EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the
United States and Latin America, today announced results for its third
quarter ended June 30, 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 in this release are to the
same period in the prior year unless otherwise noted.
HIGHLIGHTS FOR THIRD QUARTER OF FISCAL 2018
In June 2018, the company expanded its store presence in the Latin
America pawn market by acquiring 63 pawn stores in Mexico City and the
surrounding states in two separate transactions, for total cash
consideration of $30.2 million. The acquisitions are expected to provide
earnings accretion in their first full quarter ending September 30, 2018.
CEO COMMENTARY AND OUTLOOK
Chief Executive Officer Stuart Grimshaw said, “We delivered
significantly higher net revenues and net income in the quarter relative
to the same quarter last year, and continued strengthening our balance
sheet and liquidity position.
“Our strong organic growth and successful pawn store acquisitions
continue in high-growth Latin America. The segment’s net revenue and
profit before tax increased 67% and 63% on a GAAP basis and 73% and 66%
on a constant currency basis. We acquired 63 pawn stores in Mexico in
the third quarter, bringing our year-to-date Latin America pawn store
additions to 205 through acquisition and store openings. That represents
an 83% increase in our Latin America store count since the beginning of
the fiscal year, reaching 451 stores. It also provides strategic
positions for further penetration and expansion in existing and adjacent
geographical areas.
“In the U.S. Pawn segment, our disciplined approach to pawn lending
delivered industry leading PLO, PLO yield and PSC per store. Effective
inventory management initiatives almost doubled inventory reduction
relative to the prior year quarter while, at the same time, delivering
industry high sales and sales gross profit per store. Merchandise margin
increased 110bps to an industry leading 38%, while inventory turns
accelerated to 2.1x from 1.9x in the immediately preceding quarter. The
segment’s net revenues were flat to the prior year quarter and pre-tax
contribution was down 10%, reflecting the continuing impact of last
year’s hurricanes and higher expenses that included investments made to
enhance customer experience and drive future profit improvement.
“We have a strong and proven focus on delivering an outstanding customer
experience and meeting our customers’ need for cash, which drives our
industry-leading store operating performance. We continue to invest in
our core pawn business, and with our strong cash position, we will open
and acquire more pawn stores, particularly in Latin America, to further
expand our diversified, multi-country earnings platform. We are
confident that both of these strategies will continue to drive long-term
shareholder value.”
CONSOLIDATED RESULTS
SEGMENT RESULTS
U.S. Pawn
Latin America Pawn
CONFERENCE CALL & WEBCAST INFORMATION
EZCORP will host a conference call on Thursday, August 2, 2018, 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: 9691918, 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.
All industry comparisons are based on available information
from similar publicly traded companies.
Adjusted 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.
“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.
(in thousands, except share and per share amounts)
Class A Non-voting Common Stock, par value $.01 per share;shares
authorized: 100 million; issued and outstanding:51,494,246
as of June 30, 2018; 51,326,582 as of June 30, 2017;and
51,427,832 as of September 30, 2017
Class B Voting Common Stock, convertible, par value $.01 pershare;
shares authorized: 3 million; issued andoutstanding:
2,970,171
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 nine months ended June 30,
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 June 30, 2018
and 2017 was 19.9 to 1 and 18.0 to 1, respectively. The approximate
average Mexican peso to U.S. dollar exchange rate for the three months
ended June 30, 2018 and 2017 was 19.4 to
1 and 18.6 to 1, respectively. The approximate average Mexican peso to
U.S. dollar exchange rate for the nine months ended June 30, 2018
and 2017 was 19.0 to 1 and 19.5 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 nine months ended June 30, 2018.
Miscellaneous Non-GAAP Financial Measures
U.S.DollarAmount
PercentageChangeYOY
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