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EZCORP Reports 14% Growth in Net Income

Jan 19, 2012

Affirms annual guidance of $3.05 - $3.10 per share

AUSTIN, Texas, Jan. 19, 2012 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced financial results for its first fiscal quarter ended December 31, 2011.

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

Commenting on the results, EZCORP's President and Chief Executive Officer, Paul Rothamel, said "Our performance was in line with our expectations as we made planned investments in talent and technology to support our long term growth strategy. We also experienced some headwinds as U.S. holiday sales were soft; gold prices declined inside the quarter; and we were negatively impacted by currency exchange rates in Mexico. We were able to offset all of this with our double digit revenue growth, margin expansion, and expense controls inside our base business."

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

    --  Net income of $39.4 million, up 14% on a non-GAAP basis; up 43% on a
        GAAP basis.
    --  Diluted earnings per share of $0.78, an increase of 13% on a non-GAAP
        basis; up 42% on a GAAP basis.
    --  Total revenues of $248.9 million, up 14%.
    --  Net revenues of $154.0 million, up 15%.
    --  Store level operating income of $79.5 million, up 14%, with margins
        steady at 52%.
    --  Consolidated operating income of $54.8 million, up 9% on a non-GAAP
        basis, up 39% on a GAAP basis.
    --  Contribution from strategic affiliates of $4.2 million, an increase of
        24%.

Note: Non-GAAP prior year quarter 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 three months ended December 31, 2010. A reconciliation of GAAP to non-GAAP results is provided at the end of this release for further reference.

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

    --  US Pawn:
        --  Total revenue increased 15% to $184.5 million or 2% on a same store
            basis.
        --  Total sales margins improved 60 basis points to 40.8%.
        --  Store level operating income increased 17% to $57.9 million with a
            15 bps margin improvement to 54%.  Same store operating income
            increased 6%.
        --  US Pawn loan balance increased 19% to $140.4 million at December 31,
            2011 and grew 9% on a same store basis.

    --  Empeno Facil (Mexico pawn):
        --  Total revenue increased 56% to $19.4 million.
        --  Same store revenue growth of 15%, driven by same store growth in
            merchandise sales and pawn service charges of 32% and 21%,
            respectively.  Same store scrap sales were down 21%.
        --  Store level operating income increased 160% to $6.2 million with an
            improvement in margin from 36% to 51%, despite the impact from
            opening 54 new stores in the past 12 months.
        --  Empeno Facil's pawn loan balance increased 42% to $9.7 million at
            December 31, 2011 and grew 5% on a same store basis.

    --  EZMONEY (US Financial Services and Cash Converters Canada):
        --  Total revenue decreased 1% to $45.0 million.
        --  Same store revenue decreased 2% driven by a decrease in same store
            signature loan fees of 2%.  Included in signature loan fees are the
            fees related to Installment loans which increased 77% as a result of
            the continued transition to this product.
        --  Bad debt as a percentage of fees remained steady at 24%.
        --  Store level operating income decreased 13% to $15.5 million.
        --  Total loan balances (including CSO lender balances) at December 31,
            2011 decreased 3% to $44.8 million and decreased 1% on a same store
            basis.

Balance Sheet and Liquidity

    --  Combined pawn, signature and auto title loan balances (including CSO) at
        December 31 were $197 million, an increase of 15%.
    --  At December 31, cash and cash equivalents were $22.9 million, with debt
        outstanding of $40.5 million.

Growth

    --  During the quarter, US Pawn acquired 24 stores in three separate
        transactions:
        --  Two stores in Florida bringing our total store count in Florida to
            95;
        --  Seven Cash Converters stores in Virginia and Pennsylvania, new
            states for US Pawn. 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;
        --  Fifteen stores in the San Antonio metropolitan area from Money Mart.
            These stores bring the total in the San Antonio area to 37,
            consolidating EZCORP's position as the leading pawn operator in that
            market.
    --  Empeno Facil opened 14 stores during the quarter bringing our total
        store count to 192 and a market presence in 17 of the 31 states.  In the
        last 12 months, Empeno Facil has added 54 stores.  Of our 192 total
        locations at December 31, 140 are large format and 52 are smaller format
        stores.
    --  Cash Converters Canada acquired one franchise store during the quarter
        and converted eight Cashmax stores to the Cash Converter brand.  At
        December 31, 24 of its 65 company-owned stores operated under the Cash
        Converters brand with an additional 12 stores managed by franchisees.

Crediamigo

    --  EZCORP has agreed to acquire 60% of Crediamigo, a specialty consumer
        finance company based in Mexico City with 65 branches and 550 employees
        throughout Mexico. Crediamigo provides payroll deduction loans,
        primarily to employees of government agencies. Crediamigo has 170
        payroll withholding agreements signed with employers and access to
        approximately 3.5 million employees.
    --  Founded in 2003, Crediamigo is one of the top three largest and fastest
        growing providers of payroll deduction loans in Mexico with a total
        portfolio of approximately MXP 1.25 billion (approximately $92.6 million
        USD).  The average loan is around MXP 16,000 and 27 months.
    --  Under the terms of the acquisition agreement, EZCORP will pay $38.7
        million in cash to the existing shareholders of Crediamigo and will
        contribute $12 million to the capital of the company alongside $8
        million that will be contributed by certain of the minority
        shareholders.  In addition, EZCORP will be obligated to pay the existing
        stockholders additional amounts on each of the first and second
        anniversaries of the closing if certain financial performance targets
        are achieved during 2012 and 2013.  The transaction is expected to close
        in our second fiscal quarter.

Rothamel concluded, "With our ongoing domestic and international investments, we believe our company is well positioned for both short and long term growth. Through our existing channels, as well as our newest channels, we are excited to be bringing our suite of retail and financial services to an ever widening audience."

Outlook for fiscal 2012

The Company affirmed that it expects fiscal 2012 earnings per share to be between $3.05 and $3.10. At the mid-point, this represents an increase of 20% over fiscal 2011 earnings per share as adjusted for the one-time charge related to the retirement of the former Chief Executive Officer in the first quarter of fiscal 2011.

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
                                                                              December 31,
                                                                          -------------------
                                                                                             2011                 2010
                                                                                             ----                 ----

     Revenues:
                           Merchandise
                           sales                             $86,894                                   $71,880
                           Jewelry
                           scrapping
                           sales                              56,403                                    50,665
                           Pawn service
                           charges                            59,792                                    49,810
                           Signature loan
                           fees                               39,621                                    40,066
                           Auto title
                           loan fees                           5,467                                     6,244
                          Other                                  696                                       161
                                                                 ---                                       ---
                                           Total revenues                                 248,873              218,826

     Cost of goods sold:
                           Cost of
                           merchandise
                           sales                              48,396                                    41,311
                           Cost of
                           jewelry
                           scrapping
                           sales                              35,424                                    32,255
                                                              ------                                    ------
                                           Total cost of goods sold                        83,820               73,566

     Bad debt:
                           Signature loan
                           bad debt                           10,101                                    10,046
                           Auto title
                           loan bad debt                         924                                       982
                                                                 ---                                       ---
                                           Total bad debt                                  11,025               11,028
                                                                                           ------               ------

     Net revenue                  154,028                                                 134,232

     Operations expense            74,501                                                  64,504
      Administrative
      expense                      19,711                                                  26,138
      Depreciation and
      amortization                  5,255                                                   4,179
      (Gain) /loss on
      sales /disposal
      of assets                      (201)                                                      7
                                     ----                                                     ---

                           Operating
                           income                             54,762                                    39,404

     Interest income                  (39)                                                     (3)
     Interest expense                 590                                                     300
      Equity in net
      income of
      unconsolidated
      affiliates                   (4,161)                                                 (3,367)
     Other                         (1,119)                                                    (61)
                                   ------                                                     ---

      Income before
      income taxes                 59,491                                                  42,535
     Income tax expense            20,139                                                  15,106

     Net income                   $39,352                                                 $27,429
                                  =======                                                 =======

      Net income per
      share, diluted                $0.78                                                   $0.55
                                    =====                                                   =====

      Weighted average
      shares, diluted              50,693                                                  50,119

     OTHER DATA:
     -----------
      Gross margin on
      merchandise sales              44.3%                                                   42.5%
      Gross margin on
      jewelry scrapping
      sales                          37.2%                                                   36.3%
      Gross margin on
      total sales                    41.5%                                                   40.0%

      Signature loan bad
      debt as percent of
      fees                           25.5%                                                   25.1%
      Auto title loan bad
      debt as percent of
      fees                           16.9%                                                   15.7%

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

                                                                                        December 31,               September 30,
                                                                                        (unaudited)
                                                                                         ----------
                                                                                                      2011                           2011
                                                                                                      ----                           ----
     Assets:
                  Current assets:
                                       Cash and cash
                                       equivalents                      $22,868                                          $23,969
                                      Pawn loans                        150,060                                          145,318
                                       Signature
                                       loans, net                        12,676                                           11,389
                                       Auto title
                                       loans, net                         3,512                                            3,222
                                       Pawn service
                                       charges
                                       receivable,
                                       net                               28,593                                           26,455
                                       Signature
                                       loan fees
                                       receivable,
                                       net                                6,206                                            5,348
                                       Auto title
                                       loan fees
                                       receivable,
                                       net                                1,405                                            1,427
                                       Inventory,
                                       net                              100,319                                           90,373
                                       Deferred tax
                                       asset                             18,169                                           18,125
                                       Prepaid
                                       expenses and
                                       other assets                      38,914                                           30,611
                                                                         ------                                           ------
                                                     Total current assets                          382,722                        356,237

                   Investments in
                   unconsolidated
                   affiliates                117,820                                                       120,319
                   Property and
                   equipment, net             84,513                                                        78,498
                  Goodwill                   212,475                                                       173,206
                  Other assets, net           28,349                                                        28,190

                                                     Total assets                                 $825,879                       $756,450
                                                                                                  ========                       ========

      Liabilities and
      stockholders' equity:
                   Current
                   liabilities:
        Accounts
                                       payable and
                                       other
                                       accrued
                                       expenses                          57,451                                           57,400
                                       Customer
                                       layaway
                                       deposits                           6,152                                            6,176
                                       Federal
                                       income taxes
                                       payable                           12,672                                              693
                                                                         ------                                              ---
                                                     Total current liabilities                      76,275                         64,269

                   Long-term debt,
                   less current
                   maturities                 40,500                                                        17,500
                   Deferred tax
                   liability                   8,724                                                         8,331
                   Deferred gains and
                   other long-term
                   liabilities                 1,997                                                         2,102
                   Total
                   stockholders'
                   equity                    698,383                                                       664,248

        Total
                                       liabilities
                                       and
                                       stockholders'
                                       equity                          $825,879                                         $756,450
                                                                       ========                                         ========



     Other Data:
     -----------
      Pawn loan balance per
      ending pawn store                        $231                                                                        $238
      Inventory per ending
      pawn store                               $155                                                                        $148
     Book value per share                    $13.86                                                                      $13.23

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

                                                                                Three Months Ended December 31,
                                                                                -------------------------------

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

     Revenues:
                           Merchandise
                           sales                          $75,975                      $66,305                                  $10,342                            $5,575            $577         $       -
                          Scrap sales                      52,516                       47,006                                    3,537                             3,462             350               197
                           Pawn service
                           charges                         54,370                       46,436                                    5,422                             3,374               -                 -
                           Signature loan
                           fees                               920                          509                                        -                                 -          38,701            39,557
                           Auto title
                           loan fees                          457                          393                                        -                                 -           5,010             5,851
                          Other                               241                          117                                      120                                 3             335                41
                                                              ---                          ---                                      ---                               ---             ---               ---
                                           Total revenues                 184,479                                   160,766                                19,421         12,414          44,973            45,646

      Merchandise cost of
      goods sold                   43,116                                  38,197                                     4,945                                 3,114            335               -
      Scrap cost of goods
      sold                         32,973                                  29,538                                     2,274                                 2,638            177              79
      Signature loan bad
      debt                            352                                     165                                         -                                     -          9,749           9,881
      Auto title loan bad
      debt                            114                                      61                                         -                                     -            810             921
                                      ---                                     ---                                       ---                                   ---            ---             ---

                          Net revenue                     107,924                       92,805                                   12,202                             6,662          33,902            34,765

     Operations expense            50,073                                  43,196                                     5,998                                 4,278         18,430          17,030

                           Store
                           operating
                           income                         $57,851                      $49,609                                   $6,204                            $2,384         $15,472           $17,735
                                                          =======                      =======                                   ======                            ======         =======           =======

     OTHER DATA
     ----------
      Gross margin on
      merchandise sales              43.2%                                   42.4%                                     52.2%                                 44.1%          41.9%            N/A
      Gross margin on
      scrap sales                    37.2%                                   37.2%                                     35.7%                                 23.8%          49.4%           59.9%
      Gross margin on
      total sales                    40.8%                                   40.2%                                     48.0%                                 36.4%          44.8%           59.9%
      Signature loan bad
      debt as a percent
      of fees                        38.3%                                   32.4%                                      N/A                                   N/A           25.2%           25.0%
      Auto title loan bad
      debt as percent of
      fees                           24.9%                                   15.5%                                      N/A                                   N/A           16.2%           15.7%
      Operating income
      margin                         53.6%                                   53.5%                                     50.8%                                 35.8%          45.6%           51.0%

                                                                                                                                                        EZCORP, Inc.
                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                    Store Count Activity
                                                                                                                                                                                                                                                                                                                                
                                                                               Three Months Ended December 31, 2011
                                                                              ------------------------------------
                                                                                                                                                                                                                                                                                                                                
                                                                      Company-owned Stores                                               Franchises
                                                                      --------------------                                              ----------
                                                                    US Pawn                                      Empeno Facil                                   EZMONEY                                   Consolidated
                                                                    -------                                      ------------                                   -------                                   ------------
                                                                                                                                                                                                                                                                                                                                
                          Beginning of
                           period                     439                                        178                                             494                                   1,111                                              13
                          New
                           openings                     -                                         14                                                                                      14                                               -
                          Acquired                     24                                                                                          1                                      25                                              (1)
                          Sold,
                           combined
                           or closed                    -                                          -                                              (8)                                     (8)                                              -
                                                                                                                                                                                                                                                                                                                                
                          End of period               463                                        192                                             487                                   1,142                                              12
                         =========
                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                
                                                                                                                                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 December 31, 2011                                         Three Months Ended December 31, 2010
                                                             ------------------------------------                                         ------------------------------------
                                                                                                                   Non-GAAP                                                                                                                               Non-GAAP
                                                                     GAAP                                        Adjustments                                    Non-GAAP                                      GAAP                                       Adjustments                               Non-GAAP
                                                                     ----                                        -----------                                    --------                                      ----                                       -----------                               --------
                         Net revenue             $154,028                                          -                                        $154,028                                $134,232                                               -                                    $134,232
                                                                                                                                                                                                                                                                                                                                
                          Operations
                          expense                  74,501                                          -                                          74,501                                  64,504                                               -                                      64,504
                          Administrative
                          expense                  19,711                                          -                                          19,711                                  26,138                                         (10,945)                                     15,193
                          Depreciation
                          and
                          amortization              5,255                                          -                                           5,255                                   4,179                                               -                                       4,179
                          (Gain) / loss
                          on sale/
                          disposal of
                          assets                     (201)                                         -                                            (201)                                      7                                               -                                           7
                         ---------
                                                                                                                                                                                                                                                                                                                                
                             Operating
                              income               54,762                                          -                                          54,762                                  39,404                                          10,945                                      50,349
                                                                                                                                                                                                                                                                                                                                
                         Interest income              (39)                                         -                                             (39)                                     (3)                                              -                                          (3)
                          Interest
                          expense                     590                                          -                                             590                                     300                                               -                                         300
                          Equity in net
                          income of
                          unconsolidated
                          affiliates               (4,161)                                         -                                          (4,161)                                 (3,367)                                              -                                      (3,367)
                         Other                     (1,119)                                         -                                          (1,119)                                    (61)                                              -                                         (61)
                         -----
                                                                                                                                                                                                                                                                                                                                
                          Income before
                          income taxes             59,491                                          -                                          59,491                                  42,535                                          10,945                                      53,480
                          Income tax
                          expense                  20,139                                          -                                          20,139                                  15,106                                           3,831                                      18,937
                                                                                                                                                                                                                                                                                                                                
                         Net income               $39,352                            $             -                                         $39,352                                 $27,429                                          $7,114                                     $34,543
                         ==========
                                                                                                                                                                                                                                                                                                                                
                          Net income per
                          share, diluted            $0.78                            $             -                                           $0.78                                   $0.55                                           $0.14                                       $0.69
                         ===============
                          Weighted
                          average
                          shares,
                          diluted                  50,693                                          -                                          50,589                                  50,119                                               -                                      50,119

SOURCE EZCORP, Inc.

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

 

EZCORP Reports 14% Growth in Net Income Affirms annual guidance of $3.05 - $3.10 per share

PR Newswire

AUSTIN, Texas, Jan. 19, 2012 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced financial results for its first fiscal quarter ended December 31, 2011.

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

Commenting on the results, EZCORP's President and Chief Executive Officer, Paul Rothamel, said "Our performance was in line with our expectations as we made planned investments in talent and technology to support our long term growth strategy.  We also experienced some headwinds as U.S. holiday sales were soft; gold prices declined inside the quarter; and we were negatively impacted by currency exchange rates in Mexico.  We were able to offset all of this with our double digit revenue growth, margin expansion, and expense controls inside our base business." 

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

  • Net income of $39.4 million, up 14% on a non-GAAP basis; up 43% on a GAAP basis.
  • Diluted earnings per share of $0.78, an increase of 13% on a non-GAAP basis; up 42% on a GAAP basis.
  • Total revenues of $248.9 million, up 14%.
  • Net revenues of $154.0 million, up 15%.
  • Store level operating income of $79.5 million, up 14%, with margins steady at 52%.
  • Consolidated operating income of $54.8 million, up 9% on a non-GAAP basis, up 39% on a GAAP basis.
  • Contribution from strategic affiliates of $4.2 million, an increase of 24%.

Note: Non-GAAP prior year quarter 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 three months ended December 31, 2010. A reconciliation of GAAP to non-GAAP results is provided at the end of this release for further reference.

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

  • US Pawn:
    • Total revenue increased 15% to $184.5 million or 2% on a same store basis.
    • Total sales margins improved 60 basis points to 40.8%. 
    • Store level operating income increased 17% to $57.9 million with a 15 bps margin improvement to 54%.  Same store operating income increased 6%.
    • US Pawn loan balance increased 19% to $140.4 million at December 31, 2011 and grew 9% on a same store basis.

 

  • Empeno Facil (Mexico pawn):
    • Total revenue increased 56% to $19.4 million.
    • Same store revenue growth of 15%, driven by same store growth in merchandise sales and pawn service charges of 32% and 21%, respectively.  Same store scrap sales were down 21%.
    • Store level operating income increased 160% to $6.2 million with an improvement in margin from 36% to 51%, despite the impact from opening 54 new stores in the past 12 months.
    • Empeno Facil's pawn loan balance increased 42% to $9.7 million at December 31, 2011 and grew 5% on a same store basis.

 

  • EZMONEY (US Financial Services and Cash Converters Canada):
    • Total revenue decreased 1% to $45.0 million.
    • Same store revenue decreased 2% driven by a decrease in same store signature loan fees of 2%.  Included in signature loan fees are the fees related to Installment loans which increased 77% as a result of the continued transition to this product.
    • Bad debt as a percentage of fees remained steady at 24%.
    • Store level operating income decreased 13% to $15.5 million.
    • Total loan balances (including CSO lender balances) at December 31, 2011 decreased 3% to $44.8 million and decreased 1% on a same store basis.

Balance Sheet and Liquidity

  • Combined pawn, signature and auto title loan balances (including CSO) at December 31 were $197 million, an increase of 15%.
  • At December 31, cash and cash equivalents were $22.9 million, with debt outstanding of $40.5 million.

Growth

  • During the quarter, US Pawn acquired 24 stores in three separate transactions:
    • Two stores in Florida bringing our total store count in Florida to 95;
    • Seven Cash Converters stores in Virginia and Pennsylvania, new states for US Pawn. 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;
    • Fifteen stores in the San Antonio metropolitan area from Money Mart. These stores bring the total in the San Antonio area to 37, consolidating EZCORP's position as the leading pawn operator in that market.
  • Empeno Facil opened 14 stores during the quarter bringing our total store count to 192 and a market presence in 17 of the 31 states.  In the last 12 months, Empeno Facil has added 54 stores.  Of our 192 total locations at December 31, 140 are large format and 52 are smaller format stores.
  • Cash Converters Canada acquired one franchise store during the quarter and converted eight Cashmax stores to the Cash Converter brand.  At December 31, 24 of its 65 company-owned stores operated under the Cash Converters brand with an additional 12 stores managed by franchisees.

Crediamigo

  • EZCORP has agreed to acquire 60% of Crediamigo, a specialty consumer finance company based in Mexico City with 65 branches and 550 employees throughout Mexico. Crediamigo provides payroll deduction loans, primarily to employees of government agencies. Crediamigo has 170 payroll withholding agreements signed with employers and access to approximately 3.5 million employees.
  • Founded in 2003, Crediamigo is one of the top three largest and fastest growing providers of payroll deduction loans in Mexico with a total portfolio of approximately MXP 1.25 billion (approximately $92.6 million USD).  The average loan is around MXP 16,000 and 27 months.
  • Under the terms of the acquisition agreement, EZCORP will pay $38.7 million in cash to the existing shareholders of Crediamigo and will contribute $12 million to the capital of the company alongside $8 million that will be contributed by certain of the minority shareholders.  In addition, EZCORP will be obligated to pay the existing stockholders additional amounts on each of the first and second anniversaries of the closing if certain financial performance targets are achieved during 2012 and 2013.  The transaction is expected to close in our second fiscal quarter.

Rothamel concluded, "With our ongoing domestic and international investments, we believe our company is well positioned for both short and long term growth.  Through our existing channels, as well as our newest channels, we are excited to be bringing our suite of retail and financial services to an ever widening audience."

Outlook for fiscal 2012

The Company affirmed that it expects fiscal 2012 earnings per share to be between $3.05 and $3.10. At the mid-point, this represents an increase of 20% over fiscal 2011 earnings per share as adjusted for the one-time charge related to the retirement of the former Chief Executive Officer in the first quarter of fiscal 2011.

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 December 31,

 

 

 

 

 

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Merchandise sales

$          86,894

 

$          71,880

 

 

 

 

Jewelry scrapping sales

56,403

 

50,665

 

 

 

 

Pawn service charges

59,792

 

49,810

 

 

 

 

Signature loan fees

39,621

 

40,066

 

 

 

 

Auto title loan fees

5,467

 

6,244

 

 

 

 

Other

696

 

161

 

 

 

 

 

Total revenues

248,873

 

218,826

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold:

 

 

 

 

 

 

 

Cost of merchandise sales

48,396

 

41,311

 

 

 

 

Cost of jewelry scrapping sales

35,424

 

32,255

 

 

 

 

 

Total cost of goods sold

83,820

 

73,566

 

 

 

 

 

 

 

 

 

 

 

 

Bad debt:

 

 

 

 

 

 

 

Signature loan bad debt

10,101

 

10,046

 

 

 

 

Auto title loan bad debt

924

 

982

 

 

 

 

 

Total bad debt

11,025

 

11,028

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

154,028

 

134,232

 

 

 

 

 

 

 

 

 

 

 

 

Operations expense

74,501

 

64,504

 

 

 

Administrative expense

19,711

 

26,138

 

 

 

Depreciation and amortization

5,255

 

4,179

 

 

 

(Gain) / loss on sales / disposal of assets

(201)

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

54,762

 

39,404

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

(39)

 

(3)

 

 

 

Interest expense

590

 

300

 

 

 

Equity in net income of unconsolidated affiliates

(4,161)

 

(3,367)

 

 

 

Other

(1,119)

 

(61)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

59,491

 

42,535

 

 

 

Income tax expense

20,139

 

15,106

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$          39,352

 

$          27,429

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share, diluted

$              0.78

 

$              0.55

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares, diluted

50,693

 

50,119

 

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA:

 

 

 

 

 

 

Gross margin on merchandise sales

44.3%

 

42.5%

 

 

 

Gross margin on jewelry scrapping sales

37.2%

 

36.3%

 

 

 

Gross margin on total sales

41.5%

 

40.0%

 

 

 

 

 

 

 

 

 

 

 

 

Signature loan bad debt as percent of fees

25.5%

 

25.1%

 

 

 

Auto title loan bad debt as percent of fees

16.9%

 

15.7%

 

 

  

 

EZCORP, Inc.

Highlights of Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,
(unaudited)

 

September 30,

 

 

 

 

 

 

2011

 

 

2011

 

 

Assets:

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

$      22,868

 

 

$       23,969

 

 

 

 

Pawn loans

150,060

 

 

145,318

 

 

 

 

Signature loans, net

12,676

 

 

11,389

 

 

 

 

Auto title loans, net

3,512

 

 

3,222

 

 

 

 

Pawn service charges receivable, net

28,593

 

 

26,455

 

 

 

 

Signature loan fees receivable, net

6,206

 

 

5,348

 

 

 

 

Auto title loan fees receivable, net

1,405

 

 

1,427

 

 

 

 

Inventory, net

100,319

 

 

90,373

 

 

 

 

Deferred tax asset

18,169

 

 

18,125

 

 

 

 

Prepaid expenses and other assets

38,914

 

 

30,611

 

 

 

 

 

Total current assets

382,722

 

 

356,237

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in unconsolidated affiliates

117,820

 

 

120,319

 

 

 

Property and equipment, net

84,513

 

 

78,498

 

 

 

Goodwill

212,475

 

 

173,206

 

 

 

Other assets, net

28,349

 

 

28,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$    825,879

 

 

$     756,450

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity:

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and other accrued expenses

57,451

 

 

57,400

 

 

 

 

Customer layaway deposits

6,152

 

 

6,176

 

 

 

 

Federal income taxes payable

12,672

 

 

693

 

 

 

 

 

Total current liabilities

76,275

 

 

64,269

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

40,500

 

 

17,500

 

 

 

Deferred tax liability

8,724

 

 

8,331

 

 

 

Deferred gains and other long-term liabilities

1,997

 

 

2,102

 

 

 

Total stockholders' equity

698,383

 

 

664,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

$    825,879

 

 

$     756,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data:

 

 

 

 

 

 

Pawn loan balance per ending pawn store

$           231

 

 

$            238

 

 

Inventory per ending pawn store

$           155

 

 

$            148

 

 

Book value per share

$        13.86

 

 

$         13.23

 

 

EZCORP, Inc.

Operating Segment Results (Unaudited)

(in thousands, except  percents)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US Pawn

 

Empeno Facil

 

EZMONEY

 

 

 

 

 

2011

 

2010

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$ 75,975

 

$66,305

 

$10,342

 

$ 5,575

 

$     577

 

$        -

 

 

 

Scrap sales

52,516

 

47,006

 

3,537

 

3,462

 

350

 

197

 

 

 

Pawn service charges

54,370

 

46,436

 

5,422

 

3,374

 

-

 

-

 

 

 

Signature loan fees

920

 

509

 

-

 

-

 

38,701

 

39,557

 

 

 

Auto title loan fees

457

 

393

 

-

 

-

 

5,010

 

5,851

 

 

 

Other

241

 

117

 

120

 

3

 

335

 

41

 

 

 

 

Total revenues

184,479

 

160,766

 

19,421

 

12,414

 

44,973

 

45,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise cost of goods sold

43,116

 

38,197

 

4,945

 

3,114

 

335

 

-

 

 

Scrap cost of goods sold

32,973

 

29,538

 

2,274

 

2,638

 

177

 

79

 

 

Signature loan bad debt

352

 

165

 

-

 

-

 

9,749

 

9,881

 

 

Auto title loan bad debt

114

 

61

 

-

 

-

 

810

 

921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

107,924

 

92,805

 

12,202

 

6,662

 

33,902

 

34,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations expense

50,073

 

43,196

 

5,998

 

4,278

 

18,430

 

17,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Store operating income

$ 57,851

 

$ 49,609

 

$  6,204

 

$ 2,384

 

$15,472

 

$17,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin on merchandise sales

43.2%

 

42.4%

 

52.2%

 

44.1%

 

41.9%

 

N/A

 

 

Gross margin on scrap sales

37.2%

 

37.2%

 

35.7%

 

23.8%

 

49.4%

 

59.9%

 

 

Gross margin on total sales

40.8%

 

40.2%

 

48.0%

 

36.4%

 

44.8%

 

59.9%

 

 

Signature loan bad debt as a percent of fees

38.3%

 

32.4%

 

N/A

 

N/A

 

25.2%

 

25.0%

 

 

Auto title loan bad debt as percent of fees

24.9%

 

15.5%

 

N/A

 

N/A

 

16.2%

 

15.7%

 

 

Operating income margin

53.6%

 

53.5%

 

50.8%

 

35.8%

 

45.6%

 

51.0%

 

 

EZCORP, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Store Count Activity 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Three Months Ended December 31, 2011 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Company-owned Stores 

 

 Franchises 

 

 

 

 

 

 

 

US Pawn

 

Empeno Facil

 

EZMONEY

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Beginning of period 

439

 

178

 

494

 

1,111

 

13

 

 

 

 

 

 New openings 

-

 

14

 

 

 

14

 

-

 

 

 

 

 

 Acquired 

24

 

 

 

1

 

25

 

(1)

 

 

 

 

 

 Sold, combined or closed 

-

 

-

 

(8)

 

(8)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 End of period 

463

 

192

 

487

 

1,142

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 December 31, 2011

 

Three Months Ended December 31, 2010

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

GAAP

 

Adjustments

 

Non-GAAP

 

GAAP

 

Adjustments

 

Non-GAAP

 

 

Net revenue

$ 154,028

 

-

 

$    154,028

 

$      134,232

 

-

 

$ 134,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations expense

74,501

 

-

 

74,501

 

64,504

 

-

 

64,504

 

 

Administrative expense

19,711

 

-

 

19,711

 

26,138

 

(10,945)

 

15,193

 

 

Depreciation and amortization

5,255

 

-

 

5,255

 

4,179

 

-

 

4,179

 

 

(Gain) / loss on sale/disposal of assets

(201)

 

-

 

(201)

 

7

 

-

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Operating income

54,762

 

-

 

54,762

 

39,404

 

10,945

 

50,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

(39)

 

-

 

(39)

 

(3)

 

-

 

(3)

 

 

Interest expense

590

 

-

 

590

 

300

 

-

 

300

 

 

Equity in net income of unconsolidated affiliates

(4,161)

 

-

 

(4,161)

 

(3,367)

 

-

 

(3,367)

 

 

Other

(1,119)

 

-

 

(1,119)

 

(61)

 

-

 

(61)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

59,491

 

-

 

59,491

 

42,535

 

10,945

 

53,480

 

 

Income tax expense

20,139

 

-

 

20,139

 

15,106

 

3,831

 

18,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$   39,352

 

$             -

 

$      39,352

 

$        27,429

 

$          7,114

 

$   34,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share, diluted

$       0.78

 

$             -

 

$          0.78

 

$            0.55

 

$            0.14

 

$       0.69

 

 

Weighted average shares, diluted

50,693

 

-

 

50,589

 

50,119

 

-

 

50,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE EZCORP, Inc.

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

Categories: Press Releases
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