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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): June 27, 2013
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EZCORP, Inc.
(Exact name of registrant as specified in its charter)
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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
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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 July 1, 2013, EZCORP, Inc. (the “Company”) issued a press release containing preliminary information regarding the results of operations for its third fiscal quarter (which ended June 30, 2013) and its current fiscal year (which ends September 30, 2013), as well as information about the Plan described in “Item 2.05 ― Costs Associated with Exit or Disposal Activities.” A copy of that press release is attached as Exhibit 99.1.
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 the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 2.05 — Costs Associated with Exit or Disposal Activities
On June 27, 2013, the Company’s Board of Directors, on management’s recommendation, approved a plan to exit certain components of the Company’s business and, in connection therewith, to eliminate certain positions and terminate the employment of certain employees (the “Plan”).
Under the Plan, the Company will close 107 stores, consisting of the following:
• | 29 stores in Canada — The Company’s business in Canada is in the process of transitioning to an integrated buy/sell and financial services model under the Company’s preferred “store-within-a-store” (SWS) format. The affected stores are stores that are not optimal for that model due to location or size. |
• | 57 stores in Mexico — The affected stores include 52 jewelry-only stores operating under the Empeñe su Oro brand and 5 full-service stores operating under the Empeño Fácil brand where the footprint is not optimal to house the SWS model. |
• | 21 stores in the U.S. — The affected stores include 20 financial services locations (15 in Dallas and 5 in Florida) where the regulatory environment makes the business unprofitable or marginally profitable, and one jewelry-only test store located in Austin. |
The Plan also contemplates the elimination of approximately 300 employment positions in connection with these store closures. Of the affected employees, the Company expects to place approximately 85 into other jobs within the Company and terminate the employment of the others.
The Company expects that the costs associated with the Plan to be between $21.0 million and $24.0 million, consisting of the following:
• | Lease termination costs — $8.0 million to $9.0 million; |
• | Employee severance costs — $1.0 million to $1.5 million; and |
• | Asset charges — $12.0 million to $13.5 million. |
Lease termination costs include the costs incurred to terminate the existing leases in the affected stores. Employee severance costs include one-time termination benefits to be paid to employees whose employment is terminated as a result of the Plan. Asset charges include write-offs and write-downs for loan balances, inventory and furniture, fixtures and equipment. The lease termination costs and the employees severance costs (totaling $9.0 million to $10.5 million) represent future cash expenditures. The Company expects that the Plan will result in a one-time, pre-tax charge in the range of $21 million to $24 million, which will be recorded in its third fiscal quarter.
The Company expects that the Plan will be substantially completed by December 31, 2013.
Item 9.01 — Financial Statements and Exhibits.
(d) Exhibits.
99.1 | Press Release, dated July 1, 2013, containing preliminary information regarding results of operations and information regarding exit plan |
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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: | July 1, 2013 | By: | /s/ THOMAS H. WELCH, JR. | ||||
Thomas H. Welch, Jr. | |||||||
Senior Vice President, | |||||||
General Counsel and Secretary | |||||||
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EZCORP ANNOUNCES KEY BUSINESS DEVELOPMENTS
AUSTIN, TEXAS (July 1, 2013) - EZCORP, Inc. (NASDAQ: EZPW), a leading provider of instant cash solutions for consumers, today announced that because of the precipitous decline in gold prices and the subsequent decline in gross margins on gold scrapping, the company does not expect to achieve its previously announced guidance for its third fiscal quarter ended June 30, 2013, and its current fiscal year ending September 30. The company expects the impact on earnings per share will be in excess of 35 cents in the second half of the fiscal year. The company had indicated in its second quarter earnings release that a continuation of the challenging environment would likely lead to earnings in the lower end of its guidance range, and since then the price of gold has dropped much further.
“We continue to have a very large and successful gold business and expect that we will monetize more gold through our retail sales channels where margins are substantially higher than our scrap margins,” said Paul Rothamel, EZCORP's President and CEO. “As a result of these changes in our marketplace, we are accelerating our consolidated strategic plan to diversify our business across geographies, channels, and products. This will help to insulate us against these types of short-term external impacts.”
The company also announced that as a part of the accelerated strategic plan, it will close more than 100 legacy stores in a variety of locations. These stores are generally older, smaller stores, which do not fit the company's preferred “store within a store” (SWS) format.
“While we are trimming back these locations, the overall company will continue to grow by adding 185 new stores within this fiscal year, broadening our online selling and lending channels, and adding numerous new products across our portfolio of companies to better serve our customers in the formats they desire with the products and services they want,” said Rothamel.
The store closings primarily include:
• | 57 stores in Mexico, 52 of which are small, jewelry-only formats. The company will continue to operate 235 full-service SWS stores under the Empeño Fácil brand, and expects to continue its rapid storefront growth in Mexico, ending the fiscal year with approximately 245 locations. Neither Empeño Fácil nor Grupo Finmart, the company's payroll withholding loan business, are gold dependent and together they make up the fastest growing segment in the company. |
• | 29 stores in Canada, where the company's business is in the process of transitioning to an integrated buy/sell and financial services model under the Cash Converters brand. The affected stores are stores that are not optimal for that model because of location or size. The company will continue to operate 46 full-service buy/sell and financial service center stores under the Cash Converters brand in Canada and the United States. |
The company expects these actions will result in a one-time pre-tax charge in the range of $21 million to $24 million, which will be recorded in its third fiscal quarter.
Further details on the reorganization, the one-time charge and the financial effect of the discontinued operations will be included in EZCORP's third quarter financial results that will be issued on July 30, 2013 and in its Form 10-Q filing with the Securities and Exchange Commission.
About EZCORP
EZCORP is a leading provider of instant cash solutions for consumers, employing approximately 7,800 teammates and operating over 1,300 company-operated pawn, buy/sell and personal financial services locations in the U.S., Mexico and Canada. We provide a variety of instant cash solutions, including pawn loans, consumer loans and fee-based credit services to customers seeking loans. At our pawn and buy/sell stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.
EZCORP owns controlling interests in Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. (doing business under the names "Crediamigo" and "Adex"), a leading provider of payroll deduction loans in Mexico; in Ariste Holding Limited (doing business under the name "Cash Genie"), a leading provider of online loans in the U.K.; and in Renueva Commercial, S.A.P.I. de C.V., an operator of buy/sell stores in Mexico under the name "TUYO." The company also has significant investments in Albemarle &
Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 180 full-line stores offering pawnbroking, jewelry retailing, gold buying and financial services; and in Cash Converters International Limited (CCV.ASX), which franchises and operates a worldwide network of over 700 stores that provide personal financial services and sell pre-owned merchandise.
For the latest information on EZCORP, please visit our website at: www.ezcorp.com.
Forward-Looking Statements
This announcement contains certain forward-looking statements regarding the company's expected operating and financial performance for future periods, including expected future earnings and growth rates. 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 changes in the regulatory environment, changing market conditions in the overall economy and the industry, fluctuations in gold prices or the desire of our customers to pawn or sell their gold items, and consumer demand for the company's services and merchandise. 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.
EZCORP Investor Relations
(512) 314-2220
Investor_Relations@ezcorp.com
http://investors.ezcorp.com/
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