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EZCORP Announces First Quarter Fiscal 2016 Results

Feb 8, 2016

Austin, Texas (February 8, 2016) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico and consumer loans in Mexico, today announced results for its first quarter ended December 31, 2015.

CEO COMMENTARY AND OUTLOOK

Stuart Grimshaw, EZCORP’s Chief Executive Officer, said, “In July 2015, we announced significant strategic changes in our company’s direction which included a refocus on our pawn operations in both the United States and Mexico. With the goal of increasing both our market share and efficiency, our stated path to making that a reality was to serve and satisfy our customers beyond their expectations. This quarter’s results reflect encouraging progress in meeting those expectations with growth in our customer transactions as well as the expansion in our portfolio of pawn loans, while improving the return on investment on our earning assets.”

Mr. Grimshaw continued, “Today, we also announced that we are undertaking a strategic review of Grupo Finmart. Clearly we are disappointed in the financial performance, which is affected by changes in the industry dynamics as well as the business environment over the past several quarters. With a view to maximizing our long term shareholder value, initiatives are underway for the short term while the longer term strategic options are being evaluated.”

1Note: In addition to the financial information prepared in conformity with U.S. generally accepted accounting principles ("GAAP"), we provide certain other non-GAAP financial information such as constant currency results ("constant currency") where indicated. The average Mexican peso to U.S. dollar exchange rate as of December 31, 2015 was 17.3 to 1, compared to 14.7 to 1 in the prior year. The average Mexican peso to U.S. dollar exchange rate for the current three-month period ended December 31, 2015 was 16.8 to 1, compared to 13.9 to 1 in the comparable prior-year period. See additional information at the end of this release regarding non-GAAP financial measures.

CONSOLIDATED RESULTS

• For the quarter ended December 31, 2015, net loss from continuing operations attributable to EZCORP was $7.2 million (-$0.13 per share), compared to net income of $4.7 million ($0.09 per share) in the prior-year quarter.  This year-over-year difference reflects continued improvement in our U.S. and Mexico pawn businesses (as discussed below) that was more than offset by continued challenges in Grupo Finmart.

• Total revenues for the quarter were $198.5 million, 7% lower than the prior-year quarter, primarily due to lower scrapping revenues and lower consumer loan fees and interest income in Grupo Finmart. On a constant currency basis, total revenues were 3% lower year-over-year.

• Net revenues for the quarter were $111.5 million, a 5% decrease from the prior-year quarter, reflecting an increase in bad debt reserves discussed below. On a constant currency basis, net revenues decreased 2%.

• Operating expenses increased 19% on a constant currency basis (14% on a GAAP basis) reflecting costs associated with the prior-period restatements, restructuring, reversal of stock compensation costs in the prior-year quarter as a result of forfeitures, and store-level bonus programs during fiscal 2016 to better incentivize performance.

• Annualized return on pawn earning assets (defined as average annual merchandise and scrap sales gross profit and pawn service charges ("PSC") yield on pawn loans and inventory balances outstanding) increased to 151% in the current quarter versus 142% in the prior-year quarter.

OPERATING METRICS

 

U.S. Pawn

• Core pawn revenue increased 3% YOY driven by growth in PSC and merchandise sales.

• We posted our first same store PLO growth since Q4FY14: up 0.5% YOY in the December 2015 quarter, an improvement from -6% YOY in the September 2015 quarter, and -11% YOY in the June 2015 quarter.

• Quality loan growth continued with PLO increasing 4%.

• Strong merchandise gross margin expansion to 40% from 34%.

• Aged inventory reduction to 11% of total inventory from 16%.

 

Mexico Pawn

• Core pawn revenue increased 8% YOY on a constant currency basis (11% decrease on a GAAP basis), primarily driven by 22% growth in PSC revenue on a constant currency basis (1% increase on a GAAP basis).

• Same store PLO increased 34% on a constant currency basis (14% increase on a GAAP basis), the sixth consecutive quarter with double-digit same store loan growth on a constant currency basis (same store YOY loan growth has both increased and decreased on a GAAP basis over the same periods).

• Strong merchandise margin expansion to 35% from 31%.

• Aged inventory reduction to 3% of total inventory from 16%.

 

Grupo Finmart

• Segment loss of $19.5 million on a constant currency basis ($16.9 million on a GAAP basis) compared to a segment loss of $8.2 million on a GAAP basis in the prior-year quarter. The increase in the segment loss was primarily attributable to an 87% increase on a constant currency basis (55% increase on a GAAP basis) in bad debt expense, driven predominately by industry-wide delays in payment timing.

• We reserve for a loan at 100% of principal and accrued interest if no payment is received within a consecutive 180-day period. The bad debt expense included $2.1 million received in collections in the current quarter on loans that were fully reserved.

• In response to the payment and collections challenges, we are refocusing our operations on higher quality, shorter term loans with the lowest risk convenios.

• Operations expense increased 40% YOY on a constant currency basis (16% on a GAAP basis), driven by an increase in commissions and investments in the senior management team. We have initiated a cost reduction program to better align the expense structure with the revenue performance.

• In light of the changing industry dynamics and business environment, we have initiated a review of all strategic options for Grupo Finmart, to be completed by the end of Q3FY16, with a view toward maximizing long-term shareholder value.

 

 

 

CONFERENCE CALL

EZCORP will host a conference call on Tuesday, February 9, 2016 at 7:30 a.m. Central Time to discuss our first quarter results.  Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 43999396, International dialing (678) 894-3054. The conference call will be webcast simultaneously to the public through this link: http://investors.ezcorp.com/. A replay of the conference call will be available online at http://investors.ezcorp.com/ shortly after the call.

 

ABOUT EZCORP

EZCORP is a leading provider of pawn loans in the United States and Mexico and consumer loans in Mexico. At our pawn stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.

FORWARD LOOKING STATEMENTS

This announcement contains certain forward-looking statements regarding the company’s strategy, initiatives and expected performance. These statements are based on the company’s current expectations as to the outcome and timing of future events. All statements, other than statements of historical facts, including all statements regarding the company's strategy, initiatives and future performance, that address activities or results that the company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future financial or operating results, are forward-looking statements. 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 operating risks, liquidity risks, legislative or regulatory developments, market factors or current or future litigation. 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. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

 

Contact:

Jeff Christensen

Vice President, Investor Relations

Email: jeff_christensen@ezcorp.com

Phone: (512) 437-3545

 

 

 

EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended December 31,

 

2015

 

2014

 

 

 

 

 

(Unaudited)

 

(in thousands, except per share amounts)

Revenues:

 

 

 

Merchandise sales

$

108,584

 

 

$

109,639

 

Jewelry scrapping sales

9,621

 

 

18,534

 

Pawn service charges

66,594

 

 

64,927

 

Consumer loan fees and interest

13,188

 

 

18,971

 

Other revenues

467

 

 

655

 

Total revenues

198,454

 

 

212,726

 

Merchandise cost of goods sold

66,259

 

 

72,478

 

Jewelry scrapping cost of goods sold

8,076

 

 

14,675

 

Consumer loan bad debt

12,603

 

 

8,515

 

Net revenues

111,516

 

 

117,058

 

Operating expenses:

 

 

 

Operations

85,606

 

 

80,087

 

Administrative

19,983

 

 

12,552

 

Depreciation and amortization

8,059

 

 

8,008

 

Loss on sale or disposal of assets

33

 

 

256

 

Restructuring

1,692

 

 

22

 

Total operating expenses

115,373

 

 

100,925

 

Operating (loss) income

(3,857

)

 

16,133

 

Interest expense

9,192

 

 

12,034

 

Interest income

(140

)

 

(531

)

Equity in net income of unconsolidated affiliate

(2,055

)

 

(2,194

)

Other expense

870

 

 

759

 

(Loss) income from continuing operations before income taxes

(11,724

)

 

6,065

 

Income tax (benefit) expense

(3,696

)

 

3,264

 

(Loss) income from continuing operations, net of tax

(8,028

)

 

2,801

 

(Loss) income from discontinued operations, net of tax

(238

)

 

6,877

 

Net (loss) income

(8,266

)

 

9,678

 

Net loss from continuing operations attributable to redeemable noncontrolling interest

(792

)

 

(1,934

)

Net (loss) income attributable to EZCORP, Inc.

$

(7,474

)

 

$

11,612

 

 

 

 

 

Basic (loss) earnings per share attributable to EZCORP, Inc.:

 

 

 

Continuing operations

$

(0.13

)

 

$

0.09

 

Discontinued operations

 

 

0.13

 

Basic earnings (loss) per share

$

(0.13

)

 

$

0.22

 

 

 

 

 

Diluted (loss) earnings per share attributable to EZCORP, Inc.:

 

 

 

Continuing operations

$

(0.13

)

 

$

0.09

 

Discontinued operations

 

 

0.13

 

Diluted (loss) earnings per share

$

(0.13

)

 

$

0.22

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

Basic

54,895

 

 

53,650

 

Diluted

54,895

 

 

53,698

 

 

 

 

 

Net (loss) income from continuing operations attributable to EZCORP, Inc.

$

(7,236

)

 

$

4,735

 

Income from discontinued operations attributable to EZCORP, Inc.

(238

)

 

6,877

 

Net (loss) income attributable to EZCORP, Inc.

$

(7,474

)

 

$

11,612

 

 

 

EZCORP, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

December 31,
 2015

 

December 31,
 2014

 

September 30,
 2015

 

 

 

 

 

 

 

(Unaudited)

 

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

22,781

 

 

$

77,599

 

 

$

59,124

 

Restricted cash

16,157

 

 

60,218

 

 

15,137

 

Pawn loans

157,905

 

 

150,930

 

 

159,964

 

Consumer loans, net

32,175

 

 

61,347

 

 

36,533

 

Pawn service charges receivable, net

31,342

 

 

30,241

 

 

30,852

 

Consumer loan fees and interest receivable, net

12,827

 

 

13,199

 

 

19,802

 

Inventory, net

132,980

 

 

132,659

 

 

124,084

 

Prepaid income taxes

5,929

 

 

36,580

 

 

7,945

 

Income taxes receivable

35,131

 

 

16,243

 

 

37,230

 

Prepaid expenses and other current assets

25,296

 

 

34,075

 

 

21,076

 

Total current assets

472,523

 

 

613,091

 

 

511,747

 

Investment in unconsolidated affiliate

53,404

 

 

99,219

 

 

56,182

 

Property and equipment, net

69,963

 

 

104,353

 

 

75,594

 

Restricted cash, non-current

2,667

 

 

4,310

 

 

2,883

 

Goodwill

326,201

 

 

337,498

 

 

327,460

 

Intangible assets, net

40,443

 

 

49,523

 

 

41,263

 

Non-current consumer loans, net

71,502

 

 

78,362

 

 

75,824

 

Deferred tax asset, net

73,655

 

 

28,189

 

 

69,121

 

Other assets, net

35,482

 

 

77,352

 

 

42,985

 

Total assets

$

1,145,840

 

 

$

1,391,897

 

 

$

1,203,059

 

 

 

 

 

 

 

Liabilities, temporary equity and stockholders’ equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

$

75,586

 

 

$

74,832

 

 

$

74,345

 

Current capital lease obligations

 

 

258

 

 

 

Accounts payable and other accrued expenses

87,219

 

 

81,417

 

 

107,871

 

Other current liabilities

6,470

 

 

6,000

 

 

15,384

 

Customer layaway deposits

10,138

 

 

5,133

 

 

10,470

 

Total current liabilities

179,413

 

 

167,640

 

 

208,070

 

Long-term debt, less current maturities

281,545

 

 

374,600

 

 

297,166

 

Deferred gains and other long-term liabilities

5,917

 

 

8,446

 

 

6,157

 

Total liabilities

466,875

 

 

550,686

 

 

511,393

 

Commitments and contingencies

 

 

 

 

 

Temporary equity:

 

 

 

 

 

Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; 1,168,456 shares issued and outstanding at redemption value as of December 31, 2015 and September 30, 2015; and none as of December 31, 2014

11,696

 

 

 

 

11,696

 

Redeemable noncontrolling interest

2,379

 

 

18,550

 

 

3,235

 

Total temporary equity

14,075

 

 

18,550

 

 

14,931

 

Stockholders’ equity:

 

 

 

 

 

Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of December 31, 2015 and 2014 and September 30, 2015; issued and outstanding: 50,756,171 as of December 31, 2015; 50,680,358 as of December 31, 2014; and 50,726,289 as of September 30, 2015

508

 

 

506

 

 

507

 

Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171

30

 

 

30

 

 

30

 

Additional paid-in capital

309,562

 

 

329,443

 

 

307,080

 

Retained earnings

415,663

 

 

521,198

 

 

423,137

 

Accumulated other comprehensive loss

(60,873

)

 

(28,516

)

 

(54,019

)

EZCORP, Inc. stockholders’ equity

664,890

 

 

822,661

 

 

676,735

 

Total liabilities, temporary equity and stockholders’ equity

$

1,145,840

 

 

$

1,391,897

 

 

$

1,203,059

 

 

 

EZCORP, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Three Months Ended December 31,

 

2015

 

2014

 

 

 

 

 

(Unaudited)

 

(in thousands)

Operating activities:

 

 

 

Net (loss) income

$

(8,266

)

 

$

9,678

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization

8,090

 

 

9,030

 

Amortization of debt discount and consumer loan premium, net

2,362

 

 

1,982

 

Consumer loan loss provision

9,691

 

 

7,590

 

Deferred income taxes

(4,534

)

 

1,498

 

Restructuring

1,692

 

 

 

Amortization of deferred financing costs

833

 

 

1,633

 

Amortization of prepaid commissions

4,023

 

 

3,013

 

Other adjustments

(1,966

)

 

(176

)

Loss on sale or disposal of assets

33

 

 

324

 

Stock compensation expense (benefit)

833

 

 

(2,458

)

Income from investment in unconsolidated affiliate

(2,055

)

 

(2,194

)

Changes in operating assets and liabilities:

 

 

 

Service charges and fees receivable

6,381

 

 

(3,361

)

Inventory

(2,107

)

 

509

 

Prepaid expenses, other current assets and other assets

(5,739

)

 

(7,824

)

Accounts payable and other accrued expenses and deferred gains and other long-term liabilities

(12,707

)

 

(13,955

)

Customer layaway deposits

(310

)

 

(2,895

)

Restricted cash

147

 

 

(933

)

Prepaid income taxes and income taxes receivable

4,074

 

 

3,903

 

Payments of restructuring charges

(4,943

)

 

(2,285

)

Dividends from unconsolidated affiliate

 

 

2,407

 

Net cash (used in) provided by operating activities

(4,468

)

 

5,486

 

Investing activities:

 

 

 

Loans made

(173,162

)

 

(223,748

)

Loans repaid

106,372

 

 

166,771

 

Recovery of pawn loan principal through sale of forfeited collateral

58,566

 

 

69,886

 

Additions to property and equipment

(1,166

)

 

(8,954

)

Investment in unconsolidated affiliate

 

 

(12,140

)

Proceeds from sale of assets

27

 

 

 

Net cash used in investing activities

(9,363

)

 

(8,185

)

Financing activities:

 

 

 

Payout of deferred and contingent consideration

(8,915

)

 

(6,000

)

Proceeds from settlement of forward currency contracts

3,557

 

 

2,313

 

Change in restricted cash

(1,261

)

 

(795

)

Proceeds from bank borrowings, net of debt issuance costs

14,302

 

 

66,560

 

Payments on bank borrowings and capital lease obligations

(29,358

)

 

(34,650

)

Net cash (used in) provided by financing activities

(21,675

)

 

27,428

 

Effect of exchange rate changes on cash and cash equivalents

(837

)

 

(2,455

)

Net (decrease) increase in cash and cash equivalents

(36,343

)

 

22,274

 

Cash and cash equivalents at beginning of period

59,124

 

 

55,325

 

Cash and cash equivalents at end of period

$

22,781

 

 

$

77,599

 

 

 

 

 

Non-cash investing activities:

 

 

 

Pawn loans forfeited and transferred to inventory

$

65,629

 

 

$

66,699

 

 

 

EZCORP, Inc.

SELECTED OPERATING SEGMENT RESULTS (UNAUDITED)

 

U.S. Pawn

The following table presents selected summary financial data from continuing operations for the U.S. Pawn segment:

 

Three Months Ended December 31,

 

Percentage Change

 

2015

 

2014

 

 

 

 

 

 

 

 

(in thousands)

 

 

Net revenues:

 

 

 

 

 

Pawn service charges

$

58,621

 

 

$

57,035

 

 

3

%

 

 

 

 

 

 

Merchandise sales

91,994

 

 

89,442

 

 

3

%

Merchandise sales gross profit

36,533

 

 

30,825

 

 

19

%

Gross margin on merchandise sales

40

%

 

34

%

 

18

%

 

 

 

 

 

 

Jewelry scrapping sales

9,600

 

 

17,007

 

 

(44

)%

Jewelry scrapping sales gross profit

1,540

 

 

3,674

 

 

(58

)%

Gross margin on jewelry scrapping sales

16

%

 

22

%

 

(27

)%

 

 

 

 

 

 

Other revenues

193

 

 

184

 

 

5

%

Net revenues

96,887

 

 

91,718

 

 

6

%

 

 

 

 

 

 

Segment operating expenses:

 

 

 

 

 

Operations

63,545

 

 

59,507

 

 

7

%

Depreciation and amortization

3,560

 

 

3,452

 

 

3

%

Segment operating contribution

29,782

 

 

28,759

 

 

4

%

 

 

 

 

 

 

Other segment expenses (income)

983

 

 

(8

)

 

*

Segment contribution

$

28,799

 

 

$

28,767

 

 

%

 

 

 

 

 

 

Other data:

 

 

 

 

 

Net earning assets — continuing operations

$

258,798

 

 

$

251,317

 

 

3

%

Inventory turnover — general merchandise

2.5

 

 

2.6

 

(4

)%

Inventory turnover — jewelry

1.2

 

 

1.1

 

9

%

Average monthly ending pawn loan balance per store (a)

$

276

 

 

$

274

 

 

1

%

Average annual yield on pawn loans outstanding

163

%

 

161

%

 

200bps

Pawn loan redemption rate

83

%

 

83

%

 

0bps

 

*

Represents an increase or decrease in excess of 100% or not meaningful.

(a)

Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.

 

Mexico Pawn

The following table presents selected summary financial data from continuing operations for the Mexico Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.

 

Three Months Ended December 31,

 

Percentage Change GAAP

 

Percentage Change Constant Currency

 

2015

 

2015 Constant Currency (a)

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

(in USD thousands)

 

 

 

 

Net revenues:

 

 

 

 

 

 

 

 

 

Pawn service charges

$

7,973

 

 

$

9,636

 

 

$

7,892

 

 

1

%

 

22

%

 

 

 

 

 

 

 

 

 

 

Merchandise sales

16,586

 

 

20,046

 

 

19,580

 

 

(15

)%

 

2

%

Merchandise sales gross profit

5,788

 

 

6,996

 

 

6,096

 

 

(5

)%

 

15

%

Gross margin on merchandise sales

35

%

 

35

%

 

31

%

 

13

%

 

13

%

 

 

 

 

 

 

 

 

 

 

Jewelry scrapping sales

 

 

 

 

1,407

 

 

(100

)%

 

(100

)%

Jewelry scrapping sales gross profit

 

 

 

 

146

 

 

(100

)%

 

(100

)%

Gross margin on jewelry scrapping sales

*

 

*

 

10

%

 

*

 

*

 

 

 

 

 

 

 

 

 

 

Other revenues

191

 

 

231

 

 

240

 

 

(20

)%

 

(4

)%

Net revenues

13,952

 

 

16,863

 

 

14,374

 

 

(3

)%

 

17

%

 

 

 

 

 

 

 

 

 

 

Segment operating expenses:

 

 

 

 

 

 

 

 

 

Operations

11,193

 

 

13,528

 

 

10,520

 

 

6

%

 

29

%

Depreciation and amortization

801

 

 

968

 

 

1,244

 

 

(36

)%

 

(22

)%

Segment operating contribution

1,958

 

 

2,367

 

 

2,610

 

 

(25

)%

 

(9

)%

 

 

 

 

 

 

 

 

 

 

Other segment expenses (b)

522

 

 

475

 

 

695

 

 

(25

)%

 

(32

)%

Segment contribution

$

1,436

 

 

$

1,892

 

 

$

1,915

 

 

(25

)%

 

(1

)%

 

 

 

 

 

 

 

 

 

 

Other data:

 

 

 

 

 

 

 

 

 

Net earning assets — continuing operations

$

32,074

 

 

$

37,747

 

 

$

31,764

 

 

1

%

 

19

%

Inventory turnover

2.4

 

 

2.4

 

 

2.7

 

 

(11

)%

 

(11

)%

Average monthly ending pawn loan balance per store (c)

$

69

 

 

$

81

 

 

$

63

 

 

10

%

 

29

%

Average annual yield on pawn loans outstanding

195

%

 

194

%

 

199

%

 

-400bps

 

-500bps

Pawn loan redemption rate

78

%

 

78

%

 

77

%

 

100bps

 

100bps

 

*

Represents an increase or decrease in excess of 100% or not meaningful.

(a)

For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used.

(b)

The three-month period ended December 31, 2015 constant currency balance excludes $0.1 million of net foreign currency transaction losses resulting from movement in exchange rates. The net foreign currency transaction losses for the three-month period ended December 31, 2014 were $0.4 million and are not excluded from the above results.

(c)

Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.

 

Grupo Finmart

The table below presents selected summary financial data from continuing operations for the Grupo Finmart segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.

 

Three Months Ended December 31,

 

Percentage Change GAAP

 

Percentage Change Constant Currency

 

2015

 

2015 Constant Currency (a)

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Consumer loan fees and interest

$

10,814

 

 

$

13,070

 

 

$

16,315

 

 

(34

)%

 

(20

)%

Other revenues

83

 

 

100

 

 

56

 

 

48

%

 

79

%

Total revenues

10,897

 

 

13,170

 

 

16,371

 

 

(33

)%

 

(20

)%

Consumer loan bad debt

11,991

 

 

14,493

 

 

7,740

 

 

55

%

 

87

%

Net revenues

(1,094

)

 

(1,323

)

 

8,631

 

 

*

 

*

 

 

 

 

 

 

 

 

 

 

Segment expenses (income):

 

 

 

 

 

 

 

 

 

Operations

9,588

 

 

11,588

 

 

8,288

 

 

16

%

 

40

%

Depreciation and amortization

517

 

 

625

 

 

566

 

 

(9

)%

 

10

%

Interest expense

5,065

 

 

6,122

 

 

8,281

 

 

(39

)%

 

(26

)%

Interest income

(131

)

 

(158

)

 

(481

)

 

(73

)%

 

(67

)%

Other expense (b)

768

 

 

 

 

174

 

 

*

 

(100

)%

Segment loss

$

(16,901

)

 

$

(19,500

)

 

$

(8,197

)

 

*

 

*

 

 

 

 

 

 

 

 

 

 

Other data:

 

 

 

 

 

 

 

 

 

Net earning assets — continuing operations

$

101,519

 

 

$

119,475

 

 

$

115,186

 

 

(12

)%

 

4

%

Consumer loan originations (c)

$

15,970

 

 

$

19,302

 

 

$

21,897

 

 

(27

)%

 

(12

)%

Consumer loan bad debt as a percentage of gross average consumer loan balance (d)

12

%

 

12

%

 

6

%

 

100

%

 

100

%

 

*

Represents an increase or decrease in excess of 100% or not meaningful.

(a)

For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used.

(b)

The three-month period ended December 31, 2015 constant currency balance excludes a $0.8 million of net foreign currency transaction losses resulting from movement in exchange rates. The net foreign currency transaction losses for the three-month period ended December 31, 2014 were $0.2 million and are not excluded from the above results.

(c)

Constant currency result is calculated as the average monthly consumer loan origination balance translated at the average closing daily exchange rate for the applicable period.

(d)

Represents consumer loan bad debt expense during the applicable period as a percentage of the average monthly consumer loan balance during the applicable period. Constant currency consumer loan balance is calculated using the end of period rate for each month.

 

EZCORP, Inc.

STORE COUNT ACTIVITY

 

Three Months Ended December 31, 2015

 

Company-owned Stores

 

 

 

U.S. Pawn

 

Mexico Pawn

 

Grupo Finmart

 

Other International

 

Consolidated

 

Franchises

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2015

522

 

 

237

 

*

53

 

 

27

 

 

839

 

 

1

 

New locations opened

 

 

1

 

 

 

 

 

 

1

 

 

 

Locations sold, combined or closed

(6

)

 

(1

)

 

(7

)

 

 

 

(14

)

 

 

As of December 31, 2015

516

 

 

237

 

 

46

 

 

27

 

 

826

 

 

1

 

 

*

Includes five buy/sell stores.

 

 

Three Months Ended December 31, 2014

 

Company-owned Stores

 

 

 

U.S. Pawn

 

Mexico Pawn

 

Grupo Finmart

 

Other International

 

Consolidated

 

Franchises

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2014

504

 

 

261

 

 

53

 

 

39

 

 

857

 

 

5

 

New locations opened

5

 

 

1

 

 

 

 

 

 

6

 

 

 

Locations sold, combined or closed

 

 

 

 

 

 

 

 

 

 

(1

)

As of December 31, 2014

509

 

 

262

 

 

53

 

 

39

 

 

863

 

 

4

 

 

 NON-GAAP FINANCIAL INFORMATION

In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we provide certain other non-GAAP financial information on a constant currency basis ("constant currency"). We use constant currency results to evaluate results of the Mexico Pawn and Grupo Finmart segment operations, which are denominated in Mexican pesos and believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Mexico Pawn and Grupo Finmart operations and reflect an additional way of viewing aspects of our business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting our business. We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Constant currency results reported herein are calculated by translating consolidated balance sheet and consolidated statement of operations items denominated in Mexican pesos to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations. For condensed consolidated balance sheet items, the average Mexican peso to U.S. dollar exchange rate as of December 31, 2015 of 17.3 to 1 was used, compared to the end of period rate as of December 31, 2014 of 14.7 to 1. For condensed consolidated statement of operations items, the average closing daily exchange rate for the appropriate period was used. The average Mexican peso to U.S. dollar exchange rate for the current three-month period ended December 31, 2015 was 16.8 to 1 as compared to the prior year three-month period ended December 31, 2014 rate of 13.9 to 1. Constant currency results, where presented, also exclude foreign currency gain or loss and the related foreign currency derivative gain or loss impact.

The following information provides reconciliations of certain non-GAAP financial measures presented in this press release to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Miscellaneous Non-GAAP Financial Measures

 

Dollar Amount

 

Percentage Change YOY

 

 

 

 

 

(in thousands)

Consolidated pawn loans outstanding

$

157,905

 

 

5

%

Currency exchange rate fluctuations

2,561

 

 

 

Constant currency consolidated pawn loans outstanding

$

160,466

 

 

6

%

 

 

 

 

Same store consolidated pawn loans outstanding

$

151,393

 

 

2

%

Currency exchange rate fluctuations

2,532

 

 

 

Constant currency same store consolidated pawn loans outstanding

$

153,925

 

 

3

%

 

 

 

 

Consolidated revenue

$

198,454

 

 

(7

)%

Currency exchange rate fluctuations

7,436

 

 

 

Constant currency consolidated revenue

$

205,890

 

 

(3

)%

 

 

 

 

Consolidated net revenue

$

111,516

 

 

(5

)%

Currency exchange rate fluctuations

2,682

 

 

 

Constant currency consolidated net revenue

$

114,198

 

 

(2

)%

 

 

 

 

Consolidated operating expenses

$

115,373

 

 

14

%

Currency exchange rate fluctuations

4,825

 

 

 

Constant currency consolidated operating expenses

$

120,198

 

 

19

%

 

 

 

 

Mexico Pawn core pawn revenue

$

24,559

 

 

(11

)%

Currency exchange rate fluctuations

5,123

 

 

 

Constant currency Mexico Pawn core pawn revenue

$

29,682

 

 

8

%

 

 

 

 

Mexico Pawn service charge revenue

$

7,973

 

 

1

%

Currency exchange rate fluctuations

1,663

 

 

 

Constant currency Mexico Pawn core pawn revenue

$

9,636

 

 

22

%

 

 

 

 

Same store Mexico Pawn loans outstanding

$

14,324

 

 

14

%

Currency exchange rate fluctuations

2,532

 

 

 

Constant currency same store Mexico Pawn loans outstanding

$

16,856

 

 

34

%

 

 

 

 

Grupo Finmart segment loss

$

(16,901

)

 

(106

)%

Currency exchange rate fluctuations

(2,599

)

 

 

Constant currency Grupo Finmart segment loss

$

(19,500

)

 

(138

)%

 

 

 

 

Grupo Finmart operations expenses

$

9,588

 

 

16

%

Currency exchange rate fluctuations

2,000

 

 

 

Constant currency Grupo Finmart operations expenses

$

11,588

 

 

40

%

 

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