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| 8-K - 8-K - EZCORP INC | a2016q4-earningsrelease8xk.htm |
EZCORP Announces Fourth Quarter and Full-Year Fiscal 2016 Results
Austin, Texas (December 7, 2016) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its fourth quarter and fiscal year ended September 30, 2016.
CEO COMMENTARY AND OUTLOOK
Stuart Grimshaw, EZCORP's Chief Executive Officer, said: "Fiscal 2016 was an important year for our company. Our intense focus on market leadership in meeting our customers' desire for cash whenever they want it, combined with consistent execution, delivered strong operating results for our pawn businesses in the U.S. and Mexico. We achieved market leading growth in same store pawn loans outstanding (PLO), the most influential driver of revenue and profitability, and continued to improve our customer experience metrics.
“In September, we completed the divestiture of Grupo Finmart, which frees up capital, management attention and other resources that we can now deploy to grow our pawn businesses. We exit the year in a strong liquidity position, including $66 million of cash, $50 million available on our credit facility and $89.8 million in notes receivable from the Grupo Finmart sale, over half of which we expect to receive in fiscal 2017.
“From a financial standpoint, the positive pawn operating results were offset by $16.8 million of non-cash charges associated with our minority equity investment in Cash Converters International Limited recorded in the fourth quarter.
"Our intense focus on customer leadership and delivering an outstanding customer experience will continue with investments in process improvements, product and customer data analytics and feedback, technology, targeted incentives, and coaching and mentoring for our field team. We are confident these initiatives will continue to improve our core pawn operating performance, which will provide our platform for profitable growth."
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.
OPERATIONAL HIGHLIGHTS
▪ | Strong pawn fundamentals: |
◦ | For the year, pawn loans outstanding (PLO) up 4% to $149.8 million in the U.S and up 7% to $17.5 million in Mexico. |
◦ | Leading the U.S. market with average PLO of $288,100 per store. |
◦ | Pawn service charges (PSC) up 5% to $60.3 million in the quarter and up 6% to $229.9 million for the year in the U.S., and up 5% to $8.3 million in the quarter and up 3% to $31.9 million for the year in Mexico. |
◦ | Merchandise sales gross margin up 200bps to 35% in the quarter and up 400bps to 37% for the year. |
▪ | Revenue growth from strong customer engagement and continued focus on expense management drove underlying business improvement: |
◦ | Total revenue up $14.3 million in the fourth quarter and $10.5 million for the year. |
◦ | Net revenue up $7.3 million (7%) in the fourth quarter and $25.2 million (6%) for the year. |
◦ | Total operating expenses down $32.6 million (24%) in the quarter and $19.6 million (5%) for the year. |
▪ | Strong liquidity position to support growth with $66 million cash balance at year-end plus $50 million undrawn on our credit facility. Of the $89.8 million in notes receivable from the Grupo Finmart sale, EZCORP anticipates |
receiving $45.7 million in fiscal 2017. To date, $6.4 million has been received, consistent with the terms of the notes.
CONSOLIDATED RESULTS
Three-Months Ended September 30, 2016
• | Net loss from continuing operations attributable to EZCORP was $16.9 million ($(0.31) per share), compared to a net loss of $57.1 million ($(1.04) per share) in the prior year quarter. This improvement was driven by revenue growth and continued focus on expense management. The fourth quarter results included a $16.8 million non-cash impairment and equity loss on our investment in Cash Converters International Limited. |
• | Total revenue was $184.6 million, up 8%, and net revenue was $106.9 million, up 7%. On a constant currency basis1, total revenue was $188.2 million, up 11%, with net revenue of $108.8 million, up 9%. Higher PLO balances drove increased PSC, and improved inventory management drove increased merchandise margins. |
• | Total operating expenses for the fourth quarter decreased 24% (23% decrease a constant currency basis) as we continue to implement operational efficiencies. Corporate administrative expense decreased $10.8 million to $18.0 million, down 37%. |
Fiscal Year Ended September 30, 2016
• | Net loss from continuing operations attributable to EZCORP was $8.0 million ($(0.15) per share), compared to a net loss of $51.3 million ($(0.94) per share). This increase reflects continued improvement in our U.S. and Mexico pawn businesses (as discussed below). Fiscal year 2016 results included $11.0 million non-cash impairment on our investment in Cash Converters International Limited, $4.2 million in restatement related expenses and $1.9 million in restructuring costs. |
• | Total revenue was $730.5 million, 1% higher, with net revenue of $428.2 million, a 6% increase. On a constant currency basis, total revenue was $748.1 million, 4% higher, and net revenue was $437.9 million, 9% higher. The net revenue increases were driven by growth in PSC as a result of higher PLO balances, as well as improved merchandise sales margins. |
• | Total operating expenses decreased 5% (3% on a constant currency basis), with store operating expenses up due to the addition of new stores during the year. |
OPERATING METRICS
U.S. Pawn Segment
Three-Months Ended September 30, 2016
• | Enhanced focus on lending operations resulted in an increase in total PLO of 4% to $149.8 million, up 4% on a same store basis. |
• | Same store sales were strong in the quarter, up 8%. Merchandise sales gross margin improved to 36% from 35% attributable to efficiently pricing and selling aged inventory, driving merchandise sales gross profit growth of 9% to $29.2 million. |
• | Total PSC increased 5% to $60.3 million; 4% on a same store basis. Average monthly yield on PLO decreased to 13% from 14% in the prior-year quarter. |
• | Net revenue gains along with reduced expenses led to an increase in segment profit before tax of 136% to $21.4 million. |
• | Inventory aged over one year reduced to 8% of total inventory from 10%. |
Fiscal Year Ended September 30, 2016
• | PSC of $229.9 million, up 6%, with same store PSC growth of 4%. |
• | Average monthly PLO yield remained flat to the prior-year period at 14%. |
• | Same store sales increased 3%. Merchandise sales gross margin increased to 38% from 35%, resulting in a 14% increase in merchandise sales gross profit to $131.5 million. |
• | Net revenue increased 7% to $369.4 million and segment expenses increased 2%, resulting in a 25% increase in segment profit before tax to $100.1 million. |
Mexico Pawn Segment
Three-Months Ended September 30, 2016
• | PLO increased 7% to $17.5 million (up 21% on a constant currency basis). PSC grew 5% to $8.3 million (up 21% on a constant currency basis). Average monthly PLO yield was consistent with the prior-year at 16% |
• | Same store sales increased 4% (19% in constant currency). Merchandise sales gross margin increased to 29% from 21% as a result of more disciplined pawn loan valuations and pricing cadence. Merchandise sales gross profit increased 32% to $4.4 million (up 52% on a constant currency basis). |
• | Segment profit before tax increased $5.6 million to $2.3 million (up $6.5 million on a constant currency basis). |
• | Inventory aged over one year reduced to 3% of total inventory from 4%. |
Fiscal Year Ended September 30, 2016
• | PSC increase of 3% to $31.9 million (up 22% on a constant currency basis). Annualized yield on pawn loans remained unchanged to the prior-year period at 16%. |
• | Same store sales were flat (19% increase on a constant currency basis). Merchandise sales gross margin increased to 32% from 28%, resulting in a 7% increase in merchandise sales gross profit to $19.3 million (up 27% on a constant currency basis). |
• | Expense management leveraged a 3% growth in net revenue to $52.0 million into a $9.5 million increase in segment profit before tax to $8.5 million (net revenue up 22% and segment profit before tax up $12.6 million on a constant currency basis to $11.6 million). |
DISCONTINUED OPERATIONS: GRUPO FINMART
During the fourth quarter of fiscal 2016 as a result of the Grupo Finmart disposition, we recorded a gain of $34.2 million. The gain does not take into consideration the total costs associated with the transaction, which were $9.8 million, approximately $8.0 million of which were recorded in our consolidated statements of operations in fiscal 2016 and the remaining $1.8 million of which will be recorded in our consolidated statements of operations in future periods due to ongoing employee service requirements.
CONFERENCE CALL
EZCORP will host a conference call on Thursday, December 8, 2016, at 7:30am Central Time to discuss fourth quarter and fiscal year results. Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 29660657, 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 at http://investors.ezcorp.com/ shortly after the call.
ABOUT EZCORP
EZCORP is a leading provider of pawn loans in the United States and Mexico. 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.
Contact:
Jeff Christensen
Vice President, Investor Relations
Email: jeff_christensen@ezcorp.com
Phone: (512) 437-3545
EZCORP, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
Three Months Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
As Corrected | As Corrected | ||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Merchandise sales | $ | 97,166 | $ | 91,490 | $ | 409,107 | $ | 402,118 | |||||||
Jewelry scrapping sales | 16,482 | 10,452 | 50,113 | 57,973 | |||||||||||
Pawn service charges | 68,603 | 65,208 | 261,800 | 247,204 | |||||||||||
Other revenues | 2,334 | 3,141 | 9,485 | 12,705 | |||||||||||
Total revenues | 184,585 | 170,291 | 730,505 | 720,000 | |||||||||||
Merchandise cost of goods sold | 63,540 | 61,359 | 258,271 | 267,789 | |||||||||||
Jewelry scrapping cost of goods sold | 13,768 | 8,457 | 42,039 | 46,066 | |||||||||||
Other cost of revenues | 416 | 928 | 1,965 | 3,125 | |||||||||||
Net revenues | 106,861 | 99,547 | 428,230 | 403,020 | |||||||||||
Operating expenses: | |||||||||||||||
Operations | 79,941 | 81,604 | 301,387 | 294,939 | |||||||||||
Administrative | 18,016 | 28,774 | 68,101 | 72,986 | |||||||||||
Depreciation and amortization | 6,120 | 8,511 | 26,542 | 30,959 | |||||||||||
Loss on sale or disposal of assets | 465 | 1,934 | 1,106 | 2,659 | |||||||||||
Restructuring | 11 | 16,317 | 1,921 | 17,080 | |||||||||||
Total operating expenses | 104,553 | 137,140 | 399,057 | 418,623 | |||||||||||
Operating income (loss) | 2,308 | (37,593 | ) | 29,173 | (15,603 | ) | |||||||||
Interest expense | 4,463 | 3,929 | 16,477 | 16,385 | |||||||||||
Interest income | (15 | ) | (55 | ) | (81 | ) | (278 | ) | |||||||
Loss from investment in unconsolidated affiliates | 5,881 | 5,811 | 255 | 5,473 | |||||||||||
Impairment of investments | 10,957 | 26,837 | 10,957 | 26,837 | |||||||||||
Other expense | 387 | 1,234 | 1,202 | 2,187 | |||||||||||
(Loss) income from continuing operations before income taxes | (19,365 | ) | (75,349 | ) | 363 | (66,207 | ) | ||||||||
Income tax (benefit) expense | (1,863 | ) | (18,242 | ) | 9,361 | (14,025 | ) | ||||||||
Loss from continuing operations, net of tax | (17,502 | ) | (57,107 | ) | (8,998 | ) | (52,182 | ) | |||||||
Income (loss) from discontinued operations, net of tax | 19,636 | (36,998 | ) | (79,432 | ) | (42,045 | ) | ||||||||
Net income (loss) | 2,134 | (94,105 | ) | (88,430 | ) | (94,227 | ) | ||||||||
Net loss attributable to noncontrolling interest | (1,097 | ) | (1,805 | ) | (7,686 | ) | (5,035 | ) | |||||||
Net income (loss) attributable to EZCORP, Inc. | $ | 3,231 | $ | (92,300 | ) | $ | (80,744 | ) | $ | (89,192 | ) | ||||
Basic loss per share attributable to EZCORP, Inc. — continuing operations | $ | (0.31 | ) | $ | (1.04 | ) | $ | (0.15 | ) | $ | (0.94 | ) | |||
Diluted loss per share attributable to EZCORP, Inc. — continuing operations | $ | (0.31 | ) | $ | (1.04 | ) | $ | (0.15 | ) | $ | (0.94 | ) | |||
Weighted-average basic shares outstanding | 53,991 | 54,821 | 54,427 | 54,369 | |||||||||||
Net loss from continuing operations attributable to EZCORP, Inc. | $ | (16,927 | ) | $ | (57,105 | ) | $ | (7,973 | ) | $ | (51,298 | ) | |||
Income (loss) from discontinued operations attributable to EZCORP, Inc. | 20,158 | (35,195 | ) | (72,771 | ) | (37,894 | ) | ||||||||
Net income (loss) attributable to EZCORP, Inc. | $ | 3,231 | $ | (92,300 | ) | $ | (80,744 | ) | $ | (89,192 | ) | ||||
Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.
EZCORP, Inc. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share amounts) | |||||||
September 30, | |||||||
2016 | 2015 | ||||||
As Corrected | |||||||
Assets: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 65,737 | $ | 56,244 | |||
Pawn loans | 167,329 | 159,964 | |||||
Pawn service charges receivable, net | 31,062 | 30,852 | |||||
Inventory, net | 140,224 | 124,084 | |||||
Notes receivable, net | 41,946 | — | |||||
Income taxes receivable | 2,533 | 42,231 | |||||
Current assets held for sale | — | 72,849 | |||||
Prepaid expenses and other current assets | 33,312 | 25,077 | |||||
Total current assets | 482,143 | 511,301 | |||||
Investment in unconsolidated affiliate | 37,128 | 56,182 | |||||
Property and equipment, net | 58,455 | 73,938 | |||||
Goodwill | 253,976 | 251,646 | |||||
Intangible assets, net | 30,681 | 30,778 | |||||
Non-current notes receivable, net | 41,119 | — | |||||
Deferred tax asset, net | 35,303 | 34,176 | |||||
Non-current assets held for sale | — | 217,233 | |||||
Other assets, net | 44,439 | 13,736 | |||||
Total assets | $ | 983,244 | $ | 1,188,990 | |||
Liabilities, temporary equity and equity: | |||||||
Current liabilities: | |||||||
Accounts payable, accrued expenses and other current liabilities | $ | 84,285 | $ | 109,875 | |||
Current liabilities held for sale | — | 87,329 | |||||
Customer layaway deposits | 10,693 | 10,470 | |||||
Total current liabilities | 94,978 | 207,674 | |||||
Long-term debt, net | 283,611 | 197,976 | |||||
Non-current liabilities held for sale | — | 101,644 | |||||
Deferred gains and other long-term liabilities | 10,450 | 9,929 | |||||
Total liabilities | 389,039 | 517,223 | |||||
Commitments and contingencies | |||||||
Temporary equity: | |||||||
Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; none as of September 30, 2016 and 1,168,456 shares issued and outstanding at redemption value as of September 30, 2015 | — | 11,696 | |||||
Redeemable noncontrolling interest | — | 4,040 | |||||
Total temporary equity | — | 15,736 | |||||
Stockholders’ equity: | |||||||
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of September 30, 2016 and 2015; issued and outstanding: 51,129,144 as of September 30, 2016 and 50,726,289 as of September 30, 2015 | 511 | 507 | |||||
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171 | 30 | 30 | |||||
Additional paid-in capital | 318,723 | 310,038 | |||||
Retained earnings | 319,808 | 400,552 | |||||
Accumulated other comprehensive loss | (44,089 | ) | (55,096 | ) | |||
EZCORP, Inc. stockholders’ equity | 594,983 | 656,031 | |||||
Noncontrolling interest | (778 | ) | — | ||||
Total equity | 594,205 | 656,031 | |||||
Total liabilities, temporary equity and equity | $ | 983,244 | $ | 1,188,990 | |||
Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.
EZCORP, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
Fiscal Year Ended September 30, | |||||||
2016 | 2015 | ||||||
As Corrected | |||||||
(in thousands) | |||||||
Operating activities: | |||||||
Net loss | $ | (88,430 | ) | $ | (94,227 | ) | |
Loss from discontinued operations* | 78,872 | 14,728 | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 26,542 | 34,450 | |||||
Amortization of debt discount | 8,928 | 8,888 | |||||
Amortization of deferred financing costs | 1,763 | 1,657 | |||||
Consumer loan loss provision | 704 | 22,303 | |||||
Deferred income taxes | 849 | (6,050 | ) | ||||
Impairment of goodwill | — | 12,253 | |||||
Impairment of long-lived assets | — | 18,529 | |||||
Other adjustments | 969 | (95 | ) | ||||
Loss on sale or disposal of assets | 1,106 | 2,893 | |||||
Stock compensation | 5,346 | 2,374 | |||||
Loss from investments in unconsolidated affiliates | 255 | 5,473 | |||||
Impairment of investments | 10,957 | 26,837 | |||||
Changes in operating assets and liabilities, net of business acquisitions: | |||||||
Service charges and fees receivable | 286 | 5,181 | |||||
Inventory | (3,735 | ) | 433 | ||||
Prepaid expenses, other current assets and other assets | (14,875 | ) | 7,475 | ||||
Accounts payable and other, deferred gains and other long-term liabilities | (3,505 | ) | 22,079 | ||||
Customer layaway deposits | 329 | 1,997 | |||||
Income taxes receivable | 42,108 | (18,298 | ) | ||||
Payments of restructuring charges | (8,478 | ) | (5,376 | ) | |||
Dividends from unconsolidated affiliate | 2,197 | 4,842 | |||||
Net cash provided by operating activities — continuing operations | 62,188 | 68,346 | |||||
Net cash provided by operating activities — discontinued operations* | 2,215 | 11,052 | |||||
Investing activities: | |||||||
Loans made | (640,977 | ) | (756,463 | ) | |||
Loans repaid | 385,333 | 528,733 | |||||
Recovery of pawn loan principal through sale of forfeited collateral | 235,168 | 243,692 | |||||
Additions to property and equipment | (9,486 | ) | (23,174 | ) | |||
Acquisitions, net of cash acquired | (6,000 | ) | (7,802 | ) | |||
Investments in unconsolidated affiliate | — | (12,140 | ) | ||||
Proceeds from sale of assets | — | 564 | |||||
Net cash used in investing activities — continuing operations | (35,962 | ) | (26,590 | ) | |||
Net cash provided by (used in) investing activities — discontinued operations* | 42,678 | (41,103 | ) | ||||
Financing activities: | |||||||
Taxes paid related to net share settlement of equity awards | (172 | ) | (210 | ) | |||
Debt issuance costs | (740 | ) | — | ||||
Payout of deferred consideration | (15,000 | ) | (6,000 | ) | |||
Purchase of subsidiary shares from noncontrolling interest | — | (32,411 | ) | ||||
Proceeds from borrowings and line of credit | 48,688 | — | |||||
Payments on borrowings, line of credit and capital lease obligations | (48 | ) | (418 | ) | |||
Repurchase of common stock | (11,750 | ) | — | ||||
Net cash provided by (used in) financing activities — continuing operations | 20,978 | (39,039 | ) | ||||
Net cash (used in) provided by financing activities — discontinued operations* | (84,134 | ) | 41,441 | ||||
EZCORP, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (1,350 | ) | (10,308 | ) | |||
Net increase in cash and cash equivalents | 6,613 | 3,799 | |||||
Cash and cash equivalents at beginning of period, excluding held for sale | 56,244 | 52,294 | |||||
Cash and cash equivalents held for sale at beginning of period | 2,880 | 3,031 | |||||
Cash and cash equivalents at end of period | 65,737 | 59,124 | |||||
Less: cash and cash equivalents held for sale at end of period | — | (2,880 | ) | ||||
Cash and cash equivalents at end of period, excluding held for sale | $ | 65,737 | $ | 56,244 | |||
Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.
* Represents operations discontinued subsequent to the adoption of FASB ASU 2014-08. Amounts are exclusive of intercompany loans.
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Three Months Ended September 30, 2016 | |||||||||||||||||||||||
U.S. Pawn | Mexico Pawn | Other International | Total Segments | Corporate Items | Consolidated | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 82,211 | $ | 14,955 | $ | — | $ | 97,166 | $ | — | $ | 97,166 | |||||||||||
Jewelry scrapping sales | 15,693 | 789 | — | 16,482 | — | 16,482 | |||||||||||||||||
Pawn service charges | 60,263 | 8,340 | — | 68,603 | — | 68,603 | |||||||||||||||||
Other revenues | 50 | 154 | 2,130 | 2,334 | — | 2,334 | |||||||||||||||||
Total revenues | 158,217 | 24,238 | 2,130 | 184,585 | 184,585 | ||||||||||||||||||
Merchandise cost of goods sold | 52,980 | 10,560 | — | 63,540 | — | 63,540 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 13,105 | 663 | — | 13,768 | — | 13,768 | |||||||||||||||||
Other cost of revenues | — | — | 416 | 416 | — | 416 | |||||||||||||||||
Net revenues | 92,132 | 13,015 | 1,714 | 106,861 | — | 106,861 | |||||||||||||||||
Operating expenses (income): | |||||||||||||||||||||||
Operations | 67,803 | 9,520 | 2,618 | 79,941 | — | 79,941 | |||||||||||||||||
Administrative | — | — | — | — | 18,016 | 18,016 | |||||||||||||||||
Depreciation and amortization | 2,753 | 680 | 55 | 3,488 | 2,632 | 6,120 | |||||||||||||||||
Loss on sale or disposal of assets | 162 | 53 | 4 | 219 | 246 | 465 | |||||||||||||||||
Restructuring | 11 | — | — | 11 | — | 11 | |||||||||||||||||
Interest expense | — | 6 | — | 6 | 4,457 | 4,463 | |||||||||||||||||
Interest income | — | (7 | ) | — | (7 | ) | (8 | ) | (15 | ) | |||||||||||||
Loss from investment in unconsolidated affiliate | — | — | 5,881 | 5,881 | — | 5,881 | |||||||||||||||||
Impairment of investment | — | — | 10,957 | 10,957 | — | 10,957 | |||||||||||||||||
Other expense (income) | — | 465 | (1 | ) | 464 | (77 | ) | 387 | |||||||||||||||
Segment contribution (loss) | $ | 21,403 | $ | 2,298 | $ | (17,800 | ) | $ | 5,901 | ||||||||||||||
Loss from continuing operations before income taxes | $ | 5,901 | $ | (25,266 | ) | $ | (19,365 | ) | |||||||||||||||
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Three Months Ended September 30, 2015 | |||||||||||||||||||||||
U.S. Pawn | Mexico Pawn | Other International | Total Segments | Corporate Items | Consolidated | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 75,595 | $ | 15,498 | $ | 397 | $ | 91,490 | $ | — | $ | 91,490 | |||||||||||
Jewelry scrapping sales | 10,331 | 57 | 64 | 10,452 | — | 10,452 | |||||||||||||||||
Pawn service charges | 57,250 | 7,958 | — | 65,208 | — | 65,208 | |||||||||||||||||
Other revenues | 375 | 238 | 2,528 | 3,141 | — | 3,141 | |||||||||||||||||
Total revenues | 143,551 | 23,751 | 2,989 | 170,291 | 170,291 | ||||||||||||||||||
Merchandise cost of goods sold | 48,763 | 12,180 | 416 | 61,359 | — | 61,359 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 8,401 | 6 | 50 | 8,457 | — | 8,457 | |||||||||||||||||
Other cost of revenues | — | — | 928 | 928 | — | 928 | |||||||||||||||||
Net revenues | 86,387 | 11,565 | 1,595 | 99,547 | — | 99,547 | |||||||||||||||||
Operating expenses (income): | |||||||||||||||||||||||
Operations | 67,903 | 12,200 | 1,501 | 81,604 | — | 81,604 | |||||||||||||||||
Administrative | — | — | — | — | 28,774 | 28,774 | |||||||||||||||||
Depreciation and amortization | 4,461 | 998 | 103 | 5,562 | 2,949 | 8,511 | |||||||||||||||||
Loss (gain) on sale or disposal of assets | 918 | (6 | ) | — | 912 | 1,022 | 1,934 | ||||||||||||||||
Restructuring | 4,016 | 799 | 2,563 | 7,378 | 8,939 | 16,317 | |||||||||||||||||
Interest expense | 44 | 6 | — | 50 | 3,879 | 3,929 | |||||||||||||||||
Interest income | (1 | ) | (24 | ) | — | (25 | ) | (30 | ) | (55 | ) | ||||||||||||
Loss from investment in unconsolidated affiliate | — | — | 5,811 | 5,811 | — | 5,811 | |||||||||||||||||
Impairment of investment | — | — | 26,837 | 26,837 | — | 26,837 | |||||||||||||||||
Other expense (income) | (12 | ) | 916 | 7 | 911 | 323 | 1,234 | ||||||||||||||||
Segment (loss) contribution | $ | 9,058 | $ | (3,324 | ) | $ | (35,227 | ) | $ | (29,493 | ) | ||||||||||||
Loss from continuing operations before income taxes | $ | (29,493 | ) | $ | (45,856 | ) | $ | (75,349 | ) | ||||||||||||||
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Fiscal Year Ended September 30, 2016 | |||||||||||||||||||||||
U.S. Pawn | Mexico Pawn | Other International | Total Segments | Corporate Items | Consolidated | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 348,771 | $ | 60,331 | $ | 5 | $ | 409,107 | $ | — | $ | 409,107 | |||||||||||
Jewelry scrapping sales | 47,810 | 2,282 | 21 | 50,113 | — | 50,113 | |||||||||||||||||
Pawn service charges | 229,893 | 31,907 | — | 261,800 | — | 261,800 | |||||||||||||||||
Other revenues | 331 | 385 | 8,769 | 9,485 | — | 9,485 | |||||||||||||||||
Total revenues | 626,805 | 94,905 | 8,795 | 730,505 | — | 730,505 | |||||||||||||||||
Merchandise cost of goods sold | 217,268 | 41,002 | 1 | 258,271 | — | 258,271 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 40,138 | 1,885 | 16 | 42,039 | — | 42,039 | |||||||||||||||||
Other cost of revenues | — | — | 1,965 | 1,965 | — | 1,965 | |||||||||||||||||
Net revenues | 369,399 | 52,018 | 6,813 | 428,230 | — | 428,230 | |||||||||||||||||
Operating expenses (income): | |||||||||||||||||||||||
Operations | 255,321 | 38,481 | 7,585 | 301,387 | — | 301,387 | |||||||||||||||||
Administrative | — | — | — | — | 68,101 | 68,101 | |||||||||||||||||
Depreciation and amortization | 12,242 | 2,965 | 218 | 15,425 | 11,117 | 26,542 | |||||||||||||||||
Loss on sale or disposal of assets | 664 | 169 | 4 | 837 | 269 | 1,106 | |||||||||||||||||
Restructuring | 993 | 543 | 202 | 1,738 | 183 | 1,921 | |||||||||||||||||
Interest expense | 125 | 109 | — | 234 | 16,243 | 16,477 | |||||||||||||||||
Interest income | (2 | ) | (30 | ) | — | (32 | ) | (49 | ) | (81 | ) | ||||||||||||
Loss from investment in unconsolidated affiliate | — | — | 255 | 255 | — | 255 | |||||||||||||||||
Impairment of investment | — | — | 10,957 | 10,957 | — | 10,957 | |||||||||||||||||
Other expense (income) | — | 1,273 | 2 | 1,275 | (73 | ) | 1,202 | ||||||||||||||||
Segment contribution (loss) | $ | 100,056 | $ | 8,508 | $ | (12,410 | ) | $ | 96,154 | ||||||||||||||
Income from continuing operations before income taxes | $ | 96,154 | $ | (95,791 | ) | $ | 363 | ||||||||||||||||
EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Fiscal Year Ended September 30, 2015 | |||||||||||||||||||||||
U.S. Pawn | Mexico Pawn | Other International | Total Segments | Corporate Items | Consolidated | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Merchandise sales | $ | 334,635 | $ | 65,408 | $ | 2,075 | $ | 402,118 | $ | — | $ | 402,118 | |||||||||||
Jewelry scrapping sales | 54,343 | 3,267 | 363 | 57,973 | — | 57,973 | |||||||||||||||||
Pawn service charges | 216,211 | 30,993 | — | 247,204 | — | 247,204 | |||||||||||||||||
Other revenues | 945 | 1,021 | 10,739 | 12,705 | — | 12,705 | |||||||||||||||||
Total revenues | 606,134 | 100,689 | 13,177 | 720,000 | — | 720,000 | |||||||||||||||||
Merchandise cost of goods sold | 218,953 | 47,371 | 1,465 | 267,789 | — | 267,789 | |||||||||||||||||
Jewelry scrapping cost of goods sold | 42,845 | 2,954 | 267 | 46,066 | — | 46,066 | |||||||||||||||||
Other cost of revenues | — | — | 3,125 | 3,125 | — | 3,125 | |||||||||||||||||
Net revenues | 344,336 | 50,364 | 8,320 | 403,020 | — | 403,020 | |||||||||||||||||
Operating expenses (income): | |||||||||||||||||||||||
Operations | 244,232 | 43,927 | 6,780 | 294,939 | — | 294,939 | |||||||||||||||||
Administrative | — | — | — | — | 72,986 | 72,986 | |||||||||||||||||
Depreciation and amortization | 15,227 | 4,440 | 616 | 20,283 | 10,676 | 30,959 | |||||||||||||||||
Loss (gain) on sale or disposal of assets | 995 | 258 | (1 | ) | 1,252 | 1,407 | 2,659 | ||||||||||||||||
Restructuring | 4,016 | 799 | 2,563 | 7,378 | 9,702 | 17,080 | |||||||||||||||||
Interest expense | 60 | 15 | — | 75 | 16,310 | 16,385 | |||||||||||||||||
Interest income | (42 | ) | (78 | ) | — | (120 | ) | (158 | ) | (278 | ) | ||||||||||||
Loss from investment in unconsolidated affiliate | — | — | 5,473 | 5,473 | — | 5,473 | |||||||||||||||||
Impairment of investments | — | — | 26,837 | 26,837 | — | 26,837 | |||||||||||||||||
Other expense | — | 1,988 | 7 | 1,995 | 192 | 2,187 | |||||||||||||||||
Segment contribution (loss) | $ | 79,848 | $ | (985 | ) | $ | (33,955 | ) | $ | 44,908 | |||||||||||||
Loss from continuing operations before income taxes | $ | 44,908 | $ | (111,115 | ) | $ | (66,207 | ) | |||||||||||||||
EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
Company-owned Stores | ||||||||||||||
U.S. Pawn | Mexico Pawn | Other International | Consolidated | Franchises | ||||||||||
As of September 30, 2013 | 502 | 258 | 39 | 799 | 8 | |||||||||
New locations opened | 9 | 3 | — | 12 | — | |||||||||
Locations sold, combined or closed | (7 | ) | — | — | (7 | ) | (3 | ) | ||||||
As of September 30, 2014 | 504 | 261 | 39 | 804 | 5 | |||||||||
New locations opened | 5 | 3 | — | 8 | — | |||||||||
Locations acquired | 25 | — | — | 25 | — | |||||||||
Locations sold, combined or closed | (12 | ) | (27 | ) | (12 | ) | (51 | ) | (4 | ) | ||||
As of September 30, 2015 | 522 | 237 | * | 27 | 786 | 1 | ||||||||
New locations opened | — | 3 | — | 3 | — | |||||||||
Locations acquired | 6 | 1 | — | 7 | — | |||||||||
Locations sold, combined or closed | (8 | ) | (2 | ) | — | (10 | ) | (1 | ) | |||||
As of September 30, 2016 | 520 | 239 | 27 | 786 | — | |||||||||
* Includes five buy/sell stores reflected in fiscal 2015 ending count which were converted to Mexico Pawn stores during the three-months ended March 31, 2016.
NON-GAAP FINANCIAL INFORMATION (UNAUDITED)
In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we provide certain other non-GAAP financial information on a constant currency basis ("constant currency"). We use constant currency and ongoing segment contribution results to evaluate results of our Mexico Pawn operations, which are denominated in Mexican pesos and believe that presentation of constant currency results are meaningful and useful in understanding the activities and business metrics of our Mexico Pawn operations and reflect an additional way of viewing aspects of our business that, when viewed with GAAP results, provide a more complete understanding of factors and trends affecting our business. We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. We use this non-GAAP financial information to evaluate and compare operating results across accounting periods. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.
Constant currency results reported herein are calculated by translating consolidated balance sheet and consolidated statement of operations items denominated in Mexican pesos to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate during the appropriate period for statement of operations items. The end-of-period exchange rate as of September 30, 2016 and 2015 was 19.4 to 1 and 17.1 to 1, respectively. The average exchange rate for the years ended September 30, 2016, 2015 and 2014 was 17.9 to 1, 15.1 to 1, and 13.1 to 1, respectively. Constant currency results, where presented, also exclude the foreign currency gain or loss and the related foreign currency derivative gain or loss impact.
The following information provides reconciliations of certain non-GAAP financial measures presented in this press release to the most directly comparable financial measures calculated and presented in accordance with GAAP.
Miscellaneous Non-GAAP Financial Measures
U.S. Dollar Amount | Percentage Change YOY | |||||
(in thousands) | ||||||
Consolidated revenue (three-months ended September 30, 2016) | $ | 184,585 | 8 | % | ||
Currency exchange rate fluctuations | 3,656 | |||||
Constant currency consolidated revenue (three-months ended September 30, 2016) | $ | 188,241 | 11 | % | ||
Consolidated net revenue (three-months ended September 30, 2016) | $ | 106,861 | 7 | % | ||
Currency exchange rate fluctuations | 1,950 | |||||
Constant currency consolidated net revenue (three-months ended September 30, 2016) | $ | 108,811 | 9 | % | ||
Consolidated operating expenses (three-months ended September 30, 2016) | $ | 104,553 | (24 | )% | ||
Currency exchange rate fluctuations | 1,524 | |||||
Constant currency consolidated operating expenses (three-months ended September 30, 2016) | $ | 106,077 | (23 | )% | ||
Consolidated revenue (year ended September 30, 2016) | $ | 730,505 | 1 | % | ||
Currency exchange rate fluctuations | 17,598 | |||||
Constant currency consolidated revenue (year ended September 30, 2016) | $ | 748,103 | 4 | % | ||
Consolidated net revenue (year ended September 30, 2016) | $ | 428,230 | 6 | % | ||
Currency exchange rate fluctuations | 9,645 | |||||
Constant currency consolidated net revenue (year ended September 30, 2016) | $ | 437,875 | 9 | % | ||
Consolidated operating expenses (year ended September 30, 2016) | $ | 399,057 | (5 | )% | ||
Currency exchange rate fluctuations | 7,818 | |||||
Constant currency consolidated operating expenses (year ended September 30, 2016) | $ | 406,875 | (3 | )% | ||
Mexico Pawn loans outstanding as of September 30, 2016 | $ | 17,538 | 7 | % | ||
Currency exchange rate fluctuations | 2,359 | |||||
Constant currency Mexico Pawn loans outstanding as of September 30, 2016 | $ | 19,897 | 21 | % | ||
Mexico Pawn service charges (three-months ended September 30, 2016) | $ | 8,340 | 5 | % | ||
Currency exchange rate fluctuations | 1,268 | |||||
Constant currency Mexico Pawn service charges (three-months ended September 30, 2016) | $ | 9,608 | 21 | % | ||
Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016) | $ | 14,559 | 4 | % | ||
Currency exchange rate fluctuations | 2,144 | |||||
Constant currency Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016) | $ | 16,703 | 19 | % | ||
Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016) | $ | 4,395 | 32 | % | ||
Currency exchange rate fluctuations | 638 | |||||
Constant currency Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016) | $ | 5,033 | 52 | % | ||
Mexico Pawn segment profit before tax (three-months ended September 30, 2016) | $ | 2,298 | N/A | |||
Currency exchange rate fluctuations | 922 | |||||
Constant currency Mexico Pawn segment profit before tax (three-months ended September 30, 2016) | $ | 3,220 | N/A | |||
Mexico Pawn service charges (year ended September 30, 2016) | $ | 31,907 | 3 | % | ||
Currency exchange rate fluctuations | 5,917 | |||||
Constant currency Mexico Pawn service charges (year ended September 30, 2016) | $ | 37,824 | 22 | % | ||
Mexico Pawn same store merchandise revenue (year ended September 30, 2016) | $ | 58,636 | — | % | ||
Currency exchange rate fluctuations | 10,873 | |||||
Constant currency Mexico Pawn same store merchandise revenue (year ended September 30, 2016) | $ | 69,509 | 19 | % | ||
Mexico Pawn merchandise sales gross profit (year ended September 30, 2016) | $ | 19,329 | 7 | % | ||
Currency exchange rate fluctuations | 3,584 | |||||
Constant currency Mexico Pawn merchandise sales gross profit (year ended September 30, 2016) | $ | 22,913 | 27 | % | ||
Mexico Pawn net revenue (year ended September 30, 2016) | $ | 52,018 | 3 | % | ||
Currency exchange rate fluctuations | 9,645 | |||||
Constant currency Mexico Pawn net revenue (year ended September 30, 2016) | $ | 61,663 | 22 | % | ||
Mexico Pawn segment profit before tax (year ended September 30, 2016) | $ | 8,508 | N/A | |||
Currency exchange rate fluctuations | 3,116 | |||||
Constant currency Mexico Pawn segment profit before tax (year ended September 30, 2016) | $ | 11,624 | N/A | |||