Press Release Details

View all Investor News

EZCORP Reports Fourth Quarter and Fiscal Year 2018 Results

Nov 14, 2018

AUSTIN, Texas--(BUSINESS WIRE)-- EZCORP, Inc. (NASDAQ: EZPW) today announced results for its fourth quarter and fiscal year ended September 30, 2018.

All amounts in this release are from continuing operations and conform with U.S. generally accepted accounting principles (GAAP) unless otherwise noted. Comparisons are made to the same period in the prior year unless otherwise noted.

HIGHLIGHTS

  • Profit before tax was $3.7 million in the quarter and $57.1 million for the year. Adjusted profit before tax1 increased 38% to $16.2 million in the quarter and increased 33% to $64.4 million in the year. The adjusted profit before tax improvement in both periods reflects successful pawn store acquisitions and strong organic growth in Latin America.
  • Pawn fundamentals remain strong:
    • Pawn loans outstanding (PLO) expanded 17% to $198.5 million, and pawn service charges (PSC) rose 16% in the quarter driven by the contribution of acquired stores in Latin America and same store growth in both the U.S. and Latin America. For the full year, PSC increased 12%.
    • Latin America Pawn's quarterly segment contribution expanded 63% to $9.4 million (69% higher to $9.8 million on a constant currency basis2). For the year, segment contribution grew 84% to $34.3 million (up 83% to $34.2 million on a constant currency basis).
    • U.S. Pawn's quarterly segment contribution grew 13% on industry-high same store PLO growth of 5%, monthly PLO yield improvement of 54 basis points (bps) to 14%, and a 240bps expansion of merchandise sales margin to 39%. The segment posted industry leading PLO per store at $305,000, the highest year-end balance in seven years.
  • Latin America Pawn store count increased 84% in the year. This segment now comprises 47% of the company's total consolidated pawn stores, up from 32% a year ago. It produced 25% of consolidated pawn contribution in fiscal 2018, up from 15%.
  • Cash and cash equivalents rose 74% to $286.0 million, enhancing the company's ability to capitalize on attractive acquisition opportunities. The improved liquidity was driven by $167.0 million of net proceeds from a convertible debt issuance combined with strong cash flow from operations and $38.0 million of collections under two notes receivable.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Stuart Grimshaw commented, "It was pleasing to see our fourth quarter earnings momentum accelerating, underlining the important progress we have made this year in customer service excellence. The biggest contributor to the company's outstanding performance was our terrific execution in Latin America, through both acquisitions and organic growth. Profit improvement was exceptional and our pawn store count in Latin America jumped 84%, growing by 207 stores. Those acquired stores have exceeded our expectations, providing strategic bases for further penetration and expansion in existing and neighboring geographies.

"In the U.S. Pawn segment, our disciplined lending and relentless focus on servicing and satisfying our customers' needs for cash delivered industry leading same store PLO growth, PLO yield, and per store averages of both PLO and PSC. We effectively managed our inventory again this quarter in relation to the PLO growth, while maintaining industry leading merchandise sales margins. These results reflect a well-balanced execution in excelling in customer service that underpins the growth of the business.

“We’ll begin fiscal 2019 with strong momentum as a result of the improved activity coming out of this year’s fourth quarter and will continue to leverage opportunities that will further our successful growth strategy. By maintaining our intense focus on outstanding customer service and meeting customers' desire for cash, this will underpin our industry leading store operating performance for the future. We will invest in the core pawn businesses, and open and acquire more pawn stores, particularly in Latin America, to further expand our geographically diversified earnings platform, where the right opportunities present themselves. We will continue to support our customers where they have a strong need for cash and there are many more locations where we believe we can be relevant to them. We maintain a discipline in assessment of opportunities that when coupled with our proven customer service focus, will drive long-term shareholder value."

CONSOLIDATED RESULTS

  • Profit before tax was $3.7 million in the quarter and $57.1 million for the year. Adjusted profit before tax increased 38% to $16.2 million in the quarter. For the year, adjusted profit before tax increased 33% to $64.4 million. Successful pawn store acquisitions and strong organic growth in Latin America drove the improvements in both the quarter and the full fiscal year.
  • A 10% increase in average PLO during the year led to a 12% improvement in annual PSC and 11% higher net revenues to $482.9 million (up 11% to $482.9 million on a constant currency basis). PLO ended the year 17% above the balance at the end of fiscal 2017. Consolidated merchandise sales gross profit for the year grew 9% to $161.8 million on a 6% rise in merchandise sales, while merchandise sales margin increased 120bps to 37%. On a constant currency basis, PSC expanded 12% and merchandise sales gross profit grew 9%.
  • Operations expenses rose 10% to $334.6 million for the year (the same on a constant currency basis) due primarily to acquired stores. As a percentage of net revenues, operations expenses improved to 69% for the year from 70% in fiscal 2017, and to 69% in the quarter from 72% in the prior-year quarter.
  • Included in the quarter was an $11.7 million ($9.2 million net of tax) non-cash impairment of our investment in Cash Converters International Limited, an unconsolidated affiliate. This revalued our investments made in prior years to the value of the Cash Converters' stock at fiscal year-end, equaling the price at which Cash Converters raised additional equity in June 2018.
  • Cash and cash equivalents at the end of the year improved 74% to $286.0 million. During the year, the company completed a $172.5 million offering of convertible senior notes due 2025, yielding net proceeds of $167.0 million, and collected $38.0 million in principal and interest, as scheduled, on the notes receivable related to the 2016 sale of Grupo Finmart.
  • Basic EPS grew 18% to $0.73 and diluted EPS rose 11% to $0.69 for the year. On an adjusted basis, basic EPS was $0.84 (up 31%) and diluted EPS was $0.79 (up 23%). The fully diluted shares calculation includes the hypothetical conversion of our convertible notes to the extent the company's average share price in the period exceeded the conversion price of the notes. However, the 2019 convertible notes must be settled in cash and the company may choose to satisfy all or some of its 2024 and 2025 convertible notes with cash rather than shares to minimize actual share dilution.

SEGMENT RESULTS

U.S. Pawn

  • The U.S. Pawn segment reported a 5% increase in same store PLO, with improved monthly yield, indicating the quality of loan growth. The segment delivered industry leading PLO per store at $305,000. This was driven by disciplined lending practices and our focus on meeting customers' need for cash. In stores unaffected by hurricanes in the prior year, same store PLO increased 2%.
  • Merchandise sales gross profit increased 9% in the quarter to $31.1 million and 5% for the year to $134.3 million. Merchandise margins increased 240bps to an industry high 39% in the quarter, and were 38% for the full year.
  • Net revenues improved 5% and profit rose 13% in the quarter. For the year, net revenues were up 1% and profit remained relatively flat. This reflected the PSC impact of last year's hurricanes on PLO, as well as higher expenses. Expenses reflect a higher number of team members per store and other investments implemented in our third quarter to improve customer experience and drive future profit growth.

Latin America Pawn

  • Latin America Pawn continued to deliver outstanding growth. Its contribution increased 63% in the quarter to $9.4 million (up 69% to $9.8 million on a constant currency basis) and rose 84% for the year to $34.3 million (up 83% to $34.2 million on a constant currency basis).
  • Pawn store count expanded 84% in fiscal 2018, with 196 stores acquired and 12 stores opened.
  • The acquired stores offer significant opportunity for higher revenue and profit by increasing focus on general merchandise pawn loan and retail activities, and implementing EZCORP's systems and operating practices. The company continues to see a robust pipeline of acquisition opportunities in Latin America.
  • As a percentage of net revenues, segment operating expenses improved 200bps in both the quarter and the full year, at 62% and 63%, respectively.
  • PLO rose 106% to $43.5 million (up 110% to $44.3 million on a constant currency basis). Industry leading same store PLO increased 4% (7% higher on a constant currency basis).
  • Net revenues expanded 74% to $26.8 million in the quarter (up 82% to $28.0 million on a constant currency basis). PSC jumped 90% to $19.3 million (increasing 99% to $20.1 million on a constant currency basis), reflecting the significantly higher PLO from acquired stores and organic growth at same stores. For the full year, net revenues increased 74%.
  • Merchandise sales improved 50% in total and 4% on a same store basis in the quarter (up 57% in total and 4% in same stores on a constant currency basis). Combined with a 90bps improvement in merchandise sales margins, this drove a 54% increase in merchandise sales gross profit (63% on a constant currency basis). For the year, merchandise sales increased 39% and 7% on a same store basis (39% and 6%, respectively, on a constant currency basis).

CONFERENCE CALL

EZCORP will host a conference call on Thursday, November 15, 2018, at 7:30 a.m. Central Time to discuss fourth quarter and fiscal year-end results. Analysts and institutional investors may participate by dialing (877) 201-0168, Conference ID: 1292208, international dialing (647) 788-4901. The call will be webcast simultaneously to the public through this link: http://investors.ezcorp.com/. A replay will be available online at http://investors.ezcorp.com/ shortly after the call.

ABOUT EZCORP

Formed in 1989, EZCORP has grown into a leading provider of pawn loans in the United States and Latin America. It also sells merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers. We are dedicated to satisfying the short-term cash needs of consumers who are both cash and credit constrained, focusing on an industry-leading customer experience. EZCORP is traded on NASDAQ under the symbol EZPW and is a member of the Russell 2000 Index, S&P SmallCap 600 Index, S&P 1000 Index and Nasdaq Composite Index.

FORWARD LOOKING STATEMENTS

This news release contains forward-looking statements on the company’s strategy, initiatives and expected performance. These statements are based on management’s current expectations on the outcome and timing of future events. All statements other than historical facts-including those on the company's strategy, initiatives and future performance, which 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 here, due to a number of uncertainties and other factors. These include 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 EZCORP’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.

All industry comparisons are based on available information from similar publicly traded companies.

1 Adjusted basis, which is a non-GAAP measure, excludes certain items. For additional information about these calculations, as well as a reconciliation to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

2 “Constant currency” basis, which is a non-GAAP measure, excludes the impact of foreign currency exchange rate fluctuations. For additional information about these calculations, as well as a reconciliation to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

 
 
EZCORP, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
    Three Months Ended     Fiscal Year Ended
September 30, September 30,
  2018         2017     2018         2017  
 
(Unaudited)
(in thousands, except per share amounts)
Revenues:
Merchandise sales $ 105,102 $ 95,166 $ 438,372 $ 414,838
Jewelry scrapping sales 16,586 13,531 60,752 51,189
Pawn service charges 82,335 71,097 305,936 273,080
Other revenues   2,308     2,275     8,455     8,847  
Total revenues 206,331 182,069 813,515 747,954
Merchandise cost of goods sold 66,335 61,685 276,618 266,525
Jewelry scrapping cost of goods sold 14,754 11,736 52,290 43,931
Other cost of revenues   424     555     1,697     1,988  
Net revenues 124,818 108,093 482,910 435,510
Operating expenses:
Operations 85,847 78,284 334,649 304,636
Administrative 13,726 11,949 53,653 53,254
Depreciation and amortization 7,186 5,415 25,484 23,661
Loss on sale or disposal of assets   10     348     463     359  
Total operating expenses   106,769     95,996     414,249     381,910  
Operating income 18,049 12,097 68,661 53,600
Interest expense 8,764 10,956 27,834 27,803
Interest income (4,145 ) (5,194 ) (17,041 ) (12,103 )
Equity in net income of unconsolidated affiliate (2,052 ) (1,148 ) (5,529 ) (4,916 )
Impairment of investment 11,712 11,712
Other expense (income)   82     (129 )   (5,391 )   (423 )
Income from continuing operations before income taxes 3,688 7,612 57,076 43,239
Income tax expense (benefit)   3,238     (2,457 )   18,149     11,206  
Income from continuing operations, net of tax 450 10,069 38,927 32,033
(Loss) income from discontinued operations, net of tax   (225 )   43     (856 )   (1,825 )
Net income 225 10,112 38,071 30,208
Net income (loss) attributable to noncontrolling interest   360     (1,298 )   (988 )   (1,650 )
Net (loss) income attributable to EZCORP, Inc. $ (135 ) $ 11,410   $ 39,059   $ 31,858  
 
Basic earnings per share attributable to EZCORP, Inc. — continuing operations $ $ 0.21 $ 0.73 $ 0.62
Diluted earnings per share attributable to EZCORP, Inc. — continuing operations $ $ 0.21 $ 0.69 $ 0.62
 
Weighted-average basic shares outstanding 54,466 54,298 54,456 54,260
Weighted-average diluted shares outstanding 57,390 54,428 57,896 54,368
 
 
EZCORP, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
    September 30,
  2018         2017  
 
Assets:
Current assets:
Cash and cash equivalents $ 286,015 $ 164,393
Pawn loans 198,463 169,242
Pawn service charges receivable, net 38,318 31,548
Inventory, net 166,997 154,411
Notes receivable, net 34,199 32,598
Prepaid expenses and other current assets   33,154     28,765  
Total current assets 757,146 580,957
Investment in unconsolidated affiliate 49,500 43,319
Property and equipment, net 73,649 57,959
Goodwill 297,448 254,760
Intangible assets, net 54,923 32,420
Notes receivable, net 3,226 28,377
Deferred tax asset, net 7,165 16,856
Other assets, net   3,863     9,715  
Total assets $ 1,246,920   $ 1,024,363  
 
Liabilities and equity:
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $ 57,800 $ 61,543
Current Maturities of long-term debt 190,181
Customer layaway deposits   11,824     11,032  
Total current liabilities 259,805 72,575
Long-term debt, net 226,702 284,807
Deferred tax liability 8,817
Other long-term liabilities   6,890     7,055  
Total liabilities 502,214 364,437
Stockholders’ equity:

Class A Non-Voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued
and outstanding: 51,614,746 as of September 30, 2018 and 51,427,832 as of September 30, 2017

516 514

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

30 30
Additional paid-in capital 397,927 348,532
Retained earnings 392,180 351,666
Accumulated other comprehensive loss   (42,616 )   (38,367 )
EZCORP, Inc. stockholders’ equity 748,037 662,375
Noncontrolling interest   (3,331 )   (2,449 )
Total equity   744,706     659,926  
Total liabilities and equity $ 1,246,920   $ 1,024,363  
 
 
EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
    Fiscal Year Ended
September 30,
  2018         2017  
 
(in thousands)
Operating activities:
Net income $ 38,071 $ 30,208
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 25,484 23,661
Amortization of debt discount and deferred financing costs 17,595 12,303
Accretion of notes receivable discount (9,150 ) (3,788 )
Deferred income taxes 7,978 6,046
Other adjustments 2,607 2,364
Gain on restructured notes receivable (3,048 )
Loss on extinguishment of debt and other 5,250
Stock compensation expense 10,784 5,866
Income from investment in unconsolidated affiliate (5,529 ) (4,916 )
Impairment of investments in unconsolidated affiliate 11,712
Changes in operating assets and liabilities:
Service charges and fees receivable (3,153 ) (224 )
Inventory (1,074 ) 721
Prepaid expenses, other current assets and other assets 214 11,314
Accounts payable, accrued expenses and other liabilities (3,902 ) (31,041 )
Customer layaway deposits 709 241
Income taxes, net of excess tax benefit from stock compensation   (3,622 )   3,027  
Net cash provided by operating activities 88,724 57,984
Investing activities:
Loans made (707,220 ) (646,625 )
Loans repaid 421,331 386,383
Recovery of pawn loan principal through sale of forfeited collateral 266,962 244,632
Additions to property and equipment (40,474 ) (25,001 )
Acquisitions, net of cash acquired (93,165 ) (2,250 )
Investment in unconsolidated affiliate (14,036 )
Principal collections on notes receivable   32,396     29,458  
Net cash used in investing activities (134,206 ) (13,403 )
Financing activities:
Taxes paid related to net share settlement of equity awards (311 ) (767 )
Proceeds from borrowings, net of issuance costs 171,409 139,506
Payments on borrowings   (3,510 )   (85,388 )
Net cash provided by financing activities 167,588 53,351
Effect of exchange rate changes on cash and cash equivalents   (484 )   724  
Net increase in cash and cash equivalents 121,622 98,656
Cash and cash equivalents at beginning of period   164,393     65,737  
Cash and cash equivalents at end of period $ 286,015   $ 164,393  
Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory $ 274,590 $ 257,388
 
 
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
    Three Months Ended September 30, 2018
    Latin                
America Other Total Corporate
U.S. Pawn Pawn International Segments Items Consolidated
 
(in thousands)
Revenues:
Merchandise sales $ 80,554 $ 24,548 $ $ 105,102 $ $ 105,102
Jewelry scrapping sales 13,230 3,356 16,586 16,586
Pawn service charges 63,022 19,313 82,335 82,335
Other revenues   45   (503 )   2,766     2,308         2,308  
Total revenues 156,851 46,714 2,766 206,331 206,331
Merchandise cost of goods sold 49,443 16,892 66,335 66,335
Jewelry scrapping cost of goods sold 11,734 3,020 14,754 14,754
Other cost of revenues         424     424         424  
Net revenues 95,674 26,802 2,342 124,818 124,818
Segment and corporate expenses (income):
Operations 66,346 16,583 2,918 85,847 85,847
Administrative 13,726 13,726
Depreciation and amortization 3,529 1,356 42 4,927 2,259 7,186
Loss (gain) on sale or disposal of assets 6 (4 ) 2 8 10
Interest expense 71 19 90 8,674 8,764
Interest income (547 ) (547 ) (3,598 ) (4,145 )
Equity in net income of unconsolidated affiliate (2,052 ) (2,052 ) (2,052 )
Impairment of investment 11,712 11,712 11,712
Other income     (53 )   (14 )   (67 )   149     82  
Segment contribution (loss) $ 25,722 $ 9,448   $ (10,264 ) $ 24,906  
Income from continuing operations before income taxes $ 24,906   $ (21,218 ) $ 3,688  
 
 
EZCORP, Inc.
OPERATING SEGMENT RESULTS
 
    Twelve Months Ended September 30, 2018
    Latin                
America Other Total Corporate
U.S. Pawn Pawn International Segments Items Consolidated
 
(in thousands)
Revenues:
Merchandise sales $ 350,699 $ 87,673 $ $ 438,372 $ $ 438,372
Jewelry scrapping sales 47,745 13,007 60,752 60,752
Pawn service charges 237,461 68,475 305,936 305,936
Other revenues   250     85     8,120     8,455         8,455  
Total revenues 636,155 169,240 8,120 813,515 813,515
Merchandise cost of goods sold 216,408 60,210 276,618 276,618
Jewelry scrapping cost of goods sold 40,417 11,873 52,290 52,290
Other cost of revenues           1,697     1,697         1,697  
Net revenues 379,330 97,157 6,423 482,910 482,910
Segment and corporate expenses (income):
Operations 263,094 61,361 10,194 334,649 334,649
Administrative 53,653 53,653
Depreciation and amortization 12,869 4,068 184 17,121 8,363 25,484
Loss on sale or disposal of assets 203 27 230 233 463
Interest expense 71 25 96 27,738 27,834
Interest income (2,619 ) (2,619 ) (14,422 ) (17,041 )
Equity in net income of unconsolidated affiliate (5,529 ) (5,529 ) (5,529 )
Impairment of investments 11,712 11,712 11,712
Other income   (3 )   (42 )   (132 )   (177 )   (5,214 )   (5,391 )
Segment contribution (loss) $ 103,096   $ 34,337   $ (10,006 ) $ 127,427  
Income from continuing operations before income taxes $ 127,427   $ (70,351 ) $ 57,076  
 
 
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
    Three Months Ended September 30, 2017
    Latin                
America Other Total Corporate
U.S. Pawn Pawn International Segments Items Consolidated
 
(in thousands)
Revenues:
Merchandise sales $ 78,753 $ 16,410 $ 3 $ 95,166 $ $ 95,166
Jewelry scrapping sales 13,045 486 13,531 13,531
Pawn service charges 60,957 10,140 71,097 71,097
Other revenues   62     188     2,025     2,275         2,275  
Total revenues 152,817 27,224 2,028 182,069 182,069
Merchandise cost of goods sold 50,240 11,445 61,685 61,685
Jewelry scrapping cost of goods sold 11,320 416 11,736 11,736
Other cost of revenues           555     555         555  
Net revenues 91,257 15,363 1,473 108,093 108,093
Segment and corporate expenses (income):
Operations 65,478 9,772 3,034 78,284 78,284
Administrative 11,949 11,949
Depreciation and amortization 2,684 765 47 3,496 1,919 5,415
Loss on sale or disposal of assets 252 69 321 27 348
Interest expense 2 2 10,954 10,956
Interest income (1,041 ) (1,041 ) (4,153 ) (5,194 )
Equity in net income of unconsolidated affiliate (1,148 ) (1,148 ) (1,148 )
Impairment of investments
Other income   (5 )   (8 )   (68 )   (81 )   (48 )   (129 )
Segment contribution (loss) $ 22,848   $ 5,804   $ (392 ) $ 28,260  
Income from continuing operations before income taxes $ 28,260   $ (20,648 ) $ 7,612  
 
 
EZCORP, Inc.
OPERATING SEGMENT RESULTS
 
    Twelve Months Ended September 30, 2017
    Latin                
America Other Total Corporate
U.S. Pawn Pawn International Segments Items Consolidated
 
(in thousands)
Revenues:
Merchandise sales $ 351,878 $ 62,957 $ 3 $ 414,838 $ $ 414,838
Jewelry scrapping sales 48,203 2,986 51,189 51,189
Pawn service charges 238,437 34,643 273,080 273,080
Other revenues   219     645     7,983     8,847         8,847  
Total revenues 638,737 101,231 7,986 747,954 747,954
Merchandise cost of goods sold 223,475 43,050 266,525 266,525
Jewelry scrapping cost of goods sold 41,434 2,497 43,931 43,931
Other cost of revenues           1,988     1,988         1,988  
Net revenues 373,828 55,684 5,998 435,510 435,510
Segment and corporate expenses (income):
Operations 259,977 36,211 8,448 304,636 304,636
Administrative 53,254 53,254
Depreciation and amortization 10,171 2,675 191 13,037 10,624 23,661
Loss on sale or disposal of assets 198 134 332 27 359
Interest expense 9 9 27,794 27,803
Interest income (1,930 ) (1,930 ) (10,173 ) (12,103 )
Equity in net income of unconsolidated affiliate (4,916 ) (4,916 ) (4,916 )
Other income   (19 )   (69 )   (96 )   (184 )   (239 )   (423 )
Segment contribution $ 103,501   $ 18,654   $ 2,371   $ 124,526  
Income from continuing operations before income taxes $ 124,526   $ (81,287 ) $ 43,239  
 
 
EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
 
    Three Months Ended September 30, 2018
    Latin America     Other    
U.S. Pawn Pawn International Consolidated
 
As of June 30, 2018 510 451 27 988
New locations opened 2 2
Locations sold, combined or closed (2 )   (2 )
As of September 30, 2018 508   453   27 988  
 
Three Months Ended September 30, 2017
Latin America Other
U.S. Pawn Pawn International Consolidated
 
As of June 30, 2017 515 244 27 786
New locations opened 4 4
Locations acquired 2 2
Locations sold, combined or closed (4 ) (2 ) (6 )
As of September 30, 2017 513   246   27 786  
 
Twelve Months Ended September 30, 2018
Latin America Other
U.S. Pawn Pawn International Consolidated
 
As of September 30, 2017 513 246 27 786
New locations opened 12 12
Locations acquired 196 196
Locations sold, combined or closed (5 ) (1 ) (6 )
As of September 30, 2018 508   453   27 988  
 
Twelve Months Ended September 30, 2017
Latin America Other
U.S. Pawn Pawn International Consolidated
 
As of September 30, 2016 520 239 27 786
New locations opened 10 10
Locations acquired 2 2
Locations sold, combined or closed (9 ) (3 ) (12 )
As of September 30, 2017 513   246   27 786  
 
 

Non-GAAP Financial Information (Unaudited)

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") and on an adjusted basis. We use constant currency results to evaluate our Latin America Pawn operations, which are denominated primarily in Mexican pesos and other Latin American currencies. As GPMX was not acquired until fiscal 2018, such results included on a constant currency basis reflect the actual exchange rates in effect during the year ended September 30, 2018 without adjustment. We believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Latin America Pawn operations and reflect an additional way of viewing aspects of our business that, when viewed with GAAP results, provide a more complete understanding of factors and trends affecting our business. We believe that presentation of results on an adjusted basis is meaningful and useful in understanding the activities and business metrics of our operations and reflect an additional way of viewing aspects of our business that, when viewed with 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. We use this non-GAAP financial information to evaluate and compare operating results across accounting periods. 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 period, in order to exclude the effects of foreign currency rate fluctuations. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate on a monthly basis during the appropriate period for statement of operations items. The end-of-period Mexican peso to U.S. dollar exchange rate as of September 30, 2018 and 2017 was 18.7 to 1 and 18.2 to 1, respectively. The approximate average Mexican peso to U.S. dollar exchange rate for the years ended September 30, 2018, 2017 and 2016 was 19 to 1, 19.1 to 1, and 17.9, respectively.

Our statement of operations constant currency results reflect the monthly exchange rate fluctuations and so are not directly calculable from the above rates. Constant currency results, where presented, also exclude the foreign currency gain or loss. We have experienced a prolonged weakening of the Mexican peso to the U.S. dollar and may continue to experience further weakening in future reporting periods, which may adversely impact our future operating results when stated on a GAAP basis.

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 as of and for the September 30, 2018.

 
 

Miscellaneous Non-GAAP Financial Measures (Unaudited)

 
    Three Months Ended     Fiscal Year Ended
September 30, September 30,
2018     2017 2018     2017
 
(in millions)
Income from continuing operations before income taxes $ 3.7 $ 7.6 $ 57.1 $ 43.2
Impairment of investment 11.7 11.7
Acquisition expenses 0.2 0.8 0.8 1.1
Currency exchange rate fluctuations 0.6 0.1 (0.4 )
Net revenue impact from Hurricanes Harvey and Irma 0.2 0.2
Operating expense impact from Hurricanes Harvey and Irma 0.9 0.9
Impact from restructuring of Grupo Finmart notes receivable (3.0 ) (3.0 )
Debt extinguishment costs 5.2 5.2
Litigation settlement (5.2 )
Asset disposal (0.1 ) 0.2
Organizational realignment expenses             1.1  
Adjusted income from continuing operations before income taxes $ 16.2 $ 11.7   $ 64.4   $ 48.5  
 
Basic earnings per share $ 0.73 $ 0.62
Impairment of investment, net of tax impact per share 0.16
Acquisition expenses, net of tax impact per share 0.01 0.02
Operating expense impact from Hurricanes Harvey and Irma, net of tax impact per share 0.02
Impact from restructuring of Grupo Finmart notes receivable, net of tax impact per share (0.09 )
Debt extinguishment costs, net of tax impact per share 0.06
Litigation settlement, net of tax impact per share (0.06 )
Organizational realignment expenses, net of tax impact per share       0.01  
Adjusted basic earnings per share $ 0.84   $ 0.64  
 
Diluted earnings per share $ 0.69 $ 0.62
Impairment of investment, net of tax impact per share 0.15
Acquisition expenses, net of tax impact per share 0.01 0.02
Operating expense impact from Hurricanes Harvey and Irma, net of tax impact per share 0.02
Impact from restructuring of Grupo Finmart notes receivable, net of tax impact per share (0.09 )
Debt extinguishment costs, net of tax impact per share 0.06
Litigation settlement, net of tax impact per share (0.06 )
Organizational realignment expenses, net of tax impact per share       0.01  
Adjusted diluted earnings per share $ 0.79   $ 0.64  
       
 
U.S. Dollar Percentage
Amount Change YOY
 
(in millions)
Latin America Pawn segment profit before tax (three months ended September 30, 2018) $ 9.4 63 %
Currency exchange rate fluctuations   0.4    
Constant currency Latin America Pawn segment profit before tax (three months ended September 30, 2018) $ 9.8 69 %
 
Latin America Pawn segment profit before tax (twelve months ended September 30, 2018) $ 34.3 84 %
Currency exchange rate fluctuations   (0.1 )  
Constant currency Latin America Pawn segment profit before tax (twelve months ended September 30, 2018) $ 34.2 83 %
 
Consolidated net revenue (twelve months ended September 30, 2018) $ 482.9 11 %
Currency exchange rate fluctuations   0.1    
Constant currency consolidated net revenue (twelve months ended September 30, 2018) $ 482.9 11 %
 
Consolidated PSC revenue (twelve months ended September 30, 2018) $ 305.9 12 %
Currency exchange rate fluctuations   0.4    
Constant currency consolidated PSC revenue (twelve months ended September 30, 2018) $ 306.3 12 %
 
Consolidated merchandise sales gross profit (twelve months ended September 30, 2018) $ 161.8 9 %
Currency exchange rate fluctuations   (0.1 )  
Constant currency consolidated merchandise sales gross profit (twelve months ended September 30, 2018) $ 161.7 9 %
 
Consolidated operations expenses (twelve months ended September 30, 2018) $ 334.6 10 %
Currency exchange rate fluctuations      
Constant currency consolidated operations expenses (twelve months ended September 30, 2018) $ 334.6 10 %
 
U.S. Pawn same store PLO $ 155.0 5 %
U.S. Pawn same store PLO for Hurricanes Harvey and Irma impacted   (50.8 )  
U.S. Pawn adjusted same store PLO $ 104.2 2 %
 
Latin America Pawn PLO $ 43.5 106 %
Currency exchange rate fluctuations   0.8    
Constant currency Latin America Pawn PLO $ 44.3 110 %
 
Latin American Pawn same store PLO $ 22.0 4 %
Currency exchange rate fluctuations   0.6    
Constant currency Latin America Pawn same store PLO $ 22.6 7 %
 
Latin America Pawn net revenue (three months ended September 30, 2018) $ 26.8 74 %
Currency exchange rate fluctuations   1.2    
Constant currency Latin America Pawn net revenue (three months ended September 30, 2018) $ 28.0 82 %
 
Latin America Pawn PSC revenue (three months ended September 30, 2018) $ 19.3 90 %
Currency exchange rate fluctuations   0.8    
Constant currency Latin America Pawn PSC revenue (three months ended September 30, 2018) $ 20.1 99 %
 
Latin America Pawn merchandise sales (three months ended September 30, 2018) $ 24.5 50 %
Currency exchange rate fluctuations   1.3    
Constant currency Latin America Pawn merchandise sales (three months ended September 30, 2018) $ 25.8 57 %
 
Latin America Pawn same store merchandise sales (three months ended September 30, 2018) $ 17.0 4 %
Currency exchange rate fluctuations   1.0    
Constant currency Latin America Pawn same store merchandise sales (three months ended September 30, 2018) $ 18.0 4 %
 
Latin America Pawn merchandise sales gross profit (three months ended September 30, 2018) $ 7.7 54 %
Currency exchange rate fluctuations   0.4    
Constant currency Latin America Pawn merchandise sales gross profit (three months ended September 30, 2018) $ 8.1 63 %
 
Latin America Pawn merchandise sales (twelve months ended September 30, 2018) $ 87.7 39 %
Currency exchange rate fluctuations   (0.2 )  
Constant currency Latin America Pawn merchandise sales (twelve months ended September 30, 2018) $ 87.5 39 %
 
Latin America Pawn same store merchandise sales (twelve months ended September 30, 2018) $ 66.8 7 %
Currency exchange rate fluctuations   (0.3 )  

Constant currency Latin America Pawn same store merchandise sales (twelve months ended September 30, 2018)

$ 66.5 6 %
 

Jeff Christensen
Vice President, Investor Relations
Email: jeff_christensen@ezcorp.com
Phone: (512) 437-3545

Source: EZCORP, Inc.

Categories: Press Releases
View all Investor News