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2014 - Q4 8-K Earnings Release_9/30/2014


 
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): November 6, 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 November 6, 2014, EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the fourth fiscal quarter and the fiscal year ended September 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, income from continuing operations attributable to EZCORP, Inc. and diluted earnings per share for the three months and fiscal year ended September 30, 2014 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 November 6, 2014, announcing EZCORP, Inc.’s results of operations and financial condition for the fourth fiscal quarter and fiscal year ended September 30, 2014.

2


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:
November 6, 2014
 
 
 
By:
 
/s/ Mark Kuchenrither
 
 
 
 
 
 
 
Mark Kuchenrither
 
 
 
 
 
 
 
President and Chief Executive Officer and Chief Financial Officer
 
 
 
 
 
 
 
 

3


EXHIBIT INDEX
Exhibit
No.
  
Description of Exhibit
 
 
 
99.1
  
Press Release, dated November 6, 2014, announcing EZCORP, Inc.’s results of operations and financial condition for the fourth fiscal quarter and fiscal year ended September 30, 2014.


4
2014 - Q4 8-K EX 99.1_9/30/2014


Exhibit 99.1


EZCORP REPORTS 2014 FINANCIAL RESULTS AND ESTABLISHES FOUNDATION FOR SUSTAINABLE GROWTH IN 2015 AND BEYOND

AUSTIN, Texas (November 6, 2014) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of easy cash solutions for consumers, today announced fiscal fourth quarter financial results consistent with its October 27 pre-release. Adjusted non-GAAP net income from continuing operations was $14 million, or $0.27 per share. On a GAAP-basis, net loss from continuing operations attributable to EZCORP was $2 million or $(0.04) per share.* For the fiscal year ended September 30, 2014 total revenues were $990 million, and net income from continuing operations attributable to EZCORP was $47 million or $0.86 per share.
The fourth quarter marked a significant turning point for EZCORP as the company completed the review of its business units and initiated a number of actions designed to align organizational structure with strategic focus. During the quarter, the company discontinued operations in its online lending businesses in the U.S. and the U.K.; reevaluated its organizational design and overhead structure; and reduced expenses, which will immediately benefit the bottom line and allow the company to reinvest in its storefront businesses. The company improved the depth and experience of its Board of Directors with the addition of experienced and successful pawn, finance and international business executives.

Mark Kuchenrither, EZCORP’s President and Chief Executive Officer, stated, “In the fourth quarter, we established our foundation for sustainable growth as a customer-focused company, and we are pleased to welcome our new Executive Chairman, Stuart Grimshaw, to help us build on this foundation. Stuart has an established track record of success in creating and developing customer-centric businesses, and we will benefit from his experience and expertise as we focus our energies and resources on delivering a superior customer experience."

Mr. Grimshaw stated, “I am excited about the tremendous opportunities for growth I see at EZCORP. I look forward to working with the Board of Directors and the management team to deliver superior long-term growth and shareholder returns.”

* See the attached non-GAAP EPS reconciliation table.

Financial and Operating Highlights - Fiscal Year ended September 30, 2014 vs. Prior Year
Consolidated
•
For the fiscal year ended September 30, 2014, total revenues were $990 million as compared to $980 million for the same period last year.
•
Net income from continuing operations attributable to EZCORP was $47 million or $0.86 per share, as compared to $69 million or $1.27 per share in the same period a year earlier.



•
Cash and cash equivalents, including restricted cash, were $123 million at year-end, with aggregate consolidated debt of $367 million comprised of the $223 million of convertible debt and $144 million of Grupo Finmart third-party debt, which is non-recourse to EZCORP.

U.S. & Canada Segment
Pawn —
▪
Pawn loan balances were $145 million at year-end, up 2% in total and up 3% on a same-store basis.
▪
Redemption rates were 83%, up 100 basis points compared to a year ago, driven by a 200 basis point increase in the jewelry redemption rate to 88% with the general merchandise redemption rate remaining flat at 76%.
▪
Total merchandise sales were $328 million, an increase of 6% in total and 4% on a same-store basis. Gross margin on merchandise sales was 37% as compared to 41% in the prior year.
▪
Inventory turns were 2.3 times as compared to 2.6 times for the same period last year.
Financial Services —
•
Total loan balances including CSO loans, net of reserves, were $46 million at year-end, a 10% decrease over the prior year. At year end including CSO loans, installment loans were up 12% while auto title loans decreased 16% and traditional payday loans declined 15%.
•
Total loan fees were $167 million, down 2% over the prior year.
•
Bad debt as a percentage of fees was 28%, up 400 basis points over the prior year. Bad debt in installment loans was 31%, up 400 basis points over the prior year; auto title loans bad debt was 21%, up 400 basis points over the prior year; and traditional payday loans bad debt was 29%, an increase of 300 basis points over the prior year

Latin America Segment
Consumer Lending —
•
New loan originations for the year were $81 million, up 30% over the prior year.
•
Total consumer loan and interest fees were $54 million, up 7% as compared to the prior year.
•
Structured financing transactions in fiscal 2014 resulted in approximately $26 million of gains (consisting of consumer loan and interest fees, less commission and other related expenses) reported in “Consumer loan sales and other.”
•
Bad debt as a percentage of fees was 13%, up from a bad debt benefit in the prior year. The increase is primarily due to an increase in bad debt reserves after a government agency offered early retirement to its workers, which increased the number of loans outside of the automatic payroll deduction system.


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•
The number of contracts, primarily with government agencies, grew by 75% for the fiscal year, from 72 contracts in fiscal year 2013 to 126 contracts in fiscal year 2014.
Pawn —
•
Pawn loan balances were $17 million, up 25% over the prior year.
•
Redemption rates were 77%, up 300 basis points. Jewelry redemption rates were 76%, up 500 basis points from prior year. General merchandise redemption rates were 78%, a 200 basis point increase over the prior year.
•
Total merchandise sales were $60 million, an increase of 2% in total and a 5% decrease on a same-store basis over last year, with gross margin of 29%, as compared to 39% in the prior year.
•
Inventory turns were 2.3 times as compared to 2.5 times for the prior fiscal year.
Other International Segment
•
Income from Cash Converters International was $7 million compared to $10 million in fiscal 2013. The decrease is mainly due to an interest rate cap commencing in Australia on July 1, 2013, which impacted both margins and volumes. The decrease in their financial services operations was partially offset by increases in profitability of store and franchise operations.
Discontinued Operations
•
During the fourth quarter of fiscal 2014 the company discontinued operations of its stand-alone online lending businesses in the U.S. and the U.K. and incurred pre-tax charges for goodwill impairment, asset write-down to net realizable liquidation value, uncollectible receivables, employee severance and lease termination costs of approximately $103 million. These costs have been recorded as part of "Loss from discontinued operations, net of tax."

•
Discontinued operations in fiscal 2014 include $12 million in pre-tax operating losses from the company's online businesses.

CEO Commentary
Mr. Kuchenrither added, “Our organization is focused on one strategy comprised of four pillars: a high-performance culture, a customer-centric business, operational excellence, and disciplined growth. The pillars are being implemented throughout the company using a balanced scorecard approach that measures and manages critical success factors and Key Performance Indicators.

“We are one month into our first fiscal quarter of 2015, and we are seeing positive signs from the renewed strategic focus in each of our operating segments. Same-store pawn sales and pawn service charges in the U.S. and Mexico, and new loan originations at U.S. Financial Services, are exceeding our expectations. New loan originations at Grupo Finmart in October were a record for the company. While these results are encouraging, we are still in the very early stages of fundamental changes in operations and implementation of key initiatives. Our strategy is in place, and we are confident that through focused execution, we will create a great experience for our customers and superior returns for our shareholders.”




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About EZCORP
EZCORP is a leader in delivering easy cash solutions to our customers across channels, products, services and markets. With approximately 7,300 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 and Canada, and fee-based credit services to customers seeking loans. 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.
Forward-Looking Statements
This announcement contains certain forward-looking statements regarding the company’s strategy, initiatives and expected performance. These statements are based on the company’s current expectations as to the outcome and timing of future events. All statements, other than statements of historical facts, including all statements regarding the company's strategy, initiatives and future performance, that address activities or results that the company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future financial or operating results, are forward-looking statements. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including operating risks, liquidity risks, legislative or regulatory developments, market factors or current or future litigation. For a discussion of these and other factors affecting the company’s business and prospects, see the company’s annual, quarterly and other reports filed with the Securities and Exchange Commission. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

Contact:
Mark Trinske
Vice President, Investor Relations and Communications
EZCORP, Inc.
(512) 314-2220
Investor_Relations@ezcorp.com
http://investors.ezcorp.com/





4 of 12





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

 
 
Three Months Ended September 30,
 
Fiscal Year Ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
89,120

 
$
87,504

 
$
387,331

 
$
368,766

Jewelry scrapping sales
22,074

 
18,123

 
96,243

 
131,702

Pawn service charges
65,166

 
63,542

 
248,378

 
251,354

Consumer loan fees and interest
52,202

 
59,059

 
220,643

 
219,752

Consumer loan sales and other
14,755

 
(248
)
 
37,045

 
8,547

Total revenues
243,317

 
227,980

 
989,640

 
980,121

Merchandise cost of goods sold
64,197

 
53,906

 
247,393

 
218,617

Jewelry scrapping cost of goods sold
17,574

 
15,140

 
72,836

 
96,133

Consumer loan bad debt
17,628

 
15,235

 
53,206

 
40,667

Net revenues
143,918

 
143,699

 
616,205

 
624,704

Operating expenses:
 
 
 
 
 
 
 
Operations
110,136

 
97,868

 
420,350

 
389,386

Administrative
13,875

 
17,556

 
64,119

 
52,474

Depreciation
7,587

 
7,192

 
29,801

 
27,858

Amortization
1,411

 
1,148

 
5,475

 
3,485

(Gain) loss on sale or disposal of assets
440

 
1,139

 
(5,629
)
 
1,359

Total operating expenses
133,449

 
124,903

 
514,116

 
474,562

Operating income
10,469

 
18,796

 
102,089

 
150,142

Interest expense, net
7,147

 
4,140

 
22,832

 
15,168

Restructuring expense
6,664

 
—

 
6,664

 
—

Equity in net (income) loss of unconsolidated affiliates
(2,068
)
 
1,613

 
(5,948
)
 
(11,878
)
Impairment of investments
—

 
44,598

 
7,940

 
44,598

Other income
(1,693
)
 
(205
)
 
(907
)
 
(205
)
Income (loss) from continuing operations before income taxes
419


(31,350
)

71,508

 
102,459

Income tax expense (benefit)
2,001

 
(12,062
)
 
20,465

 
29,582

Income (loss) from continuing operations, net of tax
(1,582
)

(19,288
)

51,043

 
72,877

Loss from discontinued operations, net of tax
(86,606
)
 
(4,482
)
 
(93,426
)
 
(34,452
)
Net (loss) income
(88,188
)

(23,770
)

(42,383
)
 
38,425

Net income from continuing operations attributable to redeemable noncontrolling interest
470

 
984

 
4,208

 
4,424

Net loss from discontinued operations attributable to redeemable noncontrolling interest
—

 
(14
)
 
—

 
(76
)
Net (loss) income attributable to EZCORP, Inc.
$
(88,658
)

$
(24,740
)

$
(46,591
)
 
$
34,077

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share attributable to EZCORP, Inc.:
 
 
 
 
 
 
 
Continuing operations
$
(0.04
)
 
$
(0.37
)
 
$
0.86

 
$
1.27

Discontinued operations
(1.61
)
 
(0.09
)
 
(1.72
)
 
(0.64
)
Diluted earnings (loss) per share
$
(1.65
)
 
$
(0.46
)
 
$
(0.86
)
 
$
0.63

 
 
 
 
 
 
 
 
Weighted average shares outstanding diluted
53,657

 
54,310

 
54,292

 
53,737

 
 
 
 
 
 
 
 
Net income (loss) from continuing operations attributable to EZCORP, Inc.
$
(2,052
)
 
$
(20,258
)
 
$
46,835

 
$
68,529

Loss from discontinued operations attributable to EZCORP, Inc.
(86,606
)
 
(4,482
)
 
(93,426
)
 
(34,452
)
Net (loss) income attributable to EZCORP, Inc.
$
(88,658
)
 
$
(24,740
)
 
$
(46,591
)
 
$
34,077



5 of 12




EZCORP, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands)
 
 
September 30,
 
2014
 
2013
Assets:
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
56,329

 
$
36,317

Restricted cash
62,406

 
3,312

Pawn loans
162,444

 
156,637

Consumer loans, net
67,594

 
64,683

Pawn service charges receivable, net
31,044

 
30,362

Consumer loan fees and interest receivable, net
31,761

 
36,292

Inventory, net
139,419

 
145,200

Deferred tax asset
20,858

 
13,825

Income tax prepaid
15,976

 
16,105

Prepaid expenses and other assets
76,959

 
34,217

Total current assets
664,790

 
536,950

Investments in unconsolidated affiliates
91,098

 
97,085

Property and equipment, net
105,900

 
116,281

Restricted cash, non-current
4,257

 
2,156

Goodwill
346,577

 
433,300

Intangible assets, net
49,482

 
58,772

Non-current consumer loans, net
40,442

 
70,294

Deferred tax asset
26,174

 
8,214

Other assets, net
76,200

 
29,138

Total assets
$
1,404,920

 
$
1,352,190

Liabilities and stockholders’ equity:
 
 
 
Current liabilities:
 
 
 
Current maturities of long-term debt
$
10,673

 
$
30,436

Current capital lease obligations
418

 
533

Accounts payable and other accrued expenses
97,213

 
79,967

Other current liabilities
8,595

 
22,337

Customer layaway deposits
8,097

 
8,628

Total current liabilities
124,996

 
141,901

Long-term debt, less current maturities
356,430

 
215,939

Long-term capital lease obligations
—

 
391

Deferred gains and other long-term liabilities
11,359

 
24,040

Total liabilities
492,785

 
382,271

Temporary equity:
 
 
 
Redeemable noncontrolling interest
35,498

 
55,393

EZCORP, Inc. stockholders’ equity
876,637

 
914,526

Total liabilities and stockholders’ equity
$
1,404,920

 
$
1,352,190




6 of 12




EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)
 
 
Three Months Ended September 30, 2014
 
U.S. & Canada
 
Latin America
 
Other International
 
Total Segments
 
Corporate Items
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
74,219

 
$
14,901

 
$
—

 
$
89,120

 
$
—

 
$
89,120

Jewelry scrapping sales
20,410

 
1,664

 
—

 
22,074

 
—

 
22,074

Pawn service charges
56,774

 
8,392

 
—

 
65,166

 
—

 
65,166

Consumer loan fees and interest
41,524

 
10,678

 
—

 
52,202

 
—

 
52,202

Consumer loan sales and other
312

 
14,443

 
—

 
14,755

 
—

 
14,755

Total revenues
193,239

 
50,078

 
—

 
243,317

 
—

 
243,317

Merchandise cost of goods sold
51,485

 
12,712

 
—

 
64,197

 
—

 
64,197

Jewelry scrapping cost of goods sold
15,772

 
1,802

 
—

 
17,574

 
—

 
17,574

Consumer loan bad debt
13,967

 
3,661

 
—

 
17,628

 
—

 
17,628

Net revenues
112,015

 
31,903

 
—

 
143,918

 
—

 
143,918

Operating expenses (income):
 
 
 
 
 
 

 
 
 
—

Operations
84,247

 
25,889

 
—

 
110,136

 
—

 
110,136

Administrative
—

 
—

 
—

 
—

 
13,875

 
13,875

Depreciation
4,452

 
1,462

 
—

 
5,914

 
1,673

 
7,587

Amortization
112

 
451

 
—

 
563

 
848

 
1,411

Loss on sale or disposal of assets
106

 
12

 
—

 
118

 
322

 
440

Interest expense (income), net
(6
)
 
3,615

 
—

 
3,609

 
3,538

 
7,147

Restructuring expense
—

 
—

 
—

 
—

 
6,664

 
6,664

Equity in net income of unconsolidated affiliates
—

 
—

 
(2,068
)
 
(2,068
)
 
—

 
(2,068
)
Other (income) expense
2

 
(2,066
)
 
(231
)
 
(2,295
)
 
602

 
(1,693
)
Segment contribution
$
23,102

 
$
2,540

 
$
2,299

 
$
27,941

 

 
 
Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
27,941

 
$
(27,522
)
 
$
419



7 of 12




EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)

 
Three Months Ended September 30, 2013
 
U.S. & Canada
 
Latin America
 
Other International
 
Segments Total
 
Corporate Items
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
72,944

 
$
14,560

 
$
—

 
$
87,504

 
$
—

 
$
87,504

Jewelry scrapping sales
14,385

 
3,738

 
—

 
18,123

 
—

 
18,123

Pawn service charges
56,573

 
6,969

 
—

 
63,542

 
—

 
63,542

Consumer loan fees and interest
45,181

 
13,878

 
—

 
59,059

 
—

 
59,059

Consumer loan sales and other
(565
)
 
317

 
—

 
(248
)
 
—

 
(248
)
Total revenues
188,518

 
39,462

 
—

 
227,980

 
—

 
227,980

Merchandise cost of goods sold
44,211

 
9,695

 
—

 
53,906

 
—

 
53,906

Jewelry scrapping cost of goods sold
11,715

 
3,425

 
—

 
15,140

 
—

 
15,140

Consumer loan bad debt expense
14,324

 
911

 
—

 
15,235

 
—

 
15,235

Net revenues
118,268

 
25,431

 
—

 
143,699

 
—

 
143,699

Operating expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
81,445

 
16,013

 
410

 
97,868

 
—

 
97,868

Administrative
—

 
—

 
—

 
—

 
17,556

 
17,556

Depreciation
3,988

 
1,440

 
—

 
5,428

 
1,764

 
7,192

Amortization
113

 
426

 
—

 
539

 
609

 
1,148

Loss (gain) on sale or disposal of assets
7

 
(1
)
 
—

 
6

 
1,133

 
1,139

Interest expense, net
9

 
3,074

 
—

 
3,083

 
1,057

 
4,140

Equity in net income of unconsolidated affiliates
—

 
—

 
1,613

 
1,613

 
—

 
1,613

Impairment of investments
—

 
—

 
44,598

 
44,598

 
 
 
44,598

Other (income) expense
2

 
20

 
222

 
244

 
(449
)
 
(205
)
Segment (loss) contribution
$
32,704

 
$
4,459

 
$
(46,843
)
 
$
(9,680
)
 
 
 
 
Loss from continuing operations before income taxes
 
 
 
 
 
 
$
(9,680
)
 
$
(21,670
)
 
$
(31,350
)


8 of 12




EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)
 
 
Year Ended September 30, 2014
 
U.S. & Canada
 
Latin America
 
Other International
 
Total Segments
 
Corporate Items
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
327,720

 
$
59,611

 
$
—

 
$
387,331

 
$
—

 
$
387,331

Jewelry scrapping sales
89,941

 
6,302

 
—

 
96,243

 
—

 
96,243

Pawn service charges
217,891

 
30,487

 
—

 
248,378

 
—

 
248,378

Consumer loan fees and interest
166,505

 
54,138

 
—

 
220,643

 
—

 
220,643

Consumer loan sales and other
2,082

 
34,963

 
—

 
37,045

 
—

 
37,045

Total revenues
804,139

 
185,501

 
—

 
989,640

 
—

 
989,640

Merchandise cost of goods sold
205,349

 
42,044

 
—

 
247,393

 
—

 
247,393

Jewelry scrapping cost of goods sold
67,029

 
5,807

 
—

 
72,836

 
—

 
72,836

Consumer loan bad debt
46,339

 
6,867

 
—

 
53,206

 
—

 
53,206

Net revenues
485,422

 
130,783

 
—

 
616,205

 
—

 
616,205

Operating expenses (income):
 
 
 
 
 
 
 
 
 
 

Operations
335,881

 
84,469

 
—

 
420,350

 
—

 
420,350

Administrative
—

 
—

 
—

 
—

 
64,119

 
64,119

Depreciation
17,265

 
5,873

 
—

 
23,138

 
6,663

 
29,801

Amortization
399

 
2,004

 
—

 
2,403

 
3,072

 
5,475

(Gain) loss on sale or disposal of assets
(6,620
)
 
27

 
—

 
(6,593
)
 
964

 
(5,629
)
Interest (income) expense, net
(16
)
 
15,243

 
—

 
15,227

 
7,605

 
22,832

Restructuring
—

 
—

 
—

 
—

 
6,664

 
6,664

Equity in net income of unconsolidated affiliates
—

 
—

 
(5,948
)
 
(5,948
)
 
—

 
(5,948
)
Impairment of investments
—

 
—

 
7,940

 
7,940

 
—

 
7,940

Other expense (income)
(5
)
 
(2,274
)
 
115

 
(2,164
)
 
1,257

 
(907
)
Segment contribution (loss)
$
138,518

 
$
25,441

 
$
(2,107
)
 
$
161,852

 
 
 
 
Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
161,852

 
$
(90,344
)
 
$
71,508



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EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands)

 
Year Ended September 30, 2013
 
U.S. & Canada
 
Latin America
 
Other International
 
Segments Total
 
Corporate Items
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
310,521

 
$
58,245

 
$
—

 
$
368,766

 
$
—

 
$
368,766

Jewelry scrapping sales
123,162

 
8,540

 
—

 
131,702

 
—

 
131,702

Pawn service charges
221,775

 
29,579

 
—

 
251,354

 
—

 
251,354

Consumer loan fees and interest
169,291

 
50,461

 
—

 
219,752

 
—

 
219,752

Consumer loan sales and other
3,811

 
3,197

 
1,539

 
8,547

 
—

 
8,547

Total revenues
828,560

 
150,022

 
1,539

 
980,121

 
—

 
980,121

Merchandise cost of goods sold
183,147

 
35,470

 
—

 
218,617

 
—

 
218,617

Jewelry scrapping cost of goods sold
88,637

 
7,496

 
—

 
96,133

 
—

 
96,133

Consumer loan bad debt expense (benefit)
40,780

 
(113
)
 
—

 
40,667

 
—

 
40,667

Net revenues
515,996

 
107,169

 
1,539

 
624,704

 
—

 
624,704

Operating expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
325,795

 
62,496

 
1,095

 
389,386

 
—

 
389,386

Administrative
—

 
—

 
—

 
—

 
52,474

 
52,474

Depreciation
15,814

 
5,222

 
—

 
21,036

 
6,822

 
27,858

Amortization
393

 
1,711

 
—

 
2,104

 
1,381

 
3,485

Loss on sale or disposal of assets
209

 
17

 
—

 
226

 
1,133

 
1,359

Interest expense (income), net
16

 
11,279

 
—

 
11,295

 
3,873

 
15,168

Equity in net income of unconsolidated affiliates
—

 
—

 
(11,878
)
 
(11,878
)
 
—

 
(11,878
)
Impairment of investments
—

 
—

 
44,598

 
44,598

 
—

 
44,598

Other (income) expense
(3
)
 
(218
)
 
153

 
(68
)
 
(137
)
 
(205
)
Segment contribution
$
173,772

 
$
26,662

 
$
(32,429
)
 
$
168,005

 
 
 
 
Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
168,005

 
$
(65,546
)
 
$
102,459




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EZCORP, Inc.
Store Count Activity
 
Fiscal Year Ended September 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
25

 
6

 
—

 
31

 
—

Sold, combined, or closed
(10
)
 
(4
)
 
—

 
(14
)
 
(3
)
Discontinued operations
(1
)
 
—

 
—

 
(1
)
 
—

End of period
1,044

 
314

 
—

 
1,358

 
5

 
 
 
 
 
 
 
 
 
 
 
Fiscal Year Ended September 30, 2013
 
Company-owned Stores
 
Franchises
 
U.S. & Canada
 
Latin America
 
Other
International
 
Consolidated
 
 
Beginning of period
987

 
275

 
—

 
1,262

 
10

De novo
84

 
73

 
—

 
157

 
—

Acquired
12

 
26

 
—

 
38

 
—

Sold, combined, or closed
(3
)
 
(5
)
 
—

 
(8
)
 
(2
)
Discontinued operations
(50
)
 
(57
)
 
—

 
(107
)
 
—

End of period
1,030

 
312

 
—

 
1,342

 
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 September 30, 2014
 
(in millions)
 
(per diluted share)
 
 
 
 
Net Loss Attributable to EZCORP (GAAP)
$
(88.7
)
 
$
(1.65
)
 
 
 
 
Add Back:
 
 
 
Discontinued Operations Write-off
$
85.1

 
$
1.59

 
 
 
 
Restructuring Charges
$
6.5

 
$
0.12

 
 
 
 
Reserve Adjustments
$
6.4

 
$
0.12

Other One Time and Non-trendable Items
$
3.5

 
$
0.06

Total One Time and Non-trendable Items
$
9.9

 
$
0.18

 
 
 
 
Discontinued Operations Loss (excluding write-off)
$
1.5

 
$
0.03

 
 
 
 
Adjusted Net Income from Continuing Operations attributable to EZCORP (non-GAAP)
$
14.3

 
$
0.27



Fiscal Year Ended September 30, 2014
 
(in millions)
 
(per diluted share)
 
 
 
 
Net Loss Attributable to EZCORP (GAAP)
$
(46.6
)
 
$
(0.86
)
 
 
 
 
Add Back:
 
 
 
Discontinued Operations Write-off
$
85.1

 
$
1.57

 
 
 
 
Restructuring Charges
$
6.5

 
$
0.12

 
 
 
 
Reserve Adjustments
$
6.4

 
$
0.12

Other One Time and Non-trendable Items
$
16.3

 
$
0.30

Total One Time and Non-trendable Items
$
22.7

 
$
0.42

 
 
 
 
Discontinued Operations Loss (excluding write-off)
$
8.3

 
$
0.15

 
 
 
 
Adjusted Net Income from Continuing Operations attributable to EZCORP (non-GAAP)
$
76.0

 
$
1.40




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