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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________________________________________ 
FORM 8-K
_______________________________________________________ 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 7, 2016 (December 7, 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 December 7, 2016, EZCORP, Inc. will issue a press release announcing its results of operations and financial condition for the fiscal quarter and 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 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 fourth quarter and annual fiscal 2016 earnings conference call (to be held on December 8, 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 December 7, 2016, announcing EZCORP, Inc.’s results of operations and financial condition for the fiscal quarter and 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:
December 7, 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 December 7, 2016, announcing EZCORP, Inc.’s results of operations and financial condition for the fiscal quarter and year ended September 30, 2016.


Exhibit


https://cdn.kscope.io/943ab98b63f87c61a3d2fe5cee821989-fy2014q1ezcorpa01a04a01.jpg
EZCORP Announces Fourth Quarter and Full-Year Fiscal 2016 Results
Austin, Texas (December 7, 2016) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its fourth quarter and fiscal year ended September 30, 2016.
CEO COMMENTARY AND OUTLOOK
Stuart Grimshaw, EZCORP's Chief Executive Officer, said: "Fiscal 2016 was an important year for our company. Our intense focus on market leadership in meeting our customers' desire for cash whenever they want it, combined with consistent execution, delivered strong operating results for our pawn businesses in the U.S. and Mexico. We achieved market leading growth in same store pawn loans outstanding (PLO), the most influential driver of revenue and profitability, and continued to improve our customer experience metrics.
“In September, we completed the divestiture of Grupo Finmart, which frees up capital, management attention and other resources that we can now deploy to grow our pawn businesses. We exit the year in a strong liquidity position, including $66 million of cash, $50 million available on our credit facility and $89.8 million in notes receivable from the Grupo Finmart sale, over half of which we expect to receive in fiscal 2017.
“From a financial standpoint, the positive pawn operating results were offset by $16.8 million of non-cash charges associated with our minority equity investment in Cash Converters International Limited recorded in the fourth quarter.
"Our intense focus on customer leadership and delivering an outstanding customer experience will continue with investments in process improvements, product and customer data analytics and feedback, technology, targeted incentives, and coaching and mentoring for our field team. We are confident these initiatives will continue to improve our core pawn operating performance, which will provide our platform for profitable growth."
All amounts in this release are from EZCORP continuing operations and in conformity with U.S. generally accepted accounting principles ("GAAP") unless otherwise noted. Comparisons shown in this release are to the same period in the prior year unless otherwise noted.
OPERATIONAL HIGHLIGHTS
▪
Strong pawn fundamentals:
◦
For the year, pawn loans outstanding (PLO) up 4% to $149.8 million in the U.S and up 7% to $17.5 million in Mexico.
◦
Leading the U.S. market with average PLO of $288,100 per store.
◦
Pawn service charges (PSC) up 5% to $60.3 million in the quarter and up 6% to $229.9 million for the year in the U.S., and up 5% to $8.3 million in the quarter and up 3% to $31.9 million for the year in Mexico.
◦
Merchandise sales gross margin up 200bps to 35% in the quarter and up 400bps to 37% for the year.
▪
Revenue growth from strong customer engagement and continued focus on expense management drove underlying business improvement:
◦
Total revenue up $14.3 million in the fourth quarter and $10.5 million for the year.
◦
Net revenue up $7.3 million (7%) in the fourth quarter and $25.2 million (6%) for the year.
◦
Total operating expenses down $32.6 million (24%) in the quarter and $19.6 million (5%) for the year.
▪
Strong liquidity position to support growth with $66 million cash balance at year-end plus $50 million undrawn on our credit facility. Of the $89.8 million in notes receivable from the Grupo Finmart sale, EZCORP anticipates



receiving $45.7 million in fiscal 2017. To date, $6.4 million has been received, consistent with the terms of the notes.
CONSOLIDATED RESULTS
Three-Months Ended September 30, 2016
•
Net loss from continuing operations attributable to EZCORP was $16.9 million ($(0.31) per share), compared to a net loss of $57.1 million ($(1.04) per share) in the prior year quarter. This improvement was driven by revenue growth and continued focus on expense management. The fourth quarter results included a $16.8 million non-cash impairment and equity loss on our investment in Cash Converters International Limited.
•
Total revenue was $184.6 million, up 8%, and net revenue was $106.9 million, up 7%. On a constant currency basis1, total revenue was $188.2 million, up 11%, with net revenue of $108.8 million, up 9%. Higher PLO balances drove increased PSC, and improved inventory management drove increased merchandise margins.
•
Total operating expenses for the fourth quarter decreased 24% (23% decrease a constant currency basis) as we continue to implement operational efficiencies. Corporate administrative expense decreased $10.8 million to $18.0 million, down 37%.
Fiscal Year Ended September 30, 2016
•
Net loss from continuing operations attributable to EZCORP was $8.0 million ($(0.15) per share), compared to a net loss of $51.3 million ($(0.94) per share). This increase reflects continued improvement in our U.S. and Mexico pawn businesses (as discussed below). Fiscal year 2016 results included $11.0 million non-cash impairment on our investment in Cash Converters International Limited, $4.2 million in restatement related expenses and $1.9 million in restructuring costs.
•
Total revenue was $730.5 million, 1% higher, with net revenue of $428.2 million, a 6% increase. On a constant currency basis, total revenue was $748.1 million, 4% higher, and net revenue was $437.9 million, 9% higher. The net revenue increases were driven by growth in PSC as a result of higher PLO balances, as well as improved merchandise sales margins.
•
Total operating expenses decreased 5% (3% on a constant currency basis), with store operating expenses up due to the addition of new stores during the year.
OPERATING METRICS
U.S. Pawn Segment
Three-Months Ended September 30, 2016
•
Enhanced focus on lending operations resulted in an increase in total PLO of 4% to $149.8 million, up 4% on a same store basis.
•
Same store sales were strong in the quarter, up 8%. Merchandise sales gross margin improved to 36% from 35% attributable to efficiently pricing and selling aged inventory, driving merchandise sales gross profit growth of 9% to $29.2 million.
•
Total PSC increased 5% to $60.3 million; 4% on a same store basis. Average monthly yield on PLO decreased to 13% from 14% in the prior-year quarter.
•
Net revenue gains along with reduced expenses led to an increase in segment profit before tax of 136% to $21.4 million.
•
Inventory aged over one year reduced to 8% of total inventory from 10%.



Fiscal Year Ended September 30, 2016
•
PSC of $229.9 million, up 6%, with same store PSC growth of 4%.
•
Average monthly PLO yield remained flat to the prior-year period at 14%.
•
Same store sales increased 3%. Merchandise sales gross margin increased to 38% from 35%, resulting in a 14% increase in merchandise sales gross profit to $131.5 million.
•
Net revenue increased 7% to $369.4 million and segment expenses increased 2%, resulting in a 25% increase in segment profit before tax to $100.1 million.
Mexico Pawn Segment
Three-Months Ended September 30, 2016
•
PLO increased 7% to $17.5 million (up 21% on a constant currency basis). PSC grew 5% to $8.3 million (up 21% on a constant currency basis). Average monthly PLO yield was consistent with the prior-year at 16%
•
Same store sales increased 4% (19% in constant currency). Merchandise sales gross margin increased to 29% from 21% as a result of more disciplined pawn loan valuations and pricing cadence. Merchandise sales gross profit increased 32% to $4.4 million (up 52% on a constant currency basis).
•
Segment profit before tax increased $5.6 million to $2.3 million (up $6.5 million on a constant currency basis).
•
Inventory aged over one year reduced to 3% of total inventory from 4%.
Fiscal Year Ended September 30, 2016
•
PSC increase of 3% to $31.9 million (up 22% on a constant currency basis). Annualized yield on pawn loans remained unchanged to the prior-year period at 16%.
•
Same store sales were flat (19% increase on a constant currency basis). Merchandise sales gross margin increased to 32% from 28%, resulting in a 7% increase in merchandise sales gross profit to $19.3 million (up 27% on a constant currency basis).
•
Expense management leveraged a 3% growth in net revenue to $52.0 million into a $9.5 million increase in segment profit before tax to $8.5 million (net revenue up 22% and segment profit before tax up $12.6 million on a constant currency basis to $11.6 million).
DISCONTINUED OPERATIONS: GRUPO FINMART
During the fourth quarter of fiscal 2016 as a result of the Grupo Finmart disposition, we recorded a gain of $34.2 million. The gain does not take into consideration the total costs associated with the transaction, which were $9.8 million, approximately $8.0 million of which were recorded in our consolidated statements of operations in fiscal 2016 and the remaining $1.8 million of which will be recorded in our consolidated statements of operations in future periods due to ongoing employee service requirements.

CONFERENCE CALL
EZCORP will host a conference call on Thursday, December 8, 2016, at 7:30am Central Time to discuss fourth quarter and fiscal year results. Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 29660657, 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. 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 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




EZCORP, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
Three Months Ended September 30,
 
Fiscal Year Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
As Corrected
 
 
 
As Corrected
 
(in thousands, except per share amounts)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
97,166

 
$
91,490

 
$
409,107

 
$
402,118

Jewelry scrapping sales
16,482

 
10,452

 
50,113

 
57,973

Pawn service charges
68,603

 
65,208

 
261,800

 
247,204

Other revenues
2,334

 
3,141

 
9,485

 
12,705

Total revenues
184,585

 
170,291

 
730,505

 
720,000

Merchandise cost of goods sold
63,540

 
61,359

 
258,271

 
267,789

Jewelry scrapping cost of goods sold
13,768

 
8,457

 
42,039

 
46,066

Other cost of revenues
416

 
928

 
1,965

 
3,125

Net revenues
106,861

 
99,547

 
428,230

 
403,020

Operating expenses:
 
 
 
 
 
 
 
Operations
79,941

 
81,604

 
301,387

 
294,939

Administrative
18,016

 
28,774

 
68,101

 
72,986

Depreciation and amortization
6,120

 
8,511

 
26,542

 
30,959

Loss on sale or disposal of assets
465

 
1,934

 
1,106

 
2,659

Restructuring
11

 
16,317

 
1,921

 
17,080

Total operating expenses
104,553

 
137,140

 
399,057

 
418,623

Operating income (loss)
2,308

 
(37,593
)
 
29,173

 
(15,603
)
Interest expense
4,463

 
3,929

 
16,477

 
16,385

Interest income
(15
)
 
(55
)
 
(81
)
 
(278
)
Loss from investment in unconsolidated affiliates
5,881

 
5,811

 
255

 
5,473

Impairment of investments
10,957

 
26,837

 
10,957

 
26,837

Other expense
387

 
1,234

 
1,202

 
2,187

(Loss) income from continuing operations before income taxes
(19,365
)
 
(75,349
)
 
363

 
(66,207
)
Income tax (benefit) expense
(1,863
)
 
(18,242
)
 
9,361

 
(14,025
)
Loss from continuing operations, net of tax
(17,502
)
 
(57,107
)
 
(8,998
)
 
(52,182
)
Income (loss) from discontinued operations, net of tax
19,636

 
(36,998
)
 
(79,432
)
 
(42,045
)
Net income (loss)
2,134

 
(94,105
)
 
(88,430
)
 
(94,227
)
Net loss attributable to noncontrolling interest
(1,097
)
 
(1,805
)
 
(7,686
)
 
(5,035
)
Net income (loss) attributable to EZCORP, Inc.
$
3,231

 
$
(92,300
)
 
$
(80,744
)
 
$
(89,192
)
 
 
 
 
 
 
 
 
Basic loss per share attributable to EZCORP, Inc. — continuing operations
$
(0.31
)
 
$
(1.04
)
 
$
(0.15
)
 
$
(0.94
)
Diluted loss per share attributable to EZCORP, Inc. — continuing operations
$
(0.31
)
 
$
(1.04
)
 
$
(0.15
)
 
$
(0.94
)
 
 
 
 
 
 
 
 
Weighted-average basic shares outstanding
53,991

 
54,821

 
54,427

 
54,369

 
 
 
 
 
 
 
 
Net loss from continuing operations attributable to EZCORP, Inc.
$
(16,927
)
 
$
(57,105
)
 
$
(7,973
)
 
$
(51,298
)
Income (loss) from discontinued operations attributable to EZCORP, Inc.
20,158

 
(35,195
)
 
(72,771
)
 
(37,894
)
Net income (loss) attributable to EZCORP, Inc.
$
3,231

 
$
(92,300
)
 
$
(80,744
)
 
$
(89,192
)
Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.



EZCORP, Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
 
September 30,
 
2016
 
2015
 
 
 
 
 
 
 
As Corrected
Assets:
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
65,737

 
$
56,244

Pawn loans
167,329

 
159,964

Pawn service charges receivable, net
31,062

 
30,852

Inventory, net
140,224

 
124,084

Notes receivable, net
41,946

 
—

Income taxes receivable
2,533

 
42,231

Current assets held for sale
—

 
72,849

Prepaid expenses and other current assets
33,312

 
25,077

Total current assets
482,143

 
511,301

Investment in unconsolidated affiliate
37,128

 
56,182

Property and equipment, net
58,455

 
73,938

Goodwill
253,976

 
251,646

Intangible assets, net
30,681

 
30,778

Non-current notes receivable, net
41,119

 
—

Deferred tax asset, net
35,303

 
34,176

Non-current assets held for sale
—

 
217,233

Other assets, net
44,439

 
13,736

Total assets
$
983,244

 
$
1,188,990

 
 
 
 
Liabilities, temporary equity and equity:
 
 
 
Current liabilities:
 
 
 
Accounts payable, accrued expenses and other current liabilities
$
84,285

 
$
109,875

Current liabilities held for sale
—

 
87,329

Customer layaway deposits
10,693

 
10,470

Total current liabilities
94,978

 
207,674

Long-term debt, net
283,611

 
197,976

Non-current liabilities held for sale
—

 
101,644

Deferred gains and other long-term liabilities
10,450

 
9,929

Total liabilities
389,039

 
517,223

Commitments and contingencies


 


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

 
11,696

Redeemable noncontrolling interest
—

 
4,040

Total temporary equity
—

 
15,736

Stockholders’ equity:
 
 
 
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of September 30, 2016 and 2015; issued and outstanding: 51,129,144 as of September 30, 2016 and 50,726,289 as of September 30, 2015
511

 
507

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

 
30

Additional paid-in capital
318,723

 
310,038

Retained earnings
319,808

 
400,552

Accumulated other comprehensive loss
(44,089
)
 
(55,096
)
EZCORP, Inc. stockholders’ equity
594,983

 
656,031

Noncontrolling interest
(778
)
 
—

Total equity
594,205

 
656,031

Total liabilities, temporary equity and equity
$
983,244

 
$
1,188,990

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.



EZCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Fiscal Year Ended September 30,
 
2016
 
2015
 
 
 
 
 
 
 
As Corrected
 
(in thousands)
Operating activities:
 
 
 
Net loss
$
(88,430
)
 
$
(94,227
)
Loss from discontinued operations*
78,872

 
14,728

Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
26,542

 
34,450

Amortization of debt discount
8,928

 
8,888

Amortization of deferred financing costs
1,763

 
1,657

Consumer loan loss provision
704

 
22,303

Deferred income taxes
849

 
(6,050
)
Impairment of goodwill
—

 
12,253

Impairment of long-lived assets
—

 
18,529

Other adjustments
969

 
(95
)
Loss on sale or disposal of assets
1,106

 
2,893

Stock compensation
5,346

 
2,374

Loss from investments in unconsolidated affiliates
255

 
5,473

Impairment of investments
10,957

 
26,837

Changes in operating assets and liabilities, net of business acquisitions:
 
 
 
Service charges and fees receivable
286

 
5,181

Inventory
(3,735
)
 
433

Prepaid expenses, other current assets and other assets
(14,875
)
 
7,475

Accounts payable and other, deferred gains and other long-term liabilities
(3,505
)
 
22,079

Customer layaway deposits
329

 
1,997

Income taxes receivable
42,108

 
(18,298
)
Payments of restructuring charges
(8,478
)
 
(5,376
)
Dividends from unconsolidated affiliate
2,197

 
4,842

Net cash provided by operating activities — continuing operations
62,188

 
68,346

Net cash provided by operating activities — discontinued operations*
2,215

 
11,052

Investing activities:
 
 
 
Loans made
(640,977
)
 
(756,463
)
Loans repaid
385,333

 
528,733

Recovery of pawn loan principal through sale of forfeited collateral
235,168

 
243,692

Additions to property and equipment
(9,486
)
 
(23,174
)
Acquisitions, net of cash acquired
(6,000
)
 
(7,802
)
Investments in unconsolidated affiliate
—

 
(12,140
)
Proceeds from sale of assets
—

 
564

Net cash used in investing activities — continuing operations
(35,962
)
 
(26,590
)
Net cash provided by (used in) investing activities — discontinued operations*
42,678

 
(41,103
)
Financing activities:
 
 
 
Taxes paid related to net share settlement of equity awards
(172
)
 
(210
)
Debt issuance costs
(740
)
 
—

Payout of deferred consideration
(15,000
)
 
(6,000
)
Purchase of subsidiary shares from noncontrolling interest
—

 
(32,411
)
Proceeds from borrowings and line of credit
48,688

 
—

Payments on borrowings, line of credit and capital lease obligations
(48
)
 
(418
)
Repurchase of common stock
(11,750
)
 
—

Net cash provided by (used in) financing activities — continuing operations
20,978

 
(39,039
)
Net cash (used in) provided by financing activities — discontinued operations*
(84,134
)
 
41,441




EZCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Effect of exchange rate changes on cash and cash equivalents
(1,350
)
 
(10,308
)
Net increase in cash and cash equivalents
6,613

 
3,799

Cash and cash equivalents at beginning of period, excluding held for sale
56,244

 
52,294

Cash and cash equivalents held for sale at beginning of period
2,880

 
3,031

Cash and cash equivalents at end of period
65,737

 
59,124

Less: cash and cash equivalents held for sale at end of period
—

 
(2,880
)
Cash and cash equivalents at end of period, excluding held for sale
$
65,737

 
$
56,244

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.
*    Represents operations discontinued subsequent to the adoption of FASB ASU 2014-08. Amounts are exclusive of intercompany loans.



EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended September 30, 2016
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
82,211

 
$
14,955

 
$
—

 
$
97,166

 
$
—

 
$
97,166

Jewelry scrapping sales
15,693

 
789

 
—

 
16,482

 
—

 
16,482

Pawn service charges
60,263

 
8,340

 
—

 
68,603

 
—

 
68,603

Other revenues
50

 
154

 
2,130

 
2,334

 
—

 
2,334

Total revenues
158,217

 
24,238

 
2,130

 
184,585

 
 
 
184,585

Merchandise cost of goods sold
52,980

 
10,560

 
—

 
63,540

 
—

 
63,540

Jewelry scrapping cost of goods sold
13,105

 
663

 
—

 
13,768

 
—

 
13,768

Other cost of revenues
—

 
—

 
416

 
416

 
—

 
416

Net revenues
92,132

 
13,015

 
1,714

 
106,861

 
—

 
106,861

Operating expenses (income):
 
 
 
 
 
 


 
 
 
 
Operations
67,803

 
9,520

 
2,618

 
79,941

 
—

 
79,941

Administrative
—

 
—

 
—

 
—

 
18,016

 
18,016

Depreciation and amortization
2,753

 
680

 
55

 
3,488

 
2,632

 
6,120

Loss on sale or disposal of assets
162

 
53

 
4

 
219

 
246

 
465

Restructuring
11

 
—

 
—

 
11

 
—

 
11

Interest expense
—

 
6

 
—

 
6

 
4,457

 
4,463

Interest income
—

 
(7
)
 
—

 
(7
)
 
(8
)
 
(15
)
Loss from investment in unconsolidated affiliate
—

 
—

 
5,881

 
5,881

 
—

 
5,881

Impairment of investment
—

 
—

 
10,957

 
10,957

 
—

 
10,957

Other expense (income)
—

 
465

 
(1
)
 
464

 
(77
)
 
387

Segment contribution (loss)
$
21,403

 
$
2,298

 
$
(17,800
)
 
$
5,901

 
 
 
 
Loss from continuing operations before income taxes
 
 
 
 
 
 
$
5,901

 
$
(25,266
)
 
$
(19,365
)



EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended September 30, 2015
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
75,595

 
$
15,498

 
$
397

 
$
91,490

 
$
—

 
$
91,490

Jewelry scrapping sales
10,331

 
57

 
64

 
10,452

 
—

 
10,452

Pawn service charges
57,250

 
7,958

 
—

 
65,208

 
—

 
65,208

Other revenues
375

 
238

 
2,528

 
3,141

 
—

 
3,141

Total revenues
143,551

 
23,751

 
2,989

 
170,291

 
 
 
170,291

Merchandise cost of goods sold
48,763

 
12,180

 
416

 
61,359

 
—

 
61,359

Jewelry scrapping cost of goods sold
8,401

 
6

 
50

 
8,457

 
—

 
8,457

Other cost of revenues
—

 
—

 
928

 
928

 
—

 
928

Net revenues
86,387

 
11,565

 
1,595

 
99,547

 
—

 
99,547

Operating expenses (income):
 
 
 
 
 
 


 
 
 
 
Operations
67,903

 
12,200

 
1,501

 
81,604

 
—

 
81,604

Administrative
—

 
—

 
—

 
—

 
28,774

 
28,774

Depreciation and amortization
4,461

 
998

 
103

 
5,562

 
2,949

 
8,511

Loss (gain) on sale or disposal of assets
918

 
(6
)
 
—

 
912

 
1,022

 
1,934

Restructuring
4,016

 
799

 
2,563

 
7,378

 
8,939

 
16,317

Interest expense
44

 
6

 
—

 
50

 
3,879

 
3,929

Interest income
(1
)
 
(24
)
 
—

 
(25
)
 
(30
)
 
(55
)
Loss from investment in unconsolidated affiliate
—

 
—

 
5,811

 
5,811

 
—

 
5,811

Impairment of investment
—

 
—

 
26,837

 
26,837

 
—

 
26,837

Other expense (income)
(12
)
 
916

 
7

 
911

 
323

 
1,234

Segment (loss) contribution
$
9,058

 
$
(3,324
)
 
$
(35,227
)
 
$
(29,493
)
 
 
 
 
Loss from continuing operations before income taxes
 
 
 
 
 
 
$
(29,493
)
 
$
(45,856
)
 
$
(75,349
)



EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Fiscal Year Ended September 30, 2016
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
348,771

 
$
60,331

 
$
5

 
$
409,107

 
$
—

 
$
409,107

Jewelry scrapping sales
47,810

 
2,282

 
21

 
50,113

 
—

 
50,113

Pawn service charges
229,893

 
31,907

 
—

 
261,800

 
—

 
261,800

Other revenues
331

 
385

 
8,769

 
9,485

 
—

 
9,485

Total revenues
626,805

 
94,905

 
8,795

 
730,505

 
—

 
730,505

Merchandise cost of goods sold
217,268

 
41,002

 
1

 
258,271

 
—

 
258,271

Jewelry scrapping cost of goods sold
40,138

 
1,885

 
16

 
42,039

 
—

 
42,039

Other cost of revenues
—

 
—

 
1,965

 
1,965

 
—

 
1,965

Net revenues
369,399

 
52,018

 
6,813

 
428,230

 
—

 
428,230

Operating expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
255,321

 
38,481

 
7,585

 
301,387

 
—

 
301,387

Administrative
—

 
—

 
—

 
—

 
68,101

 
68,101

Depreciation and amortization
12,242

 
2,965

 
218

 
15,425

 
11,117

 
26,542

Loss on sale or disposal of assets
664

 
169

 
4

 
837

 
269

 
1,106

Restructuring
993

 
543

 
202

 
1,738

 
183

 
1,921

Interest expense
125

 
109

 
—

 
234

 
16,243

 
16,477

Interest income
(2
)
 
(30
)
 
—

 
(32
)
 
(49
)
 
(81
)
Loss from investment in unconsolidated affiliate
—

 
—

 
255

 
255

 
—

 
255

Impairment of investment
—

 
—

 
10,957

 
10,957

 
—

 
10,957

Other expense (income)
—

 
1,273

 
2

 
1,275

 
(73
)
 
1,202

Segment contribution (loss)
$
100,056

 
$
8,508

 
$
(12,410
)
 
$
96,154

 


 


Income from continuing operations before income taxes
 
 
 
 
 
 
$
96,154

 
$
(95,791
)
 
$
363




EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Fiscal Year Ended September 30, 2015
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
334,635

 
$
65,408

 
$
2,075

 
$
402,118

 
$
—

 
$
402,118

Jewelry scrapping sales
54,343

 
3,267

 
363

 
57,973

 
—

 
57,973

Pawn service charges
216,211

 
30,993

 
—

 
247,204

 
—

 
247,204

Other revenues
945

 
1,021

 
10,739

 
12,705

 
—

 
12,705

Total revenues
606,134

 
100,689

 
13,177

 
720,000

 
—

 
720,000

Merchandise cost of goods sold
218,953

 
47,371

 
1,465

 
267,789

 
—

 
267,789

Jewelry scrapping cost of goods sold
42,845

 
2,954

 
267

 
46,066

 
—

 
46,066

Other cost of revenues
—

 
—

 
3,125

 
3,125

 
—

 
3,125

Net revenues
344,336

 
50,364

 
8,320

 
403,020

 
—

 
403,020

Operating expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
244,232

 
43,927

 
6,780

 
294,939

 
—

 
294,939

Administrative
—

 
—

 
—

 
—

 
72,986

 
72,986

Depreciation and amortization
15,227

 
4,440

 
616

 
20,283

 
10,676

 
30,959

Loss (gain) on sale or disposal of assets
995

 
258

 
(1
)
 
1,252

 
1,407

 
2,659

Restructuring
4,016

 
799

 
2,563

 
7,378

 
9,702

 
17,080

Interest expense
60

 
15

 
—

 
75

 
16,310

 
16,385

Interest income
(42
)
 
(78
)
 
—

 
(120
)
 
(158
)
 
(278
)
Loss from investment in unconsolidated affiliate
—

 
—

 
5,473

 
5,473

 
—

 
5,473

Impairment of investments
—

 
—

 
26,837

 
26,837

 
—

 
26,837

Other expense
—

 
1,988

 
7

 
1,995

 
192

 
2,187

Segment contribution (loss)
$
79,848

 
$
(985
)
 
$
(33,955
)
 
$
44,908

 


 


Loss from continuing operations before income taxes
 
 
 
 
 
 
$
44,908

 
$
(111,115
)
 
$
(66,207
)



EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
 
Company-owned Stores
 
 
 
U.S. Pawn
 
Mexico Pawn
 
Other International
 
Consolidated
 
Franchises
 
 
 
 
 
 
 
 
 
 
As of September 30, 2013
502

 
258

 
39

 
799

 
8

New locations opened
9

 
3

 
—

 
12

 
—

Locations sold, combined or closed
(7
)
 
—

 
—

 
(7
)
 
(3
)
As of September 30, 2014
504

 
261

 
39

 
804

 
5

New locations opened
5

 
3

 
—

 
8

 
—

Locations acquired
25

 
—

 
—

 
25

 
—

Locations sold, combined or closed
(12
)
 
(27
)
 
(12
)
 
(51
)
 
(4
)
As of September 30, 2015
522

 
237

*
27

 
786

 
1

New locations opened
—

 
3

 
—

 
3

 
—

Locations acquired
6

 
1

 
—

 
7

 
—

Locations sold, combined or closed
(8
)
 
(2
)
 
—

 
(10
)
 
(1
)
As of September 30, 2016
520

 
239

 
27

 
786

 
—

*    Includes five buy/sell stores reflected in fiscal 2015 ending count which were converted to Mexico Pawn stores during the three-months ended March 31, 2016.
NON-GAAP FINANCIAL INFORMATION (UNAUDITED)
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 and ongoing segment contribution results to evaluate results of our Mexico Pawn operations, which are denominated in Mexican pesos and believe that presentation of constant currency results are meaningful and useful in understanding the activities and business metrics of our Mexico Pawn operations and reflect an additional way of viewing aspects of our business that, when viewed with 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 consolidated balance sheet and 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 period, in order to exclude the effects of foreign currency rate fluctuations. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate during the appropriate period for statement of operations items. The end-of-period exchange rate as of September 30, 2016 and 2015 was 19.4 to 1 and 17.1 to 1, respectively. The average exchange rate for the years ended September 30, 2016, 2015 and 2014 was 17.9 to 1, 15.1 to 1, and 13.1 to 1, respectively. Constant currency results, where presented, also exclude the foreign currency gain or loss and the related foreign currency derivative gain or loss impact.
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.
Miscellaneous Non-GAAP Financial Measures
 
U.S. Dollar Amount
 
Percentage Change YOY
 
 
 
 
 
(in thousands)
 
 
Consolidated revenue (three-months ended September 30, 2016)
$
184,585

 
8
 %
Currency exchange rate fluctuations
3,656

 
 
Constant currency consolidated revenue (three-months ended September 30, 2016)
$
188,241

 
11
 %
 
 
 
 



Consolidated net revenue (three-months ended September 30, 2016)
$
106,861

 
7
 %
Currency exchange rate fluctuations
1,950

 
 
Constant currency consolidated net revenue (three-months ended September 30, 2016)
$
108,811

 
9
 %
 
 
 
 
Consolidated operating expenses (three-months ended September 30, 2016)
$
104,553

 
(24
)%
Currency exchange rate fluctuations
1,524

 
 
Constant currency consolidated operating expenses (three-months ended September 30, 2016)
$
106,077

 
(23
)%
 
 
 
 
Consolidated revenue (year ended September 30, 2016)
$
730,505

 
1
 %
Currency exchange rate fluctuations
17,598

 
 
Constant currency consolidated revenue (year ended September 30, 2016)
$
748,103

 
4
 %
 
 
 
 
Consolidated net revenue (year ended September 30, 2016)
$
428,230

 
6
 %
Currency exchange rate fluctuations
9,645

 
 
Constant currency consolidated net revenue (year ended September 30, 2016)
$
437,875

 
9
 %
 
 
 
 
Consolidated operating expenses (year ended September 30, 2016)
$
399,057

 
(5
)%
Currency exchange rate fluctuations
7,818

 
 
Constant currency consolidated operating expenses (year ended September 30, 2016)
$
406,875

 
(3
)%
 
 
 
 
Mexico Pawn loans outstanding as of September 30, 2016
$
17,538

 
7
 %
Currency exchange rate fluctuations
2,359

 
 
Constant currency Mexico Pawn loans outstanding as of September 30, 2016
$
19,897

 
21
 %
 
 
 
 
Mexico Pawn service charges (three-months ended September 30, 2016)
$
8,340

 
5
 %
Currency exchange rate fluctuations
1,268

 
 
Constant currency Mexico Pawn service charges (three-months ended September 30, 2016)
$
9,608

 
21
 %
 
 
 
 
Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016)
$
14,559

 
4
 %
Currency exchange rate fluctuations
2,144

 
 
Constant currency Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016)
$
16,703

 
19
 %
 
 
 
 
Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016)
$
4,395

 
32
 %
Currency exchange rate fluctuations
638

 
 
Constant currency Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016)
$
5,033

 
52
 %
 
 
 
 
Mexico Pawn segment profit before tax (three-months ended September 30, 2016)
$
2,298

 
N/A

Currency exchange rate fluctuations
922

 
 
Constant currency Mexico Pawn segment profit before tax (three-months ended September 30, 2016)
$
3,220

 
N/A

 
 
 
 
Mexico Pawn service charges (year ended September 30, 2016)
$
31,907

 
3
 %
Currency exchange rate fluctuations
5,917

 
 
Constant currency Mexico Pawn service charges (year ended September 30, 2016)
$
37,824

 
22
 %
 
 
 
 
Mexico Pawn same store merchandise revenue (year ended September 30, 2016)
$
58,636

 
—
 %
Currency exchange rate fluctuations
10,873

 
 
Constant currency Mexico Pawn same store merchandise revenue (year ended September 30, 2016)
$
69,509

 
19
 %
 
 
 
 
Mexico Pawn merchandise sales gross profit (year ended September 30, 2016)
$
19,329

 
7
 %
Currency exchange rate fluctuations
3,584

 
 
Constant currency Mexico Pawn merchandise sales gross profit (year ended September 30, 2016)
$
22,913

 
27
 %
 
 
 
 



Mexico Pawn net revenue (year ended September 30, 2016)
$
52,018

 
3
 %
Currency exchange rate fluctuations
9,645

 
 
Constant currency Mexico Pawn net revenue (year ended September 30, 2016)
$
61,663

 
22
 %
 
 
 
 
Mexico Pawn segment profit before tax (year ended September 30, 2016)
$
8,508

 
N/A

Currency exchange rate fluctuations
3,116

 
 
Constant currency Mexico Pawn segment profit before tax (year ended September 30, 2016)
$
11,624

 
N/A