View:
Download DOC
Download PDF
Download XLS
Document


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 2, 2018 (May 2, 2018)
 _______________________________________________ 
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, Bldg One, Suite 200, 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))
 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




Item 2.02 — Results of Operations and Financial Condition
On May 2, 2018, EZCORP, Inc. issued a press release announcing its results of operations and financial condition for the quarter ended March 31, 2018. 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 on a constant currency basis ("constant currency") and on an adjusted basis. We use constant currency results to evaluate our Latin America Pawn operations, which are denominated primarily in Mexican pesos and other Latin American currencies. As Camira Administration Corp. and subsidiaries GPMX was not acquired until fiscal 2018, such results included on a constant currency basis reflect the actual exchange rates in effect during the three and six months ended March 31, 2018 without adjustment. We believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Latin America 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 believe that presentation of results on an adjusted basis is meaningful and useful in understanding the activities and business metrics of our 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.
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 2018 earnings conference call (to be held on May 3, 2018) 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.




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 2, 2018
 
 
 
By:
 
/s/ David McGuire
 
 
 
 
 
 
 
David McGuire
 
 
 
 
 
 
 
Deputy Chief Financial Officer and Chief Accounting Officer


Exhibit


https://cdn.kscope.io/8be30d4528403b962547873bc8d68774-fy2014q1ezcorpa01a04a13.jpg
EZCORP Reports 47% Increase in Second Quarter Net Income
Austin, Texas (May 2, 2018) - EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Latin America, today announced strong results for its second quarter ended March 31, 2018.
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 OF FISCAL 2018
•
Net income from continuing operations attributable to EZCORP increased 47% to $12.3 million, and basic earnings per share increased 53% to $0.23 - Ninth consecutive quarter of year-over-year (YOY) earnings growth in both measures.
•
U.S. Pawn extends its significant earnings and cash flow contribution with industry leading returns - Industry-high Pawn Loans Outstanding (PLO) of $243,000 per store combined with market leading pawn loan yield to drive 28% higher Pawn Service Charges (PSC) per store compared to the primary competitor. Improved store metrics include a 3% increase in sales gross profit and excellent margins up 100bps to an industry leading 38%. With its scale and operating leverage, the segment generates significant cash flow as well as 80% of the company’s pawn profit before tax, even as it continues recovery from Hurricanes Harvey and Irma.
•
Latin America Pawn accelerates company's earnings growth - Latin America Pawn segment contribution increased 119% to $7.1 million on a 98% increase in PLO YOY to $35.3 million. This includes a robust contribution from the 133 stores acquired in Q1, along with outstanding organic growth. Latin America Pawn comprises 43% of our total consolidated pawn stores.
•
Consolidated PLO increased 11% - Total consolidated PLO grew 11%, including acquired stores. Latin America Pawn same store PLO expanded 10%, or 9% on a constant currency basis1. This represents the segment's 16th consecutive quarter of same store PLO growth YOY on a constant currency basis. While U.S. Pawn same store PLO was flat, it was up 2%2 in stores unaffected by Hurricanes Harvey and Irma.
•
Liquidity continues to strengthen - Cash and cash equivalents increased 33% YOY and 41% in the current quarter, to $159.9 million.
CEO COMMENTARY AND OUTLOOK
Chief Executive Officer Stuart Grimshaw said, “We had an excellent second quarter, delivering 47% higher net income year-over-year, and continued strengthening of the balance sheet. These results extended the positive momentum we saw in Q1, with three key drivers: we maintained our intense focus on meeting the needs of customers and enhancing their experience; we continued to experience solid growth in U.S. Pawn, which produces the majority of our earnings and cash flow; and we further expanded our revenue base in the high-growth Latin America market.
“The biggest growth contributor was our outstanding results in Latin America,” Mr. Grimshaw explained. “The segment's PLO increased 98% year-over-year to $35 million, and profit before tax more than doubled for the second consecutive quarter. We have added 141 stores through acquisition and store openings so far this year, including four de novo openings in the second quarter. That represents a 57% increase in our Latin America store count since the beginning of the fiscal year to 387 stores, and provides a strategic beachhead for further expansion in existing and adjacent geographical areas. These new stores are adding to the outstanding earnings performance of our existing pawn stores, and we see plenty of opportunities to open and acquire more stores to accentuate the outsized growth.
“In the U.S., we are focused on business execution and pawn fundamentals as this larger, more mature market is our largest earnings and cash flow generator,” Mr. Grimshaw added. “As a result, of that focus, the segment produced market leading returns, and for the 10th consecutive quarter, we outperformed the U.S. market in same store PLO growth, with a 100 basis point improvement in gross margins to 38%. Included in the quarter’s results was the hurricanes’ impact on PLO and resulting pawn



service charges, resulting in 1% higher net revenue and 5% lower segment contribution. Excluding the hurricane impact and other discrete items2, U.S. Pawn performance reflected continued growth, with estimated net revenue and segment contribution up 4% and 5%, respectively.
“We are very optimistic about the growth potential of the company, given the hard work undertaken to reestablish strong operational fundamentals in the U.S., coupled with outstanding compound growth achieved in Latin America driven by terrific execution at the local level on organic and inorganic opportunities.”
CONSOLIDATED RESULTS
•
Net income increased 47% to $12.3 million. The growth and expansion in Latin America drove the improvement in earnings, with a robust base of earnings provided by U.S. Pawn.
•
Consolidated PLO, the most influential driver of revenue and profitability, increased 11%.
•
Higher PLO led to an 11% increase in PSC, driving a 10% improvement in net revenues to $120.6 million (up 9% to $119.4 million on a constant currency basis). Sales gross profit increased 7% to $42.7 million on a 4% rise in merchandise sales and a 100bps improvement in consolidated sales margins to 37%. On a constant currency basis, PSC improved 10% and merchandise sales increased 3%.
•
Business expansion in Latin America caused consolidated operations expenses to rise 10% to $82.2 million (up 9% to $81.3 million on a constant currency basis). As a percentage of net revenues, operations expenses were consistent at 68% in the second quarter and improved 100bps to 68% year-to-date.
•
Cash and cash equivalents at the end of the quarter were $159.9 million, up 33% YOY and 41% in the quarter. Year-to-date, the company has collected $12.3 million in principal and interest, as scheduled, on the notes receivable related to the sale of Grupo Finmart in September 2016.
•
Basic earnings per share increased 53% to $0.23 and diluted earnings per share rose 40% to $0.21. The calculation of fully diluted shares includes the hypothetical conversion of our convertible notes to the extent our average share price in the quarter exceeds their conversion price. However, the 2019 convertible notes must be settled in cash and the company may choose to satisfy all or some of its 2024 convertible notes with cash rather than shares to minimize actual share dilution.
SEGMENT RESULTS
U.S. Pawn
•
Segment contribution was down 5% to $28.2 million in the second quarter and down 1% to $56.0 million year-to-date. Included in the quarter is the PSC impact of Hurricanes Harvey and Irma and technology change related costs. Adjusting for those discrete items, we estimate that our U.S. Pawn segment contribution would have been up 5% in the quarter and 10% year-to-date.
•
The segment delivered market leading returns from the loan portfolio with industry highest PLO, PLO yield and PSC per store, driven by disciplined lending practices and a focus on meeting the customers’ need for cash. Same store PLO in the U.S. was flat to the prior year including stores affected by the hurricanes. In unaffected stores, same store PLO increased 2%. This was the second full quarter that operations were affected by the impact of Hurricanes Harvey and Irma on PLO, PSC and sales.
•
Net revenues were up 1%. A 1% decrease in PSC was offset by a 3% increase in sales gross profit with margin improving 100bps to 38%. Industry leading sales per store and sales margins combined to drive sales gross profit per store 16% higher than the competition. After adjustment for the estimated impact of hurricanes and other discrete items2, net revenues increased 4%.
Latin America Pawn
•
This segment again delivered outstanding growth. Segment contribution increased 119% to $7.1 million (up 109% to $6.7 million on a constant currency basis). Year-to-date contribution increased 116% to $16.1 million (up 107% to $15.4 million on a constant currency basis).
•
Pawn store count has expanded 57% from the beginning of FY18, with 133 pawn stores acquired in the first quarter, and four stores opened during each of the first and second quarters.



•
PLO rose 98% to $35.3 million (up 96% to $34.9 million on a constant currency basis). Same store PLO increased 10% (up 9% on a constant currency basis).
•
Net revenues expanded 78% to $22.2 million (up 69% to $21.1 million on a constant currency basis), and PSC increased 105% to $15.3 million (up 96% to $14.6 million on a constant currency basis).
•
Merchandise sales improved 37% in total and 9% on a same store basis (up 28% in total and 8% in same stores on a constant currency basis). Merchandise sales margin of 32% remained stable. Latin America operations expenses improved to 67% of net revenues from 71% in the prior-year quarter.
CONFERENCE CALL & WEBCAST INFORMATION
EZCORP will host a conference call on Thursday, May 3, 2018, at 7:30am Central Time to discuss first quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 8569817, or internationally by 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 ends.
ABOUT EZCORP
Formed in 1989, EZCORP has grown into a leading provider of pawn loans in the United States and Latin America. It also sells merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers. We are dedicated to satisfying the short-term cash needs of consumers who are both cash and credit constrained, focusing on an industry-leading customer experience. EZCORP is traded on NASDAQ under the symbol EZPW and 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

1“Constant currency” basis, which is a non-GAAP measure, excludes the impact of foreign currency exchange rate fluctuations. For additional information about these calculations, as well as a reconciliation to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.
2Adjusted basis, which is a non-GAAP measure, excludes certain items. For additional information about these calculations, as well as a reconciliation to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.




EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended March 31,
 
Six Months Ended March 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
(Unaudited)
 
(in thousands, except per share amounts)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
114,945

 
$
110,238

 
$
228,533

 
$
221,751

Jewelry scrapping sales
11,525

 
10,219

 
23,738

 
20,017

Pawn service charges
74,367

 
67,092

 
150,727

 
136,105

Other revenues
1,897

 
2,079

 
4,244

 
4,379

Total revenues
202,734

 
189,628

 
407,242

 
382,252

Merchandise cost of goods sold
72,220

 
70,493

 
143,387

 
142,225

Jewelry scrapping cost of goods sold
9,574

 
8,841

 
19,911

 
17,185

Other cost of revenues
347

 
397

 
924

 
980

Net revenues
120,593

 
109,897

 
243,020

 
221,862

Operating expenses:
 
 
 
 
 
 
 
Operations
82,160

 
74,460

 
165,770

 
152,106

Administrative
13,341

 
13,283

 
26,659

 
27,210

Depreciation and amortization
6,451

 
6,030

 
12,174

 
12,403

Loss (gain) on sale or disposal of assets
100

 
71

 
139

 
(6
)
Total operating expenses
102,052

 
93,844

 
204,742

 
191,713

Operating income
18,541

 
16,053

 
38,278

 
30,149

Interest expense
5,829

 
5,628

 
11,676

 
11,193

Interest income
(4,268
)
 
(2,240
)
 
(8,538
)
 
(4,856
)
Equity in net income of unconsolidated affiliate
(876
)
 
(1,243
)
 
(2,326
)
 
(2,721
)
Other (income) expense
(4
)
 
228

 
(186
)
 
(195
)
Income from continuing operations before income taxes
17,860

 
13,680

 
37,652

 
26,728

Income tax expense
5,921

 
5,449

 
13,358

 
10,231

Income from continuing operations, net of tax
11,939

 
8,231

 
24,294

 
16,497

Loss from discontinued operations, net of tax
(500
)
 
(375
)
 
(722
)
 
(1,603
)
Net income
11,439

 
7,856

 
23,572

 
14,894

Net loss attributable to noncontrolling interest
(374
)
 
(167
)
 
(989
)
 
(294
)
Net income attributable to EZCORP, Inc.
$
11,813

 
$
8,023

 
$
24,561

 
$
15,188

 
 
 
 
 
 
 
 
Basic earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.23

 
$
0.15

 
$
0.46

 
$
0.31

Diluted earnings per share attributable to EZCORP, Inc. — continuing operations
$
0.21

 
$
0.15

 
$
0.45

 
$
0.31

 
 
 
 
 
 
 
 
Weighted-average basic shares outstanding
54,464

 
54,291

 
54,447

 
54,224

Weighted-average diluted shares outstanding
57,624

 
54,346

 
56,642

 
54,278




EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
March 31,
2018
 
March 31,
2017
 
September 30,
2017
 
 
 
 
 
 
 
(Unaudited)
 
 
Assets:
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
159,912

 
$
120,099

 
$
164,393

Pawn loans
159,410

 
143,267

 
169,242

Pawn service charges receivable, net
30,493

 
27,028

 
31,548

Inventory, net
158,642

 
137,008

 
154,411

Notes receivable, net
38,091

 
29,978

 
32,598

Prepaid expenses and other current assets
29,222

 
31,011

 
28,765

Total current assets
575,770

 
488,391

 
580,957

Investment in unconsolidated affiliate
46,509

 
38,334

 
43,319

Property and equipment, net
64,833

 
53,630

 
57,959

Goodwill
289,438

 
254,217

 
254,760

Intangible assets, net
45,728

 
31,768

 
32,420

Non-current notes receivable, net
18,660

 
40,319

 
28,377

Deferred tax asset, net
13,842

 
37,134

 
16,856

Other assets, net
19,773

 
18,174

 
9,715

Total assets
$
1,074,553

 
$
961,967

 
$
1,024,363

 
 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current maturities of long-term debt, net
$
103,287

 
$
—

 
$
—

Accounts payable, accrued expenses and other current liabilities
60,689

 
62,339

 
61,543

Customer layaway deposits
12,225

 
10,992

 
11,032

Total current liabilities
176,201

 
73,331

 
72,575

Long-term debt, net
198,338

 
266,724

 
284,807

Other long-term liabilities
11,884

 
8,448

 
7,055

Total liabilities
386,423

 
348,503

 
364,437

Commitments and contingencies
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued and outstanding: 51,494,246 as of March 31, 2018; 51,321,915 as of March 31, 2017; and 51,427,832 as of September 30, 2017
515

 
513

 
514

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
353,698

 
321,531

 
348,532

Retained earnings
377,682

 
334,996

 
351,666

Accumulated other comprehensive loss
(40,463
)
 
(42,544
)
 
(38,367
)
EZCORP, Inc. stockholders’ equity
691,462

 
614,526

 
662,375

Noncontrolling interest
(3,332
)
 
(1,062
)
 
(2,449
)
Total equity
688,130

 
613,464

 
659,926

Total liabilities and equity
$
1,074,553

 
$
961,967

 
$
1,024,363




EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Six Months Ended March 31,
 
2018
 
2017
 
 
 
 
 
(Unaudited)
 
(in thousands)
Operating activities:
 
 
 
Net income
$
23,572

 
$
14,894

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
12,174

 
12,403

Amortization of debt discount and deferred financing costs
7,439

 
5,755

Accretion of notes receivable discount and deferred compensation fee
(5,032
)
 
(1,928
)
Deferred income taxes
2,801

 
(664
)
Other adjustments
1,081

 
911

Stock compensation expense
5,534

 
3,575

Income from investment in unconsolidated affiliate
(2,326
)
 
(2,721
)
Changes in operating assets and liabilities, net of business acquisitions:
 
 
 
Service charges and fees receivable
3,964

 
4,151

Inventory
(628
)
 
708

Prepaid expenses, other current assets and other assets
(3,245
)
 
5,898

Accounts payable, accrued expenses and other liabilities
(5,006
)
 
(30,120
)
Customer layaway deposits
1,128

 
240

Income taxes, net of excess tax benefit from stock compensation
4,085

 
7,590

Net cash provided by operating activities
45,541

 
20,692

Investing activities:
 
 
 
Loans made
(330,732
)
 
(300,604
)
Loans repaid
220,267

 
199,080

Recovery of pawn loan principal through sale of forfeited collateral
134,870

 
128,238

Additions to property and equipment and capitalized labor, net
(19,251
)
 
(8,020
)
Acquisitions, net of cash acquired
(63,780
)
 
—

Principal collections on notes receivable
9,152

 
15,051

Net cash (used in) provided by investing activities
(49,474
)
 
33,745

Financing activities:
 
 
 
Taxes paid related to net share settlement of equity awards
(311
)
 
(767
)
Net cash used in financing activities
(311
)
 
(767
)
Effect of exchange rate changes on cash and cash equivalents
(237
)
 
692

Net (decrease) increase in cash and cash equivalents
(4,481
)
 
54,362

Cash and cash equivalents at beginning of period
164,393

 
65,737

Cash and cash equivalents at end of period
$
159,912

 
$
120,099





EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended March 31, 2018
  
U.S. Pawn
 
Latin America Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
94,753

 
$
20,192

 
$
—

 
$
114,945

 
$
—

 
$
114,945

Jewelry scrapping sales
8,177

 
3,348

 
—

 
11,525

 
—

 
11,525

Pawn service charges
59,114

 
15,253

 
—

 
74,367

 
—

 
74,367

Other revenues
76

 
174

 
1,647

 
1,897

 
—

 
1,897

Total revenues
162,120

 
38,967

 
1,647

 
202,734

 
—

 
202,734

Merchandise cost of goods sold
58,537

 
13,683

 
—

 
72,220

 
—

 
72,220

Jewelry scrapping cost of goods sold
6,512

 
3,062

 
—

 
9,574

 
—

 
9,574

Other cost of revenues
—

 
—

 
347

 
347

 
—

 
347

Net revenues
97,071

 
22,222

 
1,300

 
120,593

 
—

 
120,593

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
65,191

 
14,994

 
1,975

 
82,160

 
—

 
82,160

Administrative
—

 
—

 
—

 
—

 
13,341

 
13,341

Depreciation and amortization
3,531

 
916

 
47

 
4,494

 
1,957

 
6,451

Loss (gain) on sale or disposal of assets
107

 
(5
)
 
—

 
102

 
(2
)
 
100

Interest expense
—

 
2

 
—

 
2

 
5,827

 
5,829

Interest income
—

 
(763
)
 
—

 
(763
)
 
(3,505
)
 
(4,268
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(876
)
 
(876
)
 
—

 
(876
)
Other (income) expense
1

 
(1
)
 
(35
)
 
(35
)
 
31

 
(4
)
Segment contribution
$
28,241

 
$
7,079

 
$
189

 
$
35,509

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
35,509

 
$
(17,649
)
 
$
17,860




EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Three Months Ended March 31, 2017
  
U.S. Pawn
 
Latin America 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, 2018
  
U.S. Pawn
 
Latin America Pawn
 
Other
International
 
Total Segments
 
Corporate Items
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Merchandise sales
$
186,247

 
$
42,286

 
$
—

 
$
228,533

 
$
—

 
$
228,533

Jewelry scrapping sales
16,702

 
7,036

 
—

 
23,738

 
—

 
23,738

Pawn service charges
118,819

 
31,908

 
—

 
150,727

 
—

 
150,727

Other revenues
150

 
343

 
3,751

 
4,244

 
—

 
4,244

Total revenues
321,918

 
81,573

 
3,751

 
407,242

 
—

 
407,242

Merchandise cost of goods sold
114,625

 
28,762

 
—

 
143,387

 
—

 
143,387

Jewelry scrapping cost of goods sold
13,354

 
6,557

 
—

 
19,911

 
—

 
19,911

Other cost of revenues
—

 
—

 
924

 
924

 
—

 
924

Net revenues
193,939

 
46,254

 
2,827

 
243,020

 
—

 
243,020

Segment and corporate expenses (income):
 
 
 
 
 
 
 
 
 
 
 
Operations
131,491

 
29,681

 
4,598

 
165,770

 
—

 
165,770

Administrative
—

 
—

 
—

 
—

 
26,659

 
26,659

Depreciation and amortization
6,330

 
1,761

 
94

 
8,185

 
3,989

 
12,174

Loss on sale or disposal of assets
123

 
5

 
—

 
128

 
11

 
139

Interest expense
—

 
3

 
—

 
3

 
11,673

 
11,676

Interest income
—

 
(1,400
)
 
—

 
(1,400
)
 
(7,138
)
 
(8,538
)
Equity in net income of unconsolidated affiliate
—

 
—

 
(2,326
)
 
(2,326
)
 
—

 
(2,326
)
Other (income) expense
(3
)
 
114

 
(118
)
 
(7
)
 
(179
)
 
(186
)
Segment contribution
$
55,998

 
$
16,090

 
$
579

 
$
72,667

 
 
 
 
Income from continuing operations before income taxes
 
 
 
 
 
 
$
72,667

 
$
(35,015
)
 
$
37,652




EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
Six Months Ended March 31, 2017
  
U.S. Pawn
 
Latin America 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.
STORE COUNT ACTIVITY (UNAUDITED)
 
Three Months Ended March 31, 2018
 
Company-owned Stores
 
U.S. Pawn
 
Latin America Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of December 31, 2017
513

 
383

 
27

 
923

New locations opened
—

 
4

 
—

 
4

Locations sold, combined or closed
(3
)
 
—

 
—

 
(3
)
As of March 31, 2018
510

 
387

 
27

 
924

 
Three Months Ended March 31, 2017
 
Company-owned Stores
 
U.S. Pawn
 
Latin America Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of September 30, 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

 
Six Months Ended March 31, 2018
 
Company-owned Stores
 
U.S. Pawn
 
Latin America Pawn
 
Other International
 
Consolidated
 
 
 
 
 
 
 
 
As of September 30, 2017
513

 
246

 
27

 
786

New locations opened
—

 
8

 
—

 
8

Locations acquired
—

 
133

 
—

 
133

Locations sold, combined or closed
(3
)
 
—

 
—

 
(3
)
As of March 31, 2018
510

 
387

 
27

 
924

 
Six Months Ended March 31, 2017
 
Company-owned Stores
 
U.S. Pawn
 
Latin America 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

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") and on an adjusted basis. We use constant currency results to evaluate our Latin America Pawn operations, which are denominated primarily in Mexican pesos and other Latin American currencies. As GPMX was not acquired until fiscal 2018, such results included on a constant currency basis reflect the actual exchange rates in effect during the three and six months ended March 31, 2018 without adjustment. We believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Latin America 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 believe that presentation of results on an adjusted basis is meaningful and useful in understanding the activities and business metrics of our 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 Mexican peso to U.S. dollar exchange rate as of March 31, 2018 and 2017 was 18.3 to 1 and 18.7 to 1, respectively. The approximate average Mexican peso to U.S. dollar exchange rate for the three months ended March 31, 2018 and 2017 was 18.7 to 1 and 20.4 to 1, respectively. The approximate average Mexican peso to U.S. dollar exchange rate for the six months ended March 31, 2018 and 2017 was 18.8 to 1 and 20.1 to 1, respectively.
Our statement of operations constant currency results reflect the monthly exchange rate fluctuations and so are not directly calculable from the above rates. Constant currency results, where presented, also exclude the foreign currency gain or loss. We have experienced a prolonged weakening of the Mexican peso to the U.S. dollar and may continue to experience further weakening in future reporting periods, which may adversely impact our future operating results when stated on a GAAP basis.
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, 2018.



Miscellaneous Non-GAAP Financial Measures
 
Three Months Ended March 31,
 
Change
 
2018
 
2017
 
 
 
 
 
 
 
 
(in thousands)
 
 
U.S. Pawn GAAP net revenue
$
97.1

 
$
95.9

 
1
 %
Estimated PSC impact from Hurricanes Harvey and Irma
2.0

 
—

 
 
Estimated discrete technology change related costs
0.7

 
—

 
 
U.S. Pawn adjusted net revenue
$
99.8

 
$
95.9

 
4
 %
 
 
 
 
 
 
U.S. Pawn GAAP segment contribution
$
28.2

 
$
29.7

 
(5
)%
Estimated PSC impact from Hurricanes Harvey and Irma
2.0

 
—

 
 
Change in expense estimate from Hurricanes Harvey and Irma
(0.2
)
 
—

 
 
Loss on assets from store closures
0.1

 
—

 
 
Estimated discrete technology change related costs
0.7

 
—

 
 
Accelerated depreciation from retirement of certain assets
0.5

 
—

 
 
U.S. Pawn adjusted segment contribution
$
31.3

 
$
29.7

 
5
 %
 
Six Months Ended March 31,
 
Change
 
2018
 
2017
 
 
 
 
 
 
 
 
(in thousands)
 
 
U.S. Pawn GAAP segment contribution
$
56.0

 
$
56.8

 
(1
)%
Estimated PSC impact from Hurricanes Harvey and Irma
5.2

 
—

 
 
Loss on assets from store closures
0.1

 
—

 
 
Estimated discrete technology change related costs
0.7

 
—

 
 
Accelerated depreciation from retirement of certain assets
0.5

 
—

 
 
U.S. Pawn adjusted segment contribution
$
62.5

 
$
56.8

 
10
 %



 
U.S. Dollar Amount
 
Percentage Change YOY
 
 
 
 
 
(in millions)
 
 
Latin America Pawn same store PLO
$
19.7

 
10
%
Currency exchange rate fluctuations
(0.3
)
 
 
Constant currency Latin America Pawn same store PLO
$
19.4

 
9
%
 
 
 
 
Consolidated net revenue (three months ended March 31, 2018)
$
120.6

 
10
%
Currency exchange rate fluctuations
(1.2
)
 
 
Constant currency consolidated net revenue (three months ended March 31, 2018)
$
119.4

 
9
%
 
 
 
 
Consolidated PSC revenue (three months ended March 31, 2018)
$
74.4

 
11
%
Currency exchange rate fluctuations
(0.7
)
 
 
Constant currency consolidated PSC revenue (three months ended March 31, 2018)
$
73.7

 
10
%
 
 
 
 
Consolidated merchandise sales (three months ended March 31, 2018)
$
114.9

 
4
%
Currency exchange rate fluctuations
(1.3
)
 
 
Constant currency consolidated merchandise sales (three months ended March 31, 2018)
$
113.6

 
3
%
 
 
 
 
Consolidated operations expenses (three months ended March 31, 2018)
$
82.2

 
10
%
Currency exchange rate fluctuations
(0.9
)
 
 
Constant currency consolidated operations expenses (three months ended March 31, 2018)
$
81.3

 
9
%
 
 
 
 
Latin America Pawn PLO
$
35.3

 
98
%
Currency exchange rate fluctuations
(0.4
)
 
 
Constant currency Latin America Pawn PLO
$
34.9

 
96
%
 
 
 
 
Latin America Pawn PSC revenue (three months ended March 31, 2018)
$
15.3

 
105
%
Currency exchange rate fluctuations
(0.7
)
 
 
Constant currency Latin America Pawn PSC revenue (three months ended March 31, 2018)
$
14.6

 
96
%
 
 
 
 
Latin America Pawn merchandise sales (three months ended March 31, 2018)
$
20.2

 
37
%
Currency exchange rate fluctuations
(1.4
)
 
 
Constant currency Latin America Pawn merchandise sales (three months ended March 31, 2018)
$
18.8

 
28
%
 
 
 
 
Latin America Pawn same store merchandise sales (three months ended March 31, 2018)
$
16.0

 
9
%
Currency exchange rate fluctuations
(0.2
)
 
 
Constant currency Latin America Pawn same store merchandise sales (three months ended March 31, 2018)
$
15.8

 
8
%
 
 
 
 
Latin America Pawn segment profit before tax (three months ended March 31, 2018)
$
7.1

 
119
%
Currency exchange rate fluctuations
(0.4
)
 
 
Constant currency Latin America Pawn segment profit before tax (three months ended March 31, 2018)
$
6.7

 
109
%
 
 
 
 
Latin America Pawn segment profit before tax (six months ended March 31, 2018)
$
16.1

 
116
%
Currency exchange rate fluctuations
(0.7
)
 
 
Constant currency Latin America Pawn segment profit before tax (six months ended March 31, 2018)
$
15.4

 
107
%
 
 
 
 
Latin America Pawn net revenue (three months ended March 31, 2018)
$
22.2

 
78
%
Currency exchange rate fluctuations
(1.1
)
 
 
Constant currency Latin America Pawn net revenue (three months ended March 31, 2018)
$
21.1

 
69
%