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

 

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.)

1901 Capital Parkway, Austin, 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))

 

 

Item 2.02 — Results of Operations and Financial Condition

On November 4, 2010, EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the fourth fiscal quarter and 2010 fiscal year ended September 30, 2010. A copy of that press release is attached as Exhibit 99.1.

As used herein, “GAAP” refers to accounting principles generally accepted in the United States.

The press release furnished in Exhibit 99.1 presents expected earnings per share for fiscal 2011 on a non-GAAP basis, as well as expected earnings per share for fiscal 2011 on a GAAP basis and information sufficient to reconcile the non-GAAP measure to the GAAP measure. This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for the corresponding GAAP measure.

As noted in the press release, the only difference between the presented non-GAAP measure and the GAAP measure is the exclusion of the affect of a one-time charge related to the retirement of the Company’s former Chief Executive Officer. The Company believes that excluding this one-time charge from the Company’s expected GAAP results allows management and investors to better understand the Company’s financial performance from period to period and in relation to the Company’s operating results, as management does not believe that the excluded one-time charge is reflective of underlying operating performance. The presentation of this non-GAAP financial measure facilitates an enhanced understanding of the Company’s expected performance and enables more meaningful period-to-period comparisons.

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 9.01 Financial Statements and Exhibits.

(d)

Exhibits.

99.1

Press Release, dated November 4, 2010, announcing EZCORP, Inc.’s results of operations and financial condition for the fourth fiscal quarter and 2010 fiscal year ended September 30, 2010.

SIGNATURE

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.

     EXHIBIT INDEX

Exhibit
No.				Description of Exhibit
	99.1			Press Release, dated November 4, 2010, announcing EZCORP, Inc.’s results of operations and financial condition for the fourth fiscal quarter and 2010 fiscal year ended September 30, 2010.

EXHIBIT 99.1

EZCORP REPORTS RECORD EARNINGS
Annual Net Income Increases 42%

AUSTIN, Texas (November 4, 2010) — EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty financial services, today announced results for its fourth fiscal quarter and 2010 fiscal year ended September 30, 2010.

EZCORP’s net income for the quarter increased 33% to $27.9 million ($0.56 per share) compared to $20.9 million ($0.42 per share) for the prior year quarter. Total revenues for the quarter increased 20% over the prior year period to $198.2 million.

Consolidated operating income improved 32% to $40.1 million (33% of net revenue) from $30.3 million (31% of net revenue) in the prior year quarter. Store level operating income improved $9.3 million in the Company’s U.S. Pawn operations, $0.4 million in its Empeño Fácil Mexico Pawn segment and $3.9 million in its EZMONEY operations.

For the fiscal year ended September 30, 2010, net income increased 42% to a record $97.3 million ($1.96 per share) compared to $68.5 million ($1.42 per share) for the prior year. Total revenues grew 23% to $733.0 million while operating income increased 40% to $141.9 million. The pre-tax contribution from the Company’s strategic affiliates, Albemarle & Bond and Cash Converters International, increased to $10.8 million from $5.0 million in the prior year.

Commenting on these results, President and Chief Executive Officer, Paul Rothamel, stated, “We are pleased to report another record year, with strong contributions from each of our operating segments. The keys to our successful year were driving strong top-line revenue growth, further leveraging our expense base to enhance margins, effectively managing bad debt to record lows, and the strong, quality growth in our earning assets. Overall, we delivered a 21% return on equity for the year.”

Rothamel concluded, “In a year of significant transition at the top of the organization, the EZCORP team members delivered another outstanding performance. We had strong earnings growth, opened or acquired 127 new stores in the U.S., Mexico and Canada and acquired a 33% stake in Cash Converters, all while reducing our long term debt and maintaining a strong balance sheet.”

The Company expects fiscal 2011 earnings per share to increase approximately 20% to $2.35, excluding the one-time charge described below.

As previously announced, in the first quarter of fiscal 2011, the Company will record a pre-tax charge of approximately $10.8 million related to the retirement of its former Chief Executive Officer, including $3.4 million attributable to cash payments and $7.4 million attributable to the vesting of restricted stock. After taxes, the charge will be approximately $7.0 million, or $0.14 per share, resulting in expected earnings per share for fiscal 2011 of approximately $2.21 on a GAAP basis.

ABOUT EZCORP

EZCORP is a leading provider of specialty consumer financial services. It provides collateralized non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans including payday loans, installment loans and auto title loans, or fee-based credit services to customers seeking loans. At its pawn stores, the company also sells merchandise, primarily collateral forfeited from its pawn lending operations.

EZCORP operates more than 1,000 stores, including over 500 pawn stores in the U.S. and Mexico and over 500 short-term consumer loan stores in the U.S. and Canada. The company also has significant investments in Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.’s largest pawnbroking businesses with over 120 stores, and Cash Converters International Limited (CCV.L and CCV.AUS), which franchises and operates a worldwide network of over 500 stores that provide financial services and sell pre-owned merchandise.

Special Note Regarding Forward-Looking Statements

This announcement contains certain forward-looking statements regarding the Company’s expected operating and financial performance for future periods, including new store expansion and expected future earnings. These statements are based on the Company’s current expectations. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including changing market conditions in the overall economy and the industry, consumer demand for the Company’s services and merchandise, actions of third parties who offer services and products in the Company’s locations and changes in the regulatory environment. 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.

For additional information, contact Investor Relations at (512) 314-2220.

EZCORP, Inc.
Highlights of Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data and percents)

		Three Months Ended September 30,								Increase				Percent
		2010				2009				(Decrease)				Change
Revenues:
Merchandise sales		$	52,670			$	48,381			$	4,289				8.9
Jewelry scrapping sales			53,968				40,313				13,655				33.9
Pawn service charges			45,168				37,392				7,776				20.8
Signature loan fees			36,699				34,935				1,764				5.0
Auto title loan fees			5,991				1,923				4,068				211.5
Other			3,672				1,857				1,815				97.7
Total revenues			198,168				164,801				33,367				20.2
Cost of goods sold:
Cost of merchandise sales			32,229				30,214				2,015				6.7
Cost of jewelry scrapping sales			35,176				25,559				9,617				37.6
Total cost of goods sold			67,405				55,773				11,632				20.9
Bad debt:
Signature loan bad debt			9,605				10,379				(774	)			(7.5	)
Auto title loan bad debt			1,119				227				892				393.0
Total bad debt			10,724				10,606				118				1.1
Net revenue			120,039				98,422				21,617				22.0
Operations expense			62,326				54,282				8,044				14.8
Administrative expense			13,384				10,605				2,779				26.2
Depreciation and amortization			3,973				3,275				698				21.3
(Gain) / Loss on sale/disposal of assets			227				(57	)			284				(498.2	)
Operating income			40,129				30,317				9,812				32.4
Interest income			(35	)			(24	)			(11	)			45.8
Interest expense			314				361				(47	)			(13.0	)
Equity in net income of unconsolidated affiliates			(3,231	)			(1,853	)			(1,378	)			74.4
Other			10				—				10				—
Income before income taxes			43,071				31,833				11,238				35.3
Income tax expense			15,219				10,894				4,325				39.7
Net income		$	27,852			$	20,939			$	6,913				33.0
Net income per share, diluted		$	0.56			$	0.42			$	0.14				33.3
Weighted average shares, diluted			49,672				49,287

										Amount or
										Percentage Point (ppt)
OTHER DATA:										Increase (Decrease)
Gross margin on merchandise sales			38.8	%			37.5	%			1.3			ppts
Gross margin on jewelry scrapping sales			34.8	%			36.6	%			(1.8	)		ppts
Gross margin on total sales			36.8	%			37.1	%			(0.3	)		ppts
Signature loan bad debt as percent of fees			26.2	%			29.7	%			(3.5	)		ppts
Auto title loan bad debt as percent of fees			18.7	%			11.8	%			6.9			ppts
Annualized inventory turnover			4.0				3.6				0.4
Operating income margin			33.4	%			30.8	%			2.6			ppts

EZCORP, Inc.
Highlights of Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data and percents)

		Year Ended September 30,								Increase				Percent
		2010				2009				(Decrease)				Change
Revenues:
Merchandise sales		$	228,120			$	204,674			$	23,446				11.5
Jewelry scrapping sales			171,411				118,922				52,489				44.1
Pawn service charges			163,695				130,169				33,526				25.8
Signature loan fees			139,315				133,344				5,971				4.5
Auto title loan fees			17,707				3,589				14,118				393.4
Other			12,797				6,758				6,039				89.4
Total revenues			733,045				597,456				135,589				22.7
Cost of goods sold:
Cost of merchandise sales			140,284				126,562				13,722				10.8
Cost of jewelry scrapping sales			110,838				77,027				33,811				43.9
Total cost of goods sold			251,122				203,589				47,533				23.3
Bad debt:
Signature loan bad debt			31,709				33,553				(1,844	)			(5.5	)
Auto title loan bad debt			2,735				380				2,355				619.7
Total bad debt			34,444				33,933				511				1.5
Net revenue			447,479				359,934				87,545				24.3
Operations expense			236,664				206,237				30,427				14.8
Administrative expense			52,740				40,497				12,243				30.2
Depreciation and amortization			14,661				12,746				1,915				15.0
(Gain) / Loss on sale/disposal of assets			1,528				(1,024	)			2,552				(249.2	)
Operating income			141,886				101,478				40,408				39.8
Interest income			(186	)			(281	)			95				(33.8	)
Interest expense			1,385				1,425				(40	)			(2.8	)
Equity in net income of unconsolidated affiliates			(10,750	)			(5,016	)			(5,734	)			114.3
Other			(93	)			38				(131	)			(344.7	)
Income before income taxes			151,530				105,312				46,218				43.9
Income tax expense			54,236				36,840				17,396				47.2
Net income		$	97,294			$	68,472			$	28,822				42.1
Net income per share, diluted		$	1.96			$	1.42			$	0.54				38.0
Weighted average shares, diluted			49,576				48,076

										Amount or
										Percentage Point (ppt)
OTHER DATA:										Increase (Decrease)
Gross margin on merchandise sales			38.5	%			38.2	%			0.3			ppts
Gross margin on jewelry scrapping sales			35.3	%			35.2	%			0.1			ppts
Gross margin on total sales			37.1	%			37.1	%			0.0			ppts
Signature loan bad debt as percent of fees			22.8	%			25.2	%			(2.4	)		ppts
Auto title loan bad debt as percent of fees			15.4	%			10.6	%			4.8			ppts
Annualized inventory turnover			4.0				3.6				0.4
Operating income margin			31.7	%			28.2	%			3.5			ppts

EZCORP, Inc.
Highlights of Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data and store counts)

		September 30,
		2010				2009
Assets:
Current assets:
Cash and cash equivalents		$	25,854			$	44,764
Pawn loans			121,201				101,684
Signature loans, net			10,775				8,357
Auto title loans, net			3,145				1,663
Pawn service charges receivable, net			21,626				18,187
Signature loan fees receivable, net			5,818				5,599
Auto title loan fees receivable, net			1,616				529
Inventory, net			71,502				64,001
Deferred tax asset			23,208				15,670
Prepaid expenses and other assets			17,427				16,927
Total current assets			302,172				277,381
Investments in unconsolidated affiliates			101,386				38,851
Property and equipment, net			62,293				51,154
Deferred tax asset, non-current			60				6,311
Goodwill			117,305				100,719
Other assets, net			23,196				18,101
Total assets		$	606,412			$	492,517
Liabilities and stockholders’ equity:
Current liabilities:
Current maturities of long-term debt		$	10,000			$	10,000
Accounts payable and other accrued expenses			49,663				33,838
Customer layaway deposits			6,109				4,175
Federal income taxes payable			3,687				572
Total current liabilities			69,459				48,585
Long-term debt, less current maturities			15,000				25,000
Deferred gains and other long-term liabilities			2,525				3,247
Total stockholders’ equity			519,428				415,685
Total liabilities and stockholders’ equity		$	606,412			$	492,517
Pawn loan balance per ending pawn store		$	240			$	236
Inventory per ending pawn store		$	142			$	148
Book value per share		$	10.55			$	8.54
Tangible book value per share		$	7.83			$	6.14
Pawn store count — end of period			505				431
Signature loan store count — end of period			501				479
Shares outstanding — end of period			49,226				48,703

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

		U.S. Pawn				Empeño				EZMONEY
		Operations				Fácil				Operations				Consolidated
Three months ended September 30, 2010:
Revenues:
Merchandise Sales		$	48,944			$	3,726			$	—			$	52,670
Scrap Sales			51,007				2,839				122				53,968
Pawn service charges			42,294				2,874				—				45,168
Signature loan fees			488				—				36,211				36,699
Auto title loan fees			398				—				5,593				5,991
Other			3,497				162				13				3,672
Total revenues			146,628				9,601				41,939				198,168
Merchandise cost of goods sold			30,112				2,117				—				32,229
Scrap cost of goods sold			32,896				2,226				54				35,176
Signature loan bad debt			195				—				9,410				9,605
Auto title loan bad debt			70				—				1,049				1,119
Net revenues			83,355				5,258				31,426				120,039
Operations expense			41,886				3,922				16,518				62,326
Store operating income		$	41,469			$	1,336			$	14,908			$	57,713
Gross margin on merchandise sales			38.5	%			43.2	%			N/A				38.8	%
Gross margin on scrap sales			35.5	%			21.6	%			55.7	%			34.8	%
Gross margin on total sales			37.0	%			33.8	%			55.7	%			36.8	%
Annualized inventory turnover			4.0				4.0				N/A				4.0
Signature loan bad debt as percent of fees			40.0	%			N/A				26.0	%			26.2	%
Auto title loan bad debt as percent of fees			17.6	%			N/A				18.8	%			18.7	%
Store operating income margin			49.7	%			25.4	%			47.4	%			48.1	%
Pawn store count — end of period			390				115				—				505
Signature loan store count — end of period			6				—				495				501
Three months ended September 30, 2009:
Revenues:
Merchandise Sales		$	45,909			$	2,472			$	—			$	48,381
Scrap Sales			39,645				659				9				40,313
Pawn service charges			35,838				1,554				—				37,392
Signature loan fees			527				—				34,408				34,935
Auto title loan fees			322				—				1,601				1,923
Other			1,780				77				—				1,857
Total revenues			124,021				4,762				36,018				164,801
Merchandise cost of goods sold			28,649				1,565				—				30,214
Scrap cost of goods sold			25,098				455				6				25,559
Signature loan bad debt			247				—				10,132				10,379
Auto title loan bad debt			52				—				175				227
Net revenues			69,975				2,742				25,705				98,422
Operations expense			37,761				1,809				14,712				54,282
Store operating income		$	32,214			$	933			$	10,993			$	44,140
Gross margin on merchandise sales			37.6	%			36.7	%			N/A				37.5	%
Gross margin on scrap sales			36.7	%			31.0	%			33.3	%			36.6	%
Gross margin on total sales			37.2	%			35.5	%			33.3	%			37.1	%
Annualized inventory turnover			3.6				2.7				N/A				3.6
Signature loan bad debt as percent of fees			46.9	%			N/A				29.4	%			29.7	%
Auto title loan bad debt as percent of fees			16.1	%			N/A				10.9	%			11.8	%
Store operating income margin			46.0	%			34.0	%			42.8	%			44.8	%
Pawn store count — end of period			369				62				—				431
Signature loan store count — end of period			6				—				473				479

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

		U.S. Pawn				Empeño				EZMONEY
		Operations				Fácil				Operations				Consolidated
Year ended September 30, 2010:
Revenues:
Merchandise Sales		$	214,598			$	13,522			$	—			$	228,120
Scrap Sales			163,667				7,389				355				171,411
Pawn service charges			154,505				9,190				—				163,695
Signature loan fees			1,930				—				137,385				139,315
Auto title loan fees			1,659				—				16,048				17,707
Other			12,268				508				21				12,797
Total revenues			548,627				30,609				153,809				733,045
Merchandise cost of goods sold			131,825				8,459				—				140,284
Scrap cost of goods sold			104,531				6,137				170				110,838
Signature loan bad debt			641				—				31,068				31,709
Auto title loan bad debt			236				—				2,499				2,735
Net revenues			311,394				16,013				120,072				447,479
Operations expense			161,145				11,658				63,861				236,664
Store operating income		$	150,249			$	4,355			$	56,211			$	210,815
Gross margin on merchandise sales			38.6	%			37.4	%			N/A				38.5	%
Gross margin on scrap sales			36.1	%			16.9	%			52.1	%			35.3	%
Gross margin on total sales			37.5	%			30.2	%			52.1	%			37.1	%
Annualized inventory turnover			3.9				4.3				N/A				4.0
Signature loan bad debt as percent of fees			33.2	%			N/A				22.6	%			22.8	%
Auto title loan bad debt as percent of fees			14.2	%			N/A				15.6	%			15.4	%
Store operating income margin			48.3	%			27.2	%			46.8	%			47.1	%
Pawn store count — end of period			390				115				—				505
Signature loan store count — end of period			6				—				495				501
Year ended September 30, 2009:
Revenues:
Merchandise Sales		$	196,035			$	8,639			$	—			$	204,674
Scrap Sales			117,013				1,900				9				118,922
Pawn service charges			124,396				5,773				—				130,169
Signature loan fees			2,293				—				131,051				133,344
Auto title loan fees			1,313				—				2,276				3,589
Other			6,646				112				—				6,758
Total revenues			447,696				16,424				133,336				597,456
Merchandise cost of goods sold			121,170				5,392				—				126,562
Scrap cost of goods sold			75,744				1,277				6				77,027
Signature loan bad debt			828				—				32,725				33,553
Auto title loan bad debt			124				—				256				380
Net revenues			249,830				9,755				100,349				359,934
Operations expense			140,525				5,833				59,879				206,237
Store operating income		$	109,305			$	3,922			$	40,470			$	153,697
Gross margin on merchandise sales			38.2	%			37.6	%			N/A				38.2	%
Gross margin on scrap sales			35.3	%			32.8	%			33.3	%			35.2	%
Gross margin on total sales			37.1	%			36.7	%			33.3	%			37.1	%
Annualized inventory turnover			3.7				2.4				N/A				3.6
Signature loan bad debt as percent of fees			36.1	%			N/A				25.0	%			25.2	%
Auto title loan bad debt as percent of fees			9.4	%			N/A				11.2	%			10.6	%
Store operating income margin			43.8	%			40.2	%			40.3	%			42.7	%
Pawn store count — end of period			369				62				—				431
Signature loan store count — end of period			6				—				473				479