EZCORP, INC. 
By AUSTIN, Texas, Jan. 19, 2012 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced financial results for its first fiscal quarter ended December 31, 2011.
(Logo: http://photos.prnewswire.com/prnh/20090713/EZCORPLOGO)
Commenting on the results, EZCORP's President and Chief Executive Officer, Paul Rothamel, said "Our performance was in line with our expectations as we made planned investments in talent and technology to support our long term growth strategy. We also experienced some headwinds as U.S. holiday sales were soft; gold prices declined inside the quarter; and we were negatively impacted by currency exchange rates in Mexico. We were able to offset all of this with our double digit revenue growth, margin expansion, and expense controls inside our base business."
Financials - Three months ended December 31, 2011 versus the prior year quarter
-- Net income of $39.4 million, up 14% on a non-GAAP basis; up 43% on a
GAAP basis.
-- Diluted earnings per share of $0.78, an increase of 13% on a non-GAAP
basis; up 42% on a GAAP basis.
-- Total revenues of $248.9 million, up 14%.
-- Net revenues of $154.0 million, up 15%.
-- Store level operating income of $79.5 million, up 14%, with margins
steady at 52%.
-- Consolidated operating income of $54.8 million, up 9% on a non-GAAP
basis, up 39% on a GAAP basis.
-- Contribution from strategic affiliates of $4.2 million, an increase of
24%.
Note: Non-GAAP prior year quarter financials and percentages are adjusted for the one-time pre-tax charge of $10.9 million ($7.1 million post-tax) related to the retirement of the former Chief Executive Officer recorded in the three months ended December 31, 2010. A reconciliation of GAAP to non-GAAP results is provided at the end of this release for further reference.
Key Operating Metrics - Three months ended December 31, 2011 versus the prior year quarter
-- US Pawn:
-- Total revenue increased 15% to $184.5 million or 2% on a same store
basis.
-- Total sales margins improved 60 basis points to 40.8%.
-- Store level operating income increased 17% to $57.9 million with a
15 bps margin improvement to 54%. Same store operating income
increased 6%.
-- US Pawn loan balance increased 19% to $140.4 million at December 31,
2011 and grew 9% on a same store basis.
-- Empeno Facil (Mexico pawn):
-- Total revenue increased 56% to $19.4 million.
-- Same store revenue growth of 15%, driven by same store growth in
merchandise sales and pawn service charges of 32% and 21%,
respectively. Same store scrap sales were down 21%.
-- Store level operating income increased 160% to $6.2 million with an
improvement in margin from 36% to 51%, despite the impact from
opening 54 new stores in the past 12 months.
-- Empeno Facil's pawn loan balance increased 42% to $9.7 million at
December 31, 2011 and grew 5% on a same store basis.
-- EZMONEY (US Financial Services and Cash Converters Canada):
-- Total revenue decreased 1% to $45.0 million.
-- Same store revenue decreased 2% driven by a decrease in same store
signature loan fees of 2%. Included in signature loan fees are the
fees related to Installment loans which increased 77% as a result of
the continued transition to this product.
-- Bad debt as a percentage of fees remained steady at 24%.
-- Store level operating income decreased 13% to $15.5 million.
-- Total loan balances (including CSO lender balances) at December 31,
2011 decreased 3% to $44.8 million and decreased 1% on a same store
basis.
Balance Sheet and Liquidity
-- Combined pawn, signature and auto title loan balances (including CSO) at
December 31 were $197 million, an increase of 15%.
-- At December 31, cash and cash equivalents were $22.9 million, with debt
outstanding of $40.5 million.
Growth
-- During the quarter, US Pawn acquired 24 stores in three separate
transactions:
-- Two stores in Florida bringing our total store count in Florida to
95;
-- Seven Cash Converters stores in Virginia and Pennsylvania, new
states for US Pawn. The Cash Converters buy / sell model allows the
Company to meet the short-term cash needs of customers in markets
and neighborhoods where the traditional pawn model may not be
feasible;
-- Fifteen stores in the San Antonio metropolitan area from Money Mart.
These stores bring the total in the San Antonio area to 37,
consolidating EZCORP's position as the leading pawn operator in that
market.
-- Empeno Facil opened 14 stores during the quarter bringing our total
store count to 192 and a market presence in 17 of the 31 states. In the
last 12 months, Empeno Facil has added 54 stores. Of our 192 total
locations at December 31, 140 are large format and 52 are smaller format
stores.
-- Cash Converters Canada acquired one franchise store during the quarter
and converted eight Cashmax stores to the Cash Converter brand. At
December 31, 24 of its 65 company-owned stores operated under the Cash
Converters brand with an additional 12 stores managed by franchisees.
Crediamigo
-- EZCORP has agreed to acquire 60% of Crediamigo, a specialty consumer
finance company based in Mexico City with 65 branches and 550 employees
throughout Mexico. Crediamigo provides payroll deduction loans,
primarily to employees of government agencies. Crediamigo has 170
payroll withholding agreements signed with employers and access to
approximately 3.5 million employees.
-- Founded in 2003, Crediamigo is one of the top three largest and fastest
growing providers of payroll deduction loans in Mexico with a total
portfolio of approximately MXP 1.25 billion (approximately $92.6 million
USD). The average loan is around MXP 16,000 and 27 months.
-- Under the terms of the acquisition agreement, EZCORP will pay $38.7
million in cash to the existing shareholders of Crediamigo and will
contribute $12 million to the capital of the company alongside $8
million that will be contributed by certain of the minority
shareholders. In addition, EZCORP will be obligated to pay the existing
stockholders additional amounts on each of the first and second
anniversaries of the closing if certain financial performance targets
are achieved during 2012 and 2013. The transaction is expected to close
in our second fiscal quarter.
Rothamel concluded, "With our ongoing domestic and international investments, we believe our company is well positioned for both short and long term growth. Through our existing channels, as well as our newest channels, we are excited to be bringing our suite of retail and financial services to an ever widening audience."
Outlook for fiscal 2012
The Company affirmed that it expects fiscal 2012 earnings per share to be between $3.05 and $3.10. At the mid-point, this represents an increase of 20% over fiscal 2011 earnings per share as adjusted for the one-time charge related to the retirement of the former Chief Executive Officer in the first quarter of fiscal 2011.
About EZCORP
EZCORP is a leading provider of specialty consumer financial services. It provides collateralized non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans, including payday loans, installment loans and auto title loans, or fee-based credit services to customers seeking loans. At its pawn stores, the company also sells merchandise, primarily collateral forfeited from its pawn lending operations.
EZCORP operates more than 1,100 pawn, buy/sell and personal financial services stores in the U.S., Mexico and Canada. The company also has significant investments in Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 160 full-line stores offering pawnbroking, jewelry retailing, gold buying and financial services; and in Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a worldwide network of over 600 stores that provide personal financial services and sell pre-owned merchandise.
Special Note Regarding Forward-Looking Statements
This announcement contains certain forward-looking statements regarding the Company's expected operating and financial performance for future periods, including expected future earnings. These statements are based on the Company's current expectations. 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 changes in the regulatory environment, changing market conditions in the overall economy and the industry and consumer demand for the Company's services and merchandise. 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.
Change to Presentation and Reclassification of Prior Year Comparatives
The Company has historically included fees from its Product Protection Plan and Jewelry VIP Program as well as layaway fees in "Other revenue" in its Consolidated Statements of Operations and its Operating Segment Results. Beginning in the second fiscal quarter of 2011 the Company has included these fees in "Merchandise sales" on the basis that fees from these products are incidental to sales of merchandise. Prior year figures have been reclassified to conform to this presentation and margins have been recalculated accordingly.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP net income and non-GAAP earnings per share for fiscal 2011. The only difference between the presented non-GAAP measures and the most closely comparable GAAP measures is the exclusion of a one-time charge related to the retirement of the Company's former Chief Executive Officer and the related tax benefit included in the quarter ended December 31, 2010. The Company's management uses these non-GAAP financial measures to understand its financial performance from period to period. Management does not believe that the excluded one-time charge is reflective of underlying operating performance. The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the corresponding GAAP measures, but rather are provided to facilitate an enhanced understanding of the Company's actual and expected performance and to enable more meaningful period-to-period comparisons. A reconciliation of the non-GAAP financial measures to the most closely comparable GAAP financial measures is provided in the accompanying financial schedules.
EZCORP Investor Relations
(512) 314-2220
EZCORP, Inc.
Highlights of Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data and percents)
Three Months Ended
December 31,
-------------------
2011 2010
---- ----
Revenues:
Merchandise
sales $86,894 $71,880
Jewelry
scrapping
sales 56,403 50,665
Pawn service
charges 59,792 49,810
Signature loan
fees 39,621 40,066
Auto title
loan fees 5,467 6,244
Other 696 161
--- ---
Total revenues 248,873 218,826
Cost of goods sold:
Cost of
merchandise
sales 48,396 41,311
Cost of
jewelry
scrapping
sales 35,424 32,255
------ ------
Total cost of goods sold 83,820 73,566
Bad debt:
Signature loan
bad debt 10,101 10,046
Auto title
loan bad debt 924 982
--- ---
Total bad debt 11,025 11,028
------ ------
Net revenue 154,028 134,232
Operations expense 74,501 64,504
Administrative
expense 19,711 26,138
Depreciation and
amortization 5,255 4,179
(Gain) /loss on
sales /disposal
of assets (201) 7
---- ---
Operating
income 54,762 39,404
Interest income (39) (3)
Interest expense 590 300
Equity in net
income of
unconsolidated
affiliates (4,161) (3,367)
Other (1,119) (61)
------ ---
Income before
income taxes 59,491 42,535
Income tax expense 20,139 15,106
Net income $39,352 $27,429
======= =======
Net income per
share, diluted $0.78 $0.55
===== =====
Weighted average
shares, diluted 50,693 50,119
OTHER DATA:
-----------
Gross margin on
merchandise sales 44.3% 42.5%
Gross margin on
jewelry scrapping
sales 37.2% 36.3%
Gross margin on
total sales 41.5% 40.0%
Signature loan bad
debt as percent of
fees 25.5% 25.1%
Auto title loan bad
debt as percent of
fees 16.9% 15.7%
EZCORP, Inc.
Highlights of Consolidated Balance Sheets
(in thousands)
December 31, September 30,
(unaudited)
----------
2011 2011
---- ----
Assets:
Current assets:
Cash and cash
equivalents $22,868 $23,969
Pawn loans 150,060 145,318
Signature
loans, net 12,676 11,389
Auto title
loans, net 3,512 3,222
Pawn service
charges
receivable,
net 28,593 26,455
Signature
loan fees
receivable,
net 6,206 5,348
Auto title
loan fees
receivable,
net 1,405 1,427
Inventory,
net 100,319 90,373
Deferred tax
asset 18,169 18,125
Prepaid
expenses and
other assets 38,914 30,611
------ ------
Total current assets 382,722 356,237
Investments in
unconsolidated
affiliates 117,820 120,319
Property and
equipment, net 84,513 78,498
Goodwill 212,475 173,206
Other assets, net 28,349 28,190
Total assets $825,879 $756,450
======== ========
Liabilities and
stockholders' equity:
Current
liabilities:
Accounts
payable and
other
accrued
expenses 57,451 57,400
Customer
layaway
deposits 6,152 6,176
Federal
income taxes
payable 12,672 693
------ ---
Total current liabilities 76,275 64,269
Long-term debt,
less current
maturities 40,500 17,500
Deferred tax
liability 8,724 8,331
Deferred gains and
other long-term
liabilities 1,997 2,102
Total
stockholders'
equity 698,383 664,248
Total
liabilities
and
stockholders'
equity $825,879 $756,450
======== ========
Other Data:
-----------
Pawn loan balance per
ending pawn store $231 $238
Inventory per ending
pawn store $155 $148
Book value per share $13.86 $13.23
EZCORP, Inc.
Operating Segment Results (Unaudited)
(in thousands, except percents)
Three Months Ended December 31,
-------------------------------
US Pawn Empeno Facil EZMONEY
------- ------------ -------
2011 2010 2011 2010 2011 2010
---- ---- ---- ---- ---- ----
Revenues:
Merchandise
sales $75,975 $66,305 $10,342 $5,575 $577 $ -
Scrap sales 52,516 47,006 3,537 3,462 350 197
Pawn service
charges 54,370 46,436 5,422 3,374 - -
Signature loan
fees 920 509 - - 38,701 39,557
Auto title
loan fees 457 393 - - 5,010 5,851
Other 241 117 120 3 335 41
--- --- --- --- --- ---
Total revenues 184,479 160,766 19,421 12,414 44,973 45,646
Merchandise cost of
goods sold 43,116 38,197 4,945 3,114 335 -
Scrap cost of goods
sold 32,973 29,538 2,274 2,638 177 79
Signature loan bad
debt 352 165 - - 9,749 9,881
Auto title loan bad
debt 114 61 - - 810 921
--- --- --- --- --- ---
Net revenue 107,924 92,805 12,202 6,662 33,902 34,765
Operations expense 50,073 43,196 5,998 4,278 18,430 17,030
Store
operating
income $57,851 $49,609 $6,204 $2,384 $15,472 $17,735
======= ======= ====== ====== ======= =======
OTHER DATA
----------
Gross margin on
merchandise sales 43.2% 42.4% 52.2% 44.1% 41.9% N/A
Gross margin on
scrap sales 37.2% 37.2% 35.7% 23.8% 49.4% 59.9%
Gross margin on
total sales 40.8% 40.2% 48.0% 36.4% 44.8% 59.9%
Signature loan bad
debt as a percent
of fees 38.3% 32.4% N/A N/A 25.2% 25.0%
Auto title loan bad
debt as percent of
fees 24.9% 15.5% N/A N/A 16.2% 15.7%
Operating income
margin 53.6% 53.5% 50.8% 35.8% 45.6% 51.0%
EZCORP, Inc.
Store Count Activity
Three Months Ended December 31, 2011
------------------------------------
Company-owned Stores Franchises
-------------------- ----------
US Pawn Empeno Facil EZMONEY Consolidated
------- ------------ ------- ------------
Beginning of
period 439 178 494 1,111 13
New
openings - 14 14 -
Acquired 24 1 25 (1)
Sold,
combined
or closed - - (8) (8) -
End of period 463 192 487 1,142 12
=========
Reconciliation of GAAP to Non-GAAP Results (Unaudited)
(in thousands, except per share data)
The following tables provide a reconciliation of the differences between the reported or projected
non-GAAP financial measures for the periods indicated and the most comparable GAAP financial
measures. The non-GAAP financial measures presented may not be directly comparable to similarly
titled measures reported by other companies and their usefulness for such purposes are therefore
limited. EZCORP management believes presentation of the non-GAAP financial measures enhances
investors' ability to analyze the Company's operating results. However, non-GAAP financial
measures are not an alternative to GAAP financial measures and should be read only in conjunction
with financial measures presented on a GAAP basis.
Three Months Ended December 31, 2011 Three Months Ended December 31, 2010
------------------------------------ ------------------------------------
Non-GAAP Non-GAAP
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
---- ----------- -------- ---- ----------- --------
Net revenue $154,028 - $154,028 $134,232 - $134,232
Operations
expense 74,501 - 74,501 64,504 - 64,504
Administrative
expense 19,711 - 19,711 26,138 (10,945) 15,193
Depreciation
and
amortization 5,255 - 5,255 4,179 - 4,179
(Gain) / loss
on sale/
disposal of
assets (201) - (201) 7 - 7
---------
Operating
income 54,762 - 54,762 39,404 10,945 50,349
Interest income (39) - (39) (3) - (3)
Interest
expense 590 - 590 300 - 300
Equity in net
income of
unconsolidated
affiliates (4,161) - (4,161) (3,367) - (3,367)
Other (1,119) - (1,119) (61) - (61)
-----
Income before
income taxes 59,491 - 59,491 42,535 10,945 53,480
Income tax
expense 20,139 - 20,139 15,106 3,831 18,937
Net income $39,352 $ - $39,352 $27,429 $7,114 $34,543
==========
Net income per
share, diluted $0.78 $ - $0.78 $0.55 $0.14 $0.69
===============
Weighted
average
shares,
diluted 50,693 - 50,589 50,119 - 50,119
SOURCE EZCORP, Inc.
