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EZCORP Reports Fourth Quarter Fiscal Year 2020 Results

Dec 14, 2020

AUSTIN, Texas--(BUSINESS WIRE)-- EZCORP, Inc. (NASDAQ: EZPW) today announced results for its fourth quarter and fiscal year ended September 30, 2020.

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

Results for the fourth quarter of fiscal 2020 were impacted by lower pawn service charges related to stimulus payments and ongoing COVID-19 headwinds, as well as charges and non-cash write-downs associated with the Company's efforts to simplify and streamline its business and other COVID-19 impacts. Given the typical delay between growth in pawn loan originations and pawn service charges, near-term pawn service charge revenue trends will continue to lag the recent stabilization and rebound in new loans made and pawn loans outstanding.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Jason Kulas stated, "We continue to make progress on key strategic initiatives. First, we implemented a number of initiatives that will result in a reduction of annual corporate expenses of more than $12 million beginning in fiscal 2021. We have also lowered store-level operating costs by $14 million on an annualized basis. While a majority of those store-level savings will be added back as transaction activity continues to grow, we are realizing significant expense reductions, with an ongoing focus on extracting further operating efficiencies. Second, we continue to strengthen our core pawn business by increasingly leveraging data analytics across geographies to optimize pricing, productivity and returns. Third, recent efforts to rationalize non-core activities have included closing our CASHMAX business in Canada. Finally, we remain focused on innovation to broaden customer engagement across channels, improve the customer experience and capture new business. Our digital pawn servicing platform, Lana, and our other digital efforts have been refocused on achieving these goals.

"At EZCORP, we are focused on optimizing the unique and essential elements of our core pawn business to address customers’ short-term cash needs. We have implemented a culture of continuous operational improvements that will drive operating leverage as we grow and will improve earnings power and shareholder value over time. As we sharpen our focus on continuous improvement in our pawn business, our team is viewing all initiatives through the lens of whether they benefit our core business. We look forward to providing updates on these initiatives in future quarters."

RESULTS FOR FOURTH QUARTER OF FISCAL 2020

  • Total revenues declined 22% to $166.9 million, and net revenues declined 26% to $89.6 million. These declines were driven by a reduction in revenue from pawn service charges (PSC), which was down 34% to $55.2 million as a result of lower average pawn loans outstanding (PLO) during the quarter.
  • PLO balance at the end of the quarter was $131.3 million, 34% below the prior-year quarter. Pawn loan demand was significantly reduced in the third quarter and into the fourth quarter following economic stimulus actions in the U.S. and constrained traffic in Latin America. Activity levels have started to normalize, with PLO increasing $18.0 million during the quarter as compared to the third quarter of fiscal 2020.
  • Operations expenses were $78.2 million, down $13.3 million, or 15%, $3.9 million of which is due to a reduction in accrued short-term and long-term incentive compensation. Administrative expenses decreased by $11.1 million due to a $17.0 million reduction in accrued short-term and long-term incentive compensation, offset by $4.9 million in increased labor costs.
  • Management implemented strategic initiatives to remove over $12 million in annual corporate expenses beginning in fiscal 2021 and $14 million related to store-level operating costs, a majority of which will be added back as transaction activity continues to increase.
  • Loss before taxes was $28.7 million and diluted loss per share was $0.42, compared to income before taxes of $0.4 million and diluted loss per share of $0.01, respectively, in the prior-year quarter. On an adjusted basis1, loss before taxes was $2.9 million and diluted earnings per share was $0.07, compared to profit before taxes of $10.0 million and diluted earnings per share of $0.13, respectively, in the prior-year quarter.
  • Net inventory of $95.9 million decreased 47%, reflecting annualized inventory turnover of 2.8x. Merchandise sales gross margin of 31% decreased 200 bps, but when excluding a $2.6 million increase in reserves resulting from the impact of COVID-19, merchandise sales gross margin was flat at 33%.
  • Cash and cash equivalents increased $147.0 million to $304.5 million as of the end of the quarter, with most of the increase attributable to the decline in PLO.
  • During the quarter, management began to implement cost savings and refocus initiatives designed to improve bottom line performance and position the Company for sustainable growth focused on the core pawn business. As a result of these initiatives, we recorded the following pre-tax charges in the quarter:
    • $6.4 million in severance benefits related to the elimination of certain management positions;
    • $4.9 million associated with the closure of the CASHMAX business in Canada and related operations;
    • $4.1 million associated with the closure of four stores in U.S. Pawn and three stores in Latin America Pawn; and
    • $5.0 million of other miscellaneous charges.

CONSOLIDATED RESULTS

Three Months Ended September 30
in millions, except per share amounts

 

As Reported

 

Adjusted1

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

Total Revenues

$

166.9

 

 

$

214.3

 

 

$

170.9

 

$

214.3

Net Revenues

$

89.6

 

 

$

120.9

 

 

$

91.3

 

 

$

121.1

 

(Loss) Income from Continuing Operations, Before Tax

$

(28.7

)

 

$

0.4

 

 

$

2.9

 

 

$

10.0

 

Net (Loss) Income from Continuing Operations

$

(23.3

)

 

$

(0.6

)

 

$

3.8

 

 

$

7.4

 

Diluted Earnings Per Share from Continuing Operations

$

(0.42

)

 

$

(0.01

)

 

$

0.07

 

 

$

0.13

 

Adjusted EBITDA1

$

(16.0

)

 

$

12.1

 

 

$

12.0

 

 

$

19.3

 

  • Total revenues decreased 22% to $166.9 million. PSC was down 34% to $55.2 million due to lower average PLO during the quarter. PLO increased 16% from June 30 to September 30, compared to a 5% sequential gain in the same period of the prior year.
  • Merchandise sales declined 2%, driven primarily by lower inventory levels.
  • Scrap sales declined 72% due to a lack of diamond scrap sales in the quarter as compared to the prior year. Jewelry scrap activity was lower than the prior year in response to lower inventory levels, but the impact of lower volume was lessened by margin improvement to 28%, as compared to 10% in the prior-year quarter. Gross profit on scrap sales decreased 24% to $1.7 million.
  • Net revenues were down 26% to $89.6 million. Consolidated merchandise sales gross profit decreased 7% to $32.3 million, while consolidated merchandise sales gross margin was 31%. When excluding a $2.6 million increase in inventory reserves resulting from the impact of COVID-19, consolidated merchandise sales gross margin was 33%.
  • Consolidated operations expenses decreased 15% primarily due to cost-cutting initiatives at the store level. Total pawn store count increased 1%, consisting of a net 13 stores opened since the end of the prior-year quarter. Administrative expense decreased 78% to $3.1 million, primarily due to a $17.0 million reduction in accrued short-term and long-term incentive compensation, offset by $4.9 million in increased labor costs.

SEGMENT RESULTS

U.S. Pawn

  • Total revenue was down 23%, reflecting the impact of lower average PLO on PSC revenue, which was down 32%.
  • PLO decreased 32% to $106.3 million, but increased $19.5 million, or 23%, since the end of June, compared to a 6% sequential increase during the same period of the prior year.
  • Gross profit on merchandise sales grew $0.7 million, or 2%, reflecting expanded sales margins, partially offset by a 3% reduction in merchandise sales volume, driven primarily by lower inventory levels. Merchandise sales gross margin was 37% (39%, when excluding an increase in inventory reserves of $1.4 million resulting from the impact of COVID-19), at the high end of our targeted range. Annualized inventory turns were 2.5x, a 32% increase over the prior year. Aged general merchandise inventory improved to 4% from 6% in the prior year.
  • Segment contribution decreased $14.6 million to $7.6 million. This decrease was the result of a $20.5 million reduction in PSC, partially offset by a $8.4 million reduction in operating expenses ($2.4 million of which attributable to a reduction in accrued short-term and long-term incentive compensation).

Latin America Pawn

  • Merchandise sales grew 2%, to $27.3 million (11% to $30.0 million on a constant currency basis). Merchandise sales gross margin was 13% (17% when excluding an increase in inventory reserves of $1.2 million resulting from the impact of COVID-19). Aged general merchandise inventory increased to 8% from 6% in the prior year, but declined sequentially from 19% at the end of the prior quarter.
  • PSC decreased 38% to $12.0 million (down 32% to $13.1 million on a constant currency basis) as a result of lower average PLO for the quarter and a lower yield on pawn loans, reflecting our commitment to work with customers by negotiating reduced interest payments on a case-by-case basis.
  • Net revenues decreased 40% to $16.0 million (down 33% to $17.8 million on a constant currency basis) primarily due to lower PSC.
  • Operations expense was tightly managed, down 16% to $16.4 million.
  • Latin America Pawn added seven de novo stores in the quarter. New store openings typically pressure earnings in the short term as they ramp up, but drive higher profitability over time.
  • Segment loss for the quarter was $3.9 million ($4.2 million on a constant currency basis), compared to a contribution of $5.8 million in the prior year quarter, primarily reflecting lower PSC revenues.

FORM 10-K

EZCORP’s Annual Report on Form 10-K for fiscal 2020 has been filed with the Securities and Exchange Commission. The report is available in the Investor Relations section of the Company’s website at http://investors.ezcorp.com. EZCORP shareholders may obtain a paper copy of the report, free of charge, by sending a request to the investor relations contact below.

CONFERENCE CALL

EZCORP will host a conference call on Tuesday, December 15, 2020, at 7:00 am Central Time to discuss fiscal fourth quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 407-0789, Conference ID: 13713707, or internationally by dialing (201) 689-8562. 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 end of the call. 

ABOUT EZCORP

Formed in 1989, EZCORP has grown into a leading provider of pawn loans in the United States and Latin America. We also sell 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 1000 Index and Nasdaq Composite Index.

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, current or future litigation and risks associated with the COVID-19 pandemic. 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.

1 “Adjusted” basis, which is a non-GAAP measure, excludes certain items. “Constant currency” basis, which is a non-GAAP measure, excludes the impact of foreign currency exchange rate fluctuations. “Free cash flow,” which is a non-GAAP measure, includes certain adjustments to cash flow from operating activities.

For additional information about these calculations, as well as a reconciliation to the most comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

EZCORP, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Fiscal Year Ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

(Unaudited)

 

 

 

 

 

 

(in thousands, except per share amounts)

Revenues:

 

 

 

 

 

 

 

Merchandise sales

$

105,118

 

 

$

107,189

 

 

$

498,213

 

 

$

453,375

 

Jewelry scrapping sales

6,244

 

 

22,572

 

 

47,953

 

 

60,445

 

Pawn service charges

55,231

 

 

83,068

 

 

272,638

 

 

327,366

 

Other revenues

267

 

 

1,510

 

 

4,007

 

 

6,043

 

Total revenues

166,860

 

 

214,339

 

 

822,811

 

 

847,229

 

Merchandise cost of goods sold

72,770

 

 

72,325

 

 

334,481

 

 

297,508

 

Jewelry scrapping cost of goods sold

4,512

 

 

20,287

 

 

38,041

 

 

52,935

 

Other cost of revenues

(39

)

 

871

 

 

1,054

 

 

2,338

 

Net revenues

89,617

 

 

120,856

 

 

449,235

 

 

494,448

 

Operating expenses:

 

 

 

 

 

 

 

Operations

78,205

 

 

91,525

 

 

341,040

 

 

358,253

 

Administrative

3,100

 

 

14,167

 

 

49,897

 

 

55,990

 

Impairment of goodwill, intangible and other assets

7,606

 

 

 

 

54,666

 

 

 

Depreciation and amortization

7,653

 

 

7,683

 

 

30,827

 

 

28,797

 

Loss on sale or disposal of assets and other

(459

)

 

756

 

 

801

 

 

4,399

 

Other charges

20,388

 

 

 

 

20,388

 

 

 

Total operating expenses

116,493

 

 

114,131

 

 

497,619

 

 

447,439

 

Operating (loss) income

(26,876

)

 

6,725

 

 

(48,384

)

 

47,009

 

Interest expense

5,883

 

 

5,425

 

 

22,472

 

 

32,637

 

Interest income

(761

)

 

(1,449

)

 

(3,173

)

 

(11,086

)

Equity in net loss (income) of unconsolidated affiliates

(3,467

)

 

767

 

 

2,429

 

 

135

 

Impairment of investment in unconsolidated affiliates

 

 

 

 

 

 

19,725

 

Other (income) expense

198

 

 

1,545

 

 

(17

)

 

1,424

 

Income from continuing operations before income taxes

(28,729

)

 

437

 

 

(70,095

)

 

4,174

 

Income tax (benefit) expense

(5,389

)

 

1,029

 

 

(1,632

)

 

2,406

 

(Loss) income from continuing operations, net of tax

(23,340

)

 

(592

)

 

(68,463

)

 

1,768

 

Loss from discontinued operations, net of tax

 

 

(53

)

 

 

 

(457

)

Net (loss) income

(23,340

)

 

(645

)

 

(68,463

)

 

1,311

 

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

(1,230

)

Net (loss) income attributable to EZCORP, Inc.

$

(23,340

)

 

$

(645

)

 

$

(68,463

)

 

$

2,541

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share attributable to EZCORP, Inc. — continuing operations

$

(0.42

)

 

$

(0.01

)

 

$

(1.24

)

 

$

0.05

 

Diluted (loss) earnings per share attributable to EZCORP, Inc. — continuing operations

$

(0.42

)

 

$

(0.01

)

 

$

(1.24

)

 

$

0.05

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

55,070

 

 

55,446

 

 

55,313

 

 

55,341

 

Weighted-average diluted shares outstanding

55,070

 

 

55,446

 

 

55,313

 

 

55,984

 

 

EZCORP, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

 

 

September 30,

 

2020

 

2019

 

 

 

 

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

304,542

 

 

$

157,567

 

Restricted cash

8,011

 

 

4,875

 

Pawn loans

131,323

 

 

199,058

 

Pawn service charges receivable, net

20,580

 

 

31,802

 

Inventory, net

95,891

 

 

179,355

 

Notes receivable, net

 

 

7,182

 

Prepaid expenses and other current assets

32,903

 

 

25,921

 

Total current assets

593,250

 

 

605,760

 

Investments in unconsolidated affiliates

32,458

 

 

34,516

 

Property and equipment, net

56,986

 

 

67,357

 

Lease right-of-use asset

183,809

 

 

 

Goodwill

257,582

 

 

300,527

 

Intangible assets, net

58,638

 

 

68,044

 

Notes receivable, net

1,148

 

 

1,117

 

Deferred tax asset, net

8,931

 

 

1,998

 

Other assets

4,221

 

 

4,383

 

Total assets

$

1,197,023

 

 

$

1,083,702

 

 

 

 

 

Liabilities and equity:

 

 

 

Current liabilities:

 

 

 

Current maturities of long-term debt, net

$

213

 

 

$

214

 

Accounts payable, accrued expenses and other current liabilities

71,504

 

 

77,957

 

Customer layaway deposits

11,008

 

 

12,915

 

Lease liability

49,742

 

 

 

Total current liabilities

132,467

 

 

91,086

 

Long-term debt, net

251,016

 

 

238,380

 

Deferred tax liability, net

524

 

 

1,985

 

Lease liability

153,040

 

 

 

Other long-term liabilities

10,849

 

 

7,302

 

Total liabilities

547,896

 

 

338,753

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Class A Non-Voting Common Stock, par value $0.01 per share; shares authorized: 100 million; issued and outstanding: 52,332,848 as of September 30, 2020 and 52,565,064 as of September 30, 2019

521

 

 

526

 

Class B Voting Common Stock, convertible, par value $0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171 as of September 30, 2020 and 2019

30

 

 

30

 

Additional paid-in capital

398,475

 

 

407,628

 

Retained earnings

318,169

 

 

389,163

 

Accumulated other comprehensive loss

(68,068

)

 

(52,398

)

Total equity

649,127

 

 

744,949

 

Total liabilities and equity

$

1,197,023

 

 

$

1,083,702

 

 

EZCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 

 

Fiscal Year Ended September 30,

 

2020

 

2019

 

2018

 

(in thousands)

Operating activities:

 

 

 

 

 

Net (loss) income

$

(68,463

)

 

$

1,311

 

 

$

36,294

 

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

 

 

 

 

 

Depreciation and amortization

30,827

 

 

28,797

 

 

25,484

 

Amortization of debt discount and deferred financing costs

13,200

 

 

19,759

 

 

17,595

 

Amortization of lease right-of-use asset

45,649

 

 

 

 

 

Accretion of notes receivable discount and deferred compensation fee

(821

)

 

(4,524

)

 

(9,150

)

Deferred income taxes

(8,393

)

 

1,616

 

 

7,916

 

Impairment of goodwill, intangibles and other assets

54,666

 

 

 

 

 

Other adjustments

1,652

 

 

5,776

 

 

2,607

 

Reserve on jewelry scrap receivable

 

 

3,646

 

 

 

Stock compensation expense

(5,094

)

 

9,751

 

 

10,784

 

Equity in net loss (gain) from investment in unconsolidated affiliates

2,429

 

 

135

 

 

(5,529

)

Impairment of investment in unconsolidated affiliates

 

 

19,725

 

 

11,712

 

Changes in operating assets and liabilities, net of business acquisitions:

 

 

 

 

 

Pawn service charges receivable

11,021

 

 

(732

)

 

(1,788

)

Inventory

17,043

 

 

(493

)

 

(1,074

)

Prepaid expenses, other current assets and other assets

(875

)

 

5,732

 

 

477

 

Accounts payable, accrued expenses and other liabilities

(37,401

)

 

22,246

 

 

(3,271

)

Customer layaway deposits

(1,647

)

 

1,176

 

 

709

 

Income taxes, net of excess tax benefit from stock compensation

(4,715

)

 

(10,404

)

 

(3,785

)

Net cash provided by operating activities

49,078

 

 

103,517

 

 

88,981

 

Investing activities:

 

 

 

 

 

Loans made

(568,368

)

 

(737,585

)

 

(707,220

)

Loans repaid

394,469

 

 

434,142

 

 

421,331

 

Recovery of pawn loan principal through sale of forfeited collateral

304,323

 

 

288,502

 

 

266,962

 

Capital expenditures, net

(28,526

)

 

(38,839

)

 

(40,474

)

Acquisitions, net of cash acquired

 

 

(8,116

)

 

(93,165

)

Investment in unconsolidated affiliate

 

 

 

 

(14,036

)

Principal collections on notes receivable

8,000

 

 

34,067

 

 

32,396

 

Net cash provided by (used in) investing activities

109,898

 

 

(27,829

)

 

(134,206

)

Financing activities:

 

 

 

 

 

Taxes paid related to net share settlement of equity awards

(1,459

)

 

(3,288

)

 

(311

)

Payout of deferred consideration

(350

)

 

 

 

 

Proceeds from borrowings, net of issuance costs

912

 

 

1,064

 

 

171,409

 

Payments on borrowings

(198

)

 

(196,093

)

 

(3,510

)

Repurchase of common stock

(5,158

)

 

 

 

 

Net cash (used in) provided by financing activities

(6,253

)

 

(198,317

)

 

167,588

 

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(2,612

)

 

(507

)

 

(654

)

Net increase (decrease) in cash and cash equivalents and restricted cash

150,111

 

 

(123,136

)

 

121,709

 

Cash and cash equivalents and restricted cash at beginning of period

162,442

 

 

285,578

 

 

163,869

 

Cash and cash equivalents and restricted cash at end of period

$

312,553

 

 

$

162,442

 

 

$

285,578

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Cash and cash equivalents

$

304,542

 

 

$

157,567

 

 

$

285,311

 

Restricted cash

8,011

 

 

4,875

 

 

267

 

Total cash and cash equivalents and restricted cash

$

312,553

 

 

$

162,442

 

 

$

285,578

 

Cash paid during the period for interest

$

8,489

 

 

$

12,900

 

 

$

8,412

 

Cash paid during the period for income taxes, net

$

9,753

 

 

$

11,132

 

 

$

13,676

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

Pawn loans forfeited and transferred to inventory

$

241,252

 

 

$

301,357

 

 

$

274,590

 

 

EZCORP, Inc.
OPERATING SEGMENT RESULTS
(Unaudited and in thousands)

 

 

Three Months Ended September 30, 2020

 

U.S. Pawn

 

Latin America Pawn

 

Lana

 

Other International

 

Total Segments

 

Corporate Items

 

Consolidated

 

 

(in thousands)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

77,862

 

$

27,256

 

 

$

 

 

$

 

 

$

105,118

 

 

$

 

 

$

105,118

 

Jewelry scrapping sales

3,786

 

 

2,458

 

 

 

 

 

 

6,244

 

 

 

 

6,244

 

Pawn service charges

43,222

 

 

12,009

 

 

 

 

 

 

55,231

 

 

 

 

55,231

 

Other revenues

43

 

 

(50

)

 

21

 

 

253

 

 

267

 

 

 

 

267

 

Total revenues

124,913

 

 

41,673

 

 

21

 

 

253

 

 

166,860

 

 

 

 

166,860

 

Merchandise cost of goods sold

49,056

 

 

23,714

 

 

 

 

 

 

72,770

 

 

 

 

72,770

 

Jewelry scrapping cost of goods sold

2,634

 

 

1,878

 

 

 

 

 

 

4,512

 

 

 

 

4,512

 

Other cost of revenues

 

 

32

 

 

 

 

(71

)

 

(39

)

 

 

 

(39

)

Net revenues

73,223

 

 

16,049

 

 

21

 

 

324

 

 

89,617

 

 

 

 

89,617

 

Operating expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations

59,687

 

 

16,423

 

 

699

 

 

1,396

 

 

78,205

 

 

 

 

78,205

 

Administrative

 

 

 

 

 

 

 

 

 

 

3,100

 

 

3,100

 

Impairment of goodwill, intangibles and other assets

 

 

2

 

 

 

 

25

 

 

27

 

 

7,579

 

 

7,606

 

Depreciation and amortization

2,705

 

 

1,839

 

 

332

 

 

8

 

 

4,884

 

 

2,769

 

 

7,653

 

Loss (gain) on sale or disposal of assets and other

151

 

 

 

 

 

 

 

 

151

 

 

(610

)

 

(459

)

Other Charges

3,106

 

 

1,715

 

 

3,258

 

 

3,802

 

 

11,881

 

 

8,507

 

 

20,388

 

Interest expense

 

 

255

 

 

 

 

85

 

 

340

 

 

5,543

 

 

5,883

 

Interest income

 

 

(425

)

 

 

 

 

 

(425

)

 

(336

)

 

(761

)

Equity in net loss of unconsolidated affiliates

 

 

 

 

 

 

(3,467

)

 

(3,467

)

 

 

 

(3,467

)

Other expense (income)

 

 

147

 

 

 

 

(8

)

 

139

 

 

59

 

 

198

 

Segment contribution (loss)

$

7,574

 

 

$

(3,907

)

 

$

(4,268

)

 

$

(1,517

)

 

$

(2,118

)

 

 

 

 

Income (loss) from continuing operations before income taxes

 

 

 

 

 

 

 

 

$

(2,118

)

 

$

(26,611

)

 

$

(28,729

)

 

Three Months Ended September 30, 2019

 

U.S. Pawn

 

Latin America Pawn

 

Lana

 

Other International

 

Total Segments

 

Corporate Items

 

Consolidated

 

 

(in thousands)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

80,357

 

$

26,832

 

 

$

 

 

$

 

 

$

107,189

 

 

$

 

 

$

107,189

 

Jewelry scrapping sales

17,458

 

 

5,114

 

 

 

 

 

 

22,572

 

 

 

 

22,572

 

Pawn service charges

63,711

 

 

19,357

 

 

 

 

 

 

83,068

 

 

 

 

83,068

 

Other revenues

108

 

 

45

 

 

 

 

1,357

 

 

1,510

 

 

 

 

1,510

 

Total revenues

161,634

 

 

51,348

 

 

 

 

1,357

 

 

214,339

 

 

 

 

214,339

 

Merchandise cost of goods sold

52,205

 

 

20,120

 

 

 

 

 

 

72,325

 

 

 

 

72,325

 

Jewelry scrapping cost of goods sold

15,638

 

 

4,649

 

 

 

 

 

 

20,287

 

 

 

 

20,287

 

Other cost of revenues

 

 

 

 

 

 

871

 

 

871

 

 

 

 

871

 

Net revenues

93,791

 

 

26,579

 

 

 

 

486

 

 

120,856

 

 

 

 

120,856

 

Operating expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations

68,119

 

 

19,496

 

 

2,694

 

 

1,207

 

 

91,516

 

 

 

 

91,516

 

Administrative

 

 

 

 

 

 

 

 

 

 

14,176

 

 

14,176

 

Depreciation and amortization

2,928

 

 

1,724

 

 

10

 

 

29

 

 

4,691

 

 

2,992

 

 

7,683

 

Loss (gain) on sale or disposal of assets

546

 

 

(52

)

 

 

 

260

 

 

754

 

 

2

 

 

756

 

Interest expense

 

 

39

 

 

 

 

211

 

 

250

 

 

5,175

 

 

5,425

 

Interest income

 

 

(375

)

 

 

 

 

 

(375

)

 

(1,074

)

 

(1,449

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

767

 

 

767

 

 

 

 

767

 

Other (income) expense

 

 

(30

)

 

 

 

1,605

 

 

1,575

 

 

(30

)

 

1,545

 

Segment contribution (loss)

$

22,198

 

 

$

5,777

 

 

$

(2,704

)

 

$

(3,593

)

 

$

21,678

 

 

 

 

 

Income from continuing operations before income taxes

 

 

 

 

 

 

 

 

$

21,678

 

 

$

(21,241

)

 

$

437

 

 

Fiscal Year Ended September 30, 2020

 

U.S. Pawn

 

Latin America Pawn

 

Lana

 

Other International

 

Total Segments

 

Corporate Items

 

Consolidated

 

 

(in thousands)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

391,921

 

$

106,292

 

 

$

 

 

$

 

 

$

498,213

 

 

$

 

 

$

498,213

 

Jewelry scrapping sales

36,691

 

 

11,262

 

 

 

 

 

 

47,953

 

 

 

 

47,953

 

Pawn service charges

210,081

 

 

62,557

 

 

 

 

 

 

272,638

 

 

 

 

272,638

 

Other revenues

150

 

 

 

 

34

 

 

3,823

 

 

4,007

 

 

 

 

4,007

 

Total revenues

638,843

 

 

180,111

 

 

34

 

 

3,823

 

 

822,811

 

 

 

 

822,811

 

Merchandise cost of goods sold

251,544

 

 

82,937

 

 

 

 

 

 

334,481

 

 

 

 

334,481

 

Jewelry scrapping cost of goods sold

28,064

 

 

9,977

 

 

 

 

 

 

38,041

 

 

 

 

38,041

 

Other cost of revenues

 

 

101

 

 

 

 

953

 

 

1,054

 

 

 

 

1,054

 

Net revenues

359,235

 

 

87,096

 

 

34

 

 

2,870

 

 

449,235

 

 

 

 

449,235

 

Operating expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations

261,608

 

 

69,916

 

 

4,270

 

 

5,246

 

 

341,040

 

 

 

 

341,040

 

Administrative

 

 

 

 

 

 

 

 

 

 

49,897

 

 

49,897

 

Impairment of goodwill, intangibles and other assets

10,000

 

 

35,938

 

 

 

 

1,149

 

 

47,087

 

 

7,579

 

 

54,666

 

Depreciation and amortization

11,030

 

 

7,315

 

 

1,058

 

 

68

 

 

19,471

 

 

11,356

 

 

30,827

 

Loss (gain) on sale or disposal of assets and other

385

 

 

(72

)

 

 

 

(20

)

 

293

 

 

508

 

 

801

 

Other Charges

3,106

 

 

1,715

 

 

3,258

 

 

3,802

 

 

11,881

 

 

8,507

 

 

20,388

 

Interest expense

 

 

685

 

 

 

 

549

 

 

1,234

 

 

21,238

 

 

22,472

 

Interest income

 

 

(1,586

)

 

 

 

 

 

(1,586

)

 

(1,587

)

 

(3,173

)

Equity in net loss of unconsolidated affiliates

 

 

 

 

 

 

2,429

 

 

2,429

 

 

 

 

2,429

 

Other expense (income)

 

 

(156

)

 

 

 

6

 

 

(150

)

 

133

 

 

(17

)

Segment contribution (loss)

$

73,106

 

 

$

(26,659

)

 

$

(8,552

)

 

$

(10,359

)

 

$

27,536

 

 

 

 

 

Income from continuing operations before income taxes

 

 

 

 

 

 

 

 

$

27,536

 

 

$

(97,631

)

 

$

(70,095

)

 

Fiscal Year Ended September 30, 2019

 

U.S. Pawn

 

Latin America Pawn

 

Lana

 

Other International

 

Total Segments

 

Corporate Items

 

Consolidated

 

 

(in thousands)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

355,996

 

$

97,379

 

 

$

 

 

$

 

 

$

453,375

 

 

$

 

 

$

453,375

 

Jewelry scrapping sales

45,815

 

 

14,630

 

 

 

 

 

 

60,445

 

 

 

 

60,445

 

Pawn service charges

248,369

 

 

78,997

 

 

 

 

 

 

327,366

 

 

 

 

327,366

 

Other revenues

233

 

 

179

 

 

 

 

5,631

 

 

6,043

 

 

 

 

6,043

 

Total revenues

650,413

 

 

191,185

 

 

 

 

5,631

 

 

847,229

 

 

 

 

847,229

 

Merchandise cost of goods sold

225,136

 

 

72,372

 

 

 

 

 

 

297,508

 

 

 

 

297,508

 

Jewelry scrapping cost of goods sold

39,318

 

 

13,617

 

 

 

 

 

 

52,935

 

 

 

 

52,935

 

Other cost of revenues

 

 

 

 

 

 

2,338

 

 

2,338

 

 

 

 

2,338

 

Net revenues

385,959

 

 

105,196

 

 

 

 

3,293

 

 

494,448

 

 

 

 

494,448

 

Operating expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations

269,003

 

 

74,199

 

 

7,675

 

 

7,376

 

 

358,253

 

 

 

 

358,253

 

Administrative

 

 

 

 

 

 

 

 

 

 

55,990

 

 

55,990

 

Depreciation and amortization

11,879

 

 

6,267

 

 

10

 

 

219

 

 

18,375

 

 

10,422

 

 

28,797

 

Loss on sale or disposal of assets

3,402

 

 

691

 

 

 

 

282

 

 

4,375

 

 

24

 

 

4,399

 

Interest expense

 

 

1,609

 

 

 

 

491

 

 

2,100

 

 

30,537

 

 

32,637

 

Interest income

 

 

(1,601

)

 

 

 

 

 

(1,601

)

 

(9,485

)

 

(11,086

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

135

 

 

135

 

 

 

 

135

 

Impairment of investment in unconsolidated affiliates

 

 

 

 

 

 

19,725

 

 

19,725

 

 

 

 

19,725

 

Other income

 

 

(93

)

 

 

 

1,895

 

 

1,802

 

 

(378

)

 

1,424

 

Segment contribution (loss)

$

101,675

 

 

$

24,124

 

 

$

(7,685

)

 

$

(26,830

)

 

$

91,284

 

 

 

 

 

Income from continuing operations before income taxes

 

 

 

 

 

 

 

 

$

91,284

 

 

$

(87,110

)

 

$

4,174

 

 

EZCORP, Inc.
STORE COUNT ACTIVITY
(Unaudited)

 

Three Months Ended September 30, 2020

 

U.S. Pawn

 

Latin America Pawn

 

Other International

 

Consolidated

 

 

 

 

 

 

 

 

As of June 30, 2020

511

 

 

496

 

 

22

 

 

1,029

 

New locations opened

 

 

7

 

 

 

 

7

 

Locations acquired

 

 

 

 

 

 

 

Locations sold, combined or closed

(6

)

 

(3

)

 

(22

)

 

(31

)

As of September 30, 2020

505

 

 

500

 

 

 

 

1,005

 

 

 

Three Months Ended September 30, 2019

 

U.S. Pawn

 

Latin America Pawn

 

Other International

 

Consolidated

 

 

 

 

 

 

 

 

As of June 30, 2019

514

 

 

470

 

 

22

 

 

1,006

 

New locations opened

 

 

10

 

 

 

 

10

 

Locations acquired

 

 

 

 

 

 

 

Locations sold, combined or closed

(2

)

 

 

 

 

 

(2

)

As of September 30, 2019

512

 

 

480

 

 

22

 

 

1,014

 

 

 

Twelve Months Ended September 30, 2020

 

U.S. Pawn

 

Latin America Pawn

 

Other International

 

Consolidated

 

 

 

 

 

 

 

 

As of September 30, 2019

512

 

 

480

 

 

22

 

 

1,014

 

New locations opened

 

 

23

 

 

 

 

23

 

Locations acquired

 

 

 

 

 

 

 

Locations sold, combined or closed

(7

)

 

(3

)

 

(22

)

 

(32

)

As of September 30, 2020

505

 

 

500

 

 

 

 

1,005

 

 

 

Twelve Months Ended September 30, 2019

 

U.S. Pawn

 

Latin America Pawn

 

Other International

 

Consolidated

 

 

 

 

 

 

 

 

As of September 30, 2018

508

 

 

453

 

 

27

 

 

988

 

New locations opened

 

 

22

 

 

 

 

22

 

Locations acquired

7

 

 

5

 

 

 

 

12

 

Locations sold, combined or closed

(3

)

 

 

 

(5

)

 

(8

)

As of September 30, 2019

512

 

 

480

 

 

22

 

 

1,014

 

Non-GAAP Financial Information (Unaudited)

In addition to the financial information prepared in conformity with accounting principles generally accepted in the United States ("GAAP"), we provide certain other non-GAAP financial information on a constant currency ("constant currency") and 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. We believe that presentation of constant currency and adjusted results 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 primarily 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 local currency 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 and approximate average exchange rates for each applicable currency as compared to U.S. dollars as of and for the three and twelve months ended September 30, 2020 and 2019 were as follows:

 

 

September 30,

 

Three Months Ended

September 30,

 

Twelve Months Ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexican peso

 

21.6

 

 

19.7

 

 

22.1

 

 

19.4

 

 

21.0

 

 

19.4

 

Guatemalan quetzal

 

7.6

 

 

7.6

 

 

7.5

 

 

7.5

 

 

7.5

 

 

7.6

 

Honduran lempira

 

24.3

 

 

24.2

 

 

24.3

 

 

24.1

 

 

24.3

 

 

24.1

 

Peruvian sol

 

3.5

 

 

3.4

 

 

3.5

 

 

3.3

 

 

3.4

 

 

3.3

 

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.

Miscellaneous Non-GAAP Financial Measures

 

2020 Q4

 

2019 Q4

 

(in millions)

Net loss

$

(23.3

)

 

$

(0.6

)

Loss from discontinued operations, net of tax

 

 

0.1

 

Interest expense

5.9

 

 

5.4

 

Interest income

(0.8

)

 

(1.4

)

Income tax (benefit) expense

(5.4

)

 

1.0

 

Depreciation and amortization

7.7

 

 

7.7

 

Adjusted EBITDA

$

(16.0

)

 

$

12.1

 

 

 

Total Revenues

 

Net Revenues

 

(Loss) Income Before Tax

 

Tax Effect

 

Net (Loss) Income

 

Adjusted EBITDA

 

Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 Q4 Reported

$

166.9

 

$

89.6

 

$

(28.7

)

 

$

5.4

 

 

$

(23.3

)

 

$

(16.0

)

 

$

(0.42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other charges

 

 

 

 

20.4

 

 

(3.7

)

 

16.7

 

 

20.4

 

 

0.30

 

Impairment of intangible assets

 

 

 

 

7.6

 

 

(1.7

)

 

5.9

 

 

7.6

 

 

0.11

 

Non cash interest

 

 

 

 

3.3

 

 

(0.8

)

 

2.5

 

 

 

 

0.05

 

Other adjustments

 

 

 

 

0.7

 

 

1.8

 

 

2.5

 

 

(0.2

)

 

0.04

 

Constant currency impact

4.0

 

 

1.7

 

 

(0.4

)

 

(0.1

)

 

(0.5

)

 

0.2

 

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 Q4 Adjusted

$

170.9

 

 

$

91.3

 

 

$

2.9

 

 

$

0.9

 

 

$

3.8

 

 

$

12.0

 

 

$

0.07

 

 

 

Total Revenues

 

Net Revenues

 

(Loss) Income Before Tax

 

Tax Effect

 

Net (Loss) Income

 

Adjusted EBITDA

 

Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Q4 Reported

$

214.3

 

 

$

120.9

 

 

$

0.4

 

 

$

1.0

 

 

$

(0.6

)

 

$

12.1

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other charges

 

 

 

 

2.4

 

 

0.4

 

 

2.0

 

 

 

 

0.04

 

Impairment of intangible assets

 

 

 

 

2.0

 

 

0.3

 

 

1.7

 

 

2.0

 

 

0.03

 

Non cash interest

 

 

 

 

1.9

 

 

0.3

 

 

1.6

 

 

1.9

 

 

0.03

 

Other adjustments

 

 

0.2

 

 

1.7

 

 

0.3

 

 

1.4

 

 

1.7

 

 

0.02

 

Constant currency impact

 

 

 

 

1.6

 

 

0.3

 

 

1.3

 

 

1.6

 

 

0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Q4 Adjusted*

$

214.3

 

$

121.1

 

$

10.0

 

$

2.6

 

$

7.4

 

 

$

19.3

 

$

0.13

 

* During the first quarter of fiscal 2020, we revised the financial information our chief operating decision maker (our chief executive officer) reviews for operational decision-making purposes to include the separate financial results of our Lana business. Our historical segment results have been recast to conform to current presentation including the removal of discretionary strategic investment in digital platform costs in historically adjusted results. We additionally recast certain other adjustments to conform to restated historical results.

2020 Q4:

U.S. Dollar Amount

 

Percentage Change YOY

 

(in millions)

 

 

Consolidated revenue (three months ended September 30, 2020)

$

166.9

 

 

(22)

%

Currency exchange rate fluctuations

4.0

 

 

 

Constant currency consolidated revenue (three months ended September 30, 2020)

$

170.9

 

 

(20)

%

 

 

 

 

Consolidated net revenue (three months ended September 30, 2020)

$

89.6

 

 

(26)

%

Currency exchange rate fluctuations

$

1.7

 

 

 

Constant currency consolidated net revenue (three months ended September 30, 2020)

$

91.3

 

 

(24)

%

 

 

 

 

Consolidated net inventory

$

95.9

 

 

(47)

%

Currency exchange rate fluctuations

$

1.7

 

 

 

Constant currency consolidated net inventory

$

97.6

 

 

(46)

%

 

 

 

 

Latin America Pawn net revenue (three months ended September 30, 2020)

$

16.0

 

 

(40)

%

Currency exchange rate fluctuations

$

1.7

 

 

 

Constant currency Latin America Pawn net revenue (three months ended September 30, 2020)

$

17.8

 

 

(33)

%

 

 

 

 

Latin America Pawn PLO

$

25.0

 

 

(40)

%

Currency exchange rate fluctuations

$

2.4

 

 

 

Constant currency Latin America Pawn PLO

$

27.4

 

 

(34)

%

 

 

 

 

Latin America Pawn PSC revenues (three months ended September 30, 2020)

$

12.0

 

 

(38)

%

Currency exchange rate fluctuations

$

1.1

 

 

 

Constant currency Latin America Pawn PSC revenues (three months ended September 30, 2020)

$

13.1

 

 

(32)

%

 

 

 

 

Latin America Pawn merchandise sales (three months ended September 30, 2020)

$

27.3

 

 

2

%

Currency exchange rate fluctuations

$

2.8

 

 

 

Constant currency Latin America Pawn merchandise sales (three months ended September 30, 2020)

$

30.0

 

 

12

%

 

 

 

 

Latin America Pawn segment profit before tax (three months ended September 30, 2020)

$

(3.9)

 

 

(168)

%

Currency exchange rate fluctuations

$

(0.3)

 

 

 

Constant currency Latin America Pawn segment profit before tax (three months ended September 30, 2020)

$

(4.2)

 

 

(103)

%

 

Email: Investor_Relations@ezcorp.com
Phone: (512) 314-2220

Source: EZCORP, Inc.

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