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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________________________________________ 
FORM 8-K
_______________________________________________________ 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 1, 2018 (August 1, 2018)
 _______________________________________________ 
EZCORP, Inc.
(Exact name of registrant as specified in its charter)
 _______________________________________________________ 

Delaware
 
0-19424
 
74-2540145
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
2500 Bee Cave Road, Bldg One, Suite 200, Rollingwood, Texas 78746
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code: (512) 314-3400
_______________________________________________________ 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




Item 2.02 — Results of Operations and Financial Condition
On August 1, 2018, EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the quarter ended June 30, 2018. A copy of that press release is attached as Exhibit 99.1.
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 Camira Administration Corp. and subsidiaries GPMX was not acquired until fiscal 2018, such results included on a constant currency basis reflect the actual exchange rates in effect during the three and nine months ended June 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.
The information set forth under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference in any filing made by EZCORP under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 7.01 — Regulation FD Disclosure
A copy of the presentation materials that management will review during the Company’s third quarter 2018 earnings conference call (to be held on August 2, 2018) will be posted in the Investor Relations section of the Company’s website at www.ezcorp.com.
Item 9.01 — Financial Statements and Exhibits
(d)
Exhibits.




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
EZCORP, INC.
 
 
 
 
 
 
 
 
Date:
August 1, 2018
 
 
 
By:
 
/s/ David McGuire
 
 
 
 
 
 
 
David McGuire
 
 
 
 
 
 
 
Deputy Chief Financial Officer and Chief Accounting Officer


Exhibit


https://cdn.kscope.io/a81b91dedc7f379ec51ff524cf6ae399-fy2014q1ezcorpa01a04a18.jpg
EZCORP Reports 163% Increase in Third Quarter Net Income
Up 27% on an Adjusted Basis
Austin, Texas (August 1, 2018) - EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Latin America, today announced results for its third quarter ended June 30, 2018.
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 in this release are to the same period in the prior year unless otherwise noted.
HIGHLIGHTS FOR THIRD QUARTER OF FISCAL 2018
•
Net income increased 163% to $14.5 million, and basic earnings per share increased 170% to $0.27 - Included in the quarter is a $5.2 million pre-tax gain on litigation settlement and an unrelated $3.3 million tax benefit. Adjusting for these and other discrete items1, net income increased by 27%, representing a strong operating result and the 10th consecutive quarter of year-over-year (YOY) growth in both net income and earnings per share (EPS).
•
Latin America Pawn accelerates earnings growth - Contribution from the Latin America Pawn segment increased 63% to $8.8 million on a 102% increase in pawn loans outstanding (PLO) to $39.3 million, driven by the contribution from acquired stores. Same store PLO led the industry, down 2% (up 8% on a constant currency basis2), following 16% growth (13% on a constant currency basis) in the prior year quarter. Latin America Pawn now comprises 47% of the company's total consolidated pawn stores and produced 29% of consolidated pawn contribution in the current quarter, up from 18% in the prior year quarter.
•
U.S. Pawn continues its significant earnings and cash flow contribution with industry leading returns - Industry-high PLO per store of $282,000 and monthly pawn loan yield of 14% combined to drive 33% higher pawn service charges (PSC) per store compared to the industry. U.S. Pawn achieved a 4% higher sales gross profit YOY and industry leading margins of 38%, up 110bps, while reducing inventory balances by $9.2 million in the quarter. The U.S. Pawn segment contributed $21.4 million of profit before tax as it continues recovery from the impact of Hurricanes Harvey and Irma.
•
Consolidated PLO increased 9% - Total consolidated PLO grew 9% and PSC increased 11%, including acquired stores. Same store PLO was 2% lower (increased 8% on a constant currency basis) in the fast growing Latin America Pawn segment, marking the segment's 17th consecutive quarter of same store PLO growth on a constant currency basis.
•
Liquidity strengthened - Cash and cash equivalents increased 151% to $285.0 million. A convertible debt issuance in the current quarter raised $167.0 million of net proceeds, significantly increasing liquidity and the company's ability to capitalize on attractive acquisition opportunities.

In June 2018, the company expanded its store presence in the Latin America pawn market by acquiring 63 pawn stores in Mexico City and the surrounding states in two separate transactions, for total cash consideration of $30.2 million. The acquisitions are expected to provide earnings accretion in their first full quarter ending September 30, 2018.
CEO COMMENTARY AND OUTLOOK
Chief Executive Officer Stuart Grimshaw said, “We delivered significantly higher net revenues and net income in the quarter relative to the same quarter last year, and continued strengthening our balance sheet and liquidity position.
"Our strong organic growth and successful pawn store acquisitions continue in high-growth Latin America. The segment's net revenue and profit before tax increased 67% and 63% on a GAAP basis and 73% and 66% on a constant currency basis. We acquired 63 pawn stores in Mexico in the third quarter, bringing our year-to-date Latin America pawn store additions to 205 through acquisition and store openings. That represents an 83% increase in our Latin America store count since the beginning



of the fiscal year, reaching 451 stores. It also provides strategic positions for further penetration and expansion in existing and adjacent geographical areas.
“In the U.S. Pawn segment, our disciplined approach to pawn lending delivered industry leading PLO, PLO yield and PSC per store. Effective inventory management initiatives almost doubled inventory reduction relative to the prior year quarter while, at the same time, delivering industry high sales and sales gross profit per store. Merchandise margin increased 110bps to an industry leading 38%, while inventory turns accelerated to 2.1x from 1.9x in the immediately preceding quarter. The segment's net revenues were flat to the prior year quarter and pre-tax contribution was down 10%, reflecting the continuing impact of last year's hurricanes and higher expenses that included investments made to enhance customer experience and drive future profit improvement.
“We have a strong and proven focus on delivering an outstanding customer experience and meeting our customers' need for cash, which drives our industry-leading store operating performance. We continue to invest in our core pawn business, and with our strong cash position, we will open and acquire more pawn stores, particularly in Latin America, to further expand our diversified, multi-country earnings platform. We are confident that both of these strategies will continue to drive long-term shareholder value."
CONSOLIDATED RESULTS
•
Net income increased 163% to $14.5 million. This reflects the successful pawn store acquisitions and strong organic growth in Latin America, as well as a $5.2 million pre-tax gain on litigation settlement and an unrelated discrete tax benefit of $3.3 million.
•
A 9% increase in PLO led to an 11% improvement in PSC and a 9% improvement in net revenues to $115.1 million (up 10% to $115.8 million on a constant currency basis). Consolidated sales gross profit improved 7% to $37.8 million on a 7% rise in merchandise sales, while sales margins remained flat at 36%. On a constant currency basis, PSC expanded 11% and merchandise sales grew 8%.
•
Expenses rose 12% to $83.0 million (up 12% to $83.5 million on a constant currency basis) due primarily to acquired stores. The increase also reflects an increased number of team members per store, as well as other investments made in U.S. stores to enhance customer experience and drive future profit growth.
•
Cash and cash equivalents at the end of the quarter improved 151% to $285.0 million. During the quarter, the company enhanced liquidity through completion of a $172.5 million offering of convertible senior notes due 2025, yielding net proceeds of $167.0 million. Year-to-date, the company has collected $20.7 million in principal and interest, as scheduled, on the notes receivable related to the sale of Grupo Finmart in September 2016.
•
Basic EPS jumped 170% to $0.27 and diluted EPS rose 150% to $0.25. On an adjusted basis1, basic EPS was $0.15 (up 25%) and diluted EPS was $0.14 (up 17%). The fully diluted shares calculation includes the hypothetical conversion of our convertible notes to the extent the company's average share price in the quarter exceeded the conversion price on 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
•
Delivered industry high PLO, PLO yield and PSC per store, driven by disciplined lending practices and a focus on meeting customers’ need for cash. Same store PLO declined 3% including stores affected by the hurricanes. In unaffected stores, same store PLO declined 1%.
•
Effective inventory management reduced inventory by almost 7%, or $9.2 million in the quarter, simultaneously delivering industry leading sales and sales gross profit per store. Merchandise margins increased 110bps to an industry high 38%.
•
Net revenues were flat and pre-tax contribution was down 10% to $21.4 million, reflecting the PSC impact of last year's hurricanes on PLO, as well as higher expenses. Expenses reflect an increased number of team members per store and other investments to enhance customer experience and drive future profit growth.



Latin America Pawn
•
The Latin America segment again delivered outstanding growth. Its contribution increased 63% to $8.8 million (up 66% to $9.0 million on a constant currency basis).
•
Pawn store count expanded 83% year-to-date, including 63 stores acquired in the third quarter. Ten new stores have been opened fiscal year-to-date, including two in the third quarter.
•
The company believes there is significant opportunity for growth and profit enhancement in the acquired stores 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.
•
Segment operations expenses increased to 63% of net revenues from 62% in the prior-year quarter, primarily due to acquired stores.
•
PLO rose 102% to $39.3 million (up 116% to $41.9 million on a constant currency basis). Same store PLO was 2% lower (increased 8% on a constant currency basis).
•
Net revenues expanded 67% to $24.1 million (up 73% to $24.9 million on a constant currency basis), and PSC increased 90% to $17.3 million (up 95% to $17.8 million on a constant currency basis), reflecting the significantly higher PLO.
•
Merchandise sales improved 37% in total and were up 5% on a same store basis (up 42% in total and up 11% in same stores on a constant currency basis).
CONFERENCE CALL & WEBCAST INFORMATION
EZCORP will host a conference call on Thursday, August 2, 2018, at 7:30am Central Time to discuss third quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 9691918, or internationally by dialing (647) 788-4901. 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 ends.
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 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

All industry comparisons are based on available information from similar publicly traded companies.
1Adjusted 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
(Unaudited)
 
(in thousands, except per share amounts)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
104,737

 
$
97,921

 
$
333,270

 
$
319,672

Jewelry scrapping sales
20,428

 
17,641

 
44,166

 
37,658

Pawn service charges
72,874

 
65,878

 
223,601

 
201,983

Other revenues
1,903

 
2,193

 
6,147

 
6,572

Total revenues
199,942

 
183,633

 
607,184

 
565,885

Merchandise cost of goods sold
66,896

 
62,615

 
210,283

 
204,840

Jewelry scrapping cost of goods sold
17,625

 
15,010

 
37,536

 
32,195

Other cost of revenues
349

 
453

 
1,273

 
1,433

Net revenues
115,072

 
105,555

 
358,092

 
327,417

Operating expenses:
 
 
 
 
 
 
 
Operations
83,032

 
74,246

 
248,802

 
226,352

Administrative
13,268

 
14,095

 
39,927

 
41,305

Depreciation and amortization
6,124

 
5,843

 
18,298

 
18,246

Loss on sale or disposal of assets
314

 
17

 
453

 
11

Total operating expenses
102,738

 
94,201

 
307,480

 
285,914

Operating income
12,334

 
11,354

 
50,612

 
41,503

Interest expense
7,394

 
5,654

 
19,070

 
16,847

Interest income
(4,358
)
 
(2,053
)
 
(12,896
)
 
(6,909
)
Equity in net income of unconsolidated affiliate
(1,151
)
 
(1,047
)
 
(3,477
)
 
(3,768
)
Other income
(5,287
)
 
(99
)
 
(5,473
)
 
(294
)
Income from continuing operations before income taxes
15,736

 
8,899

 
53,388

 
35,627

Income tax expense
1,553

 
3,432

 
14,911

 
13,663

Income from continuing operations, net of tax
14,183

 
5,467

 
38,477

 
21,964

Loss (income) from discontinued operations, net of tax
91

 
(265
)
 
(631
)
 
(1,868
)
Net income
14,274

 
5,202

 
37,846

 
20,096

Net loss attributable to noncontrolling interest
(359
)
 
(58
)
 
(1,348
)
 
(352
)
Net income attributable to EZCORP, Inc.
$
14,633

 
$
5,260

 
$
39,194

 
$
20,448

 
 
 
 
 
 
 
 
Basic earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.27

 
$
0.10

 
$
0.73

 
$
0.41

Diluted earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.25

 
$
0.10

 
$
0.70

 
$
0.41

 
 
 
 
 
 
 
 
Weighted-average basic shares outstanding
54,464

 
54,295

 
54,453

 
54,247

Weighted-average diluted shares outstanding
57,954

 
54,367

 
57,080

 
54,310




EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
June 30,
2018
 
June 30,
2017
 
September 30,
2017
 
 
 
 
 
 
 
(Unaudited)
 
 
Assets:
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
285,031

 
$
113,729

 
$
164,393

Pawn loans
183,054

 
168,262

 
169,242

Pawn service charges receivable, net
33,388

 
30,585

 
31,548

Inventory, net
151,145

 
135,053

 
154,411

Notes receivable, net
37,906

 
22,024

 
32,598

Prepaid expenses and other current assets
43,448

 
31,993

 
28,765

Total current assets
733,972

 
501,646

 
580,957

Investment in unconsolidated affiliate
61,056

 
41,725

 
43,319

Property and equipment, net
71,587

 
53,022

 
57,959

Goodwill
292,544

 
254,469

 
254,760

Intangible assets, net
59,678

 
32,551

 
32,420

Non-current notes receivable, net
13,432

 
41,253

 
28,377

Deferred tax asset, net
4,269

 
36,506

 
16,856

Other assets, net
3,575

 
9,145

 
9,715

Total assets
$
1,240,113

 
$
970,317

 
$
1,024,363

 
 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current maturities of long-term debt, net
$
195,796

 
$
—

 
$
—

Accounts payable, accrued expenses and other current liabilities
61,813

 
64,830

 
61,543

Customer layaway deposits
11,938

 
11,091

 
11,032

Total current liabilities
269,547

 
75,921

 
72,575

Long-term debt, net
222,897

 
260,414

 
284,807

Other long-term liabilities
11,111

 
9,680

 
7,055

Total liabilities
503,555

 
346,015

 
364,437

Commitments and contingencies
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued and outstanding: 51,494,246 as of June 30, 2018; 51,326,582 as of June 30, 2017; and 51,427,832 as of September 30, 2017
515

 
513

 
514

Class B Voting Common Stock, convertible, par value $.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171
30

 
30

 
30

Additional paid-in capital
395,428

 
322,559

 
348,532

Retained earnings
392,315

 
340,256

 
351,666

Accumulated other comprehensive loss
(48,040
)
 
(37,921
)
 
(38,367
)
EZCORP, Inc. stockholders’ equity
740,248

 
625,437

 
662,375

Noncontrolling interest
(3,690
)
 
(1,135
)
 
(2,449
)
Total equity
736,558

 
624,302

 
659,926

Total liabilities and equity
$
1,240,113

 
$
970,317

 
$
1,024,363




EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine Months Ended June 30,
 
2018
 
2017
 
 
 
 
 
(Unaudited)
 
(in thousands)
Operating activities:
 
 
 
Net income
$
37,846

 
$
20,096

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
18,298

 
18,246

Amortization of debt discount and deferred financing costs
12,126

 
8,595

Accretion of notes receivable discount and deferred compensation fee
(7,222
)
 
(2,898
)
Deferred income taxes
3,135

 
(871
)
Other adjustments
1,948

 
1,397

Stock compensation expense
8,216

 
5,145

Income from investment in unconsolidated affiliate
(3,477
)
 
(3,768
)
Changes in operating assets and liabilities, net of business acquisitions:
 
 
 
Service charges and fees receivable
1,601

 
604

Inventory
988

 
1,470

Prepaid expenses, other current assets and other assets
(3,617
)
 
6,808

Accounts payable, accrued expenses and other liabilities
(4,313
)
 
(29,464
)
Customer layaway deposits
935

 
288

Income taxes, net of excess tax benefit from stock compensation
2,586

 
9,873

Net cash provided by operating activities
69,050

 
35,521

Investing activities:
 
 
 
Loans made
(512,914
)
 
(472,676
)
Loans repaid
318,636

 
288,833

Recovery of pawn loan principal through sale of forfeited collateral
202,078

 
187,819

Additions to property and equipment and capitalized labor, net
(33,917
)
 
(14,887
)
Acquisitions, net of cash acquired
(93,165
)
 
—

Investment in unconsolidated affiliate
(14,036
)
 
—

Principal collections on notes receivable
16,210

 
23,336

Net cash (used in) provided by investing activities
(117,108
)
 
12,425

Financing activities:
 
 
 
Taxes paid related to net share settlement of equity awards
(311
)
 
(767
)
Proceeds from borrowings, net of issuance costs and other
170,468

 
—

Net cash provided by (used in) financing activities
170,157

 
(767
)
Effect of exchange rate changes on cash and cash equivalents
(1,461
)
 
813

Net increase in cash and cash equivalents
120,638

 
47,992

Cash and cash equivalents at beginning of period
164,393

 
65,737

Cash and cash equivalents at end of period
$
285,031

 
$
113,729





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended June 30, 2018
  
U.S. Pawn
 
Latin America Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
83,898

 
$
20,839

 
$
—

 
$
104,737

 
$
—

 
$
104,737

Jewelry scrapping sales
17,813

 
2,615

 
—

 
20,428

 
—

 
20,428

Pawn service charges
55,620

 
17,254

 
—

 
72,874

 
—

 
72,874

Other revenues
55

 
245

 
1,603

 
1,903

 
—

 
1,903

Total revenues
157,386

 
40,953

 
1,603

 
199,942

 
—

 
199,942

Merchandise cost of goods sold
52,340

 
14,556

 
—

 
66,896

 
—

 
66,896

Jewelry scrapping cost of goods sold
15,329

 
2,296

 
—

 
17,625

 
—

 
17,625

Other cost of revenues
—

 
—

 
349

 
349

 
—

 
349

Net revenues
89,717

 
24,101

 
1,254

 
115,072

 
—

 
115,072

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
65,257

 
15,097

 
2,678

 
83,032

 
—

 
83,032

Administrative
—

 
—

 
—

 
—

 
13,268

 
13,268

Depreciation and amortization
3,010

 
951

 
48

 
4,009

 
2,115

 
6,124

Loss on sale or disposal of assets
74

 
26

 
—

 
100

 
214

 
314

Interest expense
—

 
3

 
—

 
3

 
7,391

 
7,394

Interest income
—

 
(672
)
 
—

 
(672
)
 
(3,686
)
 
(4,358
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(1,151
)
 
(1,151
)
 
—

 
(1,151
)
Other income
—

 
(103
)
 
—

 
(103
)
 
(5,184
)
 
(5,287
)
Segment contribution (loss)
$
21,376

 
$
8,799

 
$
(321
)
 
$
29,854

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
29,854

 
$
(14,118
)
 
$
15,736




EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended June 30, 2017
  
U.S. Pawn
 
Latin America Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
82,714

 
$
15,207

 
$
—

 
$
97,921

 
$
—

 
$
97,921

Jewelry scrapping sales
17,257

 
384

 
—

 
17,641

 
—

 
17,641

Pawn service charges
56,774

 
9,104

 
—

 
65,878

 
—

 
65,878

Other revenues
50

 
179

 
1,964

 
2,193

 
—

 
2,193

Total revenues
156,795

 
24,874

 
1,964

 
183,633

 
—

 
183,633

Merchandise cost of goods sold
52,488

 
10,127

 
—

 
62,615

 
—

 
62,615

Jewelry scrapping cost of goods sold
14,674

 
336

 
—

 
15,010

 
—

 
15,010

Other cost of revenues
—

 
—

 
453

 
453

 
—

 
453

Net revenues
89,633

 
14,411

 
1,511

 
105,555

 
—

 
105,555

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
63,593

 
8,898

 
1,755

 
74,246

 
—

 
74,246

Administrative
—

 
—

 
—

 
—

 
14,095

 
14,095

Depreciation and amortization
2,210

 
619

 
44

 
2,873

 
2,970

 
5,843

Loss (gain) on sale or disposal of assets
20

 
(3
)
 
—

 
17

 
—

 
17

Interest expense
—

 
2

 
—

 
2

 
5,652

 
5,654

Interest income
—

 
(480
)
 
—

 
(480
)
 
(1,573
)
 
(2,053
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(1,047
)
 
(1,047
)
 
—

 
(1,047
)
Other income
(5
)
 
(24
)
 
(68
)
 
(97
)
 
(2
)
 
(99
)
Segment contribution
$
23,815

 
$
5,399

 
$
827

 
$
30,041

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
30,041

 
$
(21,142
)
 
$
8,899




EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Nine Months Ended June 30, 2018
  
U.S. Pawn
 
Latin America Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
270,145

 
$
63,125

 
$
—

 
$
333,270

 
$
—

 
$
333,270

Jewelry scrapping sales
34,515

 
9,651

 
—

 
44,166

 
—

 
44,166

Pawn service charges
174,439

 
49,162

 
—

 
223,601

 
—

 
223,601

Other revenues
205

 
588

 
5,354

 
6,147

 
—

 
6,147

Total revenues
479,304

 
122,526

 
5,354

 
607,184

 
—

 
607,184

Merchandise cost of goods sold
166,965

 
43,318

 
—

 
210,283

 
—

 
210,283

Jewelry scrapping cost of goods sold
28,683

 
8,853

 
—

 
37,536

 
—

 
37,536

Other cost of revenues
—

 
—

 
1,273

 
1,273

 
—

 
1,273

Net revenues
283,656

 
70,355

 
4,081

 
358,092

 
—

 
358,092

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
196,748

 
44,778

 
7,276

 
248,802

 
—

 
248,802

Administrative
—

 
—

 
—

 
—

 
39,927

 
39,927

Depreciation and amortization
9,340

 
2,712

 
142

 
12,194

 
6,104

 
18,298

Loss on sale or disposal of assets
197

 
31

 
—

 
228

 
225

 
453

Interest expense
—

 
6

 
—

 
6

 
19,064

 
19,070

Interest income
—

 
(2,072
)
 
—

 
(2,072
)
 
(10,824
)
 
(12,896
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(3,477
)
 
(3,477
)
 
—

 
(3,477
)
Other (income) expense
(3
)
 
11

 
(118
)
 
(110
)
 
(5,363
)
 
(5,473
)
Segment contribution
$
77,374

 
$
24,889

 
$
258

 
$
102,521

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
102,521

 
$
(49,133
)
 
$
53,388




EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Nine Months Ended June 30, 2017
  
U.S. Pawn
 
Latin America Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
273,125

 
$
46,547

 
$
—

 
$
319,672

 
$
—

 
$
319,672

Jewelry scrapping sales
35,158

 
2,500

 
—

 
37,658

 
—

 
37,658

Pawn service charges
177,480

 
24,503

 
—

 
201,983

 
—

 
201,983

Other revenues
157

 
457

 
5,958

 
6,572

 
—

 
6,572

Total revenues
485,920

 
74,007

 
5,958

 
565,885

 
—

 
565,885

Merchandise cost of goods sold
173,235

 
31,605

 
—

 
204,840

 
—

 
204,840

Jewelry scrapping cost of goods sold
30,114

 
2,081

 
—

 
32,195

 
—

 
32,195

Other cost of revenues
—

 
—

 
1,433

 
1,433

 
—

 
1,433

Net revenues
282,571

 
40,321

 
4,525

 
327,417

 
—

 
327,417

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
194,499

 
26,439

 
5,414

 
226,352

 
—

 
226,352

Administrative
—

 
—

 
—

 
—

 
41,305

 
41,305

Depreciation and amortization
7,487

 
1,910

 
144

 
9,541

 
8,705

 
18,246

Loss (gain) on sale or disposal of assets
(54
)
 
65

 
—

 
11

 
—

 
11

Interest expense
—

 
7

 
—

 
7

 
16,840

 
16,847

Interest income
—

 
(889
)
 
—

 
(889
)
 
(6,020
)
 
(6,909
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(3,768
)
 
(3,768
)
 
—

 
(3,768
)
Other income
(14
)
 
(61
)
 
(28
)
 
(103
)
 
(191
)
 
(294
)
Segment contribution
$
80,653

 
$
12,850

 
$
2,763

 
$
96,266

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
96,266

 
$
(60,639
)
 
$
35,627




EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
 
Three Months Ended June 30, 2018
 
U.S. Pawn
 
Latin America Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of March 31, 2018
510

 
387

 
27

 
924

New locations opened
—

 
2

 
—

 
2

Locations acquired
—

 
63

 
—

 
63

Locations sold, combined or closed
—

 
(1
)
 
—

 
(1
)
As of June 30, 2018
510

 
451

 
27

 
988

 
Three Months Ended June 30, 2017
 
U.S. Pawn
 
Latin America Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of March 31, 2017
517

 
240

 
27

 
784

New locations opened
—

 
4

 
—

 
4

Locations sold, combined or closed
(2
)
 
—

 
—

 
(2
)
As of June 30, 2017
515

 
244

 
27

 
786

 
Nine Months Ended June 30, 2018
 
U.S. Pawn
 
Latin America Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of September 30, 2017
513

 
246

 
27

 
786

New locations opened
—

 
10

 
—

 
10

Locations acquired
—

 
196

 
—

 
196

Locations sold, combined or closed
(3
)
 
(1
)
 
—

 
(4
)
As of June 30, 2018
510

 
451

 
27

 
988

 
Nine Months Ended June 30, 2017
 
U.S. Pawn
 
Latin America Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of September 30, 2016
520

 
239

 
27

 
786

New locations opened
—

 
6

 
—

 
6

Locations sold, combined or closed
(5
)
 
(1
)
 
—

 
(6
)
As of June 30, 2017
515

 
244

 
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 three and nine months ended June 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 June 30, 2018 and 2017 was 19.9 to 1 and 18.0 to 1, respectively. The approximate average Mexican peso to U.S. dollar exchange rate for the three months ended June 30, 2018 and 2017 was 19.4 to 1 and 18.6 to 1, respectively. The approximate average Mexican peso to U.S. dollar exchange rate for the nine months ended June 30, 2018 and 2017 was 19.0 to 1 and 19.5 to 1, 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 three and nine months ended June 30, 2018.



Miscellaneous Non-GAAP Financial Measures
 
Three Months Ended June 30,
 
Change
 
2018
 
2017
 
 
 
 
 
 
 
 
(in millions)
 
 
Net income from continuing operations attributable to EZCORP
$
14.5

 
$
5.5

 
163
 %
Gain on litigation settlement, net of tax impact
(3.6
)
 
—

 
 
Non-recurring tax benefit
(3.3
)
 
—

 
 
CFO severance, net of tax impact
—

 
0.6

 
 
Acquisition expenses, net of tax impact
0.1

 
0.2

 
 
Currency exchange rate fluctuations
0.3

 
—

 
 
Adjusted net income from continuing operations attributable to EZCORP
$
8.0

 
$
6.3

 
27
 %
 
 
 
 
 
 
Basic earnings per share
$
0.27

 
$
0.10

 
170
 %
Gain on litigation settlement, net of tax impact per share
(0.06
)
 
—

 
 
Non-recurring tax benefit per share
(0.06
)
 
—

 
 
CFO severance, net of tax impact per share
—

 
0.02

 
 
Adjusted basic earnings per share
$
0.15

 
$
0.12

 
25
 %
 
 
 
 
 
 
Diluted earnings per share
$
0.25

 
$
0.10

 
150
 %
Gain on litigation settlement, net of tax impact per share
(0.06
)
 
—

 
 
Non-recurring tax benefit per share
(0.05
)
 
—

 
 
CFO severance, net of tax impact per share
—

 
0.02

 
 
Adjusted diluted earnings per share
$
0.14

 
$
0.12

 
17
 %
 
 
 
 
 
 
U.S. Pawn same store PLO
$
143.2

 
$
147.3

 
(3
)%
U.S. Pawn same store PLO for Hurricanes Harvey and Irma impacted stores
(45.9
)
 
(48.8
)
 
 
U.S. Pawn adjusted same store PLO
$
97.3

 
$
98.5

 
(1
)%



 
U.S. Dollar Amount
 
Percentage Change YOY
 
 
 
 
 
(in millions)
 
 
Latin America Pawn same store PLO as of June 30, 2018
$
18.9

 
(2
)%
Currency exchange rate fluctuations
1.9

 
 
Constant currency Latin America Pawn same store PLO as of June 30, 2018
$
20.8

 
8
 %
 
 
 
 
Latin America Pawn same store PLO
$
19.0

 
16
 %
Currency exchange rate fluctuations
(0.6
)
 
 
Constant currency Latin America Pawn same store PLO
$
18.4

 
13
 %
 
 
 
 
Latin America Pawn net revenue (three months ended June 30, 2018)
$
24.1

 
67
 %
Currency exchange rate fluctuations
0.8

 
 
Constant currency Latin America Pawn net revenue (three months ended June 30, 2018)
$
24.9

 
73
 %
 
 
 
 
Latin America Pawn segment profit before tax (three months ended June 30, 2018)
$
8.8

 
63
 %
Currency exchange rate fluctuations
0.2

 
 
Constant currency Latin America Pawn segment profit before tax (three months ended June 30, 2018)
$
9.0

 
66
 %
 
 
 
 
Consolidated net revenue (three months ended June 30, 2018)
$
115.1

 
9
 %
Currency exchange rate fluctuations
0.7

 
 
Constant currency consolidated net revenue (three months ended June 30, 2018)
$
115.8

 
10
 %
 
 
 
 
Consolidated PSC revenue (three months ended June 30, 2018)
$
72.9

 
11
 %
Currency exchange rate fluctuations
0.5

 
 
Constant currency consolidated PSC revenue (three months ended June 30, 2018)
$
73.4

 
11
 %
 
 
 
 
Consolidated merchandise sales (three months ended June 30, 2018)
$
104.7

 
7
 %
Currency exchange rate fluctuations
0.8

 
 
Constant currency consolidated merchandise sales (three months ended June 30, 2018)
$
105.5

 
8
 %
 
 
 
 
Consolidated operations expenses (three months ended June 30, 2018)
$
83.0

 
12
 %
Currency exchange rate fluctuations
0.5

 
 
Constant currency consolidated operations expenses (three months ended June 30, 2018)
$
83.5

 
12
 %
 
 
 
 
Latin America Pawn segment profit before tax (nine months ended June 30, 2018)
$
24.9

 
94
 %
Currency exchange rate fluctuations
(0.5
)
 
 
Constant currency Latin America Pawn segment profit before tax (nine months ended June 30, 2018)
$
24.4

 
90
 %
 
 
 
 
Latin America Pawn PLO as of June 30, 2018
$
39.3

 
102
 %
Currency exchange rate fluctuations
2.6

 
 
Constant currency Latin America Pawn PLO as of June 30, 2018
$
41.9

 
116
 %
 
 
 
 
Latin America Pawn PSC revenue (three months ended June 30, 2018)
$
17.3

 
90
 %
Currency exchange rate fluctuations
0.5

 
 
Constant currency Latin America Pawn PSC revenue (three months ended June 30, 2018)
$
17.8

 
95
 %
 
 
 
 
Latin America Pawn merchandise sales (three months ended June 30, 2018)
$
20.8

 
37
 %
Currency exchange rate fluctuations
0.8

 
 
Constant currency Latin America Pawn merchandise sales (three months ended June 30, 2018)
$
21.6

 
42
 %
 
 
 
 
Latin America Pawn same store merchandise sales (three months ended June 30, 2018)
$
15.9

 
5
 %
Currency exchange rate fluctuations
0.8

 
 
Constant currency Latin America Pawn same store merchandise sales (three months ended June 30, 2018)
$
16.7

 
11
 %