EZCORP, Inc. - SEC Filing

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2014 - Q3 8-K Earnings Release_6/30/2014

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): July 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 July 29, 2014, EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the third fiscal quarter and nine month period ended June 30, 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 nine months ended June 30, 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 July 29, 2014, announcing EZCORP, Inc.’s results of operations and financial condition for the third fiscal quarter and nine month period ended June 30, 2014.

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:	July 29, 2014	By:	/s/ Mark Kuchenrither
			Mark Kuchenrither
			Executive Vice President and Chief Financial Officer

EXHIBIT INDEX



Exhibit No.		Description of Exhibit

99.1		Press Release, dated July 29, 2014, announcing EZCORP, Inc.’s results of operations and financial condition for the third fiscal quarter and nine month period ended June 30, 2014.

2014 - Q3 8-K EX 99.1_6/30/2014

Exhibit 99.1

EZCORP REPORTS THIRD QUARTER REVENUES OF $241 MILLION,

AND EARNINGS PER SHARE OF $0.21

Company confirms Q4 EPS outlook of $0.37-$0.39 including the impact of its recent financing

AUSTIN, Texas (July 29, 2014) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of easy cash solutions for consumers, today announced its financial results for the third quarter of fiscal 2014.

For the quarter, total revenues were $241 million, with net income from continuing operations of $11.3 million and earnings per share of $0.21.

Mark Kuchenrither, EZCORP’s Interim President and Chief Executive Officer, stated, “We are pleased to have met our outlook for the third quarter. Our Pawn businesses and our Grupo Finmart business continued to drive our growth, representing 69% of our total revenues this quarter. During the quarter we strengthened our financial flexibility by raising $230 million through a private convertible debt offering which enabled us to pay off all amounts outstanding under our senior secured credit agreement and to buy back one million shares of stock. These capital structure enhancements in combination with our improving operational efficiencies enhance our ability to grow revenue and earnings, while improving the customer experience."

Consolidated Financial Highlights — Third Quarter Fiscal 2014 vs. Prior Year Quarter


•	Earning assets, including credit service organization (CSO) loans, were $443 million at quarter-end, an increase of 7% from continuing operations, as a result of growth in consumer loans at Grupo Finmart, as well as strong growth of installment loans in the U.S.

•

Total revenues were $241 million, an increase of 3% compared to $235 million in the same period last year. Excluding an expected decrease in gold scrapping, total revenues were up 6%, driven by 3% increases in consumer loan fees and merchandise sales in the United States and Mexico. In addition, we had two structured financing transactions at Grupo Finmart from which we recognized $10 million of revenues.


•	Cash and cash equivalents, including restricted cash, were $86 million at quarter-end, with aggregate consolidated debt of $382 million, comprised of the $230 million of our newly issued convertible debt and $152 million of Grupo Finmart third-party debt, which is non-recourse to EZCORP.

U.S. & Canada

Pawn —


▪	Pawn loan balances were $141 million at quarter-end, up 2% in total and up 3% on a same-store basis due to transactional growth in new loans made in general merchandise and jewelry.

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▪	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%, and a 100 basis point increase in general merchandise redemption rate to 78%.


▪	Total merchandise sales increased 4% in total and 5% on a same-store basis over the same quarter last year, driven by growth in storefront jewelry sales and strong online performance. Gross margin on merchandise sales was 38%.


▪	Jewelry sales increased 18% in total and 16% on a same-store basis compared to the same quarter last year, with gross margin of 43%. For the first nine months of the fiscal year, jewelry sales growth was 27% in total and 23% on a same-store basis.


▪	Online sales grew 51% over the same quarter last year and accounted for roughly10% of the segment’s total merchandise sales. Gross margin was 43% as compared to 42% for the same quarter last year.

Financial Services —


•	Total loan balances including CSO loans, net of reserves, were $48 million at quarter-end, a 5% increase over the same quarter last year. For the quarter, including CSO loans, installment loans were up 51% while auto title loans decreased 1% and traditional payday loans declined 9%.


•	Total loan fees were $42 million, up 4% over the same quarter last year. 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 more competitive marketplace and regulatory impact.


•	Bad debt as a percentage of fees was 31%, up 600 basis points over the same quarter last year, driven primarily by our online lending business.

Latin America

Consumer Lending —

On the last day of the third quarter of fiscal 2014, EZCORP acquired an additional 16% percent ownership of Grupo Finmart and now owns 76% of the company. Grupo Finmart is a vertically integrated lender focused on the following core business activities:


•	Development and servicing of primarily government agency contracts authorizing Grupo Finmart to lend to agency employees.


•	Origination of new loans through a number of expanding sales channels (direct/indirect sales teams, call center, mobile units and branches).


•	Grupo Finmart is a financial intermediary that has developed a hybrid business comprised of a distributor model and a loan portfolio model.


•	Grupo Finmart began using structured financing transactions in the first quarter of this year. As a result, Grupo Finmart operates as a distributor, while continuing to service customer loans.

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•	Grupo Finmart will continue to grow the loan portfolio as well as sell a portion of the portfolio on a regular basis.


•	The hybrid approach is an important competitive advantage for the business that allows for maximum flexibility, healthy diversification in funding sources and consistent availability of capital for growth.

In the third quarter, Grupo Finmart's financial results were driven by focusing on organic growth initiatives, optimizing financing strategy, and capitalizing on increasing market demand.


•	New loan originations for the quarter grew 22% over last year to $22 million from $18 million.


•	Total consumer loan fees and interest was $15 million, up 15% as compared to the same period last year.


•	Three new government contracts were signed including one with the State of Tabasco.


•	Bad debt as a percentage of fees was 9%, up from 5% in the same last quarter last year.


•	Our planned structured financing transactions this quarter resulted in $38 million in accelerated cash flow to fund new loan originations, and a $10 million gain reported in “Consumer loan sales and other.”


•	This quarter's structured asset sales represented less than 25% of the company's current loan portfolio.

Pawn — Latin America


•	Pawn loan balances were $17 million, up 7% over the same quarter last year. The yield on the loan balance improved 1100 basis points to 195% as compared to the same period last year.


•	Redemption rates were 76%, up 300 basis points compared to a year ago, driven by a 600 basis point increase in jewelry redemption rates to 75% and a 300 basis point increase in general merchandise to 76%.


•	Merchandise sales decreased 4% compared to last year.

Other International

Online Lending —


•	At Cash Genie, our U.K. online lending business, total loan fees were $5 million for the quarter.


▪	Total loan balances at the end of the quarter were $3 million.


▪	Bad debt as a percentage of fees was 66% for the quarter, as a result of business changes related to Financial Conduct Authority (FCA) regulations.

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Strategic Affiliates —


•	Our income from our Cash Converters International affiliate was $2 million.

CEO Commentary

Mr. Kuchenrither added, “As we have announced, there have been significant changes to the management and board of EZCORP over the past two weeks. These strategic changes were made in order to refocus the company on building a sustainable growth model which creates long-term shareholder value. We will employ a capital allocation strategy that is focused on achieving a return on invested capital of at least 15%."

Outlook

The company confirms its outlook for Q4 earnings per share of $0.37 to $0.39 from continuing operations, including the impact of our recent financing. This outlook does not take into account any potential expenses related to the recent management and board changes at the company.

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 consumer 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/.

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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.

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.

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)



	Three Months Ended June 30,						Nine Months Ended June 30,
	2014			2013			2014			2013
Revenues:
Merchandise sales	$	89,170		$	86,576		$	298,211		$	281,262
Jewelry scrapping sales	20,273			26,288			74,169			113,579
Pawn service charges	59,917			60,397			183,212			187,812
Consumer loan fees and interest	61,144			59,234			192,258			183,119
Consumer loan sales and other	10,876			2,671			22,587			10,169
Total revenues	241,380			235,166			770,437			775,941
Merchandise cost of goods sold	55,751			51,050			183,196			164,711
Jewelry scrapping cost of goods sold	15,131			20,377			55,262			80,993
Consumer loan bad debt	17,246			12,518			46,100			34,496
Net revenues	153,252			151,221			485,879			495,741
Operating expenses:
Operations	109,575			104,230			330,408			309,346
Administrative	14,467			12,644			50,244			34,918
Depreciation	7,551			7,377			22,556			21,008
Amortization	1,640			1,591			5,555			3,621
(Gain) loss on sale or disposal of assets	(26		)	178			(5,974		)	220
Total operating expenses	133,207			126,020			402,789			369,113
Operating income	20,045			25,201			83,090			126,628
Interest expense, net	6,073			3,637			15,680			11,027
Equity in net income of unconsolidated affiliates	(2,117		)	(4,328		)	(3,880		)	(13,491		)
Impairment of investments	—			—			7,940			—
Other (income) expense	(370		)	96			786			—
Income from continuing operations before income taxes	16,459			25,796			62,564			129,092
Income tax expense	4,302			9,139			18,387			42,084
Income from continuing operations, net of tax	12,157			16,657			44,177			87,008
Income (loss) from discontinued operations, net of tax	186			(21,497		)	1,628			(24,813		)
Net income (loss)	12,343			(4,840		)	45,805			62,195
Net income from continuing operations attributable to redeemable noncontrolling interest	837			1,041			3,738			3,378
Net income (loss) attributable to EZCORP, Inc.	$	11,506		$	(5,881	)	$	42,067		$	58,817

Diluted earnings (loss) per share attributable to EZCORP, Inc.:
Continuing operations	$	0.21		$	0.29		$	0.74		$	1.56
Discontinued operations	—			(0.40		)	0.03			(0.46		)
Diluted earnings per share	$	0.21		$	(0.11	)	$	0.77		$	1.10

Weighted average shares outstanding diluted	54,395			54,255			54,529			53,540

Net income from continuing operations attributable to EZCORP, Inc.	$	11,320		$	15,616		$	40,439		$	83,630
Income (loss) from discontinued operations attributable to EZCORP, Inc.	186			(21,497		)	1,628			(24,813		)
Net income (loss) attributable to EZCORP, Inc.	$	11,506		$	(5,881	)	$	42,067		$	58,817

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EZCORP, Inc.

Consolidated Balance Sheets (Unaudited)

(in thousands)



	June 30,
	2014		2013
Assets:
Current assets:
Cash and cash equivalents	$	49,999	$	45,955
Restricted cash	13,248		3,132
Pawn loans	157,491		154,095
Consumer loans, net	76,748		42,883
Pawn service charges receivable, net	29,307		28,590
Consumer loan fees and interest receivable, net	38,351		35,315
Inventory, net	132,021		122,503
Deferred tax asset	13,825		15,716
Income tax prepaid	21,779		12,937
Prepaid expenses and other assets	113,458		37,377
Total current assets	646,227		498,503
Investments in unconsolidated affiliates	90,730		146,707
Property and equipment, net	109,458		110,312
Restricted cash, non-current	22,473		2,182
Goodwill	436,765		430,940
Intangible assets, net	62,915		60,687
Non-current consumer loans, net	51,798		82,935
Deferred tax asset	9,308		—
Other assets, net	92,693		28,835
Total assets	$	1,522,367	$	1,361,101
Liabilities and stockholders’ equity:
Current liabilities:
Current maturities of long-term debt	$	21,029	$	33,525
Current capital lease obligations	520		533
Accounts payable and other accrued expenses	90,234		68,960
Other current liabilities	8,716		22,640
Customer layaway deposits	8,206		7,912
Total current liabilities	128,705		133,570
Long-term debt, less current maturities	360,628		198,374
Long-term capital lease obligations	—		521
Deferred tax liability	—		8,948
Deferred gains and other long-term liabilities	18,463		23,351
Total liabilities	507,796		364,764
Temporary equity:
Redeemable noncontrolling interest	36,645		56,837
EZCORP, Inc. stockholders’ equity	977,926		939,500
Total liabilities and stockholders’ equity	$	1,522,367	$	1,361,101

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EZCORP, Inc.

Operating Segment Results (Unaudited)

(in thousands)



	Three Months Ended June 30, 2014
	U.S. & Canada			Latin America			Other International			Total Segments			Corporate Items			Consolidated
Revenues:
Merchandise sales	$	74,674		$	14,496		$	—		$	89,170		$	—		$	89,170
Jewelry scrapping sales	18,909			1,364			—			20,273			—			20,273
Pawn service charges	51,894			8,023			—			59,917			—			59,917
Consumer loan fees and interest	41,749			14,839			4,556			61,144			—			61,144
Consumer loan sales and other	531			10,333			12			10,876			—			10,876
Total revenues	187,757			49,055			4,568			241,380			—			241,380
Merchandise cost of goods sold	45,927			9,824			—			55,751			—			55,751
Jewelry scrapping cost of goods sold	13,894			1,237			—			15,131			—			15,131
Consumer loan bad debt	12,894			1,361			2,991			17,246			—			17,246
Net revenues	115,042			36,633			1,577			153,252			—			153,252
Operating expenses (income):																—
Operations	84,553			22,112			2,910			109,575			—			109,575
Administrative	—			—			—			—			14,467			14,467
Depreciation	4,305			1,502			80			5,887			1,664			7,551
Amortization	414			329			4			747			893			1,640
Loss (gain) on sale or disposal of assets	129			11			(160		)	(20		)	(6		)	(26		)
Interest expense (income), net	—			4,234			(2		)	4,232			1,841			6,073
Equity in net income of unconsolidated affiliates	—			—			(2,117		)	(2,117		)	—			(2,117		)
Other (income) expense	(7		)	(167		)	—			(174		)	(196		)	(370		)
Segment contribution	$	25,648		$	8,612		$	862		$	35,122
Income (loss) from continuing operations before income taxes										$	35,122		$	(18,663	)	$	16,459

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EZCORP, Inc.

Operating Segment Results (Unaudited)

(in thousands)



	Three Months Ended June 30, 2013
	U.S. & Canada			Latin America		Other International			Segments Total			Corporate Items			Consolidated
Revenues:
Merchandise sales	$	71,464		$	15,112	$	—		$	86,576		$	—		$	86,576
Jewelry scrapping sales	26,288			—		—			26,288			—			26,288
Pawn service charges	52,505			7,892		—			60,397			—			60,397
Consumer loan fees and interest	40,279			12,864		6,091			59,234			—			59,234
Consumer loan sales and other	1,058			1,034		579			2,671			—			2,671
Total revenues	191,594			36,902		6,670			235,166			—			235,166
Merchandise cost of goods sold	41,795			9,255		—			51,050			—			51,050
Jewelry scrapping cost of goods sold	20,285			92		—			20,377			—			20,377
Consumer loan bad debt expense	9,994			685		1,839			12,518			—			12,518
Net revenues	119,520			26,870		4,831			151,221			—			151,221
Operating expenses (income):
Operations	84,194			16,513		3,523			104,230			—			104,230
Administrative	—			—		—			—			12,644			12,644
Depreciation	4,184			1,420		93			5,697			1,680			7,377
Amortization	721			434		25			1,180			411			1,591
Loss on sale or disposal of assets	174			4		—			178			—			178
Interest (income) expense, net	(25		)	2,790		—			2,765			872			3,637
Equity in net income of unconsolidated affiliates	—			—		(4,328		)	(4,328		)	—			(4,328		)
Other expense	—			57		—			57			39			96
Segment contribution	$	30,272		$	5,652	$	5,518		$	41,442
Income (loss) from continuing operations before income taxes									$	41,442		$	(15,646	)	$	25,796

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EZCORP, Inc.

Operating Segment Results (Unaudited)

(in thousands)



	Nine Months Ended June 30, 2014
	U.S. & Canada			Latin America			Other International			Total Segments			Corporate Items			Consolidated
Revenues:
Merchandise sales	$	253,501		$	44,710		$	—		$	298,211		$	—		$	298,211
Jewelry scrapping sales	69,531			4,638			—			74,169			—			74,169
Pawn service charges	161,117			22,095			—			183,212			—			183,212
Consumer loan fees and interest	136,108			43,460			12,690			192,258			—			192,258
Consumer loan sales and other	2,025			20,520			42			22,587			—			22,587
Total revenues	622,282			135,423			12,732			770,437			—			770,437
Merchandise cost of goods sold	153,864			29,332			—			183,196			—			183,196
Jewelry scrapping cost of goods sold	51,257			4,005			—			55,262			—			55,262
Consumer loan bad debt	37,571			3,206			5,323			46,100			—			46,100
Net revenues	379,590			98,880			7,409			485,879			—			485,879
Operating expenses (income):
Operations	261,161			58,580			10,667			330,408			—			330,408
Administrative	—			—			—			—			50,244			50,244
Depreciation	12,867			4,411			288			17,566			4,990			22,556
Amortization	1,723			1,553			55			3,331			2,224			5,555
(Gain) loss on sale or disposal of assets	(6,630		)	15			(1		)	(6,616		)	642			(5,974		)
Interest (income) expense, net	(11		)	11,628			(4		)	11,613			4,067			15,680
Equity in net income of unconsolidated affiliates	—			—			(3,880		)	(3,880		)	—			(3,880		)
Impairment of investments	—			—			7,940			7,940			—			7,940
Other (income) expense	(7		)	(208		)	346			131			655			786
Segment contribution (loss)	$	110,487		$	22,901		$	(8,002	)	$	125,386
Income (loss) from continuing operations before income taxes										$	125,386		$	(62,822	)	$	62,564

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EZCORP, Inc.

Operating Segment Results (Unaudited)

(in thousands)



	Nine Months Ended June 30, 2013
	U.S. & Canada			Latin America			Other International			Segments Total			Corporate Items			Consolidated
Revenues:
Merchandise sales	$	237,577		$	43,685		$	—		$	281,262		$	—		$	281,262
Jewelry scrapping sales	108,777			4,802			—			113,579			—			113,579
Pawn service charges	165,202			22,610			—			187,812			—			187,812
Consumer loan fees and interest	126,873			36,583			19,663			183,119			—			183,119
Consumer loan sales and other	5,469			2,880			1,820			10,169			—			10,169
Total revenues	643,898			110,560			21,483			775,941			—			775,941
Merchandise cost of goods sold	138,936			25,775			—			164,711			—			164,711
Jewelry scrapping cost of goods sold	76,922			4,071			—			80,993			—			80,993
Consumer loan bad debt expense (benefit)	27,363			(1,024		)	8,157			34,496			—			34,496
Net revenues	400,677			81,738			13,326			495,741			—			495,741
Operating expenses (income):
Operations	251,593			46,483			11,270			309,346			—			309,346
Administrative	—			—			—			—			34,918			34,918
Depreciation	11,905			3,782			263			15,950			5,058			21,008
Amortization	1,490			1,285			74			2,849			772			3,621
Loss on sale or disposal of assets	202			18			—			220			—			220
Interest expense (income), net	7			8,205			(1		)	8,211			2,816			11,027
Equity in net income of unconsolidated affiliates	—			—			(13,491		)	(13,491		)	—			(13,491		)
Other (income) expense	(5		)	(238		)	(69		)	(312		)	312			—
Segment contribution	$	135,485		$	22,203		$	15,280		$	172,968
Income (loss) from continuing operations before income taxes										$	172,968		$	(43,876	)	$	129,092

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EZCORP, Inc.

Store Count Activity



	Three Months Ended June 30, 2014
	Company-owned Stores							Franchises
	U.S. & Canada		Latin America		Other International	Consolidated
Beginning of period	1,037		318		—	1,355		5
De novo	5		—		—	5		—
Acquired	—		—		—	—		—
Sold, combined, or closed	(1	)	(3	)	—	(4	)	—
End of period	1,041		315		—	1,356		5

	Three Months Ended June 30, 2013
	Company-owned Stores							Franchises
	U.S. & Canada		Latin America		Other International	Consolidated
Beginning of period	1,058		345		—	1,403		9
De novo	5		15		—	20		—
Acquired	—		6		—	6		—
Sold, combined, or closed	(2	)	(3	)	—	(5	)	(1	)
End of period	1,061		363		—	1,424		8

Discontinued operations	(50	)	(57	)	—	(107	)	—
Stores in continuing operations:	1,011		306		—	1,317		8



	Nine Months Ended June 30, 2014
	Company-owned Stores							Franchises
	U.S. & Canada		Latin America		Other International	Consolidated
Beginning of period	1,030		312		—	1,342		8
De novo	19		6		—	25		—
Acquired	—		—		—	—		—
Sold, combined, or closed	(8	)	(3	)	—	(11	)	(3	)
End of period	1,041		315		—	1,356		5

	Nine Months Ended June 30, 2013
	Company-owned Stores							Franchises
	U.S. & Canada		Latin America		Other International	Consolidated
Beginning of period	987		275		—	1,262		10
De novo	68		66		—	134		—
Acquired	12		26		—	38		—
Sold, combined, or closed	(6	)	(4	)	—	(10	)	(2	)
End of period	1,061		363		—	1,424		8

Discontinued operations	(50	)	(57	)	—	(107	)	—
Stores in continuing operations:	1,011		306		—	1,317		8

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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 June 30, 2014								Three Months Ended June 30, 2013
	GAAP			Non-GAAP Adjustment		Non-GAAP			GAAP			Non-GAAP Adjustment			Non-GAAP
Segment Contribution:
U.S. & Canada	$	25,648		$	—	$	25,648		$	30,272		$	—		$	30,272
Latin America	8,612			—		8,612			5,652			—			5,652
Other International*	862			—		862			5,518			(1,493		)	4,025
Total Segment Contribution (Loss)	35,122			—		35,122			41,442			(1,493		)	39,949

Administrative expense	14,467			—		14,467			12,644			—			12,644
Depreciation	1,664			—		1,664			1,680			—			1,680
Amortization	893			—		893			411			—			411
Gain on sale or disposal of assets	(6		)	—		(6		)	—			—			—
Interest expense, net	1,841			—		1,841			872			—			872
Other (income) expense	(196		)	—		(196		)	39			—			39
Income (loss) from continuing operations before income taxes	16,459			—		16,459			25,796			(1,493		)	24,303
Income tax expense (benefit)	4,302			—		4,302			9,139			(529		)	8,610
Income (loss) from continuing operations, net of tax	12,157			—		12,157			16,657			(964		)	15,693
Income (loss) from discontinued operations, net of tax	186			—		186			(21,497		)	—			(21,497		)
Net income (loss)	12,343			—		12,343			(4,840		)	(964		)	(5,804		)
Net income from continuing operations attributable to redeemable noncontrolling interest	837			—		837			1,041			—			1,041
Net income (loss) attributable to EZCORP, Inc.	$	11,506		$	—	$	11,506		$	(5,881	)	$	(964	)	$	(6,845	)

Weighted Average Shares Outstanding - Diluted	54,395			—		54,395			54,255			—			54,255
EPS - Diluted	$	0.21		$	—	$	0.21		$	(0.11	)	$	(0.02	)	$	(0.13	)

* The Other International non-GAAP adjustment includes our equity in the net income of Albemarle & Bond for the three months ended June 30, 2013.

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	Nine Months Ended June 30, 2014								Nine Months Ended June 30, 2013
	GAAP			Non-GAAP Adjustment			Non-GAAP		GAAP			Non-GAAP Adjustment			Non-GAAP
Segment Contribution:
U.S. & Canada	$	110,487		$	—		$	110,487	$	135,485		$	—		$	135,485
Latin America	22,901			—			22,901		22,203			—			22,203
Other International*	(8,002		)	9,489			1,487		15,280			(4,430		)	10,850
Total Segment Contribution (Loss)	125,386			9,489			134,875		172,968			(4,430		)	168,538

Administrative expense (income)**	50,244			(7,951		)	42,293		34,918			—			34,918
Depreciation	4,990			—			4,990		5,058			—			5,058
Amortization	2,224			—			2,224		772			—			772
Loss on sale or disposal of assets	642			—			642		—			—			—
Interest expense, net	4,067			—			4,067		2,816			—			2,816
Other expense	655			—			655		312			—			312
Income (loss) from continuing operations before income taxes	62,564			17,440			80,004		129,092			(4,430		)	124,662
Income tax expense (benefit)	18,387			5,125			23,512		42,084			(1,444		)	40,640
Income (loss) from continuing operations, net of tax	44,177			12,315			56,492		87,008			(2,986		)	84,022
Income (loss) from discontinued operations, net of tax	1,628			—			1,628		(24,813		)	—			(24,813		)
Net income (loss)	45,805			12,315			58,120		62,195			(2,986		)	59,209
Net income from continuing operations attributable to redeemable noncontrolling interest	3,738			—			3,738		3,378			—			3,378
Net income (loss) attributable to EZCORP, Inc.	$	42,067		$	12,315		$	54,382	$	58,817		$	(2,986	)	$	55,831

Weighted Average Shares Outstanding - Diluted	54,529			—			54,529		53,540			—			53,540
EPS - Diluted	$	0.77		$	0.23		$	1.00	$	1.10		$	(0.06	)	$	1.04

* The Other International non-GAAP adjustment includes the Albemarle & Bond impairment charge and its related foreign currency exchange loss during the nine months ended June 30, 2014 and our equity in the net income of Albemarle & Bond for the nine months ended June 30, 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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