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): April 29, 2014
_______________________________________________
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 April 29, 2014 EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the second fiscal quarter and six month period ended March 31, 2014. 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 the financial results in accordance with GAAP. In addition, segment contribution, income from continuing operations, net income, net income attributable to EZCORP, Inc. and earnings per share for the three and six months ended March 31, 2014 and 2013 are also presented on a non-GAAP basis. Information sufficient to reconcile the non-GAAP measure to the GAAP measure is also presented. This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for the corresponding GAAP measure.
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 April 29, 2014, announcing EZCORP, Inc.’s results of operations and financial condition for the second fiscal quarter and six month period ended March 31, 2014. |
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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.
EZCORP, INC. | |||||||
Date: | April 29, 2014 | By: | /s/ Mark Kuchenrither | ||||
Mark Kuchenrither | |||||||
Executive Vice President and Chief Financial Officer | |||||||
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EXHIBIT INDEX
Exhibit No. | Description of Exhibit | |
99.1 | Press Release, dated April 29, 2014, announcing EZCORP, Inc.’s results of operations and financial condition for the second fiscal quarter and six month period ended March 31, 2014. | |
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Exhibit 99.1
EZCORP REPORTS SECOND QUARTER REVENUES OF $260 MILLION
GAAP Earnings Per Share of $0.15, Adjusted Earnings Per Share of $0.36
AUSTIN, Texas (April 29, 2014) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of easy cash solutions for consumers, today announced its financial results for the second quarter of fiscal 2014.
For the quarter, total revenues were $260 million, with net income of $8 million and earnings per share of $0.15. Excluding the negative impact of certain one-time charges discussed below, as well as minimal losses related to our immature online lending businesses, adjusted net income was $20 million and adjusted earnings per share were $0.36, both non-GAAP measures.
Paul Rothamel, EZCORP’s President and Chief Executive Officer, stated, “We are pleased with the continued momentum demonstrated in our core businesses. From an operations standpoint, the second quarter was consistent with the improving year-over-year revenue and expense trends that we reported in the first quarter. As we discussed previously, we expected these year-over-year financial comparisons to be challenging as our pawn and financial services businesses continue to anniversary gold volume declines and regulatory changes respectively. We also continue to believe those quarterly comparisons will improve significantly in the back half of the year.
“We experienced very strong demand at our storefront jewelry business and saw continued growth in our online retail channel. Demand for our financial service offerings in the U.S. and Mexico was also very strong. Retail margins, jewelry scrap margins and bad debt provisions were all at, or ahead of, our expectations. Our expense reduction initiatives were also on track, delivering the quarter-on-quarter improvement that we expected. The demand for our products is greater than it has ever been, as our customers have fewer alternatives to access immediate cash."
Consolidated Financial Highlights — Second Quarter of Fiscal 2014 vs. Prior Year Quarter
• | Total revenues were $260 million compared to $268 million in the same period last year. Excluding an expected decrease in gold scrapping, total revenues were up 4%, driven by excellent jewelry sales and consumer loan fee growth in the United States and Mexico. |
• | Adjusted net income for the quarter was $20 million, net of the after-tax impacts of the Albemarle & Bond impairment charge ($6 million), the retirement benefit accrual for our long-time Executive Chairman ($6 million) and performance of our online businesses ($0.6 million). |
• | Earning assets, including CSO loans, were $417 million at quarter-end, an increase of 7%, as a result of growth in payroll withholding, installment and auto title loans, as well as inventory in the U.S. |
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• | Cash and cash equivalents, including restricted cash, were $63 million at quarter-end, with debt of $228 million, including $145 million of Grupo Finmart third-party debt, which is non-recourse to EZCORP. |
U.S. & Canada
Pawn —
▪ | Total merchandise sales increased 4% in total and on a same-store basis driven by growth in storefront jewelry sales and strong online performance. Gross margin on merchandise sales remained strong at 39%. Both the merchandise sales and gross margin metrics compare favorably to the U.S. and Canadian marketplace for the quarter. |
▪ | Jewelry sales were very strong, increasing 27% in total and 25% on a same-store basis, with gross margin of 43%. Coupled with our strong performance in the first quarter, jewelry sales growth was 30% in total and 27% on a same-store basis for the first half of the fiscal year. |
▪ | Online sales grew 63% over the same quarter last year and accounted for roughly 8% of the segment’s total merchandise sales. Gross margin remained strong at 44% as compared to 43% for the same quarter last year. |
▪ | Pawn loan balances were $113 million at quarter-end, down 6% in total, driven primarily by a decrease in average loan size related to jewelry. This expected decline moderated in April, and we expect pawn loan balances to stabilize and be roughly flat by the end of the year. |
▪ | Redemption rates were 85%, up 100 basis points compared to a year ago, driven by a 200 basis point increase in the jewelry redemption rate to 89%, while the general merchandise redemption rate remained flat at 79%. |
Financial Services —
• | Total loan balances including CSO loans, net of reserves, were $43 million at quarter-end, a 17% increase over the same quarter last year. This increase was driven by solid growth at our 500 storefronts as well as our online channel. For the quarter, including CSO loans, installment loans were up 77% and auto title loans grew 22% while traditional payday loans declined 12%. |
▪ | Loan fees were $46 million, up 8%. The gap in growth between loan balances and fees year-over-year is the result of a shift in product mix to lower yielding products driven by a competitive marketplace and regulatory impact. We expect to grow loan balances aggressively as consumer demand for our loan products remains high. |
▪ | Bad debt as a percentage of fees was 20%, up 500 basis points driven primarily by the impact of regulatory changes at the local and federal level. Secondarily, new store growth and the online penetration negatively impacted the year-over-year comparisons. We expect both of these factors to moderate over the next several quarters as the new stores naturally mature and online bad debt continues its quarter-over-quarter improvement. |
Latin America
Payroll Withholding Lending —
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▪ | Total fees were $14 million, up 21% as compared to the same period last year. |
▪ | Total loan balances at the end of the quarter were $113 million, up 23%, driven primarily by significant growth in new loan originations and greater penetration in existing contracts. Grupo Finmart now has approximately 100 active contracts providing access to over 6 million customers. |
▪ | Bad debt as a percentage of fees was 3%, ahead of our expectations. |
▪ | Financing activities for the quarter included a structured asset sale by Grupo Finmart and a public securitization of a portion of its receivables. The asset sale accelerated $16 million in cash flow, which was received in April, as well as a $5 million gain included in "Other Revenues." The securitization of $56 million, our second securitization in twelve months, reduced the cost of capital for the receivables financed to 6.3%. We incurred approximately $1 million in expenses during the quarter associated with this securitization. We expect to continue to use these and other types of structured transactions to finance the rapidly growing Grupo Finmart business going forward. |
Pawn —
• | Pawn loan balances were $16 million, down 16%. Pawn service fees were down 7% during the quarter as Empeño Fácil focused on better quality lending. The yield on the loan balance improved 200 basis points to 200%. |
• | Empeño Fácil's merchandise sales decreased 1% compared to last year with margins of 38%. We expect to continue to see a challenging marketplace for the foreseeable future as more jewelry-only providers attempt to enter the general merchandise pawn market. |
Other International
Online Lending —
• | Cash Genie, our U.K. online lending business, reported a nominal operating loss, showing continued improvement as compared to an operating loss of approximately $2 million in the first quarter of fiscal 2014. We expect to spend nearly $1 million in the second half of the year in direct costs associated with the implementation of the new FCA regulations. |
Strategic Affiliates —
• | Our income from affiliates was down $4 million, 88% year-over-year. This decrease was driven by a profit decline at Cash Converters International in the first half of their fiscal year due to the effect of the transition to new regulatory requirements in Australia. Cash Converters recently announced significantly improved performance in their third fiscal quarter which will be reflected in our third quarter results. Income from affiliates was also impacted by a decrease from Albemarle & Bond as it is no longer reporting any earnings. In addition, we adjusted our remaining investment in Albemarle & Bond down to zero, resulting in a $6 million after-tax write off. |
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CEO Commentary
Mr. Rothamel added, “Historically, this time of year is a challenging time for our customers and their need for cash is very high. This usually manifests itself in rapidly growing loan balances at EZCORP, and this year is no different. In fact, based on what we are seeing from our customers, we continue to expect that our year-over-year financial comparisons will improve in the second half of the fiscal year.
"We will continue to focus on our day-to-day execution of our unique loan and retail offerings. We believe that we are well positioned in the marketplace to continue to differentiate ourselves to the sophisticated consumer. We are confident that our strategy and operational efforts will deliver strong shareholder returns over the long term.”
The company provides supplemental information on its website. For additional content, please see "Investor Resources & Supplemental Information" at http://investors.ezcorp.com/.
About EZCORP
EZCORP, Inc. is a leader in delivering easy cash solutions to our customers across channels, products, services and markets. With approximately 7,500 team members and approximately 1,400 locations and branches, we give our customers multiple ways to access instant cash, including pawn loans and consumer loans in the United States, Mexico, Canada and the United Kingdom. We offer these products through four primary channels: in-store, online, at the worksite and through our mobile platform. At our pawn and buy/sell stores and online, 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; 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 a significant investment 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: http://investors.ezcorp.com/.
Forward-Looking Statements
This announcement contains certain forward-looking statements regarding the company’s expected operating and financial performance for future periods. 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 fluctuations in gold prices or the desire of our customers to pawn or sell their gold items, changes in the regulatory environment, changing market conditions in the overall economy and the industry, 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.
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Contact:
Mark Trinske
Vice President, Investor Relations and Communications
EZCORP, Inc.
(512) 314-2220
Investor_Relations@ezcorp.com
http://investors.ezcorp.com/
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EZCORP, Inc.
Highlights of Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues: | |||||||||||||||
Merchandise sales | $ | 103,454 | $ | 100,082 | $ | 209,041 | $ | 194,686 | |||||||
Jewelry scrapping sales | 26,193 | 42,582 | 53,896 | 87,291 | |||||||||||
Pawn service charges | 59,162 | 62,015 | 123,295 | 127,415 | |||||||||||
Consumer loan fees and interest | 64,785 | 60,751 | 131,114 | 123,885 | |||||||||||
Other revenues | 6,106 | 2,684 | 11,711 | 7,498 | |||||||||||
Total revenues | 259,700 | 268,114 | 529,057 | 540,775 | |||||||||||
Merchandise cost of goods sold | 63,857 | 58,716 | 127,445 | 113,661 | |||||||||||
Jewelry scrapping cost of goods sold | 20,111 | 29,311 | 40,131 | 60,616 | |||||||||||
Consumer loan bad debt | 10,422 | 8,457 | 28,854 | 21,978 | |||||||||||
Net revenues | 165,310 | 171,630 | 332,627 | 344,520 | |||||||||||
Operating expenses: | |||||||||||||||
Operations | 108,064 | 101,831 | 220,833 | 205,116 | |||||||||||
Administrative | 20,032 | 8,603 | 35,777 | 22,274 | |||||||||||
Depreciation | 7,539 | 7,071 | 15,005 | 13,631 | |||||||||||
Amortization | 1,975 | 1,316 | 3,915 | 2,030 | |||||||||||
Loss (gain) on sale or disposal of assets | 342 | 13 | (5,948 | ) | 42 | ||||||||||
Total operating expenses | 137,952 | 118,834 | 269,582 | 243,093 | |||||||||||
Operating income | 27,358 | 52,796 | 63,045 | 101,427 | |||||||||||
Interest expense, net | 5,275 | 3,753 | 9,607 | 7,390 | |||||||||||
Equity in net income of unconsolidated affiliates | (492 | ) | (4,125 | ) | (1,763 | ) | (9,163 | ) | |||||||
Impairment of investments | 7,940 | — | 7,940 | — | |||||||||||
Other expense (income) | 1,324 | 405 | 1,156 | (96 | ) | ||||||||||
Income from continuing operations before income taxes | 13,311 | 52,763 | 46,105 | 103,296 | |||||||||||
Income tax expense | 4,204 | 16,273 | 14,085 | 32,945 | |||||||||||
Income from continuing operations, net of tax | 9,107 | 36,490 | 32,020 | 70,351 | |||||||||||
(Loss) income from discontinued operations, net of tax | (40 | ) | (1,610 | ) | 1,442 | (3,316 | ) | ||||||||
Net income | 9,067 | 34,880 | 33,462 | 67,035 | |||||||||||
Net income from continuing operations attributable to redeemable noncontrolling interest | 1,075 | 899 | 2,901 | 2,337 | |||||||||||
Net income attributable to EZCORP, Inc. | $ | 7,992 | $ | 33,981 | $ | 30,561 | $ | 64,698 | |||||||
Diluted earnings (loss) per share attributable to EZCORP, Inc.: | |||||||||||||||
Continuing operations | $ | 0.15 | $ | 0.66 | $ | 0.53 | $ | 1.28 | |||||||
Discontinued operations | — | (0.03 | ) | 0.03 | (0.06 | ) | |||||||||
Diluted earnings per share | $ | 0.15 | $ | 0.63 | $ | 0.56 | $ | 1.22 | |||||||
Weighted average shares outstanding diluted | 54,586 | 54,252 | 54,583 | 53,172 | |||||||||||
Net income from continuing operations attributable to EZCORP, Inc. | $ | 8,032 | $ | 35,591 | $ | 29,119 | $ | 68,014 | |||||||
(Loss) income from discontinued operations attributable to EZCORP, Inc. | (40 | ) | (1,610 | ) | 1,442 | (3,316 | ) | ||||||||
Net income attributable to EZCORP, Inc. | $ | 7,992 | $ | 33,981 | $ | 30,561 | $ | 64,698 | |||||||
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EZCORP, Inc.
Highlights of Consolidated Balance Sheets (Unaudited)
(in thousands)
March 31, | |||||||
2014 | 2013 | ||||||
Assets: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 32,198 | $ | 41,443 | |||
Restricted cash | 21,104 | 1,204 | |||||
Pawn loans | 128,683 | 138,380 | |||||
Consumer loans, net | 75,501 | 36,596 | |||||
Pawn service charges receivable, net | 24,733 | 25,388 | |||||
Consumer loan fees and interest receivable, net | 40,033 | 33,507 | |||||
Inventory, net | 129,013 | 116,517 | |||||
Deferred tax asset | 13,825 | 15,716 | |||||
Income tax receivable | 17,702 | 3,079 | |||||
Prepaid expenses and other assets | 54,321 | 42,421 | |||||
Total current assets | 537,113 | 454,251 | |||||
Investments in unconsolidated affiliates | 88,685 | 147,232 | |||||
Property and equipment, net | 111,419 | 118,979 | |||||
Restricted cash, non-current | 9,575 | 2,197 | |||||
Goodwill | 435,048 | 438,016 | |||||
Intangible assets, net | 69,016 | 60,387 | |||||
Non-current consumer loans, net | 61,724 | 77,414 | |||||
Deferred tax asset | 9,619 | — | |||||
Other assets, net | 30,037 | 20,723 | |||||
Total assets | $ | 1,352,236 | $ | 1,319,199 | |||
Liabilities and stockholders’ equity: | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt | $ | 14,228 | $ | 34,912 | |||
Current capital lease obligations | 533 | 533 | |||||
Accounts payable and other accrued expenses | 70,812 | 63,298 | |||||
Other current liabilities | 12,121 | 36,096 | |||||
Customer layaway deposits | 8,986 | 8,191 | |||||
Total current liabilities | 106,680 | 143,030 | |||||
Long-term debt, less current maturities | 214,254 | 137,376 | |||||
Long-term capital lease obligations | 106 | 648 | |||||
Deferred tax liability | — | 10,104 | |||||
Deferred gains and other long-term liabilities | 18,613 | 19,872 | |||||
Total liabilities | 339,653 | 311,030 | |||||
Temporary equity: | |||||||
Redeemable noncontrolling interest | 58,107 | 52,982 | |||||
EZCORP, Inc. stockholders’ equity | 954,476 | 955,187 | |||||
Total liabilities and stockholders’ equity | $ | 1,352,236 | $ | 1,319,199 | |||
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EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)
Three Months Ended March 31, 2014 | |||||||||||||||||||||||
U.S. & Canada | Latin America | Other International | Total Segments | Corporate Items | Consolidated | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 89,937 | $ | 13,517 | $ | — | $ | 103,454 | $ | — | $ | 103,454 | |||||||||||
Jewelry scrapping sales | 24,697 | 1,496 | — | 26,193 | — | 26,193 | |||||||||||||||||
Pawn service charges | 52,154 | 7,008 | — | 59,162 | — | 59,162 | |||||||||||||||||
Consumer loan fees and interest | 45,657 | 14,328 | 4,800 | 64,785 | — | 64,785 | |||||||||||||||||
Other revenues | 1,009 | 5,065 | 32 | 6,106 | — | 6,106 | |||||||||||||||||
Total revenues | 213,454 | 41,414 | 4,832 | 259,700 | — | 259,700 | |||||||||||||||||
Merchandise cost of goods sold | 54,890 | 8,967 | — | 63,857 | — | 63,857 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 18,793 | 1,318 | — | 20,111 | — | 20,111 | |||||||||||||||||
Consumer loan bad debt | 9,121 | 454 | 847 | 10,422 | — | 10,422 | |||||||||||||||||
Net revenues | 130,650 | 30,675 | 3,985 | 165,310 | — | 165,310 | |||||||||||||||||
Operating expenses (income): | — | ||||||||||||||||||||||
Operations | 85,926 | 18,086 | 4,052 | 108,064 | — | 108,064 | |||||||||||||||||
Administrative | — | — | — | — | 20,032 | 20,032 | |||||||||||||||||
Depreciation | 4,295 | 1,450 | 105 | 5,850 | 1,689 | 7,539 | |||||||||||||||||
Amortization | 657 | 607 | 25 | 1,289 | 686 | 1,975 | |||||||||||||||||
(Gain) loss on sale or disposal of assets | (441 | ) | (2 | ) | 159 | (284 | ) | 626 | 342 | ||||||||||||||
Interest (income) expense, net | (16 | ) | 4,246 | — | 4,230 | 1,045 | 5,275 | ||||||||||||||||
Equity in net income of unconsolidated affiliates | — | — | (492 | ) | (492 | ) | — | (492 | ) | ||||||||||||||
Impairment of investments | — | — | 7,940 | 7,940 | — | 7,940 | |||||||||||||||||
Other (income) expense | — | (11 | ) | 375 | 364 | 960 | 1,324 | ||||||||||||||||
Segment contribution (loss) | $ | 40,229 | $ | 6,299 | $ | (8,179 | ) | $ | 38,349 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 38,349 | $ | (25,038 | ) | $ | 13,311 | ||||||||||||||||
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EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)
Three Months Ended March 31, 2013 | |||||||||||||||||||||||
U.S. & Canada | Latin America | Other International | Segments Total | Corporate Items | Consolidated | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 86,409 | $ | 13,673 | $ | — | $ | 100,082 | $ | — | $ | 100,082 | |||||||||||
Jewelry scrapping sales | 40,501 | 2,081 | — | 42,582 | — | 42,582 | |||||||||||||||||
Pawn service charges | 54,500 | 7,515 | — | 62,015 | — | 62,015 | |||||||||||||||||
Consumer loan fees and interest | 42,266 | 11,842 | 6,643 | 60,751 | — | 60,751 | |||||||||||||||||
Other revenues | 1,620 | 205 | 859 | 2,684 | — | 2,684 | |||||||||||||||||
Total revenues | 225,296 | 35,316 | 7,502 | 268,114 | — | 268,114 | |||||||||||||||||
Merchandise cost of goods sold | 50,819 | 7,897 | — | 58,716 | — | 58,716 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 27,563 | 1,748 | — | 29,311 | — | 29,311 | |||||||||||||||||
Consumer loan bad debt expense (benefit) | 6,441 | (661 | ) | 2,677 | 8,457 | — | 8,457 | ||||||||||||||||
Net revenues | 140,473 | 26,332 | 4,825 | 171,630 | — | 171,630 | |||||||||||||||||
Operating expenses (income): | |||||||||||||||||||||||
Operations | 82,827 | 15,335 | 3,669 | 101,831 | — | 101,831 | |||||||||||||||||
Administrative | — | — | — | — | 8,603 | 8,603 | |||||||||||||||||
Depreciation | 4,030 | 1,257 | 99 | 5,386 | 1,685 | 7,071 | |||||||||||||||||
Amortization | 622 | 416 | 23 | 1,061 | 255 | 1,316 | |||||||||||||||||
(Gain) loss on sale or disposal of assets | (1 | ) | 14 | — | 13 | — | 13 | ||||||||||||||||
Interest expense (income), net | 15 | 2,802 | (1 | ) | 2,816 | 937 | 3,753 | ||||||||||||||||
Equity in net income of unconsolidated affiliates | — | — | (4,125 | ) | (4,125 | ) | — | (4,125 | ) | ||||||||||||||
Other (income) expense | (1 | ) | (315 | ) | — | (316 | ) | 721 | 405 | ||||||||||||||
Segment contribution | $ | 52,981 | $ | 6,823 | $ | 5,160 | $ | 64,964 | |||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 64,964 | $ | (12,201 | ) | $ | 52,763 | ||||||||||||||||
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EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)
Six Months Ended March 31, 2014 | |||||||||||||||||||||||
U.S. & Canada | Latin America | Other International | Total Segments | Corporate Items | Consolidated | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 178,827 | $ | 30,214 | $ | — | $ | 209,041 | $ | — | $ | 209,041 | |||||||||||
Jewelry scrapping sales | 50,622 | 3,274 | — | 53,896 | — | 53,896 | |||||||||||||||||
Pawn service charges | 109,223 | 14,072 | — | 123,295 | — | 123,295 | |||||||||||||||||
Consumer loan fees and interest | 94,359 | 28,621 | 8,134 | 131,114 | — | 131,114 | |||||||||||||||||
Other revenues | 1,494 | 10,187 | 30 | 11,711 | — | 11,711 | |||||||||||||||||
Total revenues | 434,525 | 86,368 | 8,164 | 529,057 | — | 529,057 | |||||||||||||||||
Merchandise cost of goods sold | 107,937 | 19,508 | — | 127,445 | — | 127,445 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 37,363 | 2,768 | — | 40,131 | — | 40,131 | |||||||||||||||||
Consumer loan bad debt | 24,677 | 1,845 | 2,332 | 28,854 | — | 28,854 | |||||||||||||||||
Net revenues | 264,548 | 62,247 | 5,832 | 332,627 | — | 332,627 | |||||||||||||||||
Operating expenses (income): | |||||||||||||||||||||||
Operations | 176,608 | 36,468 | 7,757 | 220,833 | — | 220,833 | |||||||||||||||||
Administrative | — | — | — | — | 35,777 | 35,777 | |||||||||||||||||
Depreciation | 8,562 | 2,909 | 208 | 11,679 | 3,326 | 15,005 | |||||||||||||||||
Amortization | 1,309 | 1,224 | 51 | 2,584 | 1,331 | 3,915 | |||||||||||||||||
(Gain) loss on sale or disposal of assets | (6,759 | ) | 4 | 159 | (6,596 | ) | 648 | (5,948 | ) | ||||||||||||||
Interest (income) expense, net | (11 | ) | 7,394 | (2 | ) | 7,381 | 2,226 | 9,607 | |||||||||||||||
Equity in net income of unconsolidated affiliates | — | — | (1,763 | ) | (1,763 | ) | — | (1,763 | ) | ||||||||||||||
Impairment of investments | — | — | 7,940 | 7,940 | — | 7,940 | |||||||||||||||||
Other (income) expense | — | (41 | ) | 346 | 305 | 851 | 1,156 | ||||||||||||||||
Segment contribution (loss) | $ | 84,839 | $ | 14,289 | $ | (8,864 | ) | $ | 90,264 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 90,264 | $ | (44,159 | ) | $ | 46,105 | ||||||||||||||||
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EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)
Six Months Ended March 31, 2013 | |||||||||||||||||||||||
U.S. & Canada | Latin America | Other International | Segments Total | Corporate Items | Consolidated | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 166,113 | $ | 28,573 | $ | — | $ | 194,686 | $ | — | $ | 194,686 | |||||||||||
Jewelry scrapping sales | 82,489 | 4,802 | — | 87,291 | — | 87,291 | |||||||||||||||||
Pawn service charges | 112,697 | 14,718 | — | 127,415 | — | 127,415 | |||||||||||||||||
Consumer loan fees and interest | 86,594 | 23,719 | 13,572 | 123,885 | — | 123,885 | |||||||||||||||||
Other revenues | 4,411 | 1,846 | 1,241 | 7,498 | — | 7,498 | |||||||||||||||||
Total revenues | 452,304 | 73,658 | 14,813 | 540,775 | — | 540,775 | |||||||||||||||||
Merchandise cost of goods sold | 97,141 | 16,520 | — | 113,661 | — | 113,661 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 56,637 | 3,979 | — | 60,616 | — | 60,616 | |||||||||||||||||
Consumer loan bad debt expense (benefit) | 17,369 | (1,709 | ) | 6,318 | 21,978 | — | 21,978 | ||||||||||||||||
Net revenues | 281,157 | 54,868 | 8,495 | 344,520 | — | 344,520 | |||||||||||||||||
Operating expenses (income): | |||||||||||||||||||||||
Operations | 167,399 | 29,970 | 7,747 | 205,116 | — | 205,116 | |||||||||||||||||
Administrative | — | — | — | — | 22,274 | 22,274 | |||||||||||||||||
Depreciation | 7,721 | 2,362 | 170 | 10,253 | 3,378 | 13,631 | |||||||||||||||||
Amortization | 769 | 851 | 49 | 1,669 | 361 | 2,030 | |||||||||||||||||
Loss on sale or disposal of assets | 28 | 14 | — | 42 | — | 42 | |||||||||||||||||
Interest expense (income), net | 32 | 5,415 | (1 | ) | 5,446 | 1,944 | 7,390 | ||||||||||||||||
Equity in net income of unconsolidated affiliates | — | — | (9,163 | ) | (9,163 | ) | — | (9,163 | ) | ||||||||||||||
Other (income) expense | (5 | ) | (295 | ) | (69 | ) | (369 | ) | 273 | (96 | ) | ||||||||||||
Segment contribution | $ | 105,213 | $ | 16,551 | $ | 9,762 | $ | 131,526 | |||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 131,526 | $ | (28,230 | ) | $ | 103,296 | ||||||||||||||||
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EZCORP, Inc.
Store Count Activity
Three Months Ended March 31, 2014 | ||||||||||||||
Company-owned Stores | Franchises | |||||||||||||
U.S. & Canada | Latin America | Other International | Consolidated | |||||||||||
Beginning of period | 1,028 | 316 | — | 1,344 | 6 | |||||||||
De novo | 9 | 2 | — | 11 | — | |||||||||
Acquired | — | — | — | — | — | |||||||||
Sold, combined, or closed | — | — | — | — | (1 | ) | ||||||||
End of period | 1,037 | 318 | — | 1,355 | 5 | |||||||||
Three Months Ended March 31, 2013 | ||||||||||||||
Company-owned Stores | Franchises | |||||||||||||
U.S. & Canada | Latin America | Other International | Consolidated | |||||||||||
Beginning of period | 1,050 | 319 | — | 1,369 | 10 | |||||||||
De novo | 12 | 27 | — | 39 | — | |||||||||
Acquired | — | — | — | — | — | |||||||||
Sold, combined, or closed | (4 | ) | (1 | ) | — | (5 | ) | (1 | ) | |||||
End of period | 1,058 | 345 | — | 1,403 | 9 | |||||||||
Discontinued operations | (50 | ) | (57 | ) | — | (107 | ) | — | ||||||
Stores in continuing operations: | 1,008 | 288 | — | 1,296 | 9 | |||||||||
Six Months Ended March 31, 2014 | ||||||||||||||
Company-owned Stores | Franchises | |||||||||||||
U.S. & Canada | Latin America | Other International | Consolidated | |||||||||||
Beginning of period | 1,030 | 312 | — | 1,342 | 8 | |||||||||
De novo | 14 | 6 | — | 20 | — | |||||||||
Acquired | — | — | — | — | — | |||||||||
Sold, combined, or closed | (7 | ) | — | — | (7 | ) | (3 | ) | ||||||
End of period | 1,037 | 318 | — | 1,355 | 5 | |||||||||
Six Months Ended March 31, 2013 | ||||||||||||||
Company-owned Stores | Franchises | |||||||||||||
U.S. & Canada | Latin America | Other International | Consolidated | |||||||||||
Beginning of period | 987 | 275 | — | 1,262 | 10 | |||||||||
De novo | 63 | 51 | — | 114 | — | |||||||||
Acquired | 12 | 20 | — | 32 | — | |||||||||
Sold, combined, or closed | (4 | ) | (1 | ) | — | (5 | ) | (1 | ) | |||||
End of period | 1,058 | 345 | — | 1,403 | 9 | |||||||||
Discontinued operations | (50 | ) | (57 | ) | — | (107 | ) | — | ||||||
Stores in continuing operations: | 1,008 | 288 | — | 1,296 | 9 | |||||||||
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EZCORP, Inc.
Reconciliation of GAAP to Non-GAAP Results (Unaudited)
(in thousands, except per share data)
The following tables provide a reconciliation of the differences between the reported or projected non-GAAP financial measures for the periods indicated and the most comparable GAAP financial measures. The non-GAAP financial measures presented may not be directly comparable to similarly titled measures reported by other companies and their usefulness for such purposes are therefore limited. EZCORP management believes presentation of the non-GAAP financial measures enhances investors’ ability to analyze the Company’s operating results. However, non-GAAP financial measures are not an alternative to GAAP financial measures and should be read only in conjunction with financial measures presented on a GAAP basis.
Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | ||||||||||||||||||||||
GAAP | Non-GAAP Adjustment | Non-GAAP | GAAP | Non-GAAP Adjustment | Non-GAAP | ||||||||||||||||||
Segment Contribution: | |||||||||||||||||||||||
U.S. & Canada* | $ | 40,229 | $ | 743 | $ | 40,972 | $ | 52,981 | $ | 2,793 | $ | 55,774 | |||||||||||
Latin America | 6,299 | — | 6,299 | 6,823 | — | 6,823 | |||||||||||||||||
Other International** | (8,179 | ) | 8,448 | 269 | 5,160 | (1,374 | ) | 3,786 | |||||||||||||||
Total Segment Contribution | 38,349 | 9,191 | 47,540 | 64,964 | 1,419 | 66,383 | |||||||||||||||||
Administrative expense (income)*** | 20,032 | (7,951 | ) | 12,081 | 8,603 | — | 8,603 | ||||||||||||||||
Depreciation | 1,689 | — | 1,689 | 1,685 | — | 1,685 | |||||||||||||||||
Amortization | 686 | — | 686 | 255 | — | 255 | |||||||||||||||||
Loss on sale or disposal of assets | 626 | — | 626 | — | — | — | |||||||||||||||||
Interest expense, net | 1,045 | — | 1,045 | 937 | — | 937 | |||||||||||||||||
Other expense | 960 | — | 960 | 721 | — | 721 | |||||||||||||||||
Income from continuing operations before income taxes | 13,311 | 17,142 | 30,453 | 52,763 | 1,419 | 54,182 | |||||||||||||||||
Income tax expense | 4,204 | 5,414 | 9,618 | 16,273 | 438 | 16,711 | |||||||||||||||||
Income from continuing operations, net of tax | 9,107 | 11,728 | 20,835 | 36,490 | 981 | 37,471 | |||||||||||||||||
Loss from discontinued operations, net of tax | (40 | ) | — | (40 | ) | (1,610 | ) | — | (1,610 | ) | |||||||||||||
Net income | 9,067 | 11,728 | 20,795 | 34,880 | 981 | 35,861 | |||||||||||||||||
Net income from continuing operations attributable to redeemable noncontrolling interest | 1,075 | — | 1,075 | 899 | 240 | 1,139 | |||||||||||||||||
Net income attributable to EZCORP, Inc. | $ | 7,992 | $ | 11,728 | $ | 19,720 | $ | 33,981 | $ | 741 | $ | 34,722 | |||||||||||
Weighted Average Shares Outstanding - Diluted | 54,586 | — | 54,586 | 54,252 | — | 54,252 | |||||||||||||||||
EPS - Diluted | $ | 0.15 | $ | 0.21 | $ | 0.36 | $ | 0.63 | $ | 0.01 | $ | 0.64 | |||||||||||
* The U.S. & Canada non-GAAP adjustment is due to losses in our EZOnline business.
** The Other International non-GAAP adjustment includes the Albemarle & Bond impairment charge and its related foreign currency exchange loss, as well as results from our online business in the U.K during the three months ended March 31, 2014 and our equity in the net income of Albemarle & Bond and results from our online business in the U.K. for the three months ended March 31, 2013
*** The Administrative expense (income) non-GAAP adjustment is due to the compensatory benefits charge recorded in the second quarter of fiscal 2014 related to Sterling B. Brinkley's retirement.
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Six Months Ended March 31, 2014 | Six Months Ended March 31, 2013 | ||||||||||||||||||||||
GAAP | Non-GAAP Adjustment | Non-GAAP | GAAP | Non-GAAP Adjustment | Non-GAAP | ||||||||||||||||||
Segment Contribution: | |||||||||||||||||||||||
U.S. & Canada* | $ | 84,839 | $ | 3,521 | $ | 88,360 | $ | 105,213 | $ | 3,189 | $ | 108,402 | |||||||||||
Latin America | 14,289 | — | 14,289 | 16,551 | — | 16,551 | |||||||||||||||||
Other International** | (8,864 | ) | 11,372 | 2,508 | 9,762 | (2,251 | ) | 7,511 | |||||||||||||||
Total Segment Contribution | 90,264 | 14,893 | 105,157 | 131,526 | 938 | 132,464 | |||||||||||||||||
Administrative expense (income)*** | 35,777 | (7,951 | ) | 27,826 | 22,274 | — | 22,274 | ||||||||||||||||
Depreciation | 3,326 | — | 3,326 | 3,378 | — | 3,378 | |||||||||||||||||
Amortization | 1,331 | — | 1,331 | 361 | — | 361 | |||||||||||||||||
Loss on sale or disposal of assets | 648 | — | 648 | — | — | — | |||||||||||||||||
Interest expense, net | 2,226 | — | 2,226 | 1,944 | — | 1,944 | |||||||||||||||||
Other expense | 851 | — | 851 | 273 | — | 273 | |||||||||||||||||
Income from continuing operations before income taxes | 46,105 | 22,844 | 68,949 | 103,296 | 938 | 104,234 | |||||||||||||||||
Income tax expense | 14,085 | 5,205 | 19,290 | 32,945 | 440 | 33,385 | |||||||||||||||||
Income from continuing operations, net of tax | 32,020 | 17,639 | 49,659 | 70,351 | 498 | 70,849 | |||||||||||||||||
Income (loss) from discontinued operations, net of tax | 1,442 | — | 1,442 | (3,316 | ) | — | (3,316 | ) | |||||||||||||||
Net income | 33,462 | 17,639 | 51,101 | 67,035 | 498 | 67,533 | |||||||||||||||||
Net income (loss) from continuing operations attributable to redeemable noncontrolling interest | 2,901 | — | 2,901 | 2,337 | (114 | ) | 2,223 | ||||||||||||||||
Net income attributable to EZCORP, Inc. | $ | 30,561 | $ | 17,639 | $ | 48,200 | $ | 64,698 | $ | 612 | $ | 65,310 | |||||||||||
Weighted Average Shares Outstanding - Diluted | 54,583 | — | 54,583 | 53,172 | — | 53,172 | |||||||||||||||||
EPS - Diluted | $ | 0.56 | $ | 0.32 | $ | 0.88 | $ | 1.22 | $ | 0.01 | $ | 1.23 | |||||||||||
* The U.S. & Canada non-GAAP adjustment is due to losses in our EZOnline business for six months of operations in 2014 and four months of operations in 2013.
** The Other International non-GAAP adjustment includes the Albemarle & Bond impairment charge and its related foreign currency exchange loss, as well as results from our online business in the U.K. during the six months ended March 31, 2014 and our equity in the net income of Albemarle & Bond and results from our online business in the U.K. for the six months ended March 31, 2013.
*** The Administrative expense (income) non-GAAP adjustment is due to the compensatory benefits charge recorded in the second quarter of fiscal 2014 related to Sterling B. Brinkley's retirement.
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