CONSOLIDATED RESULTS
Three-Months Ended March 31, 2016
Six-Months Ended March 31, 2016
OPERATING METRICS
U.S. Pawn Segment
Three-Months Ended March 31, 2016
1 In 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.
2 Annualized return on pawn earning assets is equal to the annualized merchandise and scrap sales gross profit and pawn service charges, divided by average pawn loans and inventory balances outstanding.
Six-Months Ended March 31, 2016
Mexico Pawn Segment
Three-Months Ended March 31, 2016
Six-Months Ended March 31, 2016
Grupo Finmart Segment
Three Months Ended March 31, 2016
- Loan collections up 33%, including accelerated receipts on previously reserved loans more than doubling.
- Cost reduction program delivering cash SG&A savings.
- Originations focused on higher quality, better performing government agencies.
Six Months Ended March 31, 2016
CONFERENCE CALL
EZCORP will host a conference call on Tuesday, May 10, 2016, at 7:30am Central Time to discuss second quarter results. Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 8428284, International dialing (678) 894-3054. 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 athttp://investors.ezcorp.com/ shortly after the call.
ABOUT EZCORP
EZCORP is a leading provider of pawn loans in the United States and Mexico and consumer loans in Mexico. At our pawn stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.
FORWARD LOOKING STATEMENTS
This announcement contains certain forward-looking statements regarding the company’s strategy, initiatives and expected performance. These statements are based on the company’s current expectations as to the outcome and timing of future events. All statements, other than statements of historical facts, including all statements regarding the company's strategy, initiatives and future performance, that address activities or results that the company plans, expects, believes, projects, estimates or anticipates, will, should or may occur in the future, including future financial or operating results, are forward-looking statements. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including operating risks, liquidity risks, legislative or regulatory developments, market factors or current or future litigation. For a discussion of these and other factors affecting the company’s business and prospects, see the company’s annual, quarterly and other reports filed with the Securities and Exchange Commission. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Unaudited) | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Merchandise sales | $ | 109,343 | $ | 107,852 | $ | 217,927 | $ | 217,491 | |||||||
Jewelry scrapping sales | 12,780 | 18,399 | 22,401 | 36,933 | |||||||||||
Pawn service charges | 64,130 | 59,470 | 130,724 | 124,397 | |||||||||||
Consumer loan fees and interest | 15,616 | 18,544 | 28,804 | 37,515 | |||||||||||
Other revenues | 30 | 910 | 497 | 1,565 | |||||||||||
Total revenues | 201,899 | 205,175 | 400,353 | 417,901 | |||||||||||
Merchandise cost of goods sold | 68,332 | 72,492 | 134,591 | 144,970 | |||||||||||
Jewelry scrapping cost of goods sold | 11,085 | 14,354 | 19,161 | 29,029 | |||||||||||
Consumer loan bad debt | 8,683 | 4,761 | 21,286 | 13,276 | |||||||||||
Net revenues | 113,799 | 113,568 | 225,315 | 230,626 | |||||||||||
Operating expenses: | |||||||||||||||
Operations | 80,282 | 77,190 | 165,888 | 157,277 | |||||||||||
Administrative | 15,621 | 14,800 | 35,604 | 27,352 | |||||||||||
Depreciation and amortization | 7,082 | 8,095 | 15,141 | 16,103 | |||||||||||
Loss on sale or disposal of assets | 649 | 387 | 682 | 643 | |||||||||||
Restructuring | 218 | 704 | 1,910 | 726 | |||||||||||
Total operating expenses | 103,852 | 101,176 | 219,225 | 202,101 | |||||||||||
Operating income | 9,947 | 12,392 | 6,090 | 28,525 | |||||||||||
Interest expense | 8,449 | 11,296 | 17,641 | 23,330 | |||||||||||
Interest income | (127 | ) | (512 | ) | (267 | ) | (1,043 | ) | |||||||
Equity in net (income) loss of unconsolidated affiliate | (1,877 | ) | 3,678 | (3,932 | ) | 1,484 | |||||||||
Impairment of goodwill | 73,921 | — | 73,921 | — | |||||||||||
Other expense | 89 | 1,862 | 959 | 2,621 | |||||||||||
(Loss) income from continuing operations before income taxes | (70,508 | ) | (3,932 | ) | (82,232 | ) | 2,133 | ||||||||
Income tax expense | 6,189 | 362 | 2,493 | 3,626 | |||||||||||
Loss from continuing operations, net of tax | (76,697 | ) | (4,294 | ) | (84,725 | ) | (1,493 | ) | |||||||
(Loss) income from discontinued operations, net of tax | (1,094 | ) | 4,731 | (1,332 | ) | 11,608 | |||||||||
Net (loss) income | (77,791 | ) | 437 | (86,057 | ) | 10,115 | |||||||||
Net loss from continuing operations attributable to noncontrolling interest | (3,666 | ) | (906 | ) | (4,458 | ) | (2,840 | ) | |||||||
Net (loss) income attributable to EZCORP, Inc. | $ | (74,125 | ) | $ | 1,343 | $ | (81,599 | ) | $ | 12,955 | |||||
Basic (loss) earnings per share attributable to EZCORP, Inc.: | |||||||||||||||
Continuing operations | $ | (1.33 | ) | $ | (0.06 | ) | $ | (1.46 | ) | $ | 0.02 | ||||
Discontinued operations | (0.02 | ) | 0.09 | (0.02 | ) | 0.22 | |||||||||
Basic (loss) earnings per share | $ | (1.35 | ) | $ | 0.03 | $ | (1.48 | ) | $ | 0.24 | |||||
Diluted (loss) earnings per share attributable to EZCORP, Inc.: | |||||||||||||||
Continuing operations | $ | (1.33 | ) | $ | (0.06 | ) | $ | (1.46 | ) | $ | 0.02 | ||||
Discontinued operations | (0.02 | ) | 0.09 | (0.02 | ) | 0.22 | |||||||||
Diluted (loss) earnings per share | $ | (1.35 | ) | $ | 0.03 | $ | (1.48 | ) | $ | 0.24 | |||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 54,843 | 54,184 | 54,869 | 53,915 | |||||||||||
Diluted | 54,843 | 54,184 | 54,869 | 53,972 | |||||||||||
Net (loss) income from continuing operations attributable to EZCORP, Inc. | $ | (73,031 | ) | $ | (3,388 | ) | $ | (80,267 | ) | $ | 1,347 | ||||
Net (loss) income from discontinued operations attributable to EZCORP, Inc. | (1,094 | ) | 4,731 | (1,332 | ) | 11,608 | |||||||||
Net (loss) income attributable to EZCORP, Inc. | $ | (74,125 | ) | $ | 1,343 | $ | (81,599 | ) | $ | 12,955 | |||||
EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) |
|||||||||||
March 31, 2016 |
March 31, 2015 |
September 30, 2015 |
|||||||||
(Unaudited) | |||||||||||
Assets: | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 75,336 | $ | 138,173 | $ | 59,124 | |||||
Restricted cash | 13,817 | 47,909 | 15,137 | ||||||||
Pawn loans | 140,195 | 127,929 | 159,964 | ||||||||
Consumer loans, net | 26,362 | 55,529 | 36,533 | ||||||||
Pawn service charges receivable, net | 27,626 | 24,909 | 30,852 | ||||||||
Consumer loan fees and interest receivable, net | 13,226 | 13,063 | 19,802 | ||||||||
Inventory, net | 126,446 | 116,144 | 124,084 | ||||||||
Income taxes receivable | 557 | 52,234 | 45,175 | ||||||||
Prepaid expenses and other current assets | 32,505 | 32,383 | 21,076 | ||||||||
Total current assets | 456,070 | 608,273 | 511,747 | ||||||||
Investment in unconsolidated affiliate | 56,677 | 94,510 | 56,182 | ||||||||
Property and equipment, net | 64,962 | 102,252 | 75,594 | ||||||||
Restricted cash, non-current | 2,308 | 2,880 | 2,883 | ||||||||
Goodwill | 254,782 | 344,931 | 327,460 | ||||||||
Intangible assets, net | 40,197 | 49,674 | 41,263 | ||||||||
Non-current consumer loans, net | 62,673 | 79,860 | 75,824 | ||||||||
Deferred tax asset, net | 77,125 | 35,213 | 69,121 | ||||||||
Other assets, net | 19,655 | 60,041 | 42,985 | ||||||||
Total assets | $ | 1,034,449 | $ | 1,377,634 | $ | 1,203,059 | |||||
Liabilities, temporary equity and equity: | |||||||||||
Current liabilities: | |||||||||||
Current maturities of long-term debt | $ | 82,174 | $ | 71,471 | $ | 74,345 | |||||
Current capital lease obligations | — | 93 | — | ||||||||
Accounts payable and other accrued expenses | 85,836 | 89,711 | 107,871 | ||||||||
Other current liabilities | 2,595 | 6,230 | 15,384 | ||||||||
Customer layaway deposits | 11,370 | 10,484 | 10,470 | ||||||||
Income taxes payable | 6,632 | — | — | ||||||||
Total current liabilities | 188,607 | 177,989 | 208,070 | ||||||||
Long-term debt, less current maturities, net | 252,808 | 344,960 | 297,166 | ||||||||
Deferred gains and other long-term liabilities | 2,751 | 7,673 | 6,157 | ||||||||
Total liabilities | 444,166 | 530,622 | 511,393 | ||||||||
Commitments and contingencies | |||||||||||
Temporary equity: | |||||||||||
Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; none as of March 31, 2016 and 1,168,456 shares issued and outstanding at redemption value as of March 31, 2015 and September 30, 2015 | — | 11,696 | 11,696 | ||||||||
Redeemable noncontrolling interest | (1,229 | ) | 16,827 | 3,235 | |||||||
Total temporary equity | (1,229 | ) | 28,523 | 14,931 | |||||||
Stockholders’ equity: | |||||||||||
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of March 31, 2016 and 2015 and September 30, 2015; issued and outstanding: 50,989,430 as of March 31, 2016; 50,681,477 as of March 31, 2015; and 50,726,289 as of September 30, 2015 | 510 | 506 | 507 | ||||||||
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171 | 30 | 30 | 30 | ||||||||
Additional paid-in capital | 312,569 | 329,973 | 307,080 | ||||||||
Retained earnings | 341,538 | 522,541 | 423,137 | ||||||||
Accumulated other comprehensive loss | (62,805 | ) | (34,561 | ) | (54,019 | ) | |||||
EZCORP, Inc. stockholders’ equity | 591,842 | 818,489 | 676,735 | ||||||||
Noncontrolling interest | (330 | ) | — | — | |||||||
Total equity | 591,512 | 818,489 | 676,735 | ||||||||
Total liabilities, temporary equity and equity | $ | 1,034,449 | $ | 1,377,634 | $ | 1,203,059 | |||||
EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
Six Months Ended March 31, | |||||||
2016 | 2015 | ||||||
(Unaudited) | |||||||
(in thousands) | |||||||
Operating activities: | |||||||
Net (loss) income | $ | (86,057 | ) | $ | 10,115 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 15,141 | 18,097 | |||||
Amortization of debt discount and consumer loan premium, net | 4,357 | 4,229 | |||||
Consumer loan loss provision | 18,662 | 14,023 | |||||
Deferred income taxes | (8,004 | ) | (5,536 | ) | |||
Impairment of goodwill | 73,921 | — | |||||
Amortization of deferred financing costs | 1,575 | 2,625 | |||||
Amortization of prepaid commissions | 7,754 | 6,200 | |||||
Other adjustments | (2,149 | ) | 380 | ||||
Loss on sale or disposal of assets | 682 | 950 | |||||
Stock compensation expense (benefit) | 2,149 | (1,928 | ) | ||||
(Income) loss from investment in unconsolidated affiliate | (3,932 | ) | 1,484 | ||||
Changes in operating assets and liabilities, net of business acquisitions: | |||||||
Service charges and fees receivable | 10,140 | 2,542 | |||||
Inventory | (993 | ) | 2,499 | ||||
Prepaid expenses, other current assets and other assets | (5,935 | ) | (16,949 | ) | |||
Accounts payable, other accrued expenses, deferred gains and other long-term liabilities | (12,112 | ) | (5,925 | ) | |||
Customer layaway deposits | 851 | 1,947 | |||||
Restricted cash | (4,860 | ) | (835 | ) | |||
Income taxes receivable | 51,250 | 4,427 | |||||
Payments of restructuring charges | (6,701 | ) | (2,962 | ) | |||
Dividends from unconsolidated affiliate | — | 2,407 | |||||
Net cash provided by operating activities | 55,739 | 37,790 | |||||
Investing activities: | |||||||
Loans made | (323,980 | ) | (417,014 | ) | |||
Loans repaid | 225,138 | 334,888 | |||||
Recovery of pawn loan principal through sale of forfeited collateral | 121,830 | 138,885 | |||||
Additions to property and equipment | (2,976 | ) | (15,934 | ) | |||
Acquisitions, net of cash acquired | (6,000 | ) | (4,750 | ) | |||
Investment in unconsolidated affiliate | — | (12,140 | ) | ||||
Proceeds from sale of assets | 26 | — | |||||
Net cash provided by investing activities | 14,038 | 23,935 | |||||
Financing activities: | |||||||
Payout of deferred consideration | (14,875 | ) | (6,000 | ) | |||
Repurchase of redeemable common stock issued due to acquisitions | (11,750 | ) | — | ||||
Proceeds from settlement of forward currency contracts | 3,557 | 2,313 | |||||
Change in restricted cash | 6,519 | 11,476 | |||||
Proceeds from bank borrowings, net of debt issuance costs | 14,302 | 69,384 | |||||
Payments on bank borrowings and capital lease obligations | (47,698 | ) | (51,677 | ) | |||
Net cash (used in) provided by financing activities | (49,945 | ) | 25,496 | ||||
Effect of exchange rate changes on cash and cash equivalents | (3,620 | ) | (4,373 | ) | |||
Net increase in cash and cash equivalents | 16,212 | 82,848 | |||||
Cash and cash equivalents at beginning of period | 59,124 | 55,325 | |||||
Cash and cash equivalents at end of period | $ | 75,336 | $ | 138,173 | |||
Non-cash investing and financing activities: | |||||||
Pawn loans forfeited and transferred to inventory | $ | 122,709 | $ | 119,028 | |||
Issuance of common stock, subject to possible redemption, due to acquisition | — | 11,696 | |||||
Deferred consideration | — | 250 | |||||
EZCORP, Inc.
SELECTED OPERATING SEGMENT RESULTS (UNAUDITED)
U.S. Pawn
The following table presents selected summary financial data from continuing operations for the U.S. Pawn segment:
Three Months Ended March 31, |
Percentage Change |
|||||||||
2016 | 2015 | |||||||||
(in thousands) | ||||||||||
Net revenues: | ||||||||||
Pawn service charges | $ | 56,614 | $ | 52,317 | 8 | % | ||||
Merchandise sales | 94,740 | 92,472 | 2 | % | ||||||
Merchandise sales gross profit | 36,499 | 30,982 | 18 | % | ||||||
Gross margin on merchandise sales | 39 | % | 34 | % | 15 | % | ||||
Jewelry scrapping sales | 11,599 | 17,391 | (33 | )% | ||||||
Jewelry scrapping sales gross profit | 1,471 | 3,928 | (63 | )% | ||||||
Gross margin on jewelry scrapping sales | 13 | % | 23 | % | (43 | )% | ||||
Other revenues | 49 | 224 | (78 | )% | ||||||
Net revenues | 94,633 | 87,451 | 8 | % | ||||||
Segment operating expenses: | ||||||||||
Operations | 61,240 | 57,920 | 6 | % | ||||||
Depreciation and amortization | 3,042 | 3,607 | (16 | )% | ||||||
Segment operating contribution | 30,351 | 25,924 | 17 | % | ||||||
Other segment expenses | 676 | 7 | * | |||||||
Segment contribution | $ | 29,675 | $ | 25,917 | 15 | % | ||||
Other data: | ||||||||||
Net earning assets — continuing operations | $ | 231,956 | $ | 210,728 | 10 | % | ||||
Inventory turnover — general merchandise (b) | 2.8 | 3.2 | (13 | )% | ||||||
Inventory turnover — jewelry (b) | 1.2 | 1.3 | (8 | )% | ||||||
Average monthly ending pawn loan balance per store (a) | $ | 254 | $ | 234 | 9 | % | ||||
Average annual yield on pawn loans outstanding | 168 | % | 169 | % | -100 | bps | ||||
Pawn loan redemption rate (c) | 85 | % | 85 | % | 0 | bps | ||||
* Represents an increase or decrease in excess of 100% or not meaningful. | ||||||||||
(a) Balance is calculated based upon the average of the monthly ending balance averages during the applicable period. | ||||||||||
(b) Calculation of inventory turnover excludes the effects of scrapping. | ||||||||||
(c) Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended. | ||||||||||
Mexico Pawn
The following table presents selected summary financial data from continuing operations for the Mexico Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
Three Months Ended March 31, |
Percentage Change GAAP |
Percentage Change Constant Currency |
||||||||||||||||
2016 |
2016 Constant Currency (a) |
2015 | ||||||||||||||||
(in USD thousands) | ||||||||||||||||||
Net revenues: | ||||||||||||||||||
Pawn service charges | $ | 7,516 | $ | 9,080 | $ | 7,153 | 5 | % | 27 | % | ||||||||
Merchandise sales | 14,603 | 17,641 | 14,883 | (2 | )% | 19 | % | |||||||||||
Merchandise sales gross profit | 4,513 | 5,452 | 4,203 | 7 | % | 30 | % | |||||||||||
Gross margin on merchandise sales | 31 | % | 31 | % | 28 | % | 11 | % | 11 | % | ||||||||
Jewelry scrapping sales | 1,181 | 1,427 | 917 | 29 | % | 56 | % | |||||||||||
Jewelry scrapping sales gross profit | 224 | 271 | 97 | * | * | |||||||||||||
Gross margin on jewelry scrapping sales | 19 | % | 19 | % | 11 | % | 73 | % | 73 | % | ||||||||
Other revenues | (117 | ) | (141 | ) | 269 | * | * | |||||||||||
Net revenues | 12,136 | 14,662 | 11,722 | 4 | % | 25 | % | |||||||||||
Segment operating expenses: | ||||||||||||||||||
Operations | 9,024 | 10,901 | 10,406 | (13 | )% | 5 | % | |||||||||||
Depreciation and amortization | 764 | 923 | 1,101 | (31 | )% | (16 | )% | |||||||||||
Segment operating contribution | 2,348 | 2,838 | 215 | * | * | |||||||||||||
Other segment expenses (b) | 277 | 430 | 260 | 7 | % | 65 | % | |||||||||||
Segment contribution (loss) | $ | 2,071 | $ | 2,408 | $ | (45 | ) | * | * | |||||||||
Other data: | ||||||||||||||||||
Net earning assets — continuing operations | $ | 34,793 | $ | 39,600 | $ | 33,032 | 5 | % | 20 | % | ||||||||
Inventory turnover (e) | 2.4 | 2.4 | 2.2 | 9 | % | 9 | % | |||||||||||
Average monthly ending pawn loan balance per store (c) | $ | 66 | $ | 75 | $ | 64 | 3 | % | 17 | % | ||||||||
Average annual yield on pawn loans outstanding | 197 | % | 202 | % | 203 | % | -600 | bps | -100 | bps | ||||||||
Pawn loan redemption rate (d) | 78 | % | 78 | % | 79 | % | -100 | bps | -100 | bps | ||||||||
* Represents an increase or decrease in excess of 100% or not meaningful. | ||||||||||||||||||
(a) For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used. | ||||||||||||||||||
(b) The three-months ended March 31, 2016 constant currency balance excludes $0.1 million of net foreign currency transaction gains resulting from movement in exchange rates. The net foreign currency transaction losses for the three-months ended March 31, 2015 were $0.3 million and are not excluded from the above results. | ||||||||||||||||||
(c) Balance is calculated based upon the average of the monthly ending balance averages during the applicable period. | ||||||||||||||||||
(d) Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended. | ||||||||||||||||||
(e) Calculation of inventory turnover excludes the effects of scrapping. | ||||||||||||||||||
Grupo Finmart
The table below presents selected summary financial data from continuing operations for the Grupo Finmart segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
Three Months Ended March 31, |
Percentage Change GAAP |
Percentage Change Constant Currency |
|||||||||||||||
2016 |
2016 Constant Currency (a) |
2015 | |||||||||||||||
(in thousands) | |||||||||||||||||
Revenues: | |||||||||||||||||
Consumer loan fees and interest | $ | 13,589 | $ | 16,416 | $ | 16,391 | (17 | )% | — | % | |||||||
Other revenues | 98 | 118 | 49 | 100 | % | * | |||||||||||
Total revenues | 13,687 | 16,534 | 16,440 | (17 | )% | 1 | % | ||||||||||
Consumer loan bad debt | 8,252 | 9,969 | 4,110 | * | * | ||||||||||||
Net revenues | 5,435 | 6,565 | 12,330 | (56 | )% | (47 | )% | ||||||||||
Segment expenses (income): | |||||||||||||||||
Operations | 8,026 | 9,696 | 7,109 | 13 | % | 36 | % | ||||||||||
Depreciation and amortization | 476 | 575 | 626 | (24 | )% | (8 | )% | ||||||||||
Impairment of goodwill (e) | 73,921 | 73,921 | — | * | * | ||||||||||||
Interest expense | 4,498 | 5,434 | 6,376 | (29 | )% | (15 | )% | ||||||||||
Interest income | (120 | ) | (145 | ) | (423 | ) | (72 | )% | (66 | )% | |||||||
Other (income) expense (b) | (124 | ) | — | 1,272 | * | * | |||||||||||
Segment loss | $ | (81,242 | ) | $ | (82,916 | ) | $ | (2,630 | ) | * | * | ||||||
Other data: | |||||||||||||||||
Net earning assets — continuing operations | $ | 86,771 | $ | 98,759 | $ | 116,857 | (26 | )% | (15 | )% | |||||||
Consumer loan originations (c) | 5,349 | 6,462 | 20,061 | (73 | )% | (68 | )% | ||||||||||
Consumer loan bad debt as a percentage of gross average consumer loan balance (d) | 14 | % | 14 | % | 4 | % | * | * | |||||||||
* Represents an increase or decrease in excess of 100% or not meaningful. | |||||||||||||||||
(a) For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used. | |||||||||||||||||
(b) The three-months ended March 31, 2016 constant currency balance excludes a $0.1 million of net foreign currency transaction gains resulting from movement in exchange rates. The net foreign currency transaction losses for the three-months ended March 31, 2015 were $1.3 million and are not excluded from the above results. | |||||||||||||||||
(c) Constant currency result is calculated as the average monthly consumer loan origination balance translated at the average closing daily exchange rate for the applicable period. | |||||||||||||||||
(d) Represents consumer loan bad debt expense during the applicable period as a percentage of the average monthly consumer loan balance during the applicable period. Constant currency consumer loan balance is calculated using the end of period rate for each month. | |||||||||||||||||
(e) Amount not adjusted on a constant currency basis as charge occurred at a single point in time. | |||||||||||||||||
U.S. Pawn
The following table presents selected summary financial data from continuing operations for the U.S. Pawn segment:
Six Months Ended March 31, |
Percentage Change |
||||||||||
2016 | 2015 | ||||||||||
(in thousands) | |||||||||||
Net revenues: | |||||||||||
Pawn service charges | $ | 115,235 | $ | 109,352 | 5 | % | |||||
Merchandise sales | 186,734 | 181,914 | 3 | % | |||||||
Merchandise sales gross profit | 73,032 | 61,807 | 18 | % | |||||||
Gross margin on merchandise sales | 39 | % | 34 | % | 15 | % | |||||
Jewelry scrapping sales | 21,199 | 34,398 | (38 | )% | |||||||
Jewelry scrapping sales gross profit | 3,011 | 7,602 | (60 | )% | |||||||
Gross margin on jewelry scrapping sales | 14 | % | 22 | % | (36 | )% | |||||
Other revenues | 242 | 408 | (41 | )% | |||||||
Net revenues | 191,520 | 179,169 | 7 | % | |||||||
Segment operating expenses: | |||||||||||
Operations | 124,785 | 117,427 | 6 | % | |||||||
Depreciation and amortization | 6,602 | 7,059 | (6 | )% | |||||||
Segment operating contribution | 60,133 | 54,683 | 10 | % | |||||||
Other segment expenses (income) | 1,659 | (1 | ) | * | |||||||
Segment contribution | $ | 58,474 | $ | 54,684 | 7 | % | |||||
Other data: | |||||||||||
Average monthly ending pawn loan balance per store (a) | $ | 265 | $ | 254 | 4 | % | |||||
Average annual yield on pawn loans outstanding | 166 | % | 166 | % | 0 | bps | |||||
Pawn loan redemption rate (b) | 84 | % | 84 | % | 0 | bps | |||||
* Represents an increase or decrease in excess of 100% or not meaningful. | |||||||||||
(a) Balance is calculated based upon the average of the monthly ending balance averages during the applicable period. | |||||||||||
(b) Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended. | |||||||||||
Mexico Pawn
The following table presents selected summary financial data from continuing operations for the Mexico Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
Six Months Ended March 31, |
Percentage Change GAAP |
Percentage Change Constant Currency |
|||||||||||||||
2016 |
2016 Constant Currency (a) |
2015 | |||||||||||||||
(in USD thousands) | |||||||||||||||||
Net revenues: | |||||||||||||||||
Pawn service charges | $ | 15,489 | $ | 18,716 | $ | 15,045 | 3 | % | 24 | % | |||||||
Merchandise sales | 31,189 | 37,687 | 34,463 | (10 | )% | 9 | % | ||||||||||
Merchandise sales gross profit | 10,301 | 12,447 | 10,299 | — | % | 21 | % | ||||||||||
Gross margin on merchandise sales | 33 | % | 33 | % | 30 | % | 10 | % | 10 | % | |||||||
Jewelry scrapping sales | 1,181 | 1,427 | 2,324 | (49 | )% | (39 | )% | ||||||||||
Jewelry scrapping sales gross profit | 224 | 271 | 243 | (8 | )% | 12 | % | ||||||||||
Gross margin on jewelry scrapping sales | 19 | % | 19 | % | 10 | % | 90 | % | 90 | % | |||||||
Other revenues | 74 | 89 | 509 | (85 | )% | (83 | )% | ||||||||||
Net revenues | 26,088 | 31,523 | 26,096 | — | % | 21 | % | ||||||||||
Segment operating expenses: | |||||||||||||||||
Operations | 20,217 | 24,429 | 20,926 | (3 | )% | 17 | % | ||||||||||
Depreciation and amortization | 1,565 | 1,891 | 2,345 | (33 | )% | (19 | )% | ||||||||||
Segment operating contribution | 4,306 | 5,203 | 2,825 | 52 | % | 84 | % | ||||||||||
Other segment expenses (b) | 799 | 906 | 955 | (16 | )% | (5 | )% | ||||||||||
Segment contribution | $ | 3,507 | $ | 4,297 | $ | 1,870 | 88 | % | * | ||||||||
Other data: | |||||||||||||||||
Average monthly ending pawn loan balance per store (c) | $ | 67 | $ | 76 | $ | 62 | 8 | % | 23 | % | |||||||
Average annual yield on pawn loans outstanding | 195 | % | 196 | % | 199 | % | -400 | bps | -300 | bps | |||||||
Pawn loan redemption rate (d) | 78 | % | 78 | % | 78 | % | 0 | bps | 0 | bps | |||||||
* Represents an increase or decrease in excess of 100% or not meaningful. | |||||||||||||||||
(a) For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used. | |||||||||||||||||
(b) The six-months ended March 31, 2016 constant currency balance excludes nominal net foreign currency transaction losses resulting from movement in exchange rates. The net foreign currency transaction losses for the six-months ended March 31, 2015 were $0.7 million and are not excluded from the above results. | |||||||||||||||||
(c) Balance is calculated based upon the average of the monthly ending balance averages during the applicable period. | |||||||||||||||||
(d) Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended. | |||||||||||||||||
Grupo Finmart
The table below presents selected summary financial data from continuing operations for the Grupo Finmart segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.
Six Months Ended March 31, |
Percentage Change GAAP |
Percentage Change Constant Currency |
|||||||||||||||
2016 |
2016 Constant Currency (a) |
2015 | |||||||||||||||
(in thousands) | |||||||||||||||||
Revenues: | |||||||||||||||||
Consumer loan fees and interest | $ | 24,403 | $ | 29,487 | $ | 32,706 | (25 | )% | (10 | )% | |||||||
Other revenues | 181 | 219 | 105 | 72 | % | * | |||||||||||
Total revenues | 24,584 | 29,706 | 32,811 | (25 | )% | (9 | )% | ||||||||||
Consumer loan bad debt | 20,243 | 24,460 | 11,850 | 71 | % | * | |||||||||||
Net revenues | 4,341 | 5,246 | 20,961 | (79 | )% | (75 | )% | ||||||||||
Segment expenses (income): | |||||||||||||||||
Operations | 17,614 | 21,284 | 15,397 | 14 | % | 38 | % | ||||||||||
Depreciation and amortization | 993 | 1,200 | 1,192 | (17 | )% | 1 | % | ||||||||||
Impairment of goodwill (e) | 73,921 | 73,921 | — | * | * | ||||||||||||
Interest expense | 9,563 | 11,555 | 14,657 | (35 | )% | (21 | )% | ||||||||||
Interest income | (251 | ) | (303 | ) | (904 | ) | (72 | )% | (66 | )% | |||||||
Other expense (b) | 644 | — | 1,446 | (55 | )% | * | |||||||||||
Segment loss | $ | (98,143 | ) | $ | (102,411 | ) | $ | (10,827 | ) | * | * | ||||||
Other data: | |||||||||||||||||
Consumer loan originations (c) | $ | 21,319 | $ | 25,761 | $ | 41,958 | (49 | )% | (39 | )% | |||||||
Consumer loan bad debt as a percentage of gross average consumer loan balance (d) | 26 | % | 26 | % | 10 | % | * | * | |||||||||
* Represents an increase or decrease in excess of 100% or not meaningful. | |||||||||||||||||
(a) For income statement items, the average closing daily exchange rate for the applicable period was used. For balance sheet items, the end of the period rate for the applicable period end was used. | |||||||||||||||||
(b) The six-months ended March 31, 2016 constant currency balance excludes a $0.6 million of net foreign currency transaction losses resulting from movement in exchange rates. The net foreign currency transaction losses for the six-months ended March 31, 2015 were $1.4 million and are not excluded from the above results. | |||||||||||||||||
(c) Constant currency result is calculated as the average monthly consumer loan origination balance translated at the average closing daily exchange rate for the applicable period. | |||||||||||||||||
(d) Represents consumer loan bad debt expense during the applicable period as a percentage of the average monthly consumer loan balance during the applicable period. Constant currency consumer loan balance is calculated using the end of period rate for each month. | |||||||||||||||||
(e) Amount not adjusted on a constant currency basis as charge occurred at a single point in time. | |||||||||||||||||
EZCORP, Inc.
STORE COUNT ACTIVITY
Three Months Ended March 31, 2016 | ||||||||||||||||||
Company-owned Stores | ||||||||||||||||||
U.S. Pawn | Mexico Pawn* |
Grupo Finmart |
Other International |
Consolidated | Franchises | |||||||||||||
As of December 31, 2015 | 516 | 237 | * | 46 | 27 | 826 | 1 | |||||||||||
Locations acquired | 6 | — | — | — | 6 | — | ||||||||||||
Locations sold, combined or closed | — | — | (3 | ) | — | (3 | ) | (1 | ) | |||||||||
As of March 31, 2016 | 522 | 237 | 43 | 27 | 829 | — | ||||||||||||
* Includes five buy/sell stores which were converted to Mexico Pawn stores during the period. | ||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||
Company-owned Stores | ||||||||||||||||||
U.S. Pawn | Mexico Pawn* |
Grupo Finmart |
Other International |
Consolidated | Franchises | |||||||||||||
As of December 31, 2014 | 509 | 262 | * | 53 | 39 | 863 | 4 | |||||||||||
New locations opened | — | 1 | 1 | — | 2 | — | ||||||||||||
Locations acquired | 12 | — | — | — | 12 | — | ||||||||||||
Locations sold, combined or closed | (2 | ) | (1 | ) | (4 | ) | — | (7 | ) | (2 | ) | |||||||
As of March 31, 2015 | 519 | 262 | 50 | 39 | 870 | 2 | ||||||||||||
* Includes 21 buy/sell stores. | ||||||||||||||||||
Six Months Ended March 31, 2016 | ||||||||||||||||||
Company-owned Stores | ||||||||||||||||||
U.S. Pawn | Mexico Pawn* |
Grupo Finmart |
Other International |
Consolidated | Franchises | |||||||||||||
As of September 30, 2015 | 522 | 237 | * | 53 | 27 | 839 | 1 | |||||||||||
Locations acquired | 6 | 1 | — | — | 7 | — | ||||||||||||
Locations sold, combined or closed | (6 | ) | (1 | ) | (10 | ) | — | (17 | ) | (1 | ) | |||||||
As of March 31, 2016 | 522 | 237 | 43 | 27 | 829 | — | ||||||||||||
* Includes five buy/sell stores which were converted to Mexico Pawn stores during the period. | ||||||||||||||||||
Six Months Ended March 31, 2015 | ||||||||||||||||||
Company-owned Stores | ||||||||||||||||||
U.S. Pawn | Mexico Pawn* |
Grupo Finmart |
Other International |
Consolidated | Franchises | |||||||||||||
As of September 30, 2014 | 504 | 261 | * | 53 | 39 | 857 | 5 | |||||||||||
New locations opened | 5 | 2 | * | 1 | — | 8 | — | |||||||||||
Locations acquired | 12 | — | — | — | 12 | — | ||||||||||||
Locations sold, combined or closed | (2 | ) | (1 | ) | (4 | ) | — | (7 | ) | (3 | ) | |||||||
As of March 31, 2015 | 519 | 262 | 50 | 39 | 870 | 2 | ||||||||||||
* Includes 19 buy/sell stores. We acquired two additional buy/sell stores during the period. | ||||||||||||||||||
NON-GAAP FINANCIAL INFORMATION
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 results to evaluate results of the Mexico Pawn and Grupo Finmart segment operations, which are denominated in Mexican pesos and believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Mexico Pawn and Grupo Finmart operations and reflect an additional way of viewing aspects of our business that, when viewed with its 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 condensed consolidated balance sheet and condensed 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 comparable period, in order to exclude the effects of foreign currency rate fluctuations. For balance sheet items, the end of period rate as of March 31, 2016 of 17.3 to 1 was used, compared to the end of period rate as of March 31, 2015 of 15.2 to 1. For statement of operations items, the average closing daily exchange rate for the appropriate period was used. The average exchange rates for the current three and six-months ended March 31, 2016 were 18.0 to 1 and 17.4 to 1, respectively, as compared to the prior year three and six-months ended March 31, 2015 rates of 14.9 to 1 and 14.4 to 1, respectively. Constant currency results, where presented, also exclude 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, where not already included in constant currency segment results above.
Miscellaneous Non-GAAP Financial Measures
U.S. Dollar Amount |
Percentage Change YOY |
||||||
(in thousands) | |||||||
Consolidated revenue (three-months ended March 31, 2016) | $ | 201,899 | (2 | )% | |||
Currency exchange rate fluctuations | 7,671 | ||||||
Constant currency consolidated revenue (three-months ended March 31, 2016) | $ | 209,570 | 2 | % | |||
Consolidated net revenue (three-months ended March 31, 2016) | $ | 113,799 | — | % | |||
Currency exchange rate fluctuations | 3,657 | ||||||
Constant currency consolidated net revenue (three-months ended March 31, 2016) | $ | 117,456 | 3 | % | |||
Consolidated operating expenses (three-months ended March 31, 2016) | $ | 103,852 | 3 | % | |||
Currency exchange rate fluctuations | 3,871 | ||||||
Constant currency consolidated operating expenses (three-months ended March 31, 2016) | $ | 107,723 | 6 | % | |||
Consolidated revenue (six-months ended March 31, 2016) | $ | 400,353 | (4 | )% | |||
Currency exchange rate fluctuations | 15,108 | ||||||
Constant currency consolidated revenue (six-months ended March 31, 2016) | $ | 415,461 | (1 | )% | |||
Consolidated net revenue (six-months ended March 31, 2016) | $ | 225,315 | (2 | )% | |||
Currency exchange rate fluctuations | 6,340 | ||||||
Constant currency consolidated net revenue (six-months ended March 31, 2016) | $ | 231,655 | — | % | |||
Consolidated operating expenses (six-months ended March 31, 2016) | $ | 219,225 | 8 | % | |||
Currency exchange rate fluctuations | 8,554 | ||||||
Constant currency consolidated operating expenses (six-months ended March 31, 2016) | $ | 227,779 | 13 | % | |||
Mexico Pawn loans outstanding as of March 31, 2016 | $ | 17,271 | 11 | % | |||
Currency exchange rate fluctuations | 2,386 | ||||||
Constant currency Mexico Pawn loans outstanding as of March 31, 2016 | $ | 19,657 | 26 | % | |||
Same store Mexico Pawn loans outstanding as of March 31, 2016 | $ | 17,205 | 13 | % | |||
Currency exchange rate fluctuations | 2,266 | ||||||
Constant currency same store Mexico Pawn loans outstanding as of March 31, 2016 | $ | 19,471 | 28 | % | |||
Same store Mexico Pawn service charges (three-months ended March 31, 2016) | $ | 7,380 | 5 | % | |||
Currency exchange rate fluctuations | 1,508 | ||||||
Constant currency same store Mexico Pawn service charges (three-months ended March 31, 2016) | $ | 8,888 | 27 | % | |||
Same store Mexico Pawn service charges (six-months ended March 31, 2016) | $ | 15,288 | 4 | % | |||
Currency exchange rate fluctuations | 3,175 | ||||||
Constant currency same store Mexico Pawn service charges (six-months ended March 31, 2016) | $ | 18,463 | 25 | % | |||
Contact:
Jeff Christensen
Vice President, Investor Relations
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Phone: (512) 437-3545