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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): July 31, 2017 (July 31, 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 July 31, 2017, EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the quarter ended June 30, 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 third quarter 2017 earnings conference call (to be held on August 1, 2017) 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 July 31, 2017, announcing EZCORP, Inc.’s results of operations and financial condition for the quarter ended June 30, 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:
July 31, 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 July 31, 2017, announcing EZCORP, Inc.’s results of operations and financial condition for the quarter ended June 30, 2017.


Exhibit


https://cdn.kscope.io/c1182d855783a4f66900381d2d13958c-fy2014q1ezcorpa01a04a06.jpg
EZCORP Announces Third Quarter Fiscal 2017 Results
Earnings per share from continuing operations up 100% year-over-year to $0.10
Austin, Texas (July 31, 2017) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its third quarter ended June 30, 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 THIRD QUARTER FISCAL 2017
The company produced its sixth consecutive quarter of year-over-year (YOY) earnings and profit growth with earnings per share up 100% to $0.10 and income from continuing operations before income taxes up 133% to $8.9 million.
Market leading same store pawn loans outstanding (PLO), the most influential driver of revenue and profitability, up 4% in the U.S. and 16% in Mexico. The same store PLO increase in Mexico was 13% when calculated on a constant currency basis1.
Unrestricted cash balance at the end of the quarter was up 287% YOY to $113.7 million. Shortly after the end of the quarter, the company also completed its $143.8 million offering of convertible senior notes due 2024, further strengthening its balance sheet and liquidity, as well as paying off its higher rate secured term debt and retiring a portion of its cash convertible senior notes due 2019.
CEO COMMENTARY AND OUTLOOK
Stuart Grimshaw, EZCORP's Chief Executive Officer, said: “We are delighted with our results this quarter. We doubled our earnings from continuing operations, reflecting our continued focus on meeting the needs of our customers and enhancing their experience as well as leveraging our expense structure. That focus continues to produce market leading same store PLO growth in the U.S. and Mexico, which is the main driver of future profitability.
“The quarter’s results reflect the continued, disciplined execution of our three year strategic plan announced in 2015. We delivered significant earnings growth in both the U.S. and Mexico this quarter, highlighting the value of that continued focus. We further strengthened our balance sheet and liquidity position through strong operating results and the convertible bond issuance just after the quarter-end. While we continue to focus on and invest in our core pawn business, this strong cash position enhances our ability to consider attractive acquisitions.
“We are confident that our current strategic initiatives - including store refurbishment and other investments in customer experience; product and customer analytics; team member training, coaching and mentoring; and storefront expansion - will continue to provide a robust platform for further profitable growth."
CONSOLIDATED RESULTS
Three Months Ended June 30, 2017
•
Same store pawn loans outstanding (PLO) was up 4% in U.S. and 16% in Mexico (up 13% in Mexico on a constant currency basis).
•
Total revenue increased 8% to $183.6 million. On a constant currency basis, total revenue was up 8% to $184.4 million.
•
Net revenue improved 5% to $105.6 million (up 6% to $106.0 million on a constant currency basis), due largely to a 5% increase in pawn service charge (PSC) revenue and a 4% increase in merchandise sales (PSC revenue up 6% and merchandise sales up 5% on a constant currency basis).

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.


•
The merchandise sales gross margin was consistent with the prior-year quarter at 36%, and was within our target range of 35-38%.
•
Operations expenses increased 1% to $74.2 million (up 2% to $74.5 million on a constant currency basis) due to investment in customer facing labor and higher benefit claims.
•
Corporate expenses decreased 3% to $14.1 million. The company remains on track to reduce corporate expenses to no more than $50 million in FY18.
•
This was the sixth consecutive quarter of YOY earnings per share increase, with earnings per share from continuing operations up 100% to $0.10.
•
Shortly after the end of the quarter, the company completed its offering of convertible senior notes due 2024 with a 2.875% coupon. This unsecured convertible note issuance strengthens the balance sheet and liquidity, and locks in an attractive fixed interest rate for a seven-year term. The proceeds were used to retire all remaining obligations under a secured credit facility which had a far higher cost of funds, retire $35 million of existing cash convertible senior notes due 2019, and for additional capital to potentially add to our earnings capacity as the company considers attractive acquisition opportunities.
Nine Months Ended June 30, 2017
•
Total revenue increased 4% to $565.9 million. On a constant currency basis, total revenue was up 5% to $574.4 million.
•
Net revenue was up 2% to $327.4 million (up 3% to $331.9 million on a constant currency basis), as a 5% increase in PSC revenue was offset by a lower merchandise sales gross margin (PSC revenue up 6% on a constant currency basis).
•
The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.
•
Operations expenses increased 2% to $226.4 million (up 4% to $229.4 million on a constant currency basis).
•
Corporate expenses decreased 18% to $41.3 million, in line with the company's continued focus to control corporate expenses.
•
Earnings per share from continuing operations increased 156% to $0.41.
•
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 $23.3 million in principal on those notes during the current fiscal year, and expects to collect an additional $24.4 million during the remainder of the fiscal year (for a total of $47.7 million in FY17), $24.4 million in FY18 and $18.3 million in FY19. In July 2017, the company received $6.1 million including early payment of $5.2 million.
OPERATING METRICS
U.S. Pawn Segment
Three Months Ended June 30, 2017
•
This was the seventh consecutive quarter of YOY same store PLO growth, up 3% this quarter in total and 4% on a same store basis, to $148.8 million.
•
PSC increased 4% in total and 5% on a same store basis to $56.8 million.
•
Merchandise sales increased 4% in total and on a same store basis. The merchandise sales gross margin of 37% was consistent with the prior-year quarter and within our target range of 35-38%.
•
Inventory aged over one year improved to 11% from 12% in Q2FY17.
•
Operations expenses increased 1% to $63.6 million.
•
The segment contribution was up 18% to $23.8 million.




•
Initiatives are underway to continue improving net revenue and profitability in the long-term, including investments in upgrading our point of sale system and enhancing product and customer data analytics, as well as enhancing our customer experience with a store refurbishment program.
Nine Months Ended June 30, 2017
•
PSC increased 5% in total and 4% on a same store basis to $177.5 million.
•
Merchandise sales increased 2% in total and 3% on a same store basis. The merchandise sales gross margin of 37% is within our target range of 35-38%.
•
Operations expenses increased 4% to $194.5 million, due to investment in customer facing labor and higher benefit claims.
•
Segment profit was up 3% to $80.7 million.
Mexico Pawn Segment
Three Months Ended June 30, 2017
•
PLO increased 19% to $19.4 million (up 16% to $18.9 million on a constant currency basis).
•
PSC increased 13% to $9.1 million (up 16% to $9.4 million on a constant currency basis).
•
Merchandise sales increased 7% in total and 5% on a same store basis (up 10% in total and 7% in same stores on a constant currency basis). The 33% merchandise sales gross margin was consistent with the prior-year quarter.
•
Inventory aged over one year of 6% was consistent with Q2FY17.
•
Net revenue was up 12% with a smaller 2% increase in operations expenses, yielding a 100% increase in segment contribution (segment contribution was up 104% to $5.5 million on a constant currency basis).
Nine Months Ended June 30, 2017
•
PSC increased 4% to $24.5 million (up 15% to $27.2 million on a constant currency basis).
•
Merchandise sales increased 3% in total and 2% on a same store basis (up 15% in total and 13% in same stores on a constant currency basis). Merchandise margin was 32%, 100bps lower than the prior-year nine-months.
•
Net revenue increased 3% and operations expenses were 9% lower, yielding a 107% increase in segment profit to $12.9 million (up 127% to $14.1 million on a constant currency basis).
CONFERENCE CALL
EZCORP will host a conference call on Tuesday, August 1, 2017, at 7:30am Central Time to discuss third quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 57788640, 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. We also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers. EZCORP is a member of the Russell 2000 Index, S&P SmallCap 600 Index, S&P 1000 Index and Nasdaq Composite Index.
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 June 30,
 
Nine Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
(Unaudited)
 
(in thousands, except per share amounts)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
97,921

 
$
94,014

 
$
319,672

 
$
311,941

Jewelry scrapping sales
17,641

 
11,230

 
37,658

 
33,631

Pawn service charges
65,878

 
62,473

 
201,983

 
193,197

Other revenues
2,193

 
2,433

 
6,572

 
7,151

Total revenues
183,633

 
170,150

 
565,885

 
545,920

Merchandise cost of goods sold
62,615

 
60,140

 
204,840

 
194,731

Jewelry scrapping cost of goods sold
15,010

 
9,110

 
32,195

 
28,271

Other cost of revenues
453

 
506

 
1,433

 
1,549

Net revenues
105,555

 
100,394

 
327,417

 
321,369

Operating expenses:
 
 
 
 


 


Operations
74,246

 
73,172

 
226,352

 
221,446

Administrative
14,095

 
14,481

 
41,305

 
50,085

Depreciation and amortization
5,843

 
6,274

 
18,246

 
20,422

Loss (gain) on sale or disposal of assets
17

 
(41
)
 
11

 
641

Restructuring
—

 
—

 
—

 
1,910

Total operating expenses
94,201

 
93,886

 
285,914

 
294,504

Operating income
11,354

 
6,508

 
41,503

 
26,865

Interest expense
5,654

 
3,936

 
16,847

 
12,014

Interest income
(2,053
)
 
(50
)
 
(6,909
)
 
(66
)
Equity in net income of unconsolidated affiliate
(1,047
)
 
(1,694
)
 
(3,768
)
 
(5,626
)
Other (income) expense
(99
)
 
500

 
(294
)
 
815

Income from continuing operations before income taxes
8,899

 
3,816

 
35,627

 
19,728

Income tax expense
3,432

 
1,038

 
13,663

 
11,224

Income from continuing operations, net of tax
5,467

 
2,778

 
21,964

 
8,504

Loss from discontinued operations, net of tax
(265
)
 
(9,133
)
 
(1,868
)
 
(99,068
)
Net income (loss)
5,202

 
(6,355
)
 
20,096

 
(90,564
)
Net loss attributable to noncontrolling interest
(58
)
 
(666
)
 
(352
)
 
(6,589
)
Net income (loss) attributable to EZCORP, Inc.
$
5,260

 
$
(5,689
)
 
$
20,448

 
$
(83,975
)
 
 
 
 
 
 
 
 
Basic earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.10

 
$
0.05

 
$
0.41

 
$
0.16

Diluted earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.10

 
$
0.05

 
$
0.41

 
$
0.16

 
 
 
 
 
 
 
 
Weighted-average basic shares outstanding
54,295

 
53,980

 
54,247

 
54,574

Weighted-average diluted shares outstanding
54,367

 
54,192

 
54,310

 
54,690

 
 
 
 
 
 
 
 
Net income from continuing operations attributable to EZCORP, Inc.
$
5,525

 
$
2,904

 
$
22,316

 
$
8,954

Net loss from discontinued operations attributable to EZCORP, Inc.
(265
)
 
(8,593
)
 
(1,868
)
 
(92,929
)
Net income (loss) attributable to EZCORP, Inc.
$
5,260

 
$
(5,689
)
 
$
20,448

 
$
(83,975
)




EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
June 30,
2017
 
June 30,
2016
 
September 30,
2016
 
 
 
 
 
 
 
(Unaudited)
 
 
Assets:
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
113,729

 
$
29,380

 
$
65,737

Pawn loans
168,262

 
160,269

 
167,329

Pawn service charges receivable, net
30,585

 
29,643

 
31,062

Inventory, net
135,053

 
130,368

 
140,224

Notes receivable, net
22,024

 
—

 
41,946

Current assets held for sale
—

 
157,554

 
—

Prepaid expenses and other current assets
31,993

 
26,577

 
35,845

Total current assets
501,646

 
533,791

 
482,143

Investment in unconsolidated affiliate
41,725

 
56,843

 
37,128

Property and equipment, net
53,022

 
61,201

 
58,455

Goodwill
254,469

 
254,273

 
253,976

Intangible assets, net
32,551

 
30,569

 
30,681

Non-current notes receivable, net
41,253

 
—

 
41,119

Deferred tax asset, net
36,506

 
34,170

 
35,303

Other assets, net
9,145

 
18,950

 
44,439

Total assets
$
970,317

 
$
989,797

 
$
983,244

 
 
 
 
 
 
Liabilities, temporary equity and equity:
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable, accrued expenses and other current liabilities
$
64,830

 
$
63,242

 
$
84,285

Current liabilities held for sale
—

 
130,261

 
—

Customer layaway deposits
11,091

 
11,201

 
10,693

Total current liabilities
75,921

 
204,704

 
94,978

Long-term debt, net
260,414

 
211,421

 
283,611

Other long-term liabilities
9,680

 
9,548

 
10,450

Total liabilities
346,015

 
425,673

 
389,039

Commitments and contingencies


 


 


Temporary equity:
 
 
 
 
 
Redeemable noncontrolling interest
—

 
(2,378
)
 
—

Total temporary equity
—

 
(2,378
)
 
—

Stockholders’ equity:
 
 
 
 
 
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued and outstanding: 51,326,582 as of June 30, 2017; 51,019,332 as of June 30, 2016; and 51,129,144 as of September 30, 2016
513

 
510

 
511

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

 
30

 
30

Additional paid-in capital
322,559

 
316,565

 
318,723

Retained earnings
340,256

 
316,577

 
319,808

Accumulated other comprehensive loss
(37,921
)
 
(66,974
)
 
(44,089
)
EZCORP, Inc. stockholders’ equity
625,437

 
566,708

 
594,983

Noncontrolling interest
(1,135
)
 
(206
)
 
(778
)
Total equity
624,302

 
566,502

 
594,205

Total liabilities, temporary equity and equity
$
970,317

 
$
989,797

 
$
983,244





EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine Months Ended June 30,
 
2017
 
2016
 
 
 
 
 
(Unaudited)
 
(in thousands)
Operating activities:
 
 
 
Net income (loss)
$
20,096

 
$
(90,564
)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
 
 
 
Depreciation and amortization
18,246

 
21,432

Amortization of debt discount and deferred financing costs
8,595

 
8,864

Amortization of prepaid commissions
—

 
10,684

Accretion of notes receivable discount
(2,898
)
 
—

Consumer loan loss provision
1,434

 
24,157

Deferred income taxes
(871
)
 
(14,234
)
Impairment of goodwill
—

 
73,244

Other adjustments
(48
)
 
(2,002
)
(Gain) loss on sale or disposal of assets
11

 
641

Stock compensation
5,145

 
3,206

Income from investment in unconsolidated affiliate
(3,768
)
 
(5,626
)
Changes in operating assets and liabilities:
 
 
 
Service charges and fees receivable
604

 
8,363

Inventory
1,470

 
(1,349
)
Prepaid expenses, other current assets and other assets
1,261

 
(4,983
)
Accounts payable, accrued expenses and other liabilities
(29,464
)
 
(20,497
)
Customer layaway deposits
288

 
781

Income taxes receivable and payable, current, net of excess tax benefit from stock compensation
9,873

 
51,990

Payments of restructuring charges
—

 
(8,367
)
Dividends from unconsolidated affiliate
—

 
2,197

Net cash provided by operating activities
29,974

 
57,937

Investing activities:
 
 
 
Loans made
(472,676
)
 
(497,255
)
Loans repaid
288,833

 
324,478

Recovery of pawn loan principal through sale of forfeited collateral
187,819

 
173,710

Additions to property and equipment
(9,340
)
 
(6,470
)
Acquisitions, net of cash acquired
—

 
(6,000
)
Principal collections on notes receivable
23,336

 
—

Net cash provided by (used in) investing activities
17,972

 
(11,537
)
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
—

 
2,710

Proceeds from borrowings, net of issuance costs
—

 
16,442

Payments on borrowings
—

 
(63,994
)
Net cash used in financing activities
(767
)
 
(67,910
)
Effect of exchange rate changes on cash and cash equivalents
813

 
(6,506
)
Net increase (decrease) in cash and cash equivalents
47,992

 
(28,016
)
Cash and cash equivalents at beginning of period
65,737

 
59,124

Cash and cash equivalents at end of period
$
113,729

 
$
31,108

Non-cash investing and financing activities:
 
 
 
Pawn loans forfeited and transferred to inventory
$
182,682

 
$
179,394

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

 
—






EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended June 30, 2017
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
82,714

 
$
15,207

 
$
—

 
$
97,921

 
$
—

 
$
97,921

Jewelry scrapping sales
17,257

 
384

 
—

 
17,641

 
—

 
17,641

Pawn service charges
56,774

 
9,104

 
—

 
65,878

 
—

 
65,878

Other revenues
50

 
179

 
1,964

 
2,193

 
—

 
2,193

Total revenues
156,795

 
24,874

 
1,964

 
183,633

 
—

 
183,633

Merchandise cost of goods sold
52,488

 
10,127

 
—

 
62,615

 
—

 
62,615

Jewelry scrapping cost of goods sold
14,674

 
336

 
—

 
15,010

 
—

 
15,010

Other cost of revenues
—

 
—

 
453

 
453

 
—

 
453

Net revenues
89,633

 
14,411

 
1,511

 
105,555

 
—

 
105,555

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
63,593

 
8,898

 
1,755

 
74,246

 
—

 
74,246

Administrative
—

 
—

 
—

 
—

 
14,095

 
14,095

Depreciation and amortization
2,210

 
619

 
44

 
2,873

 
2,970

 
5,843

Loss (gain) on sale or disposal of assets
20

 
(3
)
 
—

 
17

 
—

 
17

Interest expense
—

 
2

 
—

 
2

 
5,652

 
5,654

Interest income
—

 
(480
)
 
—

 
(480
)
 
(1,573
)
 
(2,053
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(1,047
)
 
(1,047
)
 
—

 
(1,047
)
Other income
(5
)
 
(24
)
 
(68
)
 
(97
)
 
(2
)
 
(99
)
Segment contribution
$
23,815

 
$
5,399

 
$
827

 
$
30,041

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
30,041

 
$
(21,142
)
 
$
8,899





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Nine Months Ended June 30, 2017
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
273,125

 
$
46,547

 
$
—

 
$
319,672

 
$
—

 
$
319,672

Jewelry scrapping sales
35,158

 
2,500

 
—

 
37,658

 
—

 
37,658

Pawn service charges
177,480

 
24,503

 
—

 
201,983

 
—

 
201,983

Other revenues
157

 
457

 
5,958

 
6,572

 
—

 
6,572

Total revenues
485,920

 
74,007

 
5,958

 
565,885

 
—

 
565,885

Merchandise cost of goods sold
173,235

 
31,605

 
—

 
204,840

 
—

 
204,840

Jewelry scrapping cost of goods sold
30,114

 
2,081

 
—

 
32,195

 
—

 
32,195

Other cost of revenues
—

 
—

 
1,433

 
1,433

 
—

 
1,433

Net revenues
282,571

 
40,321

 
4,525

 
327,417

 
—

 
327,417

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
194,499

 
26,439

 
5,414

 
226,352

 
—

 
226,352

Administrative
—

 
—

 
—

 
—

 
41,305

 
41,305

Depreciation and amortization
7,487

 
1,910

 
144

 
9,541

 
8,705

 
18,246

Loss (gain) on sale or disposal of assets
(54
)
 
65

 
—

 
11

 
—

 
11

Interest expense
—

 
7

 
—

 
7

 
16,840

 
16,847

Interest income
—

 
(889
)
 
—

 
(889
)
 
(6,020
)
 
(6,909
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(3,768
)
 
(3,768
)
 
—

 
(3,768
)
Other income
(14
)
 
(61
)
 
(28
)
 
(103
)
 
(191
)
 
(294
)
Segment contribution
$
80,653

 
$
12,850

 
$
2,763

 
$
96,266

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
96,266

 
$
(60,639
)
 
$
35,627





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended June 30, 2016
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
79,826

 
$
14,187

 
$
1

 
$
94,014

 
$
—

 
$
94,014

Jewelry scrapping sales
10,918

 
312

 
—

 
11,230

 
—

 
11,230

Pawn service charges
54,395

 
8,078

 
—

 
62,473

 
—

 
62,473

Other revenues
39

 
157

 
2,237

 
2,433

 
—

 
2,433

Total revenues
145,178

 
22,734

 
2,238

 
170,150

 
—

 
170,150

Merchandise cost of goods sold
50,586

 
9,554

 
—

 
60,140

 
—

 
60,140

Jewelry scrapping cost of goods sold
8,845

 
265

 
—

 
9,110

 
—

 
9,110

Other cost of revenues
—

 
—

 
506

 
506

 
—

 
506

Net revenues
85,747

 
12,915

 
1,732

 
100,394

 
—

 
100,394

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
62,733

 
8,744

 
1,695

 
73,172

 
—

 
73,172

Administrative
—

 
—

 
—

 
—

 
14,481

 
14,481

Depreciation and amortization
2,888

 
720

 
56

 
3,664

 
2,610

 
6,274

Loss on sale or disposal of assets
(51
)
 
(13
)
 
—

 
(64
)
 
23

 
(41
)
Interest expense
—

 
25

 
—

 
25

 
3,911

 
3,936

Interest income
(1
)
 
(23
)
 
—

 
(24
)
 
(26
)
 
(50
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(1,694
)
 
(1,694
)
 
—

 
(1,694
)
Other expense (income)
—

 
759

 
—

 
759

 
(259
)
 
500

Segment contribution
$
20,178

 
$
2,703

 
$
1,675

 
$
24,556

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
24,556

 
$
(20,740
)
 
$
3,816





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Nine Months Ended June 30, 2016
  
U.S. Pawn
 
Mexico Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
266,560

 
$
45,376

 
$
5

 
$
311,941

 
$
—

 
$
311,941

Jewelry scrapping sales
32,117

 
1,493

 
21

 
33,631

 
—

 
33,631

Pawn service charges
169,630

 
23,567

 
—

 
193,197

 
—

 
193,197

Other revenues
281

 
231

 
6,639

 
7,151

 
—

 
7,151

Total revenues
468,588

 
70,667

 
6,665

 
545,920

 
—

 
545,920

Merchandise cost of goods sold
164,288

 
30,442

 
1

 
194,731

 
—

 
194,731

Jewelry scrapping cost of goods sold
27,033

 
1,222

 
16

 
28,271

 
—

 
28,271

Other cost of revenues
—

 
—

 
1,549

 
1,549

 
—

 
1,549

Net revenues
277,267

 
39,003

 
5,099

 
321,369

 
—

 
321,369

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
187,518

 
28,961

 
4,967

 
221,446

 
—

 
221,446

Administrative
—

 
—

 
—

 
—

 
50,085

 
50,085

Depreciation and amortization
9,489

 
2,285

 
163

 
11,937

 
8,485

 
20,422

Loss on sale or disposal of assets
502

 
116

 
—

 
618

 
23

 
641

Restructuring
982

 
543

 
202

 
1,727

 
183

 
1,910

Interest expense
125

 
103

 
—

 
228

 
11,786

 
12,014

Interest income
(2
)
 
(23
)
 
—

 
(25
)
 
(41
)
 
(66
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(5,626
)
 
(5,626
)
 
—

 
(5,626
)
Other expense
—

 
808

 
3

 
811

 
4

 
815

Segment contribution
$
78,653

 
$
6,210

 
$
5,390

 
$
90,253

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
90,253

 
$
(70,525
)
 
$
19,728





EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
 
Three Months Ended June 30, 2017
 
Company-owned Stores
 
U.S. Pawn
 
Mexico Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of March 31, 2017
517

 
240

 
27

 
784

New locations opened
—

 
4

 
—

 
4

Locations sold, combined or closed
(2
)
 
—

 
—

 
(2
)
As of June 30, 2017
515

 
244

 
27

 
786

 
Three Months Ended June 30, 2016
 
Company-owned Stores
 
U.S. Pawn
 
Mexico Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of March 31, 2016
522

 
237


27

 
786

New locations opened
—

 
1

 
—

 
1

As of June 30, 2016
522

 
238

 
27

 
787

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

 
239

 
27

 
786

New locations opened
—

 
6

 
—

 
6

Locations sold, combined or closed
(5
)
 
(1
)
 
—

 
(6
)
As of June 30, 2017
515

 
244

 
27

 
786

 
Nine Months Ended June 30, 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
—

 
1

 
—

 
1

 
—

Locations acquired
6

 
1

 
—

 
7

 
—

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

 
(7
)
 
(1
)
As of June 30, 2016
522

 
238

 
27

 
787

 
—

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 June 30, 2017 and 2016 was 18.0 to 1 and 18.6 to 1, respectively. The approximate average exchange rate for the three months ended June 30, 2017 and 2016 was 18.6 to 1 and 18.1 to 1, respectively. The approximate average exchange rate for the nine months ended June 30, 2017 and 2016 was 19.6 to 1 and 17.6 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 nine months ended June 30, 2017.




Miscellaneous Non-GAAP Financial Measures
 
U.S. Dollar Amount
 
Percentage Change YOY
 
 
 
 
 
(in millions)
 
 
Mexico Pawn same store PLO
$
19.0

 
16
%
Currency exchange rate fluctuations
(0.6
)
 
 
Constant currency Mexico Pawn same store PLO
$
18.4

 
13
%
 
 
 
 
Consolidated revenue (three months ended June 30, 2017)
$
183.6

 
8
%
Currency exchange rate fluctuations (three months ended June 30, 2017)
0.8

 
 
Constant currency consolidated revenue (three months ended June 30, 2017)
$
184.4

 
8
%
 
 
 
 
Consolidated net revenue (three months ended June 30, 2017)
$
105.6

 
5
%
Currency exchange rate fluctuations
0.4

 
 
Constant currency consolidated net revenue (three months ended June 30, 2017)
$
106.0

 
6
%
 
 
 
 
Consolidated PSC revenue (three months ended June 30, 2017)
$
65.9

 
5
%
Currency exchange rate fluctuations
0.2

 
 
Constant currency consolidated PSC revenue (three months ended June 30, 2017)
$
66.1

 
6
%
 
 
 
 
Consolidated merchandise sales (three months ended June 30, 2017)
$
97.9

 
4
%
Currency exchange rate fluctuations
0.4

 
 
Constant currency consolidated merchandise sales (three months ended June 30, 2017)
$
98.3

 
5
%
 
 
 
 
Consolidated operations expenses (three months ended June 30, 2017)
$
74.2

 
1
%
Currency exchange rate fluctuations (three months ended June 30, 2017)
0.3

 
 
Constant currency consolidated operations expenses (three months ended June 30, 2017)
$
74.5

 
2
%
 
 
 
 
Consolidated revenue (nine months ended June 30, 2017)
$
565.9

 
4
%
Currency exchange rate fluctuations (nine months ended June 30, 2017)
8.5

 
 
Constant currency consolidated revenue (nine months ended June 30, 2017)
$
574.4

 
5
%
 
 
 
 
Consolidated net revenue (nine months ended June 30, 2017)
$
327.4

 
2
%
Currency exchange rate fluctuations
4.5

 
 
Constant currency consolidated net revenue (nine months ended June 30, 2017)
$
331.9

 
3
%
 
 
 
 
Consolidated PSC revenue (nine months ended June 30, 2017)
$
202.0

 
5
%
Currency exchange rate fluctuations
2.6

 
 
Constant currency consolidated PSC revenue (nine months ended June 30, 2017)
$
204.6

 
6
%
 
 
 
 
Consolidated operations expenses (nine months ended June 30, 2017)
$
226.4

 
2
%
Currency exchange rate fluctuations (nine months ended June 30, 2017)
3.0

 
 
Constant currency consolidated operations expenses (nine months ended June 30, 2017)
$
229.4

 
4
%
 
 
 
 
Mexico Pawn PLO
$
19.4

 
19
%
Currency exchange rate fluctuations
(0.5
)
 
 
Constant currency Mexico Pawn PLO
$
18.9

 
16
%
 
 
 
 
Mexico Pawn PSC revenue (three months ended June 30, 2017)
$
9.1

 
13
%
Currency exchange rate fluctuations (three months ended June 30, 2017)
0.3

 
 
Constant currency Mexico Pawn PSC revenue (three months ended June 30, 2017)
$
9.4

 
16
%
 
 
 
 
Mexico Pawn merchandise sales (three months ended June 30, 2017)
$
15.2

 
7
%
Currency exchange rate fluctuations (three months ended June 30, 2017)
0.4

 
 
Constant currency Mexico Pawn merchandise sales (three months ended June 30, 2017)
$
15.6

 
10
%
 
 
 
 
Mexico Pawn same store merchandise sales (three months ended June 30, 2017)
$
14.8

 
5
%
Currency exchange rate fluctuations (three months ended June 30, 2017)
0.4

 
 
Constant currency Mexico Pawn same store merchandise sales (three months ended June 30, 2017)
$
15.2

 
7
%
 
 
 
 
Mexico Pawn segment profit before tax (three months ended June 30, 2017)
$
5.4

 
100
%
Currency exchange rate fluctuations (three months ended June 30, 2017)
0.1

 
 
Constant currency Mexico Pawn segment profit before tax (three months ended June 30, 2017)
$
5.5

 
104
%
 
 
 
 




Mexico Pawn PSC revenue (nine months ended June 30, 2017)
$
24.5

 
4
%
Currency exchange rate fluctuations (nine months ended June 30, 2017)
2.7

 
 
Constant currency Mexico Pawn PSC revenue (nine months ended June 30, 2017)
$
27.2

 
15
%
 
 
 
 
Mexico Pawn merchandise sales (nine months ended June 30, 2017)
$
46.5

 
3
%
Currency exchange rate fluctuations (nine months ended June 30, 2017)
5.5

 
 
Constant currency Mexico Pawn merchandise sales (nine months ended June 30, 2017)
$
52.0

 
15
%
 
 
 
 
Mexico Pawn same store merchandise sales (nine months ended June 30, 2017)
$
45.2

 
2
%
Currency exchange rate fluctuations (nine months ended June 30, 2017)
5.3

 
 
Constant currency Mexico Pawn same store merchandise sales(nine months ended June 30, 2017)
$
50.5

 
13
%
 
 
 
 
Mexico Pawn segment profit before tax (nine months ended June 30, 2017)
$
12.9

 
107
%
Currency exchange rate fluctuations (nine months ended June 30, 2017)
1.2

 
 
Constant currency Mexico Pawn segment profit before tax (nine months ended June 30, 2017)
$
14.1

 
127
%