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EZCORP Reports Third Quarter Fiscal 2023 Results

Record Pawn Loans Outstanding and Third Quarter Merchandise Sales Drive Strong Revenue and Earnings Growth

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, 2023.

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 12% to $229.4 million.
  • Total revenue increased 19%, and gross profit increased 15%.
  • Merchandise sales gross margin remains within our targeted range at 36%.
  • Net income increased $6.0 million to $18.2 million.
  • Diluted earnings per share of $0.24, up from $0.17. On an adjusted basis1, diluted earnings per share of $0.20, compared to $0.16.
  • Return on earning assets (ROEA) remains strong at 161%.

CEO COMMENTARY AND OUTLOOK

Lachie Given, Chief Executive Officer, stated, "As a result of our team's persistent pursuit of operational excellence, we achieved record PLO and third quarter revenue and merchandise sales, driving another quarter of robust operating results for our stakeholders.

"We grew our store footprint, opening 13 de novo stores during the quarter. Twelve of the new stores are in Latin America, with five in Mexico, taking our store count there to 540, and seven in Guatemala, expanding our market leadership there to 110 stores. In Las Vegas, we opened an additional Max Pawn luxury store, giving us three luxury pawn stores in that market.

"Our EZ+ Rewards loyalty program has grown to 3.3 million members, an 18% increase over the previous quarter. We continue to implement strategies to win and retain customers and drive customer engagement, enhancing their experience through targeted EZ+ marketing, moving payments online, and improving our retail showrooms. In the local communities we serve, we continue to provide a unique and essential service to our customers, focusing on meeting our customers' immediate cash needs with pawn loans and purchases, while providing outstanding value-for-money, offering a broad array of second-hand goods and a more sustainable way to shop.

"We delivered another strong quarter of operating and financial results through our commitment to People, Pawn, and Passion. Team recruitment, retention, rewards and recognition remain focal points, as we employ the most passionate, productive, and tenured team in the industry. Investing in our people and technology to grow our customer base and improve the customer experience continues to be a successful formula for us in driving excellent financial and operating results for our shareholders," Given concluded.

CONSOLIDATED RESULTS

 

Three Months Ended June 30

As Reported

 

Adjusted1

in millions, except per share amounts

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Total revenues

$

255.8

 

$

215.8

 

$

249.5

 

$

215.8

Gross profit

$

148.8

 

$

129.5

 

$

145.5

 

$

129.5

Income before tax

$

21.3

 

$

13.1

 

$

18.3

 

$

14.8

Net income

$

18.2

 

$

12.2

 

$

14.6

 

$

11.0

Diluted earnings per share

$

0.24

 

$

0.17

 

$

0.20

 

$

0.16

EBITDA (non-GAAP measure)

$

30.2

 

$

23.3

 

$

27.0

 

$

25.1

  • Diluted earnings per share of $0.24, up from $0.17. On an adjusted basis, diluted earnings per share of $0.20, up from $0.16.
  • Income before taxes was $21.3 million, up from $13.1 million, and adjusted EBITDA increased 8% to $27.0 million.
  • PLO increased 12% to $229.4 million, up $25.2 million. On a same-store basis2, PLO increased 9% due to improved operational performance and continued strong loan demand.
  • Total revenues increased 19% and gross profit increased 15%, reflecting improved pawn service charge (PSC) revenue, merchandise sales and merchandise sales gross profit.
  • PSC increased 17% as a result of higher average PLO and yields.
  • Merchandise sales gross margin remains within our targeted range at 36%. Aged general merchandise was 1.6% of total general merchandise inventory. This is a 60 bps improvement over the second quarter.
  • Net inventory increased 17%, as expected with the growth in PLO. Inventory turnover remained strong at 2.8x.
  • Store expenses increased 17%, primarily due to increased labor in-line with store activity, higher store count and, to a lesser extent, expenses related to our loyalty program and rent. On a same-store basis, store expenses increased 12%. General and administrative expenses decreased 4%, primarily due to the litigation accrual charge of $2.0 million recorded in prior period partially offset by an increase in costs related to our Workday implementation.
  • Cash and cash equivalents at the end of the quarter was $238.0 million, up 7% year-over-year. The increase was primarily due to cash inflows provided by operating activities and the net cash proceeds associated with the convertible debt refinancing offset by the increase in PLO and inventory, the acquisition of new stores, and strategic investments.

SEGMENT RESULTS

U.S. Pawn

  • PLO ended the quarter at $178.9 million, up 12% or 9% on a same store basis.
  • Total revenue was up 16% and gross profit increased 12%, reflecting increased PSC and higher merchandise sales.
  • PSC increased 16% as a result of higher average PLO.
  • Merchandise sales gross margin decreased to 39% from 41%, within our target range. Aged general merchandise was 1.0% of total general merchandise inventory. This is a 40 bps improvement over the second quarter.
  • Net inventory increased 13%, as expected with the growth in PLO. Inventory turnover increased to 2.6x from 2.5x.
  • Store expenses increased 14%, primarily due to increased labor in-line with store activity, higher store count and, to a lesser extent, expenses related to our loyalty program.
  • Segment contribution increased 9% to $32.3 million.
  • Segment store count increased by 1 de novo store during the quarter.

Latin America Pawn

  • PLO improved to $50.5 million, up 14% (1% on constant currency basis). On a same store basis, PLO increased 11% (decreased 2% on a constant currency basis). PLO balance was lower than expected with a greater pay down during the quarter driven by a change in Mexican law, which significantly increased profit share required to be paid by companies to employees by May 30.
  • Total revenue was up 26% (15% on constant currency basis) and gross profit increased 24% (14% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
  • PSC increased 19% (10% on a constant currency basis) as a result of higher average PLO and yield.
  • Merchandise sales gross margin increased from 29% to 30%. Aged general merchandise increased to 2.4% from 1.3% of total merchandise inventory. This is a 80 bps improvement over the second quarter.
  • Net inventory increased 30% (13% on a constant currency basis), as expected with the growth in PLO. Inventory turnover remained strong at 3.4x, down from 3.7x.
  • Store expenses increased 26% (14% on a constant currency basis), primarily due to rent linked to inflation, higher store count and, to a lesser extent, expenses related to our loyalty program. Same-store expenses increased 21% (9% on a constant currency basis).
  • Segment contribution increased 59% (48% on a constant currency basis) to $9.7 million. On an adjusted basis, segment contribution was up 12% to $6.7 million, with the primary adjustment being the reversal of contingent consideration liability in connection with a previously completed acquisition.
  • Segment store count increased by 12 de novo stores during the quarter.

FORM 10-Q

EZCORP’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 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 3, 2023, at 8:00 am Central Time to discuss Third Quarter Fiscal 2023 results. Analysts and institutional investors may participate on the conference call by dialing (833) 470-1428, Conference ID: 870985, or internationally by dialing (404) 975-4839. 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 S&P 1000 Index and Nasdaq Composite Index.

Follow us on social media:

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

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“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.

2“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)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

Merchandise sales

$

147,980

 

 

$

128,334

 

 

$

464,274

 

 

$

399,610

 

Jewelry scrapping sales

 

13,931

 

 

 

7,168

 

 

 

34,640

 

 

 

19,802

 

Pawn service charges

 

93,819

 

 

 

80,291

 

 

 

279,442

 

 

 

232,999

 

Other revenues, net

 

82

 

 

 

49

 

 

 

206

 

 

 

407

 

Total revenues

 

255,812

 

 

 

215,842

 

 

 

778,562

 

 

 

652,818

 

Merchandise cost of goods sold

 

95,069

 

 

 

80,167

 

 

 

297,285

 

 

 

245,524

 

Jewelry scrapping cost of goods sold

 

11,958

 

 

 

6,167

 

 

 

30,813

 

 

 

16,747

 

Gross profit

 

148,785

 

 

 

129,508

 

 

 

450,464

 

 

 

390,547

 

Operating expenses:

 

 

 

 

 

 

 

Store expenses

 

104,932

 

 

 

89,430

 

 

 

307,004

 

 

 

261,944

 

General and administrative

 

17,876

 

 

 

18,715

 

 

 

48,961

 

 

 

46,487

 

Depreciation and amortization

 

8,026

 

 

 

7,746

 

 

 

23,977

 

 

 

22,770

 

(Gain) loss on sale or disposal of assets

 

(29

)

 

 

 

 

 

28

 

 

 

(692

)

Other

 

(2,632

)

 

 

 

 

 

(5,097

)

 

 

 

Total operating expenses

 

128,173

 

 

 

115,891

 

 

 

374,873

 

 

 

330,509

 

Operating income

 

20,612

 

 

 

13,617

 

 

 

75,591

 

 

 

60,038

 

Interest expense

 

3,414

 

 

 

2,693

 

 

 

12,994

 

 

 

7,651

 

Interest income

 

(2,584

)

 

 

(190

)

 

 

(5,146

)

 

 

(749

)

Equity in net (income) loss of unconsolidated affiliates

 

(1,523

)

 

 

(1,758

)

 

 

29,394

 

 

 

(1,457

)

Other (income) expense

 

(5

)

 

 

(210

)

 

 

(159

)

 

 

41

 

Income before income taxes

 

21,310

 

 

 

13,082

 

 

 

38,508

 

 

 

54,552

 

Income tax expense

 

3,088

 

 

 

867

 

 

 

10,298

 

 

 

11,729

 

Net income

$

18,222

 

 

$

12,215

 

 

$

28,210

 

 

$

42,823

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.33

 

 

$

0.22

 

 

$

0.51

 

 

$

0.76

 

Diluted earnings per share

$

0.24

 

 

$

0.17

 

 

$

0.38

 

 

$

0.59

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

55,367

 

 

 

56,656

 

 

 

55,776

 

 

 

56,465

 

Weighted-average diluted shares outstanding

 

86,825

 

 

 

82,504

 

 

 

79,559

 

 

 

82,349

 

EZCORP, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands, except share and per share amounts)

June 30,

2023

 

June 30,

2022

 

September 30,

2022

 

 

 

 

 

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

237,974

 

 

$

222,342

 

 

$

206,028

 

Restricted cash

 

8,549

 

 

 

8,614

 

 

 

8,341

 

Pawn loans

 

229,379

 

 

 

204,155

 

 

 

210,009

 

Pawn service charges receivable, net

 

34,959

 

 

 

32,000

 

 

 

33,476

 

Inventory, net

 

154,944

 

 

 

132,713

 

 

 

151,615

 

Prepaid expenses and other current assets

 

44,925

 

 

 

29,822

 

 

 

34,694

 

Total current assets

 

710,730

 

 

 

629,646

 

 

 

644,163

 

Investments in unconsolidated affiliates

 

10,247

 

 

 

43,384

 

 

 

37,733

 

Other investments

 

39,220

 

 

 

18,000

 

 

 

24,220

 

Property and equipment, net

 

61,849

 

 

 

51,505

 

 

 

56,725

 

Right-of-use asset, net

 

243,100

 

 

 

217,506

 

 

 

221,405

 

Goodwill

 

302,120

 

 

 

286,798

 

 

 

286,828

 

Intangible assets, net

 

60,009

 

 

 

61,017

 

 

 

56,819

 

Notes receivable, net

 

 

 

 

1,207

 

 

 

1,215

 

Deferred tax asset, net

 

19,610

 

 

 

15,773

 

 

 

12,145

 

Other assets

 

10,793

 

 

 

5,991

 

 

 

6,625

 

Total assets

$

1,457,678

 

 

$

1,330,827

 

 

$

1,347,878

 

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

74,458

 

 

$

76,566

 

 

$

84,509

 

Customer layaway deposits

 

18,595

 

 

 

14,927

 

 

 

16,023

 

Operating lease liabilities, current

 

56,919

 

 

 

53,358

 

 

 

52,334

 

Total current liabilities

 

149,972

 

 

 

144,851

 

 

 

152,866

 

Long-term debt, net

 

359,686

 

 

 

312,521

 

 

 

312,903

 

Deferred tax liability, net

 

349

 

 

 

307

 

 

 

373

 

Operating lease liabilities

 

197,499

 

 

 

175,489

 

 

 

180,756

 

Other long-term liabilities

 

11,130

 

 

 

11,905

 

 

 

8,749

 

Total liabilities

 

718,636

 

 

 

645,073

 

 

 

655,647

 

Commitments and Contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A Non-voting Common Stock, par value $0.01per share; shares authorized: 100 million; issued and outstanding: 52,214,761 as of June 30, 2023; 53,685,333 as of June 30, 2022; and 53,454,885 as of September 30, 2022

 

522

 

 

 

537

 

 

 

534

 

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

 

344,857

 

 

 

343,763

 

 

 

345,330

 

Retained earnings

 

422,549

 

 

 

396,461

 

 

 

402,006

 

Accumulated other comprehensive loss

 

(28,916

)

 

 

(55,037

)

 

 

(55,669

)

Total equity

 

739,042

 

 

 

685,754

 

 

 

692,231

 

Total liabilities and equity

$

1,457,678

 

 

$

1,330,827

 

 

$

1,347,878

 

EZCORP, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended

June 30,

(in thousands)

 

2023

 

 

 

2022

 

 

 

Operating activities:

 

 

 

Net income

$

28,210

 

 

$

42,823

 

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

 

 

 

Depreciation and amortization

 

23,977

 

 

 

22,770

 

Amortization of debt discount and deferred financing costs

 

1,135

 

 

 

1,051

 

Non-cash lease expense

 

41,752

 

 

 

39,061

 

Deferred income taxes

 

(7,489

)

 

 

475

 

Other adjustments

 

(4,894

)

 

 

(734

)

Provision for inventory reserve

 

(160

)

 

 

(2,096

)

Stock compensation expense

 

6,876

 

 

 

4,008

 

Equity in net loss of unconsolidated affiliates

 

29,394

 

 

 

(1,457

)

Net loss on extinguishment of debt

 

3,545

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Service charges and fees receivable

 

(316

)

 

 

(2,949

)

Inventory

 

(5,501

)

 

 

(7,837

)

Prepaid expenses, other current assets and other assets

 

(2,750

)

 

 

2,025

 

Accounts payable, accrued expenses and other liabilities

 

(53,018

)

 

 

(53,209

)

Customer layaway deposits

 

1,036

 

 

 

2,265

 

Income taxes

 

8,923

 

 

 

(1,068

)

Dividends from unconsolidated affiliates

 

3,589

 

 

 

3,366

 

Net cash provided by operating activities

 

74,309

 

 

 

48,494

 

Investing activities:

 

 

 

Loans made

 

(592,689

)

 

 

(524,965

)

Loans repaid

 

343,886

 

 

 

295,823

 

Recovery of pawn loan principal through sale of forfeited collateral

 

251,608

 

 

 

191,082

 

Capital expenditures, net

 

(27,751

)

 

 

(18,100

)

Acquisitions, net of cash acquired

 

(12,968

)

 

 

(1,850

)

Issuance of notes receivable

 

(15,500

)

 

 

(1,000

)

Investment in unconsolidated affiliates

 

(2,133

)

 

 

(6,079

)

Investment in other investments

 

(15,000

)

 

 

(16,500

)

Net cash used in investing activities

 

(70,547

)

 

 

(81,589

)

Financing activities:

 

 

 

Taxes paid related to net share settlement of equity awards

 

(1,149

)

 

 

(792

)

Proceeds from issuance of debt

 

230,000

 

 

 

 

Debt issuance cost

 

(7,458

)

 

 

 

Cash paid on extinguishment of debt

 

(1,951

)

 

 

 

Payments on debt

 

(178,488

)

 

 

 

Repurchase of common stock

 

(13,982

)

 

 

 

Net cash provided by (used in) financing activities

 

26,972

 

 

 

(792

)

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

 

1,420

 

 

 

1,219

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

32,154

 

 

 

(32,668

)

Cash, cash equivalents and restricted cash at beginning of period

 

214,369

 

 

 

263,624

 

Cash, cash equivalents and restricted cash at end of period

$

246,523

 

 

$

230,956

 

EZCORP, Inc.

OPERATING SEGMENT RESULTS

 

 

Three Months Ended June 30, 2023

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America Pawn

 

Other Investments

 

Total Segments

 

Corporate Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

102,177

 

 

$

45,803

 

 

$

 

 

$

147,980

 

 

$

 

 

$

147,980

 

Jewelry scrapping sales

 

13,098

 

 

 

833

 

 

 

 

 

 

13,931

 

 

 

 

 

 

13,931

 

Pawn service charges

 

68,790

 

 

 

25,029

 

 

 

 

 

 

93,819

 

 

 

 

 

 

93,819

 

Other revenues

 

27

 

 

 

40

 

 

 

15

 

 

 

82

 

 

 

 

 

 

82

 

Total revenues

 

184,092

 

 

 

71,705

 

 

 

15

 

 

 

255,812

 

 

 

 

 

 

255,812

 

Merchandise cost of goods sold

 

62,799

 

 

 

32,270

 

 

 

 

 

 

95,069

 

 

 

 

 

 

95,069

 

Jewelry scrapping cost of goods sold

 

11,101

 

 

 

857

 

 

 

 

 

 

11,958

 

 

 

 

 

 

11,958

 

Gross profit

 

110,192

 

 

 

38,578

 

 

 

15

 

 

 

148,785

 

 

 

 

 

 

148,785

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

75,389

 

 

 

29,543

 

 

 

 

 

 

104,932

 

 

 

 

 

 

104,932

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

17,876

 

 

 

17,876

 

Depreciation and amortization

 

2,505

 

 

 

2,303

 

 

 

 

 

 

4,808

 

 

 

3,218

 

 

 

8,026

 

Gain on sale or disposal of assets

 

 

 

 

(29

)

 

 

 

 

 

(29

)

 

 

 

 

 

(29

)

Other

 

 

 

 

(2,632

)

 

 

 

 

 

(2,632

)

 

 

 

 

 

(2,632

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

3,414

 

 

 

3,414

 

Interest income

 

(1

)

 

 

(256

)

 

 

 

 

 

(257

)

 

 

(2,327

)

 

 

(2,584

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

 

(1,523

)

 

 

(1,523

)

 

 

 

 

 

(1,523

)

Other (income) expense

 

 

 

 

(65

)

 

 

10

 

 

 

(55

)

 

 

50

 

 

 

(5

)

Segment contribution

$

32,299

 

 

$

9,714

 

 

$

1,528

 

 

$

43,541

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

43,541

 

 

$

(22,231

)

 

$

21,310

 

 

Three Months Ended June 30, 2022

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America

Pawn

 

Other Investments

 

Total Segments

 

Corporate 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30, 2023

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America Pawn

 

Other Investments

 

Total Segments

 

Corporate Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

329,231

 

 

$

135,043

 

 

$

 

 

$

464,274

 

 

$

 

 

$

464,274

 

Jewelry scrapping sales

 

30,088

 

 

 

4,552

 

 

 

 

 

 

34,640

 

 

 

 

 

 

34,640

 

Pawn service charges

 

208,045

 

 

 

71,397

 

 

 

 

 

 

279,442

 

 

 

 

 

 

279,442

 

Other revenues

 

84

 

 

 

75

 

 

 

47

 

 

 

206

 

 

 

 

 

 

206

 

Total revenues

 

567,448

 

 

 

211,067

 

 

 

47

 

 

 

778,562

 

 

 

 

 

 

778,562

 

Merchandise cost of goods sold

 

203,698

 

 

 

93,587

 

 

 

 

 

 

297,285

 

 

 

 

 

 

297,285

 

Jewelry scrapping cost of goods sold

 

25,867

 

 

 

4,946

 

 

 

 

 

 

30,813

 

 

 

 

 

 

30,813

 

Gross profit

 

337,883

 

 

 

112,534

 

 

 

47

 

 

 

450,464

 

 

 

 

 

 

450,464

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

220,639

 

 

 

86,365

 

 

 

 

 

 

307,004

 

 

 

 

 

 

307,004

 

General and administrative

 

 

 

 

(3

)

 

 

 

 

 

(3

)

 

 

48,964

 

 

 

48,961

 

Depreciation and amortization

 

7,820

 

 

 

6,850

 

 

 

 

 

 

14,670

 

 

 

9,307

 

 

 

23,977

 

Loss (gain) on sale or disposal of assets

 

84

 

 

 

(56

)

 

 

 

 

 

28

 

 

 

 

 

 

28

 

Other charges

 

 

 

 

(5,097

)

 

 

 

 

 

(5,097

)

 

 

 

 

 

(5,097

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

12,994

 

 

 

12,994

 

Interest income

 

(2

)

 

 

(723

)

 

 

 

 

 

(725

)

 

 

(4,421

)

 

 

(5,146

)

Equity in net loss of unconsolidated affiliates

 

 

 

 

 

 

 

29,394

 

 

 

29,394

 

 

 

 

 

 

29,394

 

Other (income) expense

 

 

 

 

(41

)

 

 

20

 

 

 

(21

)

 

 

(138

)

 

 

(159

)

Segment contribution (loss)

$

109,342

 

 

$

25,239

 

 

$

(29,367

)

 

$

105,214

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

105,214

 

 

$

(66,706

)

 

$

38,508

 

 

Nine Months Ended June 30, 2022

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America Pawn

 

Other Investments

 

Total Segments

 

Corporate 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

 

EZCORP, Inc.

STORE COUNT ACTIVITY

(Unaudited)

 

 

Three Months Ended June 30, 2023

 

U.S. Pawn

 

Latin America Pawn

 

Consolidated

 

 

 

 

 

 

As of March 31, 2023

527

 

672

 

1,199

New locations opened

1

 

12

 

13

As of June 30, 2023

528

 

684

 

1,212

 

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

 

Nine Months Ended June 30, 2023

 

U.S. Pawn

 

Latin America Pawn

 

Consolidated

 

 

 

 

 

 

As of September 30, 2022

515

 

660

 

 

1,175

 

New locations opened

3

 

25

 

 

28

 

Locations acquired

10

 

 

 

10

 

Locations sold, combined or closed

 

(1

)

 

(1

)

As of June 30, 2023

528

 

684

 

 

1,212

 

 

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

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. In addition, we have an equity method investment that is denominated in Australian dollars and is translated into U.S. dollars. 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, 2023 and 2022 were as follows:

 

 

June 30,

 

Three Months Ended

June 30,

 

Nine Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexican peso

 

17.1

 

20.2

 

17.7

 

20.0

 

18.7

 

20.4

Guatemalan quetzal

 

7.7

 

7.6

 

7.6

 

7.5

 

7.6

 

7.5

Honduran lempira

 

24.4

 

24.2

 

24.3

 

24.2

 

24.3

 

24.1

Australian dollar

 

1.5

 

1.5

 

1.5

 

1.4

 

1.5

 

1.4

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)

 

2023

 

 

 

2022

 

 

 

 

 

Net income

$

18.2

 

 

$

12.2

 

Interest expense

 

3.4

 

 

 

2.7

 

Interest income

 

(2.6

)

 

 

(0.2

)

Income tax expense

 

3.1

 

 

 

0.9

 

Depreciation and amortization

 

8.0

 

 

 

7.7

 

EBITDA

$

30.2

 

 

$

23.3

 

 

Total Revenues

 

Gross Profit

 

Income Before Tax

 

Tax Effect

 

Net Income

 

Diluted EPS

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 Q3 Reported

$

255.8

 

 

$

148.8

 

 

$

21.3

 

 

$

3.1

 

 

$

18.2

 

 

$

0.24

 

 

$

30.2

 

Contingent consideration liability

 

 

 

 

 

 

 

(2.6

)

 

 

(0.5

)

 

 

(2.1

)

 

 

(0.02

)

 

 

(2.6

)

Tax Impact

 

 

 

 

 

 

 

 

 

 

1.0

 

 

 

(1.0

)

 

 

(0.01

)

 

 

 

Constant currency impact

 

(6.3

)

 

 

(3.3

)

 

 

(0.4

)

 

 

0.1

 

 

 

(0.5

)

 

 

(0.01

)

 

 

(0.6

)

2023 Q3 Adjusted

$

249.5

 

 

$

145.5

 

 

$

18.3

 

 

$

3.7

 

 

$

14.6

 

 

$

0.20

 

 

$

27.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

Gross Profit

 

Income Before Tax

 

Tax Effect

 

Net Income

 

Diluted 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

 

 

 

1.9

 

 

 

0.02

 

 

 

2.0

 

Release of FIN 48 reserves

 

 

 

 

 

 

 

 

 

 

2.8

 

 

 

(2.8

)

 

 

(0.03

)

 

 

 

FX impact

 

 

 

 

 

 

 

(0.3

)

 

 

 

 

(0.3

)

 

 

 

 

 

(0.2

)

2022 Q3 Adjusted

$

215.8

 

 

$

129.5

 

 

$

14.8

 

 

$

3.8

 

 

$

11.0

 

 

$

0.16

 

 

$

25.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30, 2023

 

Nine Months Ended

June 30, 2023

(in millions)

U.S. Dollar Amount

 

Percentage Change YOY

 

U.S. Dollar Amount

 

Percentage Change YOY

 

 

 

 

 

 

 

 

Consolidated revenue

$

255.8

 

 

19

%

 

$

778.6

 

 

19

%

Currency exchange rate fluctuations

 

(6.3

)

 

 

 

 

(13.7

)

 

 

Constant currency consolidated revenue

$

249.5

 

 

16

%

 

$

764.9

 

 

17

%

 

 

 

 

 

 

 

 

Consolidated gross profit

$

148.8

 

 

15

%

 

$

450.5

 

 

15

%

Currency exchange rate fluctuations

 

(3.3

)

 

 

 

 

(7.0

)

 

 

Constant currency consolidated gross profit

$

145.5

 

 

12

%

 

$

443.5

 

 

14

%

 

 

 

 

 

 

 

 

Consolidated net inventory

$

154.9

 

 

17

%

 

$

154.9

 

 

17

%

Currency exchange rate fluctuations

 

(5.0

)

 

 

 

 

(5.0

)

 

 

Constant currency consolidated net inventory

$

149.9

 

 

13

%

 

$

149.9

 

 

13

%

 

 

 

 

 

 

 

 

Latin America Pawn gross profit

$

38.6

 

 

24

%

 

$

112.5

 

 

26

%

Currency exchange rate fluctuations

 

(3.2

)

 

 

 

 

(7.0

)

 

 

Constant currency Latin America Pawn gross profit

$

35.4

 

 

14

%

 

$

105.5

 

 

18

%

 

 

 

 

 

 

 

 

Latin America Pawn PLO

$

50.5

 

 

13

%

��

$

50.5

 

 

13

%

Currency exchange rate fluctuations

 

(5.5

)

 

 

 

 

(5.5

)

 

 

Constant currency Latin America Pawn PLO

$

45.0

 

 

1

%

 

$

45.0

 

 

1

%

 

 

 

 

 

 

 

 

Latin America Pawn PSC revenues

$

25.0

 

 

19

%

 

$

71.4

 

 

22

%

Currency exchange rate fluctuations

 

(2.0

)

 

 

 

 

(4.3

)

 

 

Constant currency Latin America Pawn PSC revenues

$

23.0

 

 

10

%

 

$

67.1

 

 

15

%

 

 

 

 

 

 

 

 

Latin America Pawn merchandise sales

$

45.8

 

 

33

%

 

$

135.0

 

 

31

%

Currency exchange rate fluctuations

 

(4.2

)

 

 

 

 

(9.1

)

 

 

Constant currency Latin America Pawn merchandise sales

$

41.6

 

 

21

%

 

$

125.9

 

 

22

%

 

 

 

 

 

 

 

 

Latin America Pawn segment profit before tax

$

9.7

 

 

59

%

 

$

25.2

 

 

46

%

Currency exchange rate fluctuations

 

(0.4

)

 

 

 

 

(0.9

)

 

 

Constant currency Latin America Pawn segment profit before tax

$

9.3

 

 

53

%

 

$

24.4

 

 

39

%

 

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