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8-K


 

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): May 9, 2016
 _______________________________________________ 
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.)
2500 Bee Cave Road, Rollingwood, 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 May 9, 2016, EZCORP, Inc. will issue a press release announcing its results of operations and financial condition for the second fiscal quarter of the fiscal year ended September 30, 2016. A copy of that press release is attached as Exhibit 99.1.




In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we provide certain other non-GAAP financial information such as constant currency results ("constant currency"). Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our Mexico Pawn and Grupo Finmart operations, which are denominated in Mexican pesos. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our business. Management provides non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. We use this non-GAAP financial information to evaluate and compare operating results across accounting periods. Readers should consider the information in addition to, but not instead of or superior to, its financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes. 
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 7.01 — Regulation FD Disclosure
A copy of the presentation materials that management will review during the Company’s second quarter of fiscal 2016 earnings conference call (to be held on May 10, 2016) will be posted in the Investor Relations section of the Company’s website at www.ezcorp.com.
Item 9.01 — Financial Statements and Exhibits
(d)Exhibits.
99.1
Press Release, dated May 9, 2016, announcing EZCORP, Inc.’s results of operations and financial condition for the second fiscal quarter of the fiscal year ended September 30, 2016.




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
EZCORP, INC.
 
 
 
 
 
 
 
 
Date:
May 9, 2016
 
 
 
By:
 
/s/ David McGuire
 
 
 
 
 
 
 
David McGuire
 
 
 
 
 
 
 
Deputy Chief Financial Officer and Chief Accounting Officer




EXHIBIT INDEX
Exhibit
No.
  
Description of Exhibit
 
 
 
99.1
  
Press Release, dated May 9, 2016, announcing EZCORP, Inc.’s results of operations and financial condition for the second fiscal quarter of the fiscal year ended September 30, 2016.


Exhibit


EZCORP Announces Second Quarter Fiscal 2016 Results
▪
U.S. and Mexico Pawn profit before tax up 23% on 8% net revenue growth as a result of continued strong momentum in pawn fundamentals:
•
Pawn loans outstanding (PLO) up 10%; same store PLO up 8%.
▪
Pawn service charges (PSC) up 8%.
▪
Merchandise sales gross margin increased to 38% from 33%.
▪
Annualized return on pawn earning assets increased to 152% from 150%.
▪
Grupo Finmart strategic review completed in April; company pursuing sale of this business.
▪
Grupo Finmart non-cash goodwill impairment charge of $73.9 million led to $73.0 million loss from continuing operations for the quarter.
Austin, Texas (May 9, 2016) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico and consumer loans in Mexico, today announced results for its second quarter ended March 31, 2016.
CEO COMMENTARY AND OUTLOOK
Stuart Grimshaw, EZCORP’s Chief Executive Officer, said: “In July 2015 we announced significant strategic changes in our company’s direction which included a refocus on our pawn operations in the United States and Mexico, aimed at serving and satisfying our customers’ desire for access to cash. This quarter’s results demonstrate continued momentum with further improvements to key pawn metrics, including return on pawn earnings assets.
"We have completed the strategic review of Grupo Finmart announced in February 2016. We have concluded that a sale of this business is the preferred alternative and have commenced a process to solicit proposals from interested buyers. UBS Investment Bank, which has been assisting us in the strategic review, is running the sale process. Separately, we determined during the quarter that the goodwill associated with Grupo Finmart should be written-off and recorded an impairment charge of $73.9 million; goodwill related to Grupo Finmart is now zero. This impairment, along with the quarterly operating results from Grupo Finmart, offset the positive performance in our U.S. and Mexico pawn businesses and resulted in a consolidated net loss for the quarter.
"Our focus on the customer experience and the fundamentals of the pawn business will continue in the months ahead, including further investment in talent, training and development, and customer-facing systems. We are confident these initiatives, along with the quality pawn fundamentals we have demonstrated in recent quarters, will help us continue to build our platform for profitable growth."
(All comparisons shown in this release are to the same period in the prior year unless otherwise noted)
CONSOLIDATED RESULTS
Three-Months Ended March 31, 2016
•
For the quarter ended March 31, 2016, net loss from continuing operations attributable to EZCORP was $73.0 million ($1.33 per share), compared to a net loss of $3.4 million ($0.06 per share). This year-over-year difference reflects ongoing challenges in Grupo Finmart, including a non-cash goodwill impairment charge of $73.9 million ($1.26 per share impact). The U.S. and Mexico pawn businesses continue to deliver improved performance.



•
Total revenue for the current quarter was $201.9 million, down 2%, and net revenue was flat at $113.8 million. On a constant currency basis1, total revenue was $209.6 million, up 2%, with net revenue of $117.5 million, up 3%. The increase in both total revenue and net revenue (stated in constant currency) is primarily due to higher pawn service charges and merchandise margin, offset by higher bad debt levels in Grupo Finmart.
•
Operating expenses for the current quarter increased 3% (6% on a constant currency basis), primarily due to continued investment in store labor costs to improve employee and customer satisfaction and costs from new stores.
•
Annualized return on pawn earning assets2 increased to 152% in the current quarter versus 150%.
Six-Months Ended March 31, 2016
•
For the six months ended March 31, 2016, net loss from continuing operations attributable to EZCORP was $80.3 million ($1.46 per share), compared to net income of $1.3 million ($0.02 per share). This year-over-year difference reflects continued improvement in our U.S. and Mexico pawn businesses (as discussed below) that was more than offset by losses attributable to Grupo Finmart, including the non-cash goodwill impairment charge of $73.9 million in the current quarter.
•
Total revenue for the six months ended March 31, 2016 was $400.4 million, 4% lower, with net revenue of $225.3 million, a 2% decrease. On a constant currency basis, total revenue was $415.5 million, 1% lower, and net revenue was flat at $231.7 million.
•
Operating expenses for the six months ended March 31, 2016 increased 8% (13% on a constant currency basis), primarily due to continued investment in store labor costs to improve employee and customer satisfaction, as well as costs from new stores, restatement expenses, increased accrued incentive compensation and investment in strengthening the Grupo Finmart management team.
•
Annualized return on pawn earning assets2 increased to 152% from 147%.
OPERATING METRICS
U.S. Pawn Segment
Three-Months Ended March 31, 2016
•
Focus on the customer experience drove pawn lending momentum, resulting in an increase in PLO of 9% in total and 7% on a same store basis. The pawn loan redemption rate for the quarter was 85%, unchanged from the prior-year period.
•
PSC increased 8% in total, 6% on a same store basis, as a result of strong PLO growth. Annualized yield on PLO decreased to 168% from 169%.
•
Merchandise sales gross margin improved to 39% from 34% attributable to discipline in pricing cadences and healthy loan valuations, driving merchandise sales gross profit growth.
•
Net revenue growth of 8% led to a 15% improvement in segment contribution. Operations expenses increased 6% as we continue to invest in labor costs to improve employee and customer satisfaction.
•
Aged inventory reduced to 10% of total inventory from 13%.
Six-Months Ended March 31, 2016
•
Same store PLO growth has continued to strengthen from a 6% decline in the September 2015 quarter, to a 0.5% increase as of the December 2015 quarter, to a 7% increase in the March 2016 quarter, generating same store PSC growth of 3% in the six-month period ended March 31, 2016.

1 In addition to the financial information prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), we provide certain financial information on a “constant currency” basis, which excludes the impact of foreign currency exchange rate fluctuations. For additional information about the constant currency calculations, as well as a reconciliation of the constant currency financial measures to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.
2Annualized return on pawn earning assets is equal to the annualized merchandise and scrap sales gross profit and pawn service charges, divided by average pawn loans and inventory balances outstanding.
2




•
Annualized PLO yield and pawn loan redemption rate are both unchanged from the prior-year period at 166% and 84%, respectively.
•
Merchandise sales gross margin increased to 39% from 34%, resulting in an 18% increase in merchandise sales gross profit.
•
Net revenue was up 7%, driving a 7% increase in segment contribution. Store operations expenses increased 6%, primarily due to higher labor costs to drive customer and employee satisfaction, including store team member incentive programs.
Mexico Pawn Segment
Three-Months Ended March 31, 2016
•
Focus on improving the customer experience along with operational execution refinements led to a 26% increase in total and a 28% increase in same-store PLO on a constant currency basis (up 11% in total and 13% in same-stores on a GAAP basis). This represents the seventh consecutive quarter with double-digit same store PLO growth on a constant currency basis. The redemption rate on pawn loans decreased slightly to 78% from 79%.
•
Same store PSC grew 27% on a constant currency basis (up 5% on a GAAP basis). Annualized PLO yield was a strong 197% compared to 203%.
•
Merchandise sales gross margin increased to 31% from 28% as the result of continued improvement in pawn loan valuations and discipline in pricing cadences. Merchandise sales gross profit increased 30% on a constant currency basis (up 7% on a GAAP basis).
•
Net revenue increased 25% on a constant currency basis (up 4% on a GAAP basis).
•
Operating expenses increased 5% on a constant currency basis (decreased 13% on a GAAP basis), driven primarily by investments in labor to drive employee and customer satisfaction and increased advertising expense.
•
Increase in segment contribution of $2.5 million on a constant currency basis (increase of $2.1 million from nominal loss in the prior-year quarter on a GAAP basis).
•
Aged inventory ended the quarter at 3% of total inventory compared to 11%.
Six-Months Ended March 31, 2016
•
Same store PSC increased 25% on a constant currency basis (up 4% on a GAAP basis). Annualized yield on pawn loans decreased to 195% from 199%. The redemption rate on pawn loans in the first half was unchanged at 78%.
•
Merchandise sales gross margin increased to 33% from 30%, driving a merchandise sales gross profit increase of 21% on a constant currency basis (flat on a GAAP basis).
•
Net revenue was up 21% on a constant currency basis (flat on a GAAP basis).
•
Operations expense increased 17% on a constant currency basis (decreased 3% on a GAAP basis) driven primarily by investments in labor to drive employee and customer satisfaction and increased advertising expense.
•
Increase in segment contribution of $2.4 million on a constant currency basis ($1.6 million on a GAAP basis).
Grupo Finmart Segment
Three Months Ended March 31, 2016
•
Segment loss of $82.9 million on a constant currency basis ($81.2 million on a GAAP basis) compared to a segment loss of $2.6 million on a GAAP basis. The increase in the segment loss was due primarily to a non-cash goodwill impairment charge of $73.9 million, in addition to increased bad debt expenses driven predominately by delays in payment timing. A valuation of Grupo Finmart of $46.5 million was determined as part of the goodwill valuation process.

3

•
During the quarter, operational initiatives yielded performance improvements. Comparison of current quarter to immediately preceding quarter showed:
◦
Loan collections up 33%, including accelerated receipts on previously reserved loans more than doubling.
◦
Cost reduction program delivering cash SG&A savings.
◦
Originations focused on higher quality, better performing government agencies.
•
Operations expenses increased 36% on a constant currency basis (13% increase on a GAAP basis) primarily attributed to investment in strengthening the management team and an increase in deferred commissions.
•
EZCORP provided $6 million of funding to Grupo Finmart in the quarter, including $2 million for working capital requirements and $4 million to repay Grupo Finmart maturing debt.
•
In light of the changing industry dynamics and business environment, a strategic review of Grupo Finmart was announced in February 2016 with a view toward maximizing long-term shareholder value. That strategic review was completed in April 2016, with sale of the business identified as the preferred alternative.
Six Months Ended March 31, 2016
•
Segment loss of $102.4 million on a constant currency basis ($98.1 million on a GAAP basis) compared to a segment loss of $10.8 million on a GAAP basis in the prior year. The increase in the segment loss was primarily attributable to the goodwill impairment charge in addition to an increase in bad debt expense.
•
The bad debt expense was offset by $10.2 million received in collections in the current six months on loans that were fully reserved.
•
Operations expense increased 38% on a constant currency basis (14% increase on a GAAP basis) primarily attributed to investment in strengthening management team and increase in deferred commissions.
•
EZCORP provided $17 million of funding to Grupo Finmart in the current six-month period, including $5 million for working capital requirements and $12 million to repay Grupo Finmart maturing debt.
CONFERENCE CALL
EZCORP will host a conference call on Tuesday, May 10, 2016, at 7:30am Central Time to discuss second quarter results. Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 8428284, International dialing (678) 894-3054. The conference call will be webcast simultaneously to the public through this link: http://investors.ezcorp.com/. A replay of the conference call will be available online at http://investors.ezcorp.com/ shortly after the call.
ABOUT EZCORP
EZCORP is a leading provider of pawn loans in the United States and Mexico and consumer loans in Mexico. At our pawn stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers. 
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

4


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:
Jeff Christensen
Vice President, Investor Relations
Email: jeff_christensen@ezcorp.com
Phone: (512) 437-3545


5


EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended March 31,
 
Six Months Ended March 31,
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
(Unaudited)
 
(in thousands, except per share amounts)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
109,343

 
$
107,852

 
$
217,927

 
$
217,491

Jewelry scrapping sales
12,780

 
18,399

 
22,401

 
36,933

Pawn service charges
64,130

 
59,470

 
130,724

 
124,397

Consumer loan fees and interest
15,616

 
18,544

 
28,804

 
37,515

Other revenues
30

 
910

 
497

 
1,565

Total revenues
201,899

 
205,175

 
400,353

 
417,901

Merchandise cost of goods sold
68,332

 
72,492

 
134,591

 
144,970

Jewelry scrapping cost of goods sold
11,085

 
14,354

 
19,161

 
29,029

Consumer loan bad debt
8,683

 
4,761

 
21,286

 
13,276

Net revenues
113,799

 
113,568

 
225,315

 
230,626

Operating expenses:


 


 


 


Operations
80,282

 
77,190

 
165,888

 
157,277

Administrative
15,621

 
14,800

 
35,604

 
27,352

Depreciation and amortization
7,082

 
8,095

 
15,141

 
16,103

Loss on sale or disposal of assets
649

 
387

 
682

 
643

Restructuring
218

 
704

 
1,910

 
726

Total operating expenses
103,852

 
101,176

 
219,225

 
202,101

Operating income
9,947

 
12,392

 
6,090

 
28,525

Interest expense
8,449

 
11,296

 
17,641

 
23,330

Interest income
(127
)
 
(512
)
 
(267
)
 
(1,043
)
Equity in net (income) loss of unconsolidated affiliate
(1,877
)
 
3,678

 
(3,932
)
 
1,484

Impairment of goodwill
73,921

 
—

 
73,921

 
—

Other expense
89

 
1,862

 
959

 
2,621

(Loss) income from continuing operations before income taxes
(70,508
)
 
(3,932
)
 
(82,232
)
 
2,133

Income tax expense
6,189

 
362

 
2,493

 
3,626

Loss from continuing operations, net of tax
(76,697
)
 
(4,294
)
 
(84,725
)
 
(1,493
)
(Loss) income from discontinued operations, net of tax
(1,094
)
 
4,731

 
(1,332
)
 
11,608

Net (loss) income
(77,791
)
 
437

 
(86,057
)
 
10,115

Net loss from continuing operations attributable to noncontrolling interest
(3,666
)
 
(906
)
 
(4,458
)
 
(2,840
)
Net (loss) income attributable to EZCORP, Inc.
$
(74,125
)
 
$
1,343

 
$
(81,599
)
 
$
12,955

 
 
 
 
 
 
 
 
Basic (loss) earnings per share attributable to EZCORP, Inc.:
 
 
 
 
 
 
 
Continuing operations
$
(1.33
)
 
$
(0.06
)
 
$
(1.46
)
 
$
0.02

Discontinued operations
(0.02
)
 
0.09

 
(0.02
)
 
0.22

Basic (loss) earnings per share
$
(1.35
)
 
$
0.03

 
$
(1.48
)
 
$
0.24

 
 
 
 
 
 
 
 
Diluted (loss) earnings per share attributable to EZCORP, Inc.:
 
 
 
 
 
 
 
Continuing operations
$
(1.33
)
 
$
(0.06
)
 
$
(1.46
)
 
$
0.02

Discontinued operations
(0.02
)
 
0.09

 
(0.02
)
 
0.22

Diluted (loss) earnings per share
$
(1.35
)
 
$
0.03

 
$
(1.48
)
 
$
0.24

 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
54,843

 
54,184

 
54,869

 
53,915

Diluted
54,843

 
54,184

 
54,869

 
53,972

 
 
 
 
 
 
 
 
Net (loss) income from continuing operations attributable to EZCORP, Inc.
$
(73,031
)
 
$
(3,388
)
 
$
(80,267
)
 
$
1,347

Net (loss) income from discontinued operations attributable to EZCORP, Inc.
(1,094
)
 
4,731

 
(1,332
)
 
11,608

Net (loss) income attributable to EZCORP, Inc.
$
(74,125
)
 
$
1,343

 
$
(81,599
)
 
$
12,955


6


EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
March 31,
2016
 
March 31,
2015
 
September 30,
2015
 
 
 
 
 
 
 
(Unaudited)
 
 
Assets:
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
75,336

 
$
138,173

 
$
59,124

Restricted cash
13,817

 
47,909

 
15,137

Pawn loans
140,195

 
127,929

 
159,964

Consumer loans, net
26,362

 
55,529

 
36,533

Pawn service charges receivable, net
27,626

 
24,909

 
30,852

Consumer loan fees and interest receivable, net
13,226

 
13,063

 
19,802

Inventory, net
126,446

 
116,144

 
124,084

Income taxes receivable
557

 
52,234

 
45,175

Prepaid expenses and other current assets
32,505

 
32,383

 
21,076

Total current assets
456,070

 
608,273

 
511,747

Investment in unconsolidated affiliate
56,677

 
94,510

 
56,182

Property and equipment, net
64,962

 
102,252

 
75,594

Restricted cash, non-current
2,308

 
2,880

 
2,883

Goodwill
254,782

 
344,931

 
327,460

Intangible assets, net
40,197

 
49,674

 
41,263

Non-current consumer loans, net
62,673

 
79,860

 
75,824

Deferred tax asset, net
77,125

 
35,213

 
69,121

Other assets, net
19,655

 
60,041

 
42,985

Total assets
$
1,034,449

 
$
1,377,634

 
$
1,203,059

 
 
 
 
 
 
Liabilities, temporary equity and equity:
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current maturities of long-term debt
$
82,174

 
$
71,471

 
$
74,345

Current capital lease obligations
—

 
93

 
—

Accounts payable and other accrued expenses
85,836

 
89,711

 
107,871

Other current liabilities
2,595

 
6,230

 
15,384

Customer layaway deposits
11,370

 
10,484

 
10,470

Income taxes payable
6,632

 
—

 
—

Total current liabilities
188,607

 
177,989

 
208,070

Long-term debt, less current maturities, net
252,808

 
344,960

 
297,166

Deferred gains and other long-term liabilities
2,751

 
7,673

 
6,157

Total liabilities
444,166

 
530,622

 
511,393

Commitments and contingencies


 


 


Temporary equity:
 
 
 
 
 
Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; none as of March 31, 2016 and 1,168,456 shares issued and outstanding at redemption value as of March 31, 2015 and September 30, 2015
—

 
11,696

 
11,696

Redeemable noncontrolling interest
(1,229
)
 
16,827

 
3,235

Total temporary equity
(1,229
)
 
28,523

 
14,931

Stockholders’ equity:
 
 
 
 
 
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of March 31, 2016 and 2015 and September 30, 2015; issued and outstanding: 50,989,430 as of March 31, 2016; 50,681,477 as of March 31, 2015; and 50,726,289 as of September 30, 2015
510

 
506

 
507

Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171
30

 
30

 
30

Additional paid-in capital
312,569

 
329,973

 
307,080

Retained earnings
341,538

 
522,541

 
423,137

Accumulated other comprehensive loss
(62,805
)
 
(34,561
)
 
(54,019
)
EZCORP, Inc. stockholders’ equity
591,842

 
818,489

 
676,735

Noncontrolling interest
(330
)
 
—

 
—

Total equity
591,512

 
818,489

 
676,735

Total liabilities, temporary equity and equity
$
1,034,449

 
$
1,377,634

 
$
1,203,059


7


EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Six Months Ended March 31,
 
2016
 
2015
 
 
 
 
 
(Unaudited)
 
(in thousands)
Operating activities:
 
 
 
Net (loss) income
$
(86,057
)
 
$
10,115

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
15,141

 
18,097

Amortization of debt discount and consumer loan premium, net
4,357

 
4,229

Consumer loan loss provision
18,662

 
14,023

Deferred income taxes
(8,004
)
 
(5,536
)
Impairment of goodwill
73,921

 
—

Amortization of deferred financing costs
1,575

 
2,625

Amortization of prepaid commissions
7,754

 
6,200

Other adjustments
(2,149
)
 
380

Loss on sale or disposal of assets
682

 
950

Stock compensation expense (benefit)
2,149

 
(1,928
)
(Income) loss from investment in unconsolidated affiliate
(3,932
)
 
1,484

Changes in operating assets and liabilities, net of business acquisitions:
 
 
 
Service charges and fees receivable
10,140

 
2,542

Inventory
(993
)
 
2,499

Prepaid expenses, other current assets and other assets
(5,935
)
 
(16,949
)
Accounts payable, other accrued expenses, deferred gains and other long-term liabilities
(12,112
)
 
(5,925
)
Customer layaway deposits
851

 
1,947

Restricted cash
(4,860
)
 
(835
)
Income taxes receivable
51,250

 
4,427

Payments of restructuring charges
(6,701
)
 
(2,962
)
Dividends from unconsolidated affiliate
—

 
2,407

Net cash provided by operating activities
55,739

 
37,790

Investing activities:
 
 
 
Loans made
(323,980
)
 
(417,014
)
Loans repaid
225,138

 
334,888

Recovery of pawn loan principal through sale of forfeited collateral
121,830

 
138,885

Additions to property and equipment
(2,976
)
 
(15,934
)
Acquisitions, net of cash acquired
(6,000
)
 
(4,750
)
Investment in unconsolidated affiliate
—

 
(12,140
)
Proceeds from sale of assets
26

 
—

Net cash provided by investing activities
14,038

 
23,935

Financing activities:
 
 
 
Payout of deferred consideration
(14,875
)
 
(6,000
)
Repurchase of redeemable common stock issued due to acquisitions
(11,750
)
 
—

Proceeds from settlement of forward currency contracts
3,557

 
2,313

Change in restricted cash
6,519

 
11,476

Proceeds from bank borrowings, net of debt issuance costs
14,302

 
69,384

Payments on bank borrowings and capital lease obligations
(47,698
)
 
(51,677
)
Net cash (used in) provided by financing activities
(49,945
)
 
25,496

Effect of exchange rate changes on cash and cash equivalents
(3,620
)
 
(4,373
)
Net increase in cash and cash equivalents
16,212

 
82,848

Cash and cash equivalents at beginning of period
59,124

 
55,325

Cash and cash equivalents at end of period
$
75,336

 
$
138,173

 
 
 
 
Non-cash investing and financing activities:
 
 
 

8



Pawn loans forfeited and transferred to inventory
$
122,709

 
$
119,028

Issuance of common stock, subject to possible redemption, due to acquisition
—

 
11,696

Deferred consideration
—

 
250


9


EZCORP, Inc.
SELECTED OPERATING SEGMENT RESULTS (UNAUDITED)
U.S. Pawn
The following table presents selected summary financial data from continuing operations for the U.S. Pawn segment:
 
Three Months Ended March 31,
 
Percentage Change
 
2016
 
2015
 
 
 
 
 
 
 
 
(in thousands)
 
 
Net revenues:
 
 
 
 
 
Pawn service charges
$
56,614

 
$
52,317

 
8
 %
 
 
 
 
 
 
Merchandise sales
94,740

 
92,472

 
2
 %
Merchandise sales gross profit
36,499

 
30,982

 
18
 %
Gross margin on merchandise sales
39
%
 
34
%
 
15
 %
 
 
 
 
 
 
 
 
 
 
 
 
Jewelry scrapping sales
11,599

 
17,391

 
(33
)%
Jewelry scrapping sales gross profit
1,471

 
3,928

 
(63
)%
Gross margin on jewelry scrapping sales
13
%
 
23
%
 
(43
)%
 
 
 
 
 
 
Other revenues
49

 
224

 
(78
)%
Net revenues
94,633

 
87,451

 
8
 %
 
 
 
 
 
 
Segment operating expenses:
 
 
 
 

Operations
61,240

 
57,920

 
6
 %
Depreciation and amortization
3,042

 
3,607

 
(16
)%
Segment operating contribution
30,351

 
25,924

 
17
 %
 
 
 
 
 
 
Other segment expenses
676

 
7

 
*

Segment contribution
$
29,675

 
$
25,917

 
15
 %
 
 
 
 
 
 
Other data:
 
 
 
 
 
Net earning assets — continuing operations
$
231,956

 
$
210,728

 
10
 %
Inventory turnover — general merchandise (b)
2.8

 
3.2

 
(13
)%
Inventory turnover — jewelry (b)
1.2

 
1.3

 
(8
)%
Average monthly ending pawn loan balance per store (a)
$
254

 
$
234

 
9
 %
Average annual yield on pawn loans outstanding
168
%
 
169
%
 
-100bps

Pawn loan redemption rate (c)
85
%
 
85
%
 
0bps

*
Represents an increase or decrease in excess of 100% or not meaningful.
(a)
Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(b)
Calculation of inventory turnover excludes the effects of scrapping.
(c)
Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.


10


Mexico Pawn
The following table presents selected summary financial data from continuing operations for the Mexico Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
 
Three Months Ended March 31,
 
Percentage Change GAAP
 
Percentage Change Constant Currency
 
2016
 
2016 Constant Currency (a)
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
(in USD thousands)
 
 
 
 
Net revenues:
 
 
 
 
 
 
 
 
 
Pawn service charges
$
7,516

 
$
9,080

 
$
7,153

 
5
 %
 
27
 %
 
 
 
 
 
 
 
 
 
 
Merchandise sales
14,603

 
17,641

 
14,883

 
(2
)%
 
19
 %
Merchandise sales gross profit
4,513

 
5,452

 
4,203

 
7
 %
 
30
 %
Gross margin on merchandise sales
31
%
 
31
%
 
28
%
 
11
 %
 
11
 %
 
 
 
 
 
 
 
 
 
 
Jewelry scrapping sales
1,181

 
1,427

 
917

 
29
 %
 
56
 %
Jewelry scrapping sales gross profit
224

 
271

 
97

 
*

 
*

Gross margin on jewelry scrapping sales
19
%
 
19
%
 
11
%
 
73
 %
 
73
 %
 
 
 
 
 
 
 
 
 
 
Other revenues
(117
)
 
(141
)
 
269

 
*

 
*

Net revenues
12,136

 
14,662

 
11,722

 
4
 %
 
25
 %
 
 
 
 
 
 
 
 
 
 
Segment operating expenses:
 
 
 
 
 
 


 
 
Operations
9,024

 
10,901

 
10,406

 
(13
)%
 
5
 %
Depreciation and amortization
764

 
923

 
1,101

 
(31
)%
 
(16
)%
Segment operating contribution
2,348

 
2,838

 
215

 
*

 
*

 
 
 
 
 
 
 
 
 
 
Other segment expenses (b)
277

 
430

 
260

 
7
 %
 
65
 %
Segment contribution (loss)
$
2,071

 
$
2,408

 
$
(45
)
 
*

 
*

 
 
 
 
 
 
 
 
 
 
Other data:
 
 
 
 
 
 


 
 
Net earning assets — continuing operations
$
34,793

 
$
39,600

 
$
33,032

 
5
 %
 
20
 %
Inventory turnover (e)
2.4

 
2.4

 
2.2

 
9
 %
 
9
 %
Average monthly ending pawn loan balance per store (c)
$
66

 
$
75

 
$
64

 
3
 %
 
17
 %
Average annual yield on pawn loans outstanding
197
%
 
202
%
 
203
%
 
-600bps

 
-100bps

Pawn loan redemption rate (d)
78
%
 
78
%
 
79
%
 
-100bps

 
-100bps

*
Represents an increase or decrease in excess of 100% or not meaningful.
(a)
For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used.
(b)
The three-months ended March 31, 2016 constant currency balance excludes $0.1 million of net foreign currency transaction gains resulting from movement in exchange rates. The net foreign currency transaction losses for the three-months ended March 31, 2015 were $0.3 million and are not excluded from the above results.
(c)
Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(d)
Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.
(e)
Calculation of inventory turnover excludes the effects of scrapping.

11


Grupo Finmart
The table below presents selected summary financial data from continuing operations for the Grupo Finmart segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
 
Three Months Ended March 31,
 
Percentage Change GAAP
 
Percentage Change Constant Currency
 
2016
 
2016 Constant Currency (a)
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Consumer loan fees and interest
$
13,589

 
$
16,416

 
$
16,391

 
(17
)%
 
—
 %
Other revenues
98

 
118

 
49

 
100
 %
 
*

Total revenues
13,687

 
16,534

 
16,440

 
(17
)%
 
1
 %
Consumer loan bad debt
8,252

 
9,969

 
4,110

 
*

 
*

Net revenues
5,435

 
6,565

 
12,330

 
(56
)%
 
(47
)%
 
 
 
 
 
 
 
 
 
 
Segment expenses (income):
 
 
 
 
 
 
 
 
 
Operations
8,026

 
9,696

 
7,109

 
13
 %
 
36
 %
Depreciation and amortization
476

 
575

 
626

 
(24
)%
 
(8
)%
Impairment of goodwill (e)
73,921

 
73,921

 
—

 
*

 
*

Interest expense
4,498

 
5,434

 
6,376

 
(29
)%
 
(15
)%
Interest income
(120
)
 
(145
)
 
(423
)
 
(72
)%
 
(66
)%
Other (income) expense (b)
(124
)
 
—

 
1,272

 
*

 
*

Segment loss
$
(81,242
)
 
$
(82,916
)
 
$
(2,630
)
 
*

 
*

 
 
 
 
 
 
 
 
 
 
Other data:
 
 
 
 
 
 
 
 
 
Net earning assets — continuing operations
$
86,771

 
$
98,759

 
$
116,857

 
(26
)%
 
(15
)%
Consumer loan originations (c)
5,349

 
6,462

 
20,061

 
(73
)%
 
(68
)%
Consumer loan bad debt as a percentage of gross average consumer loan balance (d)
14
%
 
14
%
 
4
%
 
*

 
*

*
Represents an increase or decrease in excess of 100% or not meaningful.
(a)
For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used.
(b)
The three-months ended March 31, 2016 constant currency balance excludes a $0.1 million of net foreign currency transaction gains resulting from movement in exchange rates. The net foreign currency transaction losses for the three-months ended March 31, 2015 were $1.3 million and are not excluded from the above results.
(c)
Constant currency result is calculated as the average monthly consumer loan origination balance translated at the average closing daily exchange rate for the applicable period.
(d)
Represents consumer loan bad debt expense during the applicable period as a percentage of the average monthly consumer loan balance during the applicable period. Constant currency consumer loan balance is calculated using the end of period rate for each month.
(e)
Amount not adjusted on a constant currency basis as charge occurred at a single point in time.

12



U.S. Pawn
The following table presents selected summary financial data from continuing operations for the U.S. Pawn segment:
 
Six Months Ended March 31,
 
Percentage
Change
 
2016
 
2015
 
 
 
 
 
 
 
 
(in thousands)
 
 
Net revenues:
 
 
 
 
 
Pawn service charges
$
115,235

 
$
109,352

 
5
 %
 
 
 
 
 
 
Merchandise sales
186,734

 
181,914

 
3
 %
Merchandise sales gross profit
73,032

 
61,807

 
18
 %
Gross margin on merchandise sales
39
%
 
34
%
 
15
 %
 
 
 
 
 
 
Jewelry scrapping sales
21,199

 
34,398

 
(38
)%
Jewelry scrapping sales gross profit
3,011

 
7,602

 
(60
)%
Gross margin on jewelry scrapping sales
14
%
 
22
%
 
(36
)%
 
 
 
 
 
 
Other revenues
242

 
408

 
(41
)%
Net revenues
191,520

 
179,169

 
7
 %
 
 
 
 
 
 
Segment operating expenses:
 
 
 
 


Operations
124,785

 
117,427

 
6
 %
Depreciation and amortization
6,602

 
7,059

 
(6
)%
Segment operating contribution
60,133

 
54,683

 
10
 %
 
 
 
 
 
 
Other segment expenses (income)
1,659

 
(1
)
 
*

Segment contribution
$
58,474

 
$
54,684

 
7
 %
 
 
 
 
 
 
Other data:
 
 
 
 


Average monthly ending pawn loan balance per store (a)
$
265

 
$
254

 
4
 %
Average annual yield on pawn loans outstanding
166
%
 
166
%
 
0bps

Pawn loan redemption rate (b)
84
%
 
84
%
 
0bps

*
Represents an increase or decrease in excess of 100% or not meaningful.
(a)
Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(b)
Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.

13


Mexico Pawn
The following table presents selected summary financial data from continuing operations for the Mexico Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
 
Six Months Ended March 31,
 
Percentage Change GAAP
 
Percentage Change Constant Currency
 
2016
 
2016 Constant Currency (a)
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
(in USD thousands)
 
 
 
 
Net revenues:
 
 
 
 
 
 
 
 
 
Pawn service charges
$
15,489

 
$
18,716

 
$
15,045

 
3
 %
 
24
 %
 
 
 
 
 
 
 
 
 
 
Merchandise sales
31,189

 
37,687

 
34,463

 
(10
)%
 
9
 %
Merchandise sales gross profit
10,301

 
12,447

 
10,299

 
—
 %
 
21
 %
Gross margin on merchandise sales
33
%
 
33
%
 
30
%
 
10
 %
 
10
 %
 
 
 
 
 
 
 
 
 
 
Jewelry scrapping sales
1,181

 
1,427

 
2,324

 
(49
)%
 
(39
)%
Jewelry scrapping sales gross profit
224

 
271

 
243

 
(8
)%
 
12
 %
Gross margin on jewelry scrapping sales
19
%
 
19
%
 
10
%
 
90
 %
 
90
 %
 
 
 
 
 
 
 
 
 
 
Other revenues
74

 
89

 
509

 
(85
)%
 
(83
)%
Net revenues
26,088

 
31,523

 
26,096

 
—
 %
 
21
 %
 
 
 
 
 
 
 
 
 
 
Segment operating expenses:
 
 
 
 
 
 


 
 
Operations
20,217

 
24,429

 
20,926

 
(3
)%
 
17
 %
Depreciation and amortization
1,565

 
1,891

 
2,345

 
(33
)%
 
(19
)%
Segment operating contribution
4,306

 
5,203

 
2,825

 
52
 %
 
84
 %
 
 
 
 
 
 
 
 
 
 
Other segment expenses (b)
799

 
906

 
955

 
(16
)%
 
(5
)%
Segment contribution
$
3,507

 
$
4,297

 
$
1,870

 
88
 %
 
*

 
 
 
 
 
 
 
 
 
 
Other data:
 
 
 
 
 
 


 
 
Average monthly ending pawn loan balance per store (c)
$
67

 
$
76

 
$
62

 
8
 %
 
23
 %
Average annual yield on pawn loans outstanding
195
%
 
196
%
 
199
%
 
-400bps

 
-300bps

Pawn loan redemption rate (d)
78
%
 
78
%
 
78
%
 
0bps

 
0bps

*
Represents an increase or decrease in excess of 100% or not meaningful.
(a)
For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used.
(b)
The six-months ended March 31, 2016 constant currency balance excludes nominal net foreign currency transaction losses resulting from movement in exchange rates. The net foreign currency transaction losses for the six-months ended March 31, 2015 were $0.7 million and are not excluded from the above results.
(c)
Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(d)
Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.

14


Grupo Finmart
The table below presents selected summary financial data from continuing operations for the Grupo Finmart segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
 
Six Months Ended March 31,
 
Percentage Change GAAP
 
Percentage Change Constant Currency
 
2016
 
2016 Constant Currency (a)
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Consumer loan fees and interest
$
24,403

 
$
29,487

 
$
32,706

 
(25
)%
 
(10
)%
Other revenues
181

 
219

 
105

 
72
 %
 
*

Total revenues
24,584

 
29,706

 
32,811

 
(25
)%
 
(9
)%
Consumer loan bad debt
20,243

 
24,460

 
11,850

 
71
 %
 
*

Net revenues
4,341

 
5,246

 
20,961

 
(79
)%
 
(75
)%
 
 
 
 
 
 
 
 
 
 
Segment expenses (income):
 
 
 
 
 
 
 
 
 
Operations
17,614

 
21,284

 
15,397

 
14
 %
 
38
 %
Depreciation and amortization
993

 
1,200

 
1,192

 
(17
)%
 
1
 %
Impairment of goodwill (e)
73,921

 
73,921

 
—

 
*

 
*

Interest expense
9,563

 
11,555

 
14,657

 
(35
)%
 
(21
)%
Interest income
(251
)
 
(303
)
 
(904
)
 
(72
)%
 
(66
)%
Other expense (b)
644

 
—

 
1,446

 
(55
)%
 
*

Segment loss
$
(98,143
)
 
$
(102,411
)
 
$
(10,827
)
 
*

 
*

 
 
 
 
 
 
 
 
 
 
Other data:
 
 
 
 
 
 
 
 
 
Consumer loan originations (c)
$
21,319

 
$
25,761

 
$
41,958

 
(49
)%
 
(39
)%
Consumer loan bad debt as a percentage of gross average consumer loan balance (d)
26
%
 
26
%
 
10
%
 
*

 
*

*
Represents an increase or decrease in excess of 100% or not meaningful.
(a)
For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used.
(b)
The six-months ended March 31, 2016 constant currency balance excludes a $0.6 million of net foreign currency transaction losses resulting from movement in exchange rates. The net foreign currency transaction losses for the six-months ended March 31, 2015 were $1.4 million and are not excluded from the above results.
(c)
Constant currency result is calculated as the average monthly consumer loan origination balance translated at the average closing daily exchange rate for the applicable period.
(d)
Represents consumer loan bad debt expense during the applicable period as a percentage of the average monthly consumer loan balance during the applicable period. Constant currency consumer loan balance is calculated using the end of period rate for each month.
(e)
Amount not adjusted on a constant currency basis as charge occurred at a single point in time.


15


EZCORP, Inc.
STORE COUNT ACTIVITY
 
Three Months Ended March 31, 2016
 
Company-owned Stores
 
 
 
U.S. Pawn
 
Mexico Pawn*
 
Grupo Finmart
 
Other International
 
Consolidated
 
Franchises
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2015
516

 
237

*
46

 
27

 
826

 
1

Locations acquired
6

 
—

 
—

 
—

 
6

 
—

Locations sold, combined or closed
—

 
—

 
(3
)
 
—

 
(3
)
 
(1
)
As of March 31, 2016
522

 
237

 
43

 
27

 
829

 
—

* Includes five buy/sell stores which were converted to Mexico Pawn stores during the period.
 
Three Months Ended March 31, 2015
 
Company-owned Stores
 
 
 
U.S. Pawn
 
Mexico Pawn*
 
Grupo Finmart
 
Other International
 
Consolidated
 
Franchises
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2014
509

 
262

*
53

 
39

 
863

 
4

New locations opened
—

 
1

 
1

 
—

 
2

 
—

Locations acquired
12

 
—

 
—

 
—

 
12

 
—

Locations sold, combined or closed
(2
)
 
(1
)
 
(4
)
 
—

 
(7
)
 
(2
)
As of March 31, 2015
519

 
262

 
50

 
39

 
870

 
2

* Includes 21 buy/sell stores.
 
Six Months Ended March 31, 2016
 
Company-owned Stores
 
 
 
U.S. Pawn
 
Mexico Pawn*
 
Grupo Finmart
 
Other International
 
Consolidated
 
Franchises
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2015
522

 
237

*
53

 
27

 
839

 
1

Locations acquired
6

 
1

 
—

 
—

 
7

 
—

Locations sold, combined or closed
(6
)
 
(1
)
 
(10
)
 
—

 
(17
)
 
(1
)
As of March 31, 2016
522

 
237

 
43

 
27

 
829

 
—

* Includes five buy/sell stores which were converted to Mexico Pawn stores during the period.
 
Six Months Ended March 31, 2015
 
Company-owned Stores
 
 
 
U.S. Pawn
 
Mexico Pawn*
 
Grupo Finmart
 
Other International
 
Consolidated
 
Franchises
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2014
504

 
261

*
53

 
39

 
857

 
5

New locations opened
5

 
2

*
1

 
—

 
8

 
—

Locations acquired
12

 
—

 
—

 
—

 
12

 
—

Locations sold, combined or closed
(2
)
 
(1
)
 
(4
)
 
—

 
(7
)
 
(3
)
As of March 31, 2015
519

 
262

 
50

 
39

 
870

 
2

* Includes 19 buy/sell stores. We acquired two additional buy/sell stores during the period.

16


NON-GAAP FINANCIAL INFORMATION
In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we provide certain other non-GAAP financial information on a constant currency basis ("constant currency"). We use constant currency results to evaluate results of the Mexico Pawn and Grupo Finmart segment operations, which are denominated in Mexican pesos and believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Mexico Pawn and Grupo Finmart operations and reflect an additional way of viewing aspects of our business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting our business. We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. We use this non-GAAP financial information to evaluate and compare operating results across accounting periods. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.
Constant currency results reported herein are calculated by translating condensed consolidated balance sheet and condensed consolidated statement of operations items denominated in Mexican pesos to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations. For balance sheet items, the end of period rate as of March 31, 2016 of 17.3 to 1 was used, compared to the end of period rate as of March 31, 2015 of 15.2 to 1. For statement of operations items, the average closing daily exchange rate for the appropriate period was used. The average exchange rates for the current three and six-months ended March 31, 2016 were 18.0 to 1 and 17.4 to 1, respectively, as compared to the prior year three and six-months ended March 31, 2015 rates of 14.9 to 1 and 14.4 to 1, respectively. Constant currency results, where presented, also exclude foreign currency gain or loss and the related foreign currency derivative gain or loss impact.

17


The following information provides reconciliations of certain non-GAAP financial measures presented in this press release to the most directly comparable financial measures calculated and presented in accordance with GAAP, where not already included in constant currency segment results above.
Miscellaneous Non-GAAP Financial Measures
 
U.S. Dollar Amount
 
Percentage Change YOY
 
 
 
 
 
(in thousands)
 
 
Consolidated revenue (three-months ended March 31, 2016)
$
201,899

 
(2
)%
Currency exchange rate fluctuations
7,671

 
 
Constant currency consolidated revenue (three-months ended March 31, 2016)
$
209,570

 
2
 %
 
 
 
 
Consolidated net revenue (three-months ended March 31, 2016)
$
113,799

 
—
 %
Currency exchange rate fluctuations
3,657

 
 
Constant currency consolidated net revenue (three-months ended March 31, 2016)
$
117,456

 
3
 %
 
 
 
 
Consolidated operating expenses (three-months ended March 31, 2016)
$
103,852

 
3
 %
Currency exchange rate fluctuations
3,871

 
 
Constant currency consolidated operating expenses (three-months ended March 31, 2016)
$
107,723

 
6
 %
 
 
 
 
Consolidated revenue (six-months ended March 31, 2016)
$
400,353

 
(4
)%
Currency exchange rate fluctuations
15,108

 
 
Constant currency consolidated revenue (six-months ended March 31, 2016)
$
415,461

 
(1
)%
 
 
 
 
Consolidated net revenue (six-months ended March 31, 2016)
$
225,315

 
(2
)%
Currency exchange rate fluctuations
6,340

 
 
Constant currency consolidated net revenue (six-months ended March 31, 2016)
$
231,655

 
—
 %
 
 
 
 
Consolidated operating expenses (six-months ended March 31, 2016)
$
219,225

 
8
 %
Currency exchange rate fluctuations
8,554

 
 
Constant currency consolidated operating expenses (six-months ended March 31, 2016)
$
227,779

 
13
 %
 
 
 
 
Mexico Pawn loans outstanding as of March 31, 2016
$
17,271

 
11
 %
Currency exchange rate fluctuations
2,386

 
 
Constant currency Mexico Pawn loans outstanding as of March 31, 2016
$
19,657

 
26
 %
 
 
 
 
Same store Mexico Pawn loans outstanding as of March 31, 2016
$
17,205

 
13
 %
Currency exchange rate fluctuations
2,266

 
 
Constant currency same store Mexico Pawn loans outstanding as of March 31, 2016
$
19,471

 
28
 %
 
 
 
 
Same store Mexico Pawn service charges (three-months ended March 31, 2016)
$
7,380

 
5
 %
Currency exchange rate fluctuations
1,508

 
 
Constant currency same store Mexico Pawn service charges (three-months ended March 31, 2016)
$
8,888

 
27
 %
 
 
 
 
Same store Mexico Pawn service charges (six-months ended March 31, 2016)
$
15,288

 
4
 %
Currency exchange rate fluctuations
3,175

 
 
Constant currency same store Mexico Pawn service charges (six-months ended March 31, 2016)
$
18,463

 
25
 %

18