EZCORP Reports Third Quarter 2022 Results

Record High Pawn Loans Outstanding Driving Strong Earnings Momentum

EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn transactions in the United States and Latin America, today announced results for its third quarter ended June 30, 2022.

Unless otherwise noted, all amounts in this release are in conformity with U.S. generally accepted accounting principles ("GAAP") and comparisons shown are to the same period in the prior year.

THIRD QUARTER HIGHLIGHTS

  • Pawn loans outstanding (PLO) up 30% to a record-high of $204.2 million.
  • Total revenue increased 24%, and gross profit1 increased 20%.
  • Merchandise sales gross margin was at the high end of our target range at 38%.
  • Net income was $12.2 million, an increase of $14.8 million.
  • Diluted earnings per share of $0.17 was up significantly from a loss of $0.05. On an adjusted basis2, diluted earnings per share was $0.16, compared to a loss of $0.03 in the prior-year quarter.
  • Return on earning assets (ROEA) remains strong at 165%.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Lachie Given stated, “We have delivered another outstanding quarter of financial results. PLO, the most significant driver of revenue and earnings, hit a record high, surpassing pre-COVID levels on a total and same-store basis. This has driven significant increases in pawn service charges (PSC), and as we continue to drive strong sales margins and gain cost efficiencies across the business, we have delivered very substantial earnings improvement for the quarter."

"With persistent macro issues fueling inflation, we are proud to offer our customers a unique and essential service to address their short-term cash needs. We are also a neighborhood recycling business that extends the useful life of millions of items every year, and are working to expand our customer base of environmentally-conscious consumers across the U.S. and Latin America.

"During the third quarter, we opened eight de novo stores in Latin America and acquired three stores in the Dallas, Texas area. Our EZ+ Rewards program continues to grow across all of our regions, and we now have over 1.4 million enrolled customers. Furthering our commitment to investing in our people, we introduced Career Week for our 6,800 employees to reinforce our new Career Framework and Career Path opportunities.

"The improvement in our financial results is the outcome of our team’s focus and commitment to People, Pawn, and Passion, and on providing the best possible experience for our customers. I am extremely proud of our entire team for delivering such exceptional operating and financial results for our shareholders.”

CONSOLIDATED RESULTS

Three Months Ended June 30

 

 

 

in millions, except per share amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

215.8

 

$

174.0

 

 

$

215.8

 

$

174.0

 

Gross profit1

$

129.5

 

$

108.0

 

 

$

129.5

 

$

108.0

 

Income (loss) before tax

$

13.1

 

$

(0.8

)

 

$

14.9

 

$

3.6

 

Net income (loss)

$

12.2

 

$

(2.6

)

 

$

11.0

 

$

(1.4

)

Diluted earnings (loss) per share

$

0.17

 

$

(0.05

)

 

$

0.16

 

$

(0.03

)

EBITDA (non-GAAP measure)

$

23.3

 

$

11.7

 

 

$

25.1

 

$

12.5

 

  • Diluted earnings per share were $0.17 for the third quarter, up from a loss of $0.05. On an adjusted basis, diluted earnings per share were $0.16, up from a loss of $0.03.
  • Income before taxes improved to $13.1 million from a loss of $0.8 million, while adjusted EBITDA increased 100% to $25.1 million.
  • PLO increased 30% to $204.2 million, up $47.0 million. On a same-store basis3, PLO increased 30% to its highest level due to increased loan demand reflecting a recovery above pre-COVID levels.
  • Total revenues increased 24%, and gross profit increased 20%, reflecting improved pawn service charge (PSC) revenue and merchandise sales.
  • PSC increased 33% due to an increase in the average PLO balance during the quarter.
  • Merchandise sales gross margin was at the high end of our target range at 38%, reflecting our commitment to improving the core business by decreasing aged general merchandise (now less than 1% of total general merchandise inventory) and focusing on selling inventory in the first 90 days.
  • Net inventory increased 44% reflecting a return towards normalized inventory levels. Inventory turnover remained strong at 2.8x for the quarter, down from 3.1x.
  • Store expenses increased 9%, due to increased store count and labor costs in line with increased store activity. On a same-store basis, store expenses increased 5%.
  • General and administrative expenses increased 28%, primarily due to a litigation accrual and increased performance-based incentive compensation.
  • Cash and cash equivalents at the end of the quarter was $222.3 million, down 22% year-over-year. The decrease is primarily due to the increase in PLO and inventory.

SEGMENT RESULTS

U.S. Pawn

  • PLO continued to increase, ending the quarter at $159.7 million, up 36% (36% on a same store basis).
  • Total revenue was up 22% and gross profit increased 18%, reflecting increasing PSC.
  • PSC increased 35% as a result of higher average PLO.
  • Merchandise sales gross margin decreased to 41% from 46% as expected. Aged general merchandise inventory improved to 0.4% from 1.2% of total general merchandise inventory.
  • Net inventory increased 47%. Inventory turnover decreased to 2.5x from 2.8x due to increased inventory levels in the current quarter and stimulus impacts in the prior year.
  • Store expenses increased 6% primarily due to store count and labor increases in line with store activity.
  • Segment contribution increased 64% to $29.8 million.
  • Segment store count increased by three acquired stores during the quarter.

Latin America Pawn

  • PLO improved to $44.5 million or 11% (13% on constant currency basis). On a same store basis, PLO increased 9% (10% on a constant currency basis).
  • Total revenue was up 31% (same on a constant currency basis), while gross profit increased 26% (same on a constant currency basis).
  • PSC increased to $21.0 million or 28% (same on a constant currency basis) as a result of higher average PLO for the quarter.
  • Merchandise sales gross margin decreased from 35% to 29%, reflecting a return to more normalized margins.
  • Net inventory increased 34% (35% on a constant currency basis). Inventory turnover remains strong at 3.7x, down from 4.0x.
  • Store expenses increased 21% (same on a constant currency basis) primarily due to year-over-year store count and growth in labor in line with increased store activity. Same-store expenses increased 4% (6% on a constant currency basis).
  • Segment contribution increased to $6.1 million or 71% (48% on a constant currency basis), compared to $3.6 million.
  • Segment store count increased by eight de novo stores opened during the quarter.

FORM 10-Q

EZCORP’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 has been filed with the Securities and Exchange Commission. The report is available in the Investor Relations section of the Company’s website at http://investors.ezcorp.com.

CONFERENCE CALL

EZCORP will host a conference call on Thursday, August 4, 2022, at 7:00 am Central Time to discuss Third Quarter Fiscal 2022 results. Analysts and institutional investors may participate on the conference call by dialing (844) 200-6205, Conference ID: 464794, or internationally by dialing (929) 526-1599. 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 end of the call.

ABOUT EZCORP

Formed in 1989, EZCORP has grown into a leading provider of pawn transactions in the United States and Latin America. We also sell merchandise, primarily collateral forfeited from pawn lending operations and pre-owned and recycled 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 1000 Index and Nasdaq Composite Index.

Follow us on social media:

Facebook EZPAWN Official https://www.facebook.com/EZPAWN/

EZCORP Instagram Official https://www.instagram.com/ezcorp_official/

EZPAWN Instagram Official https://www.instagram.com/ezpawnofficial/

EZCORP Linked In https://www.linkedin.com/company/ezcorp/

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, current or future litigation and risks associated with the COVID-19 pandemic. 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.

Note: Percentages are calculated from the underlying numbers in thousands and, as a result, may not agree to the percentages calculated from numbers in millions.

1”We have relabeled "net revenues" to "gross profit" throughout our filings, which we believe will improve comparability across industries and companies. This change is effective for this and future filings.

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

3”Same Store” basis, which is a financial measure, includes stores open the entirety of the comparable periods.

EZCORP, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

June 30,

 

Nine Months Ended

June 30,

(in thousands, except per share amounts)

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

Merchandise sales

$

128,334

 

 

$

107,808

 

 

$

399,610

 

 

$

330,816

 

Jewelry scrapping sales

 

7,168

 

 

 

5,673

 

 

 

19,802

 

 

 

18,507

 

Pawn service charges

 

80,291

 

 

 

60,431

 

 

 

232,999

 

 

 

187,356

 

Other revenues, net

 

49

 

 

 

121

 

 

 

407

 

 

 

428

 

Total revenues

 

215,842

 

 

 

174,033

 

 

 

652,818

 

 

 

537,107

 

Merchandise cost of goods sold

 

80,167

 

 

 

60,539

 

 

 

245,524

 

 

 

190,872

 

Jewelry scrapping cost of goods sold

 

6,167

 

 

 

5,473

 

 

 

16,747

 

 

 

16,076

 

Gross profit

 

129,508

 

 

 

108,021

 

 

 

390,547

 

 

 

330,159

 

Operating expenses:

 

 

 

 

 

 

 

Store expenses

 

89,430

 

 

 

81,803

 

 

 

261,944

 

 

 

242,261

 

General and administrative

 

18,715

 

 

 

14,589

 

 

 

46,487

 

 

 

40,870

 

Depreciation and amortization

 

7,746

 

 

 

7,419

 

 

 

22,770

 

 

 

23,080

 

(Gain) loss on sale or disposal of assets and other

 

 

 

 

 

 

 

(692

)

 

 

90

 

Other charges

 

 

 

 

497

 

 

 

 

 

 

497

 

Total operating expenses

 

115,891

 

 

 

104,308

 

 

 

330,509

 

 

 

306,798

 

Operating income

 

13,617

 

 

 

3,713

 

 

 

60,038

 

 

 

23,361

 

Interest expense

 

2,693

 

 

 

5,569

 

 

 

7,651

 

 

 

16,542

 

Interest income

 

(190

)

 

 

(512

)

 

 

(749

)

 

 

(1,918

)

Equity in net income of unconsolidated affiliates

 

(1,758

)

 

 

(643

)

 

 

(1,457

)

 

 

(2,409

)

Other expense (income)

 

(210

)

 

 

65

 

 

 

41

 

 

 

(389

)

Income (loss) before income taxes

 

13,082

 

 

 

(766

)

 

 

54,552

 

 

 

11,535

 

Income tax expense

 

867

 

 

 

1,804

 

 

 

11,729

 

 

 

4,476

 

Net income (loss)

$

12,215

 

 

$

(2,570

)

 

$

42,823

 

 

$

7,059

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

$

0.22

 

 

$

(0.05

)

 

$

0.76

 

 

$

0.13

 

Diluted earnings (loss) per share

$

0.17

 

 

$

(0.05

)

 

$

0.59

 

 

$

0.13

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

56,656

 

 

 

55,898

 

 

 

56,465

 

 

 

55,639

 

Weighted-average diluted shares outstanding

 

82,504

 

 

 

55,898

 

 

 

82,349

 

 

 

55,653

 

EZCORP, Inc.

CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share and per share amounts)

June 30,

 

June 30,

 

September 30,

2022

 

2021

 

2021

 

 

 

 

 

 

 

(Unaudited)

 

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

222,342

 

 

$

283,668

 

 

$

253,667

 

Restricted cash

 

8,614

 

 

 

13,795

 

 

 

9,957

 

Pawn loans

 

204,155

 

 

 

157,155

 

 

 

175,901

 

Pawn service charges receivable, net

 

32,000

 

 

 

24,965

 

 

 

29,337

 

Inventory, net

 

132,713

 

 

 

92,242

 

 

 

110,989

 

Prepaid expenses and other current assets

 

29,822

 

 

 

28,343

 

 

 

31,010

 

Total current assets

 

629,646

 

 

 

600,168

 

 

 

610,861

 

Investments in unconsolidated affiliates

 

43,384

 

 

 

35,387

 

 

 

37,724

 

Other investments

 

18,000

 

 

 

 

 

 

 

Property and equipment, net

 

51,505

 

 

 

55,630

 

 

 

53,811

 

Right-of-use asset, net

 

217,506

 

 

 

185,467

 

 

 

200,990

 

Goodwill

 

286,798

 

 

 

283,619

 

 

 

285,758

 

Intangible assets, net

 

61,017

 

 

 

61,922

 

 

 

62,104

 

Notes receivable, net

 

1,207

 

 

 

1,173

 

 

 

1,181

 

Deferred tax asset, net

 

15,773

 

 

 

10,292

 

 

 

9,746

 

Other assets

 

5,991

 

 

 

4,992

 

 

 

4,736

 

Total assets

$

1,330,827

 

 

$

1,238,650

 

 

$

1,266,911

 

 

 

 

 

 

 

Liabilities and stockholders' equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

76,566

 

 

$

84,966

 

 

$

90,268

 

Customer layaway deposits

 

14,927

 

 

 

11,884

 

 

 

12,557

 

Lease liability

 

53,358

 

 

 

47,241

 

 

 

52,263

 

Total current liabilities

 

144,851

 

 

 

144,091

 

 

 

155,088

 

Long-term debt, net

 

312,521

 

 

 

260,632

 

 

 

264,186

 

Deferred tax liability, net

 

307

 

 

 

1,309

 

 

 

3,684

 

Lease liability

 

175,489

 

 

 

149,342

 

 

 

161,330

 

Other long-term liabilities

 

11,905

 

 

 

10,058

 

 

 

10,385

 

Total liabilities

 

645,073

 

 

 

565,432

 

 

 

594,673

 

Commitments and Contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A Non-voting Common Stock, par value $0.01 per share; shares authorized: 100 million; issued and outstanding: 53,685,333 as of June 30, 2022; 53,086,438 as of June 30, 2021; and 53,086,438 as of September 30, 2021

 

537

 

 

 

530

 

 

 

530

 

Class B Voting Common Stock, convertible, par value $0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171

 

30

 

 

 

30

 

 

 

30

 

Additional paid-in capital

 

343,763

 

 

 

402,522

 

 

 

403,312

 

Retained earnings

 

396,461

 

 

 

325,228

 

 

 

326,781

 

Accumulated other comprehensive loss

 

(55,037

)

 

 

(55,092

)

 

 

(58,415

)

Total stockholders' equity

 

685,754

 

 

 

673,218

 

 

 

672,238

 

Total liabilities and stockholders' equity

$

1,330,827

 

 

$

1,238,650

 

 

$

1,266,911

 

EZCORP, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

Nine Months Ended

June 30,

(in thousands)

2022

 

2021

 

 

Operating activities:

 

 

 

Net income

$

42,823

 

 

$

7,059

 

Adjustments to reconcile net income to net cash flows from operating activities:

 

 

 

Depreciation and amortization

 

22,770

 

 

 

23,080

 

Amortization of debt discount and deferred financing costs

 

1,051

 

 

 

10,243

 

Amortization of lease right-of-use asset

 

39,061

 

 

 

35,885

 

Deferred income taxes

 

475

 

 

 

(576

)

Other adjustments

 

(734

)

 

 

(331

)

Provision for inventory reserve

 

(2,096

)

 

 

(6,812

)

Stock compensation expense

 

4,008

 

 

 

3,156

 

Equity in net income of unconsolidated affiliates

 

(1,457

)

 

 

(2,409

)

Changes in operating assets and liabilities:

 

 

 

Service charges and fees receivable

 

(2,949

)

 

 

(2,832

)

Inventory

 

(7,837

)

 

 

5,382

 

Prepaid expenses, other current assets and other assets

 

2,025

 

 

 

7,908

 

Accounts payable, accrued expenses and other liabilities

 

(53,209

)

 

 

(51,565

)

Customer layaway deposits

 

2,265

 

 

 

511

 

Income taxes

 

(1,068

)

 

 

4,423

 

Dividends from unconsolidated affiliates

 

3,366

 

 

 

 

Net cash provided by operating activities

 

48,494

 

 

 

33,122

 

Investing activities:

 

 

 

Loans made

 

(524,965

)

 

 

(423,450

)

Loans repaid

 

295,823

 

 

 

260,536

 

Recovery of pawn loan principal through sale of forfeited collateral

 

191,082

 

 

 

155,595

 

Capital expenditures, net

 

(18,100

)

 

 

(14,635

)

Acquisitions, net of cash acquired

 

(1,850

)

 

 

(15,132

)

Issuance of note receivable

 

(1,000

)

 

 

 

Investment in unconsolidated affiliates

 

(6,079

)

 

 

 

Investment in other investments

 

(16,500

)

 

 

 

Net cash used in investing activities

 

(81,589

)

 

 

(37,086

)

Financing activities:

 

 

 

Taxes paid related to net share settlement of equity awards

 

(792

)

 

 

(839

)

Payments on assumed debt and other borrowings

 

 

 

 

(15,363

)

Net cash used in financing activities

 

(792

)

 

 

(16,202

)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

1,219

 

 

 

5,076

 

Net decrease in cash, cash equivalents and restricted cash

 

(32,668

)

 

 

(15,090

)

Cash, cash equivalents and restricted cash at beginning of period

 

263,624

 

 

 

312,553

 

Cash, cash equivalents and restricted cash at end of period

$

230,956

 

 

$

297,463

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

Cash and cash equivalents

$

222,342

 

 

$

283,668

 

Restricted cash

 

8,614

 

 

 

13,795

 

Total cash and cash equivalents and restricted cash

$

230,956

 

 

$

297,463

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

Pawn loans forfeited and transferred to inventory

$

204,662

 

 

$

145,839

 

Transfer of consideration for other investment

 

1,500

 

 

 

 

Transfer of consideration for acquisition

 

 

 

 

1,547

 

Acquisition earn-out contingency

 

 

 

 

4,608

 

Accrued acquisition consideration held as restricted cash

 

 

 

 

5,824

 

EZCORP, Inc.

OPERATING SEGMENT RESULTS

(Unaudited)

 

 

Three Months Ended June 30, 2022

 

 

 

Latin America

 

Other

 

Total

 

Corporate

 

 

(in thousands)

U.S. Pawn

 

Pawn

 

Investments

 

Segments

 

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

94,005

 

 

$

34,329

 

 

$

 

 

$

128,334

 

 

$

 

 

$

128,334

 

Jewelry scrapping sales

 

5,404

 

 

 

1,764

 

 

 

 

 

 

7,168

 

 

 

 

 

 

7,168

 

Pawn service charges

 

59,322

 

 

 

20,969

 

 

 

 

 

 

80,291

 

 

 

 

 

 

80,291

 

Other revenues

 

21

 

 

 

7

 

 

 

21

 

 

 

49

 

 

 

 

 

 

49

 

Total revenues

 

158,752

 

 

 

57,069

 

 

 

21

 

 

 

215,842

 

 

 

 

 

 

215,842

 

Merchandise cost of goods sold

 

55,885

 

 

 

24,282

 

 

 

 

 

 

80,167

 

 

 

 

 

 

80,167

 

Jewelry scrapping cost of goods sold

 

4,506

 

 

 

1,661

 

 

 

 

 

 

6,167

 

 

 

 

 

 

6,167

 

Gross profit

 

98,361

 

 

 

31,126

 

 

 

21

 

 

 

129,508

 

 

 

 

 

 

129,508

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

66,036

 

 

 

23,394

 

 

 

 

 

 

89,430

 

 

 

 

 

 

89,430

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

18,715

 

 

 

18,715

 

Depreciation and amortization

 

2,572

 

 

 

1,987

 

 

 

 

 

 

4,559

 

 

 

3,187

 

 

 

7,746

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

2,693

 

 

 

2,693

 

Interest income

 

(1

)

 

 

(189

)

 

 

 

 

 

(190

)

 

 

 

 

 

(190

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

 

(1,758

)

 

 

(1,758

)

 

 

 

 

 

(1,758

)

Other (income) expense

 

 

 

 

(163

)

 

 

19

 

 

 

(144

)

 

 

(66

)

 

 

(210

)

Segment contribution

$

29,754

 

 

$

6,097

 

 

$

1,760

 

 

$

37,611

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

37,611

 

 

$

(24,529

)

 

$

13,082

 

 

Three Months Ended June 30, 2021

 

 

 

Latin America

 

Other

 

Total

 

Corporate

 

 

(in thousands)

U.S. Pawn

 

Pawn

 

Investments

 

Segments

 

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

84,465

 

$

23,343

 

 

$

 

 

$

107,808

 

 

$

 

 

$

107,808

 

Jewelry scrapping sales

 

1,908

 

 

3,765

 

 

 

 

 

 

5,673

 

 

 

 

 

 

5,673

 

Pawn service charges

 

44,039

 

 

16,392

 

 

 

 

 

 

60,431

 

 

 

 

 

 

60,431

 

Other revenues

 

32

 

 

 

 

 

89

 

 

 

121

 

 

 

 

 

 

121

 

Total revenues

 

130,444

 

 

43,500

 

 

 

89

 

 

 

174,033

 

 

 

 

 

 

174,033

 

Merchandise cost of goods sold

 

45,310

 

 

15,229

 

 

 

 

 

 

60,539

 

 

 

 

 

 

60,539

 

Jewelry scrapping cost of goods sold

 

1,878

 

 

3,595

 

 

 

 

 

 

5,473

 

 

 

 

 

 

5,473

 

Gross profit

 

83,256

 

 

24,676

 

 

 

89

 

 

 

108,021

 

 

 

 

 

 

108,021

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

62,507

 

 

19,296

 

 

 

 

 

 

81,803

 

 

 

 

 

 

81,803

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

14,589

 

 

 

14,589

 

Depreciation and amortization

 

2,600

 

 

1,806

 

 

 

 

 

 

4,406

 

 

 

3,013

 

 

 

7,419

 

Other Charges

 

 

 

497

 

 

 

 

 

 

497

 

 

 

 

 

 

497

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

5,569

 

 

 

5,569

 

Interest income

 

 

 

(484

)

 

 

 

 

 

(484

)

 

 

(28

)

 

 

(512

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

(643

)

 

 

(643

)

 

 

 

 

 

(643

)

Other (income) expense

 

 

 

(5

)

 

 

18

 

 

 

13

 

 

 

52

 

 

 

65

 

Segment contribution

$

18,149

 

$

3,566

 

 

$

714

 

 

$

22,429

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

22,429

 

 

$

(23,195

)

 

$

(766

)

 

Nine Months Ended June 30, 2022

 

 

 

Latin America

 

Other

 

Total

 

Corporate

 

 

(in thousands)

U.S. Pawn

Pawn

Investments

Segments

Items

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

296,147

 

 

$

103,463

 

 

$

 

 

$

399,610

 

 

$

 

 

$

399,610

 

Jewelry scrapping sales

 

13,864

 

 

 

5,938

 

 

 

 

 

 

19,802

 

 

 

 

 

 

19,802

 

Pawn service charges

 

174,651

 

 

 

58,348

 

 

 

 

 

 

232,999

 

 

 

 

 

 

232,999

 

Other revenues

 

67

 

 

 

247

 

 

 

93

 

 

 

407

 

 

 

 

 

 

407

 

Total revenues

 

484,729

 

 

 

167,996

 

 

 

93

 

 

 

652,818

 

 

 

 

 

 

652,818

 

Merchandise cost of goods sold

 

172,330

 

 

 

73,194

 

 

 

 

 

 

245,524

 

 

 

 

 

 

245,524

 

Jewelry scrapping cost of goods sold

 

11,279

 

 

 

5,468

 

 

 

 

 

 

16,747

 

 

 

 

 

 

16,747

 

Gross profit

 

301,120

 

 

 

89,334

 

 

 

93

 

 

 

390,547

 

 

 

 

 

 

390,547

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

195,217

 

 

 

66,727

 

 

 

 

 

 

261,944

 

 

 

 

 

 

261,944

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

46,487

 

 

 

46,487

 

Depreciation and amortization

 

7,867

 

 

 

5,858

 

 

 

 

 

 

13,725

 

 

 

9,045

 

 

 

22,770

 

Gain on sale or disposal of assets and other

 

 

 

 

(4

)

 

 

 

 

 

(4

)

 

 

(688

)

 

 

(692

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

7,651

 

 

 

7,651

 

Interest income

 

(1

)

 

 

(626

)

 

 

 

 

 

(627

)

 

 

(122

)

 

 

(749

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

 

(1,457

)

 

 

(1,457

)

 

 

 

 

 

(1,457

)

Other expense (income)

 

 

 

 

37

 

 

 

15

 

 

 

52

 

 

 

(11

)

 

 

41

 

Segment contribution

$

98,037

 

 

$

17,342

 

 

$

1,535

 

 

$

116,914

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

116,914

 

 

$

(62,362

)

 

$

54,552

 

 

Nine Months Ended June 30, 2021

 

 

 

Latin America

 

Other

 

Total

 

Corporate

 

 

(in thousands)

U.S. Pawn

 

Pawn

 

Investments

 

Segments

 

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

260,545

 

$

70,271

 

 

$

 

 

$

330,816

 

 

$

 

 

$

330,816

 

Jewelry scrapping sales

 

9,493

 

 

9,014

 

 

 

 

 

 

18,507

 

 

 

 

 

 

18,507

 

Pawn service charges

 

143,836

 

 

43,520

 

 

 

 

 

 

187,356

 

 

 

 

 

 

187,356

 

Other revenues

 

83

 

 

7

 

 

 

338

 

 

 

428

 

 

 

 

 

 

428

 

Total revenues

 

413,957

 

 

122,812

 

 

 

338

 

 

 

537,107

 

 

 

 

 

 

537,107

 

Merchandise cost of goods sold

 

145,181

 

 

45,691

 

 

 

 

 

 

190,872

 

 

 

 

 

 

190,872

 

Jewelry scrapping cost of goods sold

 

7,871

 

 

8,205

 

 

 

 

 

 

16,076

 

 

 

 

 

 

16,076

 

Gross profit

 

260,905

 

 

68,916

 

 

 

338

 

 

 

330,159

 

 

 

 

 

 

330,159

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

188,256

 

 

54,005

 

 

 

 

 

 

242,261

 

 

 

 

 

 

242,261

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

40,870

 

 

 

40,870

 

Depreciation and amortization

 

7,972

 

 

5,459

 

 

 

 

 

 

13,431

 

 

 

9,649

 

 

 

23,080

 

Loss on sale or disposal of assets and other

 

27

 

 

 

 

 

 

 

 

27

 

 

 

63

 

 

 

90

 

Other Charges

 

 

 

497

 

 

 

 

 

 

497

 

 

 

 

 

 

497

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

16,542

 

 

 

16,542

 

Interest income

 

 

 

(1,819

)

 

 

 

 

 

(1,819

)

 

 

(99

)

 

 

(1,918

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

(2,409

)

 

 

(2,409

)

 

 

 

 

 

(2,409

)

Other (income) expense

 

 

 

(375

)

 

 

(183

)

 

 

(558

)

 

 

169

 

 

 

(389

)

Segment contribution

$

64,650

 

$

11,149

 

 

$

2,930

 

 

$

78,729

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

78,729

 

 

$

(67,194

)

 

$

11,535

 

EZCORP, Inc.

STORE COUNT ACTIVITY

(Unaudited)

 

 

Three Months Ended June 30, 2022

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

As of March 31, 2022

516

 

636

 

 

1,152

 

New locations opened

 

8

 

 

8

 

Locations acquired

3

 

 

 

3

 

As of June 30, 2022

519

 

644

 

 

1,163

 

 

 

Three Months Ended June 30, 2021

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

 

As of March 31, 2021

505

 

506

 

 

1,011

 

New locations opened

 

4

 

 

4

 

Locations acquired

11

 

128

 

 

139

 

Locations sold, combined or closed

 

(11

)

 

(11

)

As of June 30, 2021

516

 

627

 

 

1,143

 

 

 

Nine Months Ended June 30, 2022

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

As of September 30, 2021

516

 

632

 

 

1,148

 

New locations opened

 

12

 

 

12

 

Locations acquired

3

 

 

 

3

 

As of June 30, 2022

519

 

644

 

 

1,163

 

 

 

Nine Months Ended June 30, 2021

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

As of September 30, 2020

505

 

500

 

 

1,005

 

New locations opened

 

10

 

 

10

 

Locations acquired

11

 

128

 

 

139

 

Locations sold, combined or closed

 

(11

)

 

(11

)

As of June 30, 2021

516

 

627

 

 

1,143

 

Non-GAAP Financial Information (Unaudited)

In addition to the financial information prepared in conformity with accounting principles generally accepted in the United States ("GAAP"), we provide certain other non-GAAP financial information on a constant currency ("constant currency") and adjusted basis. We use constant currency results to evaluate our Latin America Pawn operations, which are denominated primarily in Mexican pesos, Guatemalan quetzales and other Latin American currencies. We believe that presentation of constant currency and adjusted results 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 primarily 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 local currency 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 and approximate average exchange rates for each applicable currency as compared to U.S. dollars as of and for the three and nine months ended June 30, 2022 and 2021 were as follows:

 

 

 

 

Three Months Ended

 

Nine Months Ended

June 30,

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexican peso

 

20.2

 

19.9

 

20.0

 

20.0

 

20.4

 

20.3

Guatemalan quetzal

 

7.6

 

7.6

 

7.5

 

7.6

 

7.5

 

7.6

Honduran lempira

 

24.2

 

23.6

 

24.2

 

23.7

 

24.1

 

23.8

Peruvian sol

 

3.7

 

3.9

 

3.7

 

3.8

 

3.8

 

3.7

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.

Miscellaneous Non-GAAP Financial Measures

 

Three Months Ended

June 30,

(in millions)

2022

 

2021

 

 

 

 

Net income (loss)

$

12.2

 

 

$

(2.6

)

Interest expense

 

2.7

 

 

 

5.6

 

Interest income

 

(0.2

)

 

 

(0.5

)

Income tax expense

 

0.9

 

 

 

1.8

 

Depreciation and amortization

 

7.7

 

 

 

7.4

 

EBITDA

$

23.3

 

 

$

11.7

 

Total

 

Gross

 

Income

 

 

 

Net

 

Diluted

 

 

Revenues

 

Profit

 

Before Tax

 

Tax Effect

 

Income

 

EPS

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022 Q3 Reported

$

215.8

 

$

129.5

 

$

13.1

 

 

$

0.9

 

$

12.2

 

 

$

0.17

 

 

$

23.3

 

Litigation accrual

 

 

 

 

 

2.0

 

 

 

0.1

 

 

1.8

 

 

 

0.02

 

 

 

2.0

 

FX impact

 

 

 

 

 

(0.2

)

 

 

 

 

(0.2

)

 

 

 

 

 

(0.2

)

Release of FIN 48 reserves

 

 

 

 

 

 

 

 

2.8

 

 

(2.8

)

 

 

(0.03

)

 

 

 

Constant currency impact

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

2022 Q3 Adjusted

$

215.8

 

$

129.5

 

$

14.9

 

 

$

3.9

 

$

11.0

 

 

$

0.16

 

 

$

25.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

Gross

 

Income

 

 

 

Net

 

Diluted

 

 

Revenues

 

Profit

 

Before Tax

 

Tax Effect

 

Income

 

EPS

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021 Q3 Reported

$

174.0

 

$

108.0

 

$

(0.8

)

 

$

1.8

 

$

(2.6

)

 

$

(0.05

)

 

$

11.7

 

Acquisition expenses

 

 

 

 

 

0.4

 

 

 

0.3

 

 

0.1

 

 

 

 

 

 

0.4

 

Peru Reserve

 

 

 

 

 

0.5

 

 

 

0.4

 

 

0.1

 

 

 

 

 

 

0.4

 

Non cash Interest

 

 

 

 

 

3.5

 

 

 

2.5

 

 

1.0

 

 

 

0.02

 

 

 

 

2021 Q3 Adjusted

$

174.0

 

$

108.0

 

$

3.6

 

 

$

5.0

 

$

(1.4

)

 

$

(0.03

)

 

$

12.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

June 30, 2022

June 30, 2022

 

U.S. Dollar

 

Percentage

 

U.S. Dollar

 

Percentage

(in millions)

Amount

Change YOY

Amount

Change YOY

 

 

 

 

 

 

 

 

Consolidated revenue

$

215.8

 

24

%

 

$

652.8

 

22

%

Currency exchange rate fluctuations

 

 

 

 

 

0.7

 

 

Constant currency consolidated revenue

$

215.8

 

24

%

 

$

653.5

 

22

%

 

 

 

 

 

 

 

 

Consolidated gross profit

$

129.5

 

20

%

 

$

390.5

 

18

%

Currency exchange rate fluctuations

 

 

 

 

 

0.3

 

 

Constant currency consolidated gross profit

$

129.5

 

20

%

 

$

390.8

 

18

%

 

 

 

 

 

 

 

 

Consolidated net inventory

$

132.7

 

44

%

 

$

132.7

 

44

%

Currency exchange rate fluctuations

 

0.4

 

 

 

 

0.4

 

 

Constant currency consolidated net inventory

$

133.1

 

44

%

 

$

133.1

 

44

%

 

 

 

 

 

 

 

 

Latin America Pawn gross profit

$

31.1

 

26

%

 

$

89.3

 

30

%

Currency exchange rate fluctuations

 

 

 

 

 

0.3

 

 

Constant currency Latin America Pawn gross profit

$

31.1

 

26

%

 

$

89.6

 

30

%

 

 

 

 

 

 

 

 

Latin America Pawn PLO

$

44.5

 

11

%

 

$

44.5

 

11

%

Currency exchange rate fluctuations

 

0.5

 

 

 

 

0.5

 

 

Constant currency Latin America Pawn PLO

$

45.0

 

13

%

 

$

45.0

 

13

%

 

 

 

 

 

 

 

 

Latin America Pawn PSC revenues

$

21.0

 

28

%

 

$

58.3

 

34

%

Currency exchange rate fluctuations

 

 

 

 

 

0.1

 

 

Constant currency Latin America Pawn PSC revenues

$

21.0

 

28

%

 

$

58.4

 

34

%

 

 

 

 

 

 

 

 

Latin America Pawn merchandise sales

$

34.3

 

47

%

 

$

103.5

 

47

%

Currency exchange rate fluctuations

 

 

 

 

 

0.6

 

 

Constant currency Latin America Pawn merchandise sales

$

34.3

 

47

%

 

$

104.1

 

48

%

 

 

 

 

 

 

 

 

Latin America Pawn segment profit before tax

$

6.1

 

71

%

 

$

17.3

 

56

%

Currency exchange rate fluctuations

 

 

 

 

 

0.1

 

 

Constant currency Latin America Pawn segment profit before tax

$

6.1

 

71

%

 

$

17.4

 

56

%

 

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