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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): May 3, 2017 (May 3, 2017)
 _______________________________________________ 
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 3, 2017, EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the quarter ended March 31, 2017. 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 second quarter 2017 earnings conference call (to be held on May 4, 2017) has been 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 3, 2017, announcing EZCORP, Inc.’s results of operations and financial condition for the quarter ended March 31, 2017.




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 3, 2017
 
 
 
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 3, 2017, announcing EZCORP, Inc.’s results of operations and financial condition for the quarter ended March 31, 2017.


Exhibit


https://cdn.kscope.io/698eb004542552e44cd84a491ad93b3b-fy2014q1ezcorpa01a04a06.jpg
EZCORP Announces Second Quarter Fiscal 2017 Results
Earnings per share from continuing operations up 200% year-over-year to $0.15
Austin, Texas (May 3, 2017) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its second quarter ended March 31, 2017.
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.
HIGHLIGHTS FOR SECOND QUARTER FISCAL 2017
The company achieved its fifth consecutive quarter of year-over-year (YOY) earnings and profit increase with earnings per share up 200% to $0.15 and net income from continuing operations up 219% to $8.4 million.
The company continued to grow its pawn loans outstanding (PLO), the most influential driver to revenue and profitability, with PLO up 2% in the U.S. and 3% in Mexico. The PLO increase in Mexico was a strong 12% when calculated on a constant currency basis1.
The company exited the quarter with a much stronger balance sheet and liquidity position, with a cash balance at the end of the quarter up 68% YOY to $120.1 million. In addition, the company continues to have access to a further $50 million undrawn availability on its credit facility.
CEO COMMENTARY AND OUTLOOK
Stuart Grimshaw, EZCORP's Chief Executive Officer, said: "It is pleasing to see the continuing trend of strong profit growth after the strategic changes that were implemented over a year ago. We have devoted a lot of management attention and effort in focusing on the needs and experience of our customers. Our continued focus on and investment in satisfying our customers' need for cash whenever they want it drove the acceleration in earnings and sustained growth in pawn loans outstanding.
"We have improved our balance sheet and liquidity position, which provides strategic flexibility to continue our investment in the customer experience and expansion of the pawn loan portfolio to drive increased profit. We continue to invest in the core fabric of the pawn business, including commencement of our upgraded point of sale system rollout, which we expect to be completed in both the U.S. and Mexico this calendar year. We opened two new stores in Mexico this quarter and anticipate opening an additional eight in Mexico during the remainder of this fiscal year.
"We are confident that these initiatives, combined with further investments in product development and customer analytics, in sustained training, coaching and mentoring of our field team, and in disciplined acquisitions and de novo openings, will continue to provide a robust platform for further profitable growth."
CONSOLIDATED RESULTS
Three Months Ended March 31, 2017
•
Same store pawn loans outstanding (PLO): up 2% in U.S. and up 3% in Mexico (up 12% in Mexico on a constant currency basis).
•
Total revenue up 1% to $189.6 million. On a constant currency basis, total revenue was up 2% to $192.6 million.
•
Net revenue up 1% to $109.9 million, as a 5% increase in pawn service charge (PSC) revenue was offset by softer merchandise sales due to tax refund delays in the U.S, which adversely impacted consumers’ disposable income and our sales volume.
•
The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.

1In 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.


•
Operations expenses increased 3% to $74.5 million (up 5% to $75.6 million on a constant currency basis).
•
Corporate expenses decreased 15% to $13.3 million. The company remains on track to reduce corporate expenses to $50 million in FY18.
•
Fifth consecutive quarter of YOY earnings per share increase, with earnings per share from continuing operations up 200% to $0.15.
Six Months Ended March 31, 2017
•
Total revenue up 2% to $382.3 million. On a constant currency basis, total revenue was up 4% to $390.0 million.
•
Net revenue was consistent at $221.9 million, as a 4% increase in PSC revenue was offset by lower merchandise margin.
•
The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.
•
Operations expenses increased 3% to $152.1 million (up 4% to $154.9 million on a constant currency basis). The company expects operations expenses in the second half of FY17 to be similar to the second half of FY16.
•
Corporate expenses decreased 24% to $27.2 million.
•
Earnings per share from continuing operations up 182% to $0.31.
•
The company continues to receive regular payments on the promissory notes it received in connection with the sale of Grupo Finmart in September 2016. It has collected $15.1 million in principal on those notes during the first half of this fiscal year, and expects to collect an additional $30.8 million in the second half (for a total of $45.9 million in FY17), $26.1 million in FY18 and $18.2 million in FY19. Since the end of the second quarter, the company has received $5.2 million, which is part of the $30.8 million to be collected in the second half of this fiscal year.
OPERATING METRICS
U.S. Pawn Segment
Three Months Ended March 31, 2017
•
Six consecutive quarters of YOY positive same store PLO increase, with this quarter up 2%. Total PLO was up 2% to $125.4 million.
•
Pawn service charges (PSC) increased 5% to $59.7 million, up 5% on a same store basis.
•
Merchandise sales increased 1% in total and on a same store basis. The delay in tax refunds adversely impacted sales volume. The merchandise sales gross margin of 37% is within our target range of 35-38%.
•
Slight increase in aged inventory to 12% from 10% of total inventory from this time last year due to the previously mentioned delay in consumers’ tax refunds, which adversely impacted sales volume.
•
Operations expenses increased 4% to $63.6 million.
•
Segment profit was $29.7 million, similar to last year.
•
Initiatives are underway to improve net revenue and profitability in the long-term, including investments in upgrading our point of sale system and enhancing product and customer data analytics.
Six Months Ended March 31, 2017
•
PSC increased 5% to $120.7 million, up 4% on a same store basis.
•
Merchandise sales increased 2% in total and 2% on a same store basis. The merchandise sales gross margin of 37% is within our target range of 35-38%.
•
Operations expenses increased 5% to $130.9 million. The company expects operations expenses in the second half of FY17 to be similar to the second half of FY16.




•
Segment profit was 3% lower to $56.8 million.
Mexico Pawn Segment
Three Months Ended March 31, 2017
•
PLO increased 3% to $17.8 million (up 12% to $19.4 million on a constant currency basis).
•
PSC decreased 1% to $7.4 million, up 11% to $8.4 million on a constant currency basis.
•
Merchandise sales increased 1% in total and were flat on a same store basis (up 14% in total and 13% in same stores on a constant currency basis). Merchandise margin was 32%, 100bps higher than the prior-year quarter.
•
Looting of twelve stores in January impacted not only through increased expenses, but by reducing revenue through stolen pawn loan collateral and inventory affecting PSC and sales.
•
Net revenue was up 3% and operations expenses were 1% lower, yielding a 56% increase in segment profit (segment profit up 71% to $3.5 million on a constant currency basis). These results included $0.6 million in incremental expenses attributable to looting of twelve stores during January.
Six Months Ended March 31, 2017
•
PSC decreased 1% to $15.4 million (up 15% to $17.8 million on a constant currency basis).
•
Merchandise sales were flat in total and on a same store basis (up 17% in total and 16% in same stores on a constant currency basis). Merchandise margin was 31%, 200bps lower than the prior-year six-months.
•
Net revenue was 1% lower and operations expenses were 13% lower, yielding a 112% increase in segment profit to $7.5 million (up 144% to $8.6 million on a constant currency basis).
CONFERENCE CALL
EZCORP will host a conference call on Thursday, May 4, 2017, at 7:30am Central Time to discuss second quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 15658600, international dialing (647) 788-4901. 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended March 31,
 
Six Months Ended March 31,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
(Unaudited)
 
(in thousands, except per share amounts)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
110,238

 
$
109,343

 
$
221,751

 
$
217,927

Jewelry scrapping sales
10,219

 
12,780

 
20,017

 
22,401

Pawn service charges
67,092

 
64,130

 
136,105

 
130,724

Other revenues
2,079

 
1,959

 
4,379

 
4,717

Total revenues
189,628

 
188,212

 
382,252

 
375,769

Merchandise cost of goods sold
70,493

 
68,332

 
142,225

 
134,591

Jewelry scrapping cost of goods sold
8,841

 
11,085

 
17,185

 
19,161

Other cost of revenues
397

 
431

 
980

 
1,043

Net revenues
109,897

 
108,364

 
221,862

 
220,974

Operating expenses:
 
 
 
 


 


Operations
74,460

 
72,256

 
152,106

 
148,274

Administrative
13,283

 
15,621

 
27,210

 
35,604

Depreciation and amortization
6,030

 
6,606

 
12,403

 
14,148

Loss (gain) on sale or disposal of assets
71

 
649

 
(6
)
 
682

Restructuring
—

 
218

 
—

 
1,910

Total operating expenses
93,844

 
95,350

 
191,713

 
200,618

Operating income
16,053

 
13,014

 
30,149

 
20,356

Interest expense
5,628

 
3,951

 
11,193

 
8,078

Interest income
(2,240
)
 
(7
)
 
(4,856
)
 
(16
)
Equity in net income of unconsolidated affiliate
(1,243
)
 
(1,877
)
 
(2,721
)
 
(3,932
)
Other expense (income)
228

 
213

 
(195
)
 
315

Income from continuing operations before income taxes
13,680

 
10,734

 
26,728

 
15,911

Income tax expense
5,449

 
8,427

 
10,231

 
10,185

Income from continuing operations, net of tax
8,231

 
2,307

 
16,497

 
5,726

Loss from discontinued operations, net of tax
(375
)
 
(78,250
)
 
(1,603
)
 
(89,935
)
Net income (loss)
7,856

 
(75,943
)
 
14,894

 
(84,209
)
Net loss attributable to noncontrolling interest
(167
)
 
(5,131
)
 
(294
)
 
(5,923
)
Net income (loss) attributable to EZCORP, Inc.
$
8,023

 
$
(70,812
)
 
$
15,188

 
$
(78,286
)
 
 
 
 
 
 
 
 
Basic earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.15

 
$
0.05

 
$
0.31

 
$
0.11

Diluted earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.15

 
$
0.05

 
$
0.31

 
$
0.11

 
 
 
 
 
 
 
 
Weighted-average basic shares outstanding
54,291

 
54,843

 
54,224

 
54,869

Weighted-average diluted shares outstanding
54,346

 
54,936

 
54,278

 
54,943

 
 
 
 
 
 
 
 
Net income from continuing operations attributable to EZCORP, Inc.
$
8,398

 
$
2,630

 
$
16,791

 
$
6,049

Net loss from discontinued operations attributable to EZCORP, Inc.
(375
)
 
(73,442
)
 
(1,603
)
 
(84,335
)
Net income (loss) attributable to EZCORP, Inc.
$
8,023

 
$
(70,812
)
 
$
15,188

 
$
(78,286
)




EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
March 31,
2017
 
September 30,
2016
 
 
 
 
 
(Unaudited)
 
 
Assets:
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
120,099

 
$
65,737

Pawn loans
143,267

 
167,329

Pawn service charges receivable, net
27,028

 
31,062

Inventory, net
137,008

 
140,224

Notes receivable, net
29,978

 
41,946

Prepaid expenses and other current assets
31,011

 
35,845

Total current assets
488,391

 
482,143

Investment in unconsolidated affiliate
38,334

 
37,128

Property and equipment, net
53,630

 
58,455

Goodwill
254,217

 
253,976

Intangible assets, net
31,768

 
30,681

Non-current notes receivable, net
40,319

 
41,119

Deferred tax asset, net
37,134

 
35,303

Other assets, net
18,174

 
44,439

Total assets
$
961,967

 
$
983,244

 
 
 
 
Liabilities and equity:
 
 
 
Current liabilities:
 
 
 
Accounts payable, accrued expenses and other current liabilities
$
62,339

 
$
84,285

Customer layaway deposits
10,992

 
10,693

Total current liabilities
73,331

 
94,978

Long-term debt, net
266,724

 
283,611

Other long-term liabilities
8,448

 
10,450

Total liabilities
348,503

 
389,039

Commitments and contingencies


 


Stockholders’ equity:
 
 
 
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of March 31, 2017 and September 30, 2016; issued and outstanding: 51,321,915 as of March 31, 2017 and 51,129,144 as of September 30, 2016
513

 
511

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
321,531

 
318,723

Retained earnings
334,996

 
319,808

Accumulated other comprehensive loss
(42,544
)
 
(44,089
)
EZCORP, Inc. stockholders’ equity
614,526

 
594,983

Noncontrolling interest
(1,062
)
 
(778
)
Total equity
613,464

 
594,205

Total liabilities and equity
$
961,967

 
$
983,244





EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Six Months Ended March 31,
 
2017
 
2016
 
 
 
 
 
(Unaudited)
 
(in thousands)
Operating activities:
 
 
 
Net income (loss)
$
14,894

 
$
(84,209
)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
 
 
 
Depreciation and amortization
12,403

 
15,141

Amortization of debt discount and deferred financing costs
5,755

 
5,932

Amortization of prepaid commissions
—

 
7,754

Accretion of notes receivable discount
(1,928
)
 
—

Consumer loan loss provision
980

 
18,662

Deferred income taxes
(664
)
 
(12,635
)
Impairment of goodwill
—

 
73,244

Other adjustments
(63
)
 
(2,149
)
(Gain) loss on sale or disposal of assets
(6
)
 
682

Stock compensation
3,575

 
2,149

Income from investment in unconsolidated affiliate
(2,721
)
 
(3,932
)
Changes in operating assets and liabilities:
 
 
 
Service charges and fees receivable
4,151

 
10,140

Inventory
708

 
(993
)
Prepaid expenses, other current assets and other assets
3,171

 
(10,795
)
Accounts payable, accrued expenses and other liabilities
(30,120
)
 
(8,702
)
Customer layaway deposits
240

 
851

Income taxes receivable and payable, current, net of excess tax benefit from stock compensation
7,590

 
51,300

Payments of restructuring charges
—

 
(6,701
)
Net cash provided by operating activities
17,965

 
55,739

Investing activities:
 
 
 
Loans made
(300,604
)
 
(323,980
)
Loans repaid
199,080

 
225,138

Recovery of pawn loan principal through sale of forfeited collateral
128,238

 
121,830

Additions to property and equipment
(5,293
)
 
(2,950
)
Acquisitions, net of cash acquired
—

 
(6,000
)
Principal collections on notes receivable
15,051

 
—

Net cash provided by investing activities
36,472

 
14,038

Financing activities:
 
 
 
Taxes paid related to net share settlement of equity awards
(767
)
 
—

Payout of deferred consideration
—

 
(14,875
)
Repurchase of redeemable common stock issued due to acquisitions
—

 
(11,750
)
Proceeds from settlement of forward currency contracts
—

 
3,557

Change in restricted cash
—

 
6,519

Proceeds from borrowings, net of issuance costs
—

 
14,302

Payments on borrowings
—

 
(47,698
)
Net cash used in financing activities
(767
)
 
(49,945
)
Effect of exchange rate changes on cash and cash equivalents
692

 
(3,620
)
Net increase in cash and cash equivalents
54,362

 
16,212

Cash and cash equivalents at beginning of period
65,737

 
59,124

Cash and cash equivalents at end of period
$
120,099

 
$
75,336

Non-cash investing and financing activities:
 
 
 
Pawn loans forfeited and transferred to inventory
$
125,165

 
$
122,709

Dividend reinvestment acquisition of additional ownership in unconsolidated affiliate
1,153

 
—






EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended March 31, 2017
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
95,550

 
$
14,688

 
$
—

 
$
110,238

 
$
—

 
$
110,238

Jewelry scrapping sales
9,056

 
1,163

 
—

 
10,219

 
—

 
10,219

Pawn service charges
59,661

 
7,431

 
—

 
67,092

 
—

 
67,092

Other revenues
56

 
147

 
1,876

 
2,079

 
—

 
2,079

Total revenues
164,323

 
23,429

 
1,876

 
189,628

 
—

 
189,628

Merchandise cost of goods sold
60,499

 
9,994

 
—

 
70,493

 
—

 
70,493

Jewelry scrapping cost of goods sold
7,890

 
951

 
—

 
8,841

 
—

 
8,841

Other cost of revenues
—

 
—

 
397

 
397

 
—

 
397

Net revenues
95,934

 
12,484

 
1,479

 
109,897

 
—

 
109,897

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
63,556

 
8,901

 
2,003

 
74,460

 
—

 
74,460

Administrative
—

 
—

 
—

 
—

 
13,283

 
13,283

Depreciation and amortization
2,660

 
660

 
50

 
3,370

 
2,660

 
6,030

Loss (gain) on sale or disposal of assets
(3
)
 
74

 
—

 
71

 
—

 
71

Interest expense
—

 
3

 
—

 
3

 
5,625

 
5,628

Interest income
—

 
(342
)
 
—

 
(342
)
 
(1,898
)
 
(2,240
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(1,243
)
 
(1,243
)
 
—

 
(1,243
)
Other expense (income)
(4
)
 
(48
)
 
41

 
(11
)
 
239

 
228

Segment contribution
$
29,725

 
$
3,236

 
$
628

 
$
33,589

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
33,589

 
$
(19,909
)
 
$
13,680





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Six Months Ended March 31, 2017
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
190,411

 
$
31,340

 
$
—

 
$
221,751

 
$
—

 
$
221,751

Jewelry scrapping sales
17,901

 
2,116

 
—

 
20,017

 
—

 
20,017

Pawn service charges
120,706

 
15,399

 
—

 
136,105

 
—

 
136,105

Other revenues
107

 
278

 
3,994

 
4,379

 
—

 
4,379

Total revenues
329,125

 
49,133

 
3,994

 
382,252

 
—

 
382,252

Merchandise cost of goods sold
120,747

 
21,478

 
—

 
142,225

 
—

 
142,225

Jewelry scrapping cost of goods sold
15,440

 
1,745

 
—

 
17,185

 
—

 
17,185

Other cost of revenues
—

 
—

 
980

 
980

 
—

 
980

Net revenues
192,938

 
25,910

 
3,014

 
221,862

 
—

 
221,862

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
130,906

 
17,541

 
3,659

 
152,106

 
—

 
152,106

Administrative
—

 
—

 
—

 
—

 
27,210

 
27,210

Depreciation and amortization
5,277

 
1,291

 
100

 
6,668

 
5,735

 
12,403

(Gain) loss on sale or disposal of assets
(74
)
 
68

 
—

 
(6
)
 
—

 
(6
)
Interest expense
—

 
5

 
—

 
5

 
11,188

 
11,193

Interest income
—

 
(409
)
 
—

 
(409
)
 
(4,447
)
 
(4,856
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(2,721
)
 
(2,721
)
 
—

 
(2,721
)
Other (income) expense
(9
)
 
(37
)
 
40

 
(6
)
 
(189
)
 
(195
)
Segment contribution
$
56,838

 
$
7,451

 
$
1,936

 
$
66,225

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
66,225

 
$
(39,497
)
 
$
26,728





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended March 31, 2016
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
94,740

 
$
14,603

 
$
—

 
$
109,343

 
$
—

 
$
109,343

Jewelry scrapping sales
11,599

 
1,181

 
—

 
12,780

 
—

 
12,780

Pawn service charges
56,614

 
7,516

 
—

 
64,130

 
—

 
64,130

Other revenues
49

 
(117
)
 
2,027

 
1,959

 
—

 
1,959

Total revenues
163,002

 
23,183

 
2,027

 
188,212

 
—

 
188,212

Merchandise cost of goods sold
58,241

 
10,090

 
1

 
68,332

 
—

 
68,332

Jewelry scrapping cost of goods sold
10,128

 
957

 
—

 
11,085

 
—

 
11,085

Other cost of revenues
—

 
—

 
431

 
431

 
—

 
431

Net revenues
94,633

 
12,136

 
1,595

 
108,364

 
—

 
108,364

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
61,240

 
9,024

 
1,992

 
72,256

 
—

 
72,256

Administrative
—

 
—

 
—

 
—

 
15,621

 
15,621

Depreciation and amortization
3,042

 
764

 
56

 
3,862

 
2,744

 
6,606

Loss on sale or disposal of assets
546

 
103

 
—

 
649

 
—

 
649

Restructuring
91

 
215

 
(2
)
 
304

 
(86
)
 
218

Interest expense
39

 
38

 
—

 
77

 
3,874

 
3,951

Interest income
—

 
—

 
—

 
—

 
(7
)
 
(7
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(1,877
)
 
(1,877
)
 
—

 
(1,877
)
Other expense (income)
—

 
(79
)
 
6

 
(73
)
 
286

 
213

Segment contribution
$
29,675

 
$
2,071

 
$
1,420

 
$
33,166

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
33,166

 
$
(22,432
)
 
$
10,734





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Six Months Ended March 31, 2016
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
186,734

 
$
31,189

 
$
4

 
$
217,927

 
$
—

 
$
217,927

Jewelry scrapping sales
21,199

 
1,181

 
21

 
22,401

 
—

 
22,401

Pawn service charges
115,235

 
15,489

 
—

 
130,724

 
—

 
130,724

Other revenues
242

 
74

 
4,401

 
4,717

 
—

 
4,717

Total revenues
323,410

 
47,933

 
4,426

 
375,769

 
—

 
375,769

Merchandise cost of goods sold
113,702

 
20,888

 
1

 
134,591

 
—

 
134,591

Jewelry scrapping cost of goods sold
18,188

 
957

 
16

 
19,161

 
—

 
19,161

Other cost of revenues
—

 
—

 
1,043

 
1,043

 
—

 
1,043

Net revenues
191,520

 
26,088

 
3,366

 
220,974

 
—

 
220,974

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
124,785

 
20,217

 
3,272

 
148,274

 
—

 
148,274

Administrative
—

 
—

 
—

 
—

 
35,604

 
35,604

Depreciation and amortization
6,602

 
1,565

 
107

 
8,274

 
5,874

 
14,148

Loss on sale or disposal of assets
553

 
129

 
—

 
682

 
—

 
682

Restructuring
982

 
543

 
202

 
1,727

 
183

 
1,910

Interest expense
125

 
78

 
—

 
203

 
7,875

 
8,078

Interest income
(1
)
 
—

 
—

 
(1
)
 
(15
)
 
(16
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(3,932
)
 
(3,932
)
 
—

 
(3,932
)
Other expense
—

 
49

 
3

 
52

 
263

 
315

Segment contribution
$
58,474

 
$
3,507

 
$
3,714

 
$
65,695

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
65,695

 
$
(49,784
)
 
$
15,911





EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
 
Three Months Ended March 31, 2017
 
Company-owned Stores
 
U.S. Pawn
 
Mexico Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of December 31, 2016
517

 
239

 
27

 
783

New locations opened
—

 
2

 
—

 
2

Locations sold, combined or closed
—

 
(1
)
 
—

 
(1
)
As of March 31, 2017
517

 
240

 
27

 
784

 
Three Months Ended March 31, 2016
 
Company-owned Stores
 
 
 
U.S. Pawn
 
Mexico Pawn
 
Other International
 
Consolidated
 
Franchises
 
 
 
 
 
 
 
 
 
 
As of December 31, 2015
516

 
237

 
27

 
780

 
1

New locations opened
6

 
—

 
—

 
6

 
—

Locations sold, combined or closed
—

 
—

 
—

 
—

 
(1
)
As of March 31, 2016
522

 
237

 
27

 
786

 
—

 
Six Months Ended March 31, 2017
 
Company-owned Stores
 
U.S. Pawn
 
Mexico Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of September 30, 2016
520

 
239

 
27

 
786

New locations opened
—

 
2

 
—

 
2

Locations sold, combined or closed
(3
)
 
(1
)
 
—

 
(4
)
As of March 31, 2017
517

 
240

 
27

 
784

 
Six Months Ended March 31, 2016
 
Company-owned Stores
 
 
 
U.S. Pawn
 
Mexico Pawn
 
Other International
 
Consolidated
 
Franchises
 
 
 
 
 
 
 
 
 
 
As of September 30, 2015
522

 
237

 
27

 
786

 
1

New locations opened
6

 
1

 
—

 
7

 
—

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

 
(7
)
 
(1
)
As of March 31, 2016
522

 
237

 
27

 
786

 
—

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 on a monthly basis during the appropriate period for statement of operations items. The end-of-period exchange rate as of March 31, 2017 and 2016 was 18.7 to 1 and 17.3 to 1, respectively. The approximate average exchange rate for the three months ended March 31, 2017 and 2016 was 20.4 to 1 and 18.0 to 1. The approximate average exchange rate for the six months ended March 31, 2017 and 2016 was 20.1 to 1 and 17.4 to 1, respectively, however our statement of operations constant currency results reflect the impact of monthly effects of exchange rates and so are not directly calculable from the above rates. 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 as of and for the three and six months ended March 31, 2017.




Miscellaneous Non-GAAP Financial Measures
 
U.S. Dollar Amount
 
Percentage Change YOY
 
 
 
 
 
(in millions)
 
 
Consolidated revenue (three months ended March 31, 2017)
$
189.6

 
1
 %
Currency exchange rate fluctuations (three months ended March 31, 2017)
3.0

 
 
Constant currency consolidated revenue (three months ended March 31, 2017)
$
192.6

 
2
 %
 
 
 
 
Consolidated revenue (six months ended March 31, 2017)
$
382.3

 
2
 %
Currency exchange rate fluctuations (six months ended March 31, 2017)
7.7

 
 
Constant currency consolidated revenue (six months ended March 31, 2017)
$
390.0

 
4
 %
 
 
 
 
Consolidated operations expenses (three months ended March 31, 2017)
$
74.5

 
3
 %
Currency exchange rate fluctuations (three months ended March 31, 2017)
1.1

 
 
Constant currency consolidated operations expenses (three months ended March 31, 2017)
$
75.6

 
5
 %
 
 
 
 
Consolidated operations expenses (six months ended March 31, 2017)
$
152.1

 
3
 %
Currency exchange rate fluctuations (six months ended March 31, 2017)
2.8

 
 
Constant currency consolidated operations expenses (six months ended March 31, 2017)
$
154.9

 
4
 %
 
 
 
 
Mexico Pawn loans outstanding
$
17.8

 
3
 %
Currency exchange rate fluctuations
1.6

 
 
Constant currency Mexico Pawn loans outstanding
$
19.4

 
12
 %
 
 
 
 
Mexico Pawn service charges (three months ended March 31, 2017)
$
7.4

 
(1
)%
Currency exchange rate fluctuations (three months ended March 31, 2017)
1.0

 
 
Constant currency Mexico Pawn service charges (three months ended March 31, 2017)
$
8.4

 
11
 %
 
 
 
 
Mexico Pawn service charges (six months ended March 31, 2017)
$
15.4

 
(1
)%
Currency exchange rate fluctuations (six months ended March 31, 2017)
2.4

 
 
Constant currency Mexico Pawn service charges (six months ended March 31, 2017)
$
17.8

 
15
 %
 
 
 
 
Mexico Pawn merchandise revenue (three months ended March 31, 2017)
$
14.7

 
1
 %
Currency exchange rate fluctuations (three months ended March 31, 2017)
1.9

 
 
Constant currency Mexico Pawn merchandise revenue (three months ended March 31, 2017)
$
16.6

 
14
 %
 
 
 
 
Mexico Pawn merchandise revenue (six months ended March 31, 2017)
$
31.3

 
—
 %
Currency exchange rate fluctuations (six months ended March 31, 2017)
5.1

 
 
Constant currency Mexico Pawn merchandise revenue (six months ended March 31, 2017)
$
36.4

 
17
 %
 
 
 
 
Mexico Pawn same store merchandise revenue (three months ended March 31, 2017)
$
14.3

 
—
 %
Currency exchange rate fluctuations (three months ended March 31, 2017)
1.9

 
 
Constant currency Mexico Pawn same store merchandise revenue (three months ended March 31, 2017)
$
16.2

 
13
 %
 
 
 
 
Mexico Pawn same store merchandise revenue (six months ended March 31, 2017)
$
30.4

 
—
 %
Currency exchange rate fluctuations (six months ended March 31, 2017)
4.9

 
 
Constant currency Mexico Pawn same store merchandise revenue (six months ended March 31, 2017)
$
35.3

 
16
 %
 
 
 
 
Mexico Pawn segment profit before tax (three months ended March 31, 2017)
$
3.2

 
56
 %
Currency exchange rate fluctuations (three months ended March 31, 2017)
0.3

 
 
Constant currency Mexico Pawn segment profit before tax (three months ended March 31, 2017)
$
3.5

 
71
 %
 
 
 
 
Mexico Pawn segment profit before tax (six months ended March 31, 2017)
$
7.5

 
112
 %
Currency exchange rate fluctuations (six months ended March 31, 2017)
1.1

 
 
Constant currency Mexico Pawn segment profit before tax (six months ended March 31, 2017)
$
8.6

 
144
 %