273
                                                                 =======               ===         =======           ========           ======        ========

      Net income per share, diluted                                $0.72                $-           $0.72              $2.43            $0.14           $2.57
                                                                   =====               ===           =====              =====            =====           =====
      Weighted average shares, diluted                            50,589                 -          50,589             50,369                -          50,369

SOURCE EZCORP, Inc.

Photo:http://photos.prnewswire.com/prnh/20090713/EZCORPLOGO
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SOURCE: EZCORP, Inc.

 

EZCORP Reports Record Revenue and Earnings Fourth Quarter and Fiscal Year Net Income Increase 31% and 33%, Respectively

PR Newswire

AUSTIN, Texas, Nov. 8, 2011 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced financial results for its fourth fiscal quarter and 2011 fiscal year ended September 30, 2011.

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

Commenting on the results, EZCORP's President and Chief Executive Officer, Paul Rothamel, said, "I'm pleased with our continued strong performance, All three of our business segments reported dramatic operating income growth for the fourth quarter as well as for the fiscal year.  This performance reflects not only the strength of our business model but also the efforts of our team members in executing against our strategic initiatives, which include bolstering the core business, diversifying our geographic footprint, and integrating innovation into our service offerings."                                                    

Financials – Three months ended September 30, 2011 versus the prior year quarter

  • Net income of $36.4 million, up 31%.
  • Diluted earnings per share of $0.72, an increase of 29%.
  • Total revenues of $234.1 million, up 18%, with same store revenue up 8%.
  • Net revenues of $146.8 million, up 22%.
  • Store level operating income of $77.0 million, up 33%, with margins up to 52%.
  • Consolidated operating income of $52.7 million, up 31%, with operating margin improving 245 bps to 36%.
  • Contribution from strategic affiliates of $4.1 million, an increase of 26%.

Key Operating Metrics – Three months ended September 30, 2011 versus the prior year quarter

  • US Pawn:
    • Total revenue increased 16% to $170.2 million.
    • Same store revenue growth of 6% driven by same store growth in merchandise sales, scrap sales and pawn service charges of 4%, 4% and 12%, respectively.
    • Store level operating income increased 34% to $55.5 million with a 499 bps margin improvement to 55%.
    • US Pawn loan balance increased 18% to $134.5 million at September 30, 2011 and grew 10% on a same store basis.
  • Empeno Facil (Mexico pawn):
    • Total revenue increased 87% to $17.9 million.
    • Same store revenue growth of 32%, driven by same store growth in merchandise sales, scrap sales and pawn service charges of 37%, 24% and 31%, respectively.
    • Store level operating income increased 214% to $4.2 million with an improvement in margin from 25% to 41%, despite the impact from opening 57 new stores in the past 12 months. At constant exchange rates, Empeno Facil recorded store level operating income of $4.0 million, an increase of 201%.
    • Empeno Facil's pawn loan balance increased 50% to $10.9 million at September 30, 2011 and grew 7% on a same store basis. At constant exchange rates, loan balances grew 61% and 14% on a same store basis.
  • EZMONEY (US Financial Services and Cash Converters Canada):
    • Total revenue increased 9% to $45.9 million.
    • Same store revenue growth of 8% driven primarily by an increase in signature loan fees of 9%.
    • Bad debt as a percentage of fees decreased to 24%, compared with 28% in the fiscal third quarter 2011 and 25% in the prior year quarter.
    • Store level operating income increased 16% to $17.3 million.
    • Total loan balances (including CSO lender balances) at September 30, 2011 decreased 7% to $39.4 million.

Financials – Fiscal year ended September 30, 2011 versus the prior year

  • Net income of $129.3 million, up 33% (non-GAAP). On a GAAP basis, net income was $122.2 million, up 26%.
  • Diluted earnings per share of $2.57, an increase of 31% (non-GAAP) and $2.43, an increase of 24% (GAAP).
  • Total revenues of $869.3 million, up 19%, with same store revenue up 10%.
  • Net revenues of $534.9 million, up 20%.
  • Store level operating income of $267.9 million, up 27%, with a margin of 50%, an increase of 297 bps.
  • Consolidated operating income increased 30% to $184.9 million (non-GAAP) and 23% to $174.0 million (GAAP). Operating margin improving 285 bps to 35%.
  • Contribution from strategic affiliates of $16.2 million, an increase of 51%.

Note: Non-GAAP financials and percentages are adjusted for the one-time pre-tax charge of $10.9 million ($7.1 million post-tax) related to the retirement of the former Chief Executive Officer recorded in the first quarter of fiscal 2011. A reconciliation of GAAP to non-GAAP results is provided at the end of this release for further reference.

Balance Sheet and Liquidity

  • Combined pawn, signature and auto title loan balances (including CSO) at September 30 were $187 million, an increase of 13%.
  • At September 30, cash and cash equivalents were $24.0 million, with debt outstanding of $17.5 million, compared with cash less debt of $0.9 million a year ago.

Growth and Innovation Initiatives

US Pawn Growth

  • During the fourth quarter, US Pawn added seven stores including five in the Chicago metropolitan area. With 14 stores added in 15 months, EZCORP has grown from having no presence to becoming one of the leading pawn operators in the Chicago area.
  • During the whole of fiscal 2011, US Pawn added 44 stores on a base of 396 (an 11% increase in footprint) and established a presence in three new states: Iowa, Utah and Wisconsin.
  • In October, US Pawn acquired seven Cash Converters stores in Virginia and Pennsylvania. The Cash Converters buy / sell model allows the Company to meet the short-term cash needs of customers in markets and neighborhoods where the traditional pawn model may not be feasible.
  • On November 4, US Pawn acquired 15 Money Mart stores in the San Antonio metropolitan area.  These stores bring the total in the San Antonio area to 37, solidifying EZCORP's position as the leading pawn operator in that area.

Empeno Facil Growth

  • During the fourth quarter, Empeno Facil added 23 stores and entered the Mexican states of Hidalgo and Tlaxcala.
  • For the whole of fiscal 2011, Empeno Facil added 63 stores on a base of 115 (a 55% increase in footprint) and currently has a presence in over half of all Mexico states.

Cash Converters Canada Growth

  • In April, EZCORP acquired the Cash Converters master franchise rights for Canada.  At September 30, the Company had 15 of its 64 Company owned stores operating under the Cash Converters brand. Including the 13 franchise stores, the Cash Converters brand is represented in five of 10 Canadian provinces.

Innovation

  • During the fourth quarter, the Company established an eCommerce and Card Services division to further develop and market EZCORP's "Change" card as well as introduce online and mobile services to enhance the ease and efficiency with which customers can transact with the Company. As of September 30, 124,000 Change cards had been issued to EZCORP customers in nine states, covering 656 US Pawn and US Financial Services stores.

Rothamel concluded, "In total, strength in all markets and divisions, combined with operational execution on our strategic initiatives, drove our success, both in the fourth quarter and the 2011 fiscal year overall. Looking ahead, I'm confident we will reap additional rewards from our recent investments in talent and technology as we enhance our differentiated product offering.  We will therefore be able to better serve our customers and position  ourselves for continued growth."

Outlook for fiscal 2012

The Company expects fiscal 2012 earnings per share to be between $3.05 and $3.10. This represents an increase of approximately 20% over fiscal 2011 non-GAAP earnings per share and an increase of 27% over fiscal 2011 GAAP earnings per share.  

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 1,100 pawn, buy/sell and personal financial services stores in the U.S., Mexico and Canada.  The company also has significant investments in Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 160 full-line stores offering pawnbroking, jewelry retailing, gold buying and financial services; and in Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a worldwide network of over 600 stores that provide personal financial services and sell pre-owned merchandise.

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 and consumer demand for the Company's services and merchandise.  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 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, 2010.  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 September 30,


Year Ended September 30,





2011


2010


2011


2010













Revenues:










Merchandise sales

$ 67,856


$ 56,252


$ 282,083


$ 240,454



Jewelry scrapping sales

63,048


53,968


212,479


171,411



Pawn service charges

56,191


45,168


201,135


163,695



Signature loan fees

40,886


36,699


150,250


139,315



Auto title loan fees

5,413


5,991


21,701


17,707



Other

691


90


1,669


463




Total revenues

234,085


198,168


869,317


733,045













Cost of goods sold:










Cost of merchandise sales

39,419


32,229


162,060


140,284



Cost of jewelry scrapping sales

36,943


35,176


133,560


110,838




Total cost of goods sold

76,362


67,405


295,620


251,122













Bad debt:










Signature loan bad debt

10,353


9,605


36,328


31,709



Auto title loan bad debt

611


1,119


2,431


2,735




Total bad debt

10,964


10,724


38,759


34,444













Net revenue

146,759


120,039


534,938


447,479













Operations expense

69,750


62,326


267,052


236,664


Administrative expense

19,020


13,384


75,270


52,740


Depreciation and amortization

5,020


3,973


18,344


14,661


(Gain) / loss on sales / disposal of assets

311


227


309


1,528














Operating income

52,658


40,129


173,963


141,886













Interest income

(2)


(35)


(37)


(186)


Interest expense

504


314


1,690


1,385


Equity in net income of unconsolidated affiliates

(4,080)


(3,231)


(16,237)


(10,750)


Other


(4)


10


(164)


(93)













Income before income taxes

56,240


43,071


188,711


151,530


Income tax expense

19,875


15,219


66,552


54,236













Net income

$ 36,365


$ 27,852


$ 122,159


$   97,294













Net income per share, diluted

$     0.72


$     0.56


$       2.43


$       1.96













Weighted average shares, diluted

50,589


49,672


50,369


49,576













OTHER DATA:









Gross margin on merchandise sales

41.9%


42.7%


42.5%


41.7%


Gross margin on jewelry scrapping sales

41.4%


34.8%


37.1%


35.3%


Gross margin on total sales

41.7%


38.8%


40.2%


39.0%













Signature loan bad debt as percent of fees

25.3%


26.2%


24.2%


22.8%


Auto title loan bad debt as percent of fees

11.3%


18.7%


11.2%


15.4%



EZCORP, Inc.

Highlights of Consolidated Balance Sheets

(in thousands)















September 30, (unaudited)







2011


2010



Assets:









Current assets:








Cash and cash equivalents

$   23,969


$   25,854





Pawn loans

145,318


121,201





Signature loans, net

11,389


10,775





Auto title loans, net

3,222


3,145





Pawn service charges receivable, net

26,455


21,626





Signature loan fees receivable, net

5,348


5,818





Auto title loan fees receivable, net

1,427


1,616





Inventory, net

90,373


71,502





Deferred tax asset

18,125


23,208





Federal income taxes receivable

-


-





Prepaid expenses and other assets

30,611


17,427






Total current assets

356,237


302,172













Investments in unconsolidated affiliates

120,319


101,386




Property and equipment, net

78,498


62,293




Deferred tax asset, non-current

-


60




Goodwill

173,206


117,305




Other assets, net

28,190


23,196















Total assets

$ 756,450


$ 606,412












Liabilities and stockholders' equity:







Current liabilities:








Current maturities of long term debt

-


10,000





Accounts payable and other accrued expenses

57,400


49,663





Customer layaway deposits

6,176


6,109





Federal income taxes payable

693


3,687






Total current liabilities

64,269


69,459













Long-term debt, less current maturities

17,500


15,000




Deferred tax liability

8,331


-




Deferred gains and other long-term liabilities

2,102


2,525




Total stockholders' equity

664,248


519,428














Total liabilities and stockholders' equity

$ 756,450


$ 606,412






























Other Data:







Pawn loan balance per ending pawn store

$        238


$        240



Inventory per ending pawn store

$        148


$        142



Book value per share

$     13.23


$     10.55




EZCORP, Inc.

Operating Segment Results (Unaudited)

(in thousands, except  percents)




















Three Months Ended September 30,




















US Pawn


Empeno Facil


EZMONEY





2011


2010


2011


2010


2011


2010

















Revenues:














Merchandise sales

$   59,750


$   52,364


$   7,908


$   3,888


$      198


$           -



Scrap sales

58,055


51,007


4,634


2,839


359


122



Pawn service charges

50,879


42,294


5,312


2,874


-


-



Signature loan fees

894


488


-


-


39,992


36,211



Auto title loan fees

447


398


-


-


4,966


5,593



Other

214


77


88


-


389


13




Total revenues

170,239


146,628


17,942


9,601


45,904


41,939

















Merchandise cost of goods sold

34,647


30,112


4,636


2,117


136


-


Scrap cost of goods sold

33,788


32,896


3,004


2,226


151


54


Signature loan bad debt

340


195


-


-


10,013


9,410


Auto title loan bad debt

55


70


-


-


556


1,049


















Net revenue

101,409


83,355


10,302


5,258


35,048


31,426

















Operations expense

45,898


41,886


6,103


3,922


17,749


16,518


















Store operating income

$   55,511


$   41,469


$   4,199


$   1,336


$ 17,299


$ 14,908

















OTHER DATA













Gross margin on merchandise sales

42.0%


42.5%


41.4%


45.6%


31.3%


N/A


Gross margin on scrap sales

41.8%


35.5%


35.2%


21.6%


57.9%


55.7%


Gross margin on total sales

41.9%


39.0%


39.1%


35.4%


48.5%


55.7%


Signature loan bad debt as a percent of fees

38.0%


40.0%


N/A


N/A


25.0%


26.0%


Auto title loan bad debt as percent of fees

12.3%


17.6%


N/A


N/A


11.2%


18.8%


Operating income margin

54.7%


49.7%


40.8%


25.4%


49.4%


47.4%



































Year Ended September 30,




















US Pawn


Empeno Facil


EZMONEY





2011


2010


2011


2010


2011


2010

















Revenues:














Merchandise sales

$ 256,643


$ 226,424


$ 25,237


$ 14,030


$      203


$           -



Scrap sales

195,276


163,667


15,997


7,389


1,206


355



Pawn service charges

184,234


154,505


16,901


9,190


-


-



Signature loan fees

2,501


1,930


-


-


147,749


137,385



Auto title loan fees

1,539


1,659


-


-


20,162


16,048



Other

634


442


122


-


913


21




Total revenues

640,827


548,627


58,257


30,609


170,233


153,809

















Merchandise cost of goods sold

147,239


131,825


14,672


8,459


149


-


Scrap cost of goods sold

120,767


104,531


12,205


6,137


588


170


Signature loan bad debt

923


641


-


-


35,405


31,068


Auto title loan bad debt

165


236


-


-


2,266


2,499


















Net revenue

371,733


311,394


31,380


16,013


131,825


120,072

















Operations expense

177,191


161,145


20,636


11,658


69,225


63,861


















Store operating income

$ 194,542


$ 150,249


$ 10,744


$   4,355


$ 62,600


$ 56,211

















OTHER DATA













Gross margin on merchandise sales

42.6%


41.8%


41.9%


39.7%


26.6%


N/A


Gross margin on scrap sales

38.2%


36.1%


23.7%


16.9%


51.2%


52.1%


Gross margin on total sales

40.7%


39.4%


34.8%


31.9%


47.7%


52.1%


Signature loan bad debt as percent of fees

36.9%


33.2%


N/A


N/A


24.0%


22.6%


Auto title loan bad debt as percent of fees

10.7%


14.2%


N/A


N/A


11.2%


15.6%


Operating income margin

52.3%


48.3%


34.2%


27.2%


47.5%


46.8%



EZCORP, Inc.
















Store Count Activity




















Three Months Ended September 30, 2011






















Company-owned Stores


Franchises







US Pawn


Empeno Facil


EZMONEY


Consolidated





















Beginning of period

432


155


496


1,083


12





New openings

5


17


4


26


1





Acquired

2


6


-


8


-





Sold, combined or closed

-


-


(6)


(6)


-



















End of period

439


178


494


1,111


13






















Year Ended September 30, 2011







Company-owned Stores


Franchises






















US Pawn


Empeno Facil


EZMONEY


Consolidated





















Beginning of period

396


115


495


1,006


-





New openings

10


57


15


82


1





Acquired

34


6


-


40


13





Sold, combined or closed

(1)


-


(16)


(17)


(1)



















End of period

439


178


494


1,111


13














































































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 September 30, 2011


Year Ended September 30, 2011







Non-GAAP






Non-GAAP







GAAP


Adjustments


Non-GAAP


GAAP


Adjustments


Non-GAAP


Net revenue


$ 146,759


-


$ 146,759


$    534,938


-


$ 534,938

















Operations expense

69,750


-


69,750


267,052


-


267,052


Administrative expense


19,020


-


19,020


75,270


(10,945)


64,325


Depreciation and amortization


5,020


-


5,020


18,344


-


18,344


(Gain) / loss on sale/disposal of assets


311


-


311


309


-


309

















   Operating income


52,658


-


52,658


173,963


10,945


184,908

















Interest income


(2)


-


(2)


(37)


-


(37)


Interest expense


504


-


504


1,690


-


1,690


Equity in net income of unconsolidated affiliates


(4,080)


-


(4,080)


(16,237)


-


(16,237)


Other


(4)


-


(4)


(164)


-


(164)

















Income before income taxes

56,240


-


56,240


188,711


10,945


199,656


Income tax expense

19,875


-


19,875


66,552


3,831


70,383

















Net income


$   36,365


$                -


$   36,365


$    122,159


$       7,114


$ 129,273

















Net income per share, diluted


$       0.72


$              -


$       0.72


$          2.43


$         0.14


$       2.57


Weighted average shares, diluted

50,589


-


50,589


50,369


-


50,369



SOURCE EZCORP, Inc.

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

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