EZCORP Inc : EZCORP Reports 17% Increase In Net Income
04/19/2012| 04:05pm US/Eastern
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AUSTIN, Texas, April 19, 2012 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of instant cash solutions for consumers, today announced results for its second fiscal quarter ended March 31, 2012. For the quarter, net income was $37.3 million, a 17% increase over the prior year's quarter, and diluted earnings per share were $0.73, a 16% increase over the prior year. During the quarter, the Company completed the acquisition of 60% of Crediamigo, one of the largest and fastest growing providers of payroll deduction loans in Mexico. Since the end of the quarter, the Company has completed the acquisition of 72% of Cash Genie, a leading provider of online loans in the United Kingdom. The Company incurred costs associated with acquisitions of $2.0 million ($0.03 per share) in the quarter.
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The Company also announced it is revising its fiscal 2012 earnings guidance to a range of $2.85 to $2.95 per share, about 6% lower than the previous guidance. The mid-point of this range represents an increase of 13% over fiscal 2011 earnings per share, non-GAAP, and 19% on a GAAP basis. This revision in guidance is due to slightly slower than expected growth rates in the U.S. pawn business for both loans and sales (including scrap sales) as a result of customers' using a greater proportion of general merchandise instead of gold to satisfy their immediate cash needs. The effect of this shift will be to slow inventory turns, place downward pressure on margin rates and delay income into next year. The Company expects to continue to grow its same store loan balances and sales in the low-to-mid single digits for the rest of fiscal 2012.
Commenting on the quarter's results, EZCORP's President and Chief Executive Officer, Paul Rothamel, said "While we are very pleased with consolidated net income growth of 17% for the quarter and 15% for the first half, particularly given the strategic transactions we recently closed, we expect earnings growth in the back half of the year to be slightly slower than we originally expected. Nevertheless, the fundamentals of all our cash solutions businesses, including our inventory and loan yields, remain strong and we are filling the pipeline with new stores, new products, and additional talent."
Consolidated Financials - Three months ended March 31, 2012 versus the prior year quarter:
-- Net income of $37.3 million, up 17%.
-- Diluted earnings per share of $0.73, up 16%.
-- Total revenues of $256.3 million, up 20%.
-- Net revenues of $161.6 million, up 23%.
-- Consolidated operating income of $55.7 million, up 24%.
-- Combined loan balances (pawn and consumer loans, including CSO) at
quarter end were $219.1 million, up 57%. Excluding Crediamigo, loan
balances were $156.5M, up 12%.
-- Cash and cash equivalents at quarter-end were $47.5 million, with debt
of $132.4 million. Crediamigo had third party debt outstanding of $94.6
million, all of which is non-recourse to EZCORP.
Key Operating Segment Metrics - Three months ended March 31, 2012 versus the prior year quarter:
-- U.S. & Canada:
-- Total revenue was $229.4 million, up 14% in total and 4% on a same
store basis.
-- Total sales increased 16% to $134.9 million, with margin improving
90 basis points to 41%. Same store sales were up 2%.
-- Pawn service charges increased 17% to $50.5 million, up 9% on a same
store basis.
-- Consumer loan fees increased 6% to $42.8 million, up 3% on a same
store basis.
-- Consumer loan bad debt as a percentage of fees improved 45 bps to
14%.
-- Segment contribution increased 16% to $64.9 million.
-- Pawn loan balance was $108.8 million at quarter end, up 12% in total
and 6% on a same store basis.
-- Combined loan balances (pawn and consumer loans, including CSO) at
quarter end were $142.9 million, up 9%.
-- Latin America :
-- Total revenue was $26.7 million, up 110% in total and 9% on a same
store basis.
-- Total sales increased 47% to $13.3 million. Same store sales were
up 4%.
-- Pawn service charges increased 61% to $5.9 million, up 20% on a same
store basis.
-- Consumer loan fees were $7.4 million.
-- Consumer loan bad debt as a percentage of fees was 7%.
-- Segment contribution increased to $1.3 million, with an improvement
in margin from -1% to 5%.
-- Crediamigo recorded net revenue of $6.9 million and net income
attributable to EZCORP of $0.2 million for the two months ended
March 31, 2012.
Growth Drivers
-- U.S. & Canada:
-- Acquired 15 stores during the quarter and opened eight new de novo
locations, bringing the total number of Company-owned stores to 970
at quarter end. In the first half of fiscal 2012, the Company has
added 48 stores (40 acquired and eight de novo) in the U.S. and
Canada, and is now a leader in 48 markets across the U.S. and
Canada. The Company now offers instant cash solutions in 24 U.S.
states and, including franchises, five Canadian provinces.
-- On April 13, completed the acquisition of nine pawn stores in the
Minneapolis metropolitan area, where the Company had not previously
had a presence. The Company now operates pawn shops in 19 U.S.
states, up six from this time last year.
-- Converted nine CASHMAX stores to the Cash Converters brand. At
quarter end, 35 of the 67 Company-owned stores in Canada operated
under the Cash Converters brand, with an additional 12 Cash
Converters stores managed by franchisees.
-- Latin America:
-- Empeno Facil opened 13 stores during the quarter and 27 for the
first half, bringing total store count to 205. Of these, 153 are
full size, full service stores.
-- Empeno Facil opened its first store in Monterrey, Mexico and now
operates in 30 of 55 principal metro areas in Mexico and in 17 of 31
Mexican states primarily in the central and southern part of the
country.
-- On January 30, 2012, the Company closed its acquisition of a 60%
interest in Crediamigo, marking EZCORP's first entry into unsecured
lending in Mexico. Crediamigo offers loans with typical APRs of
around 85% and collects interest and principal through payroll
deductions. The average loan is approximately $1,200 with a term of
27 months. Crediamigo has approximately 170 payroll withholding
agreements with Mexican employers, primarily government and state
agencies, with potential access to over 3 million employees. At
March 31, 2012, Crediamigo's loan portfolio totaled $68.4 million
and the company had $94.6 million of third party debt (non-recourse
to EZCORP).
-- Other International:
-- On April 13, the Company acquired 72% of the shares in Artiste
Holding Limited, which provides online loans in the U.K. under the
name "Cash Genie." Cash Genie significantly accelerates EZCORP's
online strategy in the U.K., and EZCORP's existing U.K. online
lending operations, most of which are outsourced, will be rolled
into Cash Genie. Founded in 2009 and based in Ipswich, England,
Cash Genie is one of the top 10 largest online lenders in the U.K.
It currently has back office and collections functions based in the
Philippines, and expects to launch online lending in Finland in May.
The company offers unsecured 30-day cash advance loans from $120 to
$1,200 with an average loan of $230. The company has 300,000
customers with almost 70,000 loans outstanding and a net loan
balance of $17.6 million at the end of February.
Company Outlook
Commenting on the Company's outlook, Mr. Rothamel stated: "We believe that we are well positioned to continue our very strong growth. The consumer demand for our products in the U.S., Mexico, and Canada, as well as the rest of the world is expanding. The combination of our large and rapidly growing U.S. businesses, accelerated growth in Mexico through Empeno Facil and Crediamigo, our U.K. investments in Cash Genie and Albemarle & Bond, and our Cash Converters investments in Australia, the U.K. and Canada position us well for rapid, diversified growth around the world."
About EZCORP
EZCORP is a leading provider of instant cash solutions for consumers. Through more than 1,200 company-operated pawn, buy/sell and personal financial services stores in the U.S., Mexico and Canada, we provide a variety of instant cash solutions, including pawn loans, consumer loans, and fee-based credit services to customers seeking loans. At our pawn and buy/sell stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.
EZCORP owns controlling interests in Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. (doing business under the name "Crediamigo"), a leading provider of payroll deduction loans in Mexico, and in Artiste Holding Limited (doing business under the name "Cash Genie"), a leading provider of online loans in the U.K. The company also has significant investments in Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 170 full-line stores offering pawnbroking, jewelry retailing, gold buying and financial services; and in Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a worldwide network of over 600 stores that provide personal financial services and sell pre-owned merchandise.
Special Note Regarding Forward-Looking Statements
This announcement contains certain forward-looking statements regarding the Company's expected operating and financial performance for future periods, including expected future earnings and growth rates. These statements are based on the Company's current expectations. 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 changes in the regulatory environment, changing market conditions in the overall economy and the industry, fluctuations in gold prices or the desire of our customers to pawn or sell their gold items, and consumer demand for the Company's services and merchandise. 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.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP net income and non-GAAP earnings per share for fiscal 2011. The only difference between the presented non-GAAP measures and the most closely comparable GAAP measures is the exclusion of a one-time charge related to the retirement of the Company's former Chief Executive Officer and the related tax benefit included in the quarter ended December 31, 2010. The Company's management uses these non-GAAP financial measures to understand its financial performance from period to period. Management does not believe that the excluded one-time charge is reflective of underlying operating performance. The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the corresponding GAAP measures, but rather are provided to facilitate an enhanced understanding of the Company's actual and expected performance and to enable more meaningful period-to-period comparisons. A reconciliation of the non-GAAP financial measures to the most closely comparable GAAP financial measures is provided in the accompanying financial schedules.
EZCORP Investor Relations
(512) 314-2220
Investor_Relations@ezcorp.com
www.ezcorp.com
EZCORP, Inc.
Highlights of Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data and percents)
Three Months Ended Six Months Ended March
March 31, 31,
------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
Revenues:
Merchandise sales $94,997 $77,773 $181,891 $149,653
Jewelry scrapping
sales 53,175 47,995 109,578 98,660
Pawn service charges 56,444 46,769 116,236 96,579
Consumer loan fees 50,319 40,472 95,407 86,782
Other 1,343 245 2,039 406
Total revenues 256,278 213,254 505,151 432,080
Cost of goods sold:
Cost of merchandise
sales 55,880 44,639 104,276 85,950
Cost of jewelry
scrapping sales 32,310 31,925 67,734 64,180
Total cost of goods
sold 88,190 76,564 172,010 150,130
Bad debt:
Consumer loan bad debt 6,466 5,740 17,491 16,768
----- ----- ------ ------
Net revenue 161,622 130,950 315,650 265,182
Operations expense 77,269 66,045 151,770 130,549
Administrative expense 21,353 15,733 41,064 41,871
Depreciation and
amortization 7,259 4,466 12,514 8,645
(Gain) /loss on sales
/disposal of assets 27 (178) (174) (171)
Operating income 55,714 44,884 110,476 84,288
Interest income (314) (11) (353) (14)
Interest expense 2,560 300 3,150 600
Equity in net income
of unconsolidated
affiliates (4,577) (4,691) (8,738) (8,058)
Other 802 4 (317) (57)
Income before income
taxes 57,243 49,282 116,734 91,817
Income tax expense 19,870 17,444 40,009 32,550
------ ------ ------ ------
Net income 37,373 31,838 76,725 59,267
Attributable to
noncontrolling
interest 112 - 112 -
Net income
attributable to
EZCORP, Inc. $37,261 $31,838 $76,613 $59,267
======= ======= ======= =======
Net income per share,
diluted $0.73 $0.63 $1.51 $1.18
===== ===== ===== =====
Weighted average
shares, diluted 51,069 50,362 50,887 50,243
EZCORP, Inc.
Highlights of Consolidated Balance Sheets
(in thousands)
March 31, (unaudited) September 30,
-------------------- -------------
2012 2011 2011
---- ---- ----
Assets:
Current assets:
Cash and cash
equivalents $47,499 $59,785 $23,969
Pawn loans 122,305 106,525 145,318
Consumer loans,
net 23,998 11,948 14,611
Pawn service
charges
receivable, net 22,296 19,976 26,455
Consumer Loan fees
receivable, net 24,551 6,026 6,775
Inventory, net 87,891 70,275 90,373
Deferred tax asset 18,228 23,319 18,125
Federal income tax
receivable 2,391 1,427 -
Prepaid expenses
and other assets 34,443 20,045 30,611
------ ------ ------
Total current assets 383,602 319,326 356,237
Investments in
unconsolidated
affiliates 120,056 112,364 120,319
Property and
equipment, net 95,046 70,105 78,498
Goodwill 320,692 143,404 173,206
Intangible assets, net 38,904 16,122 19,790
Non-current consumer
loans, net 52,740 - -
Other assets, net 18,129 7,572 8,400
Total assets $1,029,169 $668,893 $756,450
========== ======== ========
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable
and other accrued
expenses $75,865 $44,754 $57,400
Current maturities
of long-term
debt 7,224 10,000 -
Customer layaway
deposits 7,193 6,844 6,176
Federal income
taxes payable - - 693
--- --- ---
Total current liabilities 90,282 61,598 64,269
Long-term debt, less
current maturities 125,131 10,000 17,500
Deferred tax liability 9,507 1,192 8,331
Deferred gains and
other long-term
liabilities 14,423 2,314 2,102
Total liabilities 239,343 75,104 92,202
EZCORP, Inc.
stockholders' equity 755,718 593,789 664,248
Noncontrolling
interest 34,108 - -
Total stockholders' equity 789,826 593,789 664,248
Total liabilities and stockholders'
equity $1,029,169 $668,893 $756,450
========== ======== ========
EZCORP, Inc.
Operating Segment Results (Unaudited)
(In thousands)
Three Months Ended March 31, 2012
---------------------------------
U.S. & Canada Latin America Other Consolidated
International
-------------
Revenues:
Merchandise
sales $85,498 $9,499 $ - $94,997
Jewelry
scrapping
sales 49,414 3,761 - 53,175
Pawn service
charges 50,505 5,939 - 56,444
Consumer loan
fees 42,806 7,383 130 50,319
Other 1,219 124 - 1,343
-----
Total revenues 229,442 26,706 130 256,278
-
Merchandise cost of goods sold 50,499 5,381 - 55,880
Jewelry scrapping cost of goods sold 29,537 2,773 - 32,310
Consumer loan bad debt 5,878 508 80 6,466
----- --- --- -----
Net revenues 143,528 18,044 50 161,622
Operating expenses:
Store operations 68,890 8,211 168 77,269
Administrative 5,424 4,334 2 9,760
Depreciation 3,382 842 14 4,238
Amortization 142 1,555 - 1,697
Loss on sale/disposal of assets 25 2 - 27
Interest, net - 1,769 - 1,769
Equity in net income of unconsolidated
affiliates - - (4,577) (4,577)
Other 791 11 - 802
--- --- --- ---
Segment contribution $64,874 $1,320 $4,443 $70,637
Corporate expenses 13,394
------
Income before taxes 57,243
Income tax expense 19,870
------
Net income $37,373
Net income attributable to noncontrolling
interest 112
---
Net income attributable to EZCORP, Inc. $37,261
=======
EZCORP, Inc.
Operating Segment Results (Unaudited)
(In thousands)
Three Months Ended March 31, 2011
---------------------------------
U.S. & Canada Latin America Other Consolidated
International
-------------
Revenues:
Merchandise
sales $72,420 $5,353 $ - $77,773
Jewelry
scrapping
sales 44,351 3,644 - 47,995
Pawn service
charges 43,073 3,696 - 46,769
Consumer loan
fees 40,472 - - 40,472
Other 220 25 - 245
-----
Total revenues 200,536 12,718 - 213,254
-
Merchandise cost of goods sold 41,484 3,155 - 44,639
Jewelry scrapping cost of goods sold 28,848 3,077 - 31,925
Consumer loan bad debt 5,740 - - 5,740
----- --- --- -----
Net revenues 124,464 6,486 - 130,950
Operating expenses:
Store operations 61,196 4,849 - 66,045
Administrative 4,407 1,079 27 5,513
Depreciation 2,764 578 - 3,342
Amortization 121 100 - 221
Gain on sale/disposal of assets (178) - - (178)
Interest, net - 1 - 1
Equity in net income of unconsolidated
affiliates - - (4,691) (4,691)
Other 3 1 - 4
--- --- --- ---
Segment contribution $56,151 $(122) $4,664 $60,693
Corporate expenses 11,411
------
Income before taxes 49,282
Income tax expense 17,444
------
Net income $31,838
Net income attributable to noncontrolling
interest -
---
Net income attributable to EZCORP, Inc. $31,838
=======
EZCORP, Inc.
Operating Segment Results (Unaudited)
(In thousands)
Six Months Ended March 31, 2012
-------------------------------
U.S. & Canada Latin America Other Consolidated
International
-------------
Revenues:
Merchandise
sales $162,050 $19,841 $ - $181,891
Jewelry
scrapping
sales 102,280 7,298 - 109,578
Pawn service
charges 104,875 11,361 - 116,236
Consumer loan
fees 87,818 7,383 206 95,407
Other 1,795 244 - 2,039
-----
Total revenues 458,818 46,127 206 505,151
-
Merchandise cost of goods sold 93,950 10,326 - 104,276
Jewelry scrapping cost of goods sold 62,687 5,047 - 67,734
Consumer loan bad debt 16,768 508 215 17,491
------ --- --- ------
Net revenues 285,413 30,246 (9) 315,650
Operating expenses:
Store operations 137,215 14,209 346 151,770
Administrative 11,871 5,629 422 17,922
Depreciation 6,499 1,522 36 8,057
Amortization 272 1,652 - 1,924
(Gain)/loss on sale/disposal of assets (175) 1 - (174)
Interest, net 4 1,733 - 1,737
Equity in net income of unconsolidated
affiliates - - (8,738) (8,738)
Other (269) 16 (64) (317)
---- --- --- ----
Segment contribution $129,996 $5,484 $7,989 $143,469
Corporate expenses 26,735
------
Income before taxes 116,734
Income tax expense 40,009
------
Net income $76,725
Net income attributable to noncontrolling
interest 112
---
Net income attributable to EZCORP, Inc. $76,613
=======
EZCORP, Inc.
Operating Segment Results (Unaudited)
(In thousands)
Six Months Ended March 31, 2011
-------------------------------
U.S. & Canada Latin America Other Consolidated
International
-------------
Revenues:
Merchandise
sales $138,725 $10,928 $ - $149,653
Jewelry
scrapping
sales 91,554 7,106 - 98,660
Pawn service
charges 89,509 7,070 - 96,579
Consumer loan
fees 86,782 - - 86,782
Other 378 28 - 406
-----
Total revenues 406,948 25,132 - 432,080
-
Merchandise cost of goods sold 79,681 6,269 - 85,950
Jewelry scrapping cost of goods sold 58,465 5,715 - 64,180
Consumer loan bad debt 16,768 - - 16,768
------ --- --- ------
Net revenues 252,034 13,148 - 265,182
Operating Expenses:
Store operations 121,422 9,127 - 130,549
Administrative 9,810 2,016 52 11,878
Depreciation 5,366 1,084 - 6,450
Amortization 236 197 - 433
(Gain)/loss on sale/disposal of assets (172) 1 - (171)
Interest, net - 2 - 2
Equity in net income of unconsolidated
affiliates - - (8,058) (8,058)
Other 3 1 (61) (57)
--- --- --- ---
Segment contribution $115,369 $720 $8,067 $124,156
Corporate expenses 32,339
------
Income before taxes 91,817
Income tax expense 32,550
------
Net income $59,267
Net income attributable to noncontrolling
interest -
---
Net income attributable to EZCORP, Inc. $59,267
=======
EZCORP, Inc.
Store Count Activity
Three Months Ended March 31, 2012
---------------------------------
Company-owned Stores Franchises
-------------------- ----------
U.S. & Canada Latin America Other Consolidated
International
-------------
Beginning of
period 950 192 - 1,142 12
De novo 8 13 21 -
Acquired 15 45 60 -
Sold, combined or closed (3) (3) -
End of period 970 250 - 1,220 12
--- --- --- ----- ---
Six Months Ended March 31, 2012
-------------------------------
Company-owned Stores Franchises
-------------------- ----------
U.S. & Canada Latin America Other Consolidated
International
-------------
Beginning of
period 933 178 - 1,111 13
De novo 8 27 35 -
Acquired 40 45 85 -
Sold, combined or closed (11) (11) (1)
End of period 970 250 - 1,220 12
--- --- --- ----- ---
Reconciliation of GAAP to Non-GAAP Results (Unaudited)
(in thousands, except per share data)
The following tables provide a reconciliation of the differences between the reported or
projected non-GAAP financial measures for the periods indicated and the most comparable
GAAP financial measures. The non-GAAP financial measures presented may not be directly
comparable to similarly titled measures reported by other companies and their usefulness for
such purposes are therefore limited. EZCORP management believes presentation of the non-
GAAP financial measures enhances investors' ability to analyze the Company's operating
results. However, non-GAAP financial measures are not an alternative to GAAP financial
measures and should be read only in conjunction with financial measures presented on a GAAP
basis.
Six Months Ended March 31, 2012 Six Months Ended March 31, 2011
------------------------------- -------------------------------
Non-GAAP Non-GAAP
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
---- ----------- -------- ---- ----------- --------
Net revenue $315,650 - $315,650 $265,182 - $265,182
Operations
expense 151,770 - 151,770 130,549 - 130,549
Administrative
expense 41,064 - 41,064 41,871 (10,945) 30,926
Depreciation
and
amortization 12,514 - 12,514 8,645 - 8,645
(Gain) / loss
on sale/
disposal of
assets (174) - (174) (171) - (171)
---- --- ---- ---- --- ----
Operating
income 110,476 - 110,476 84,288 10,945 95,233
Interest
income (353) - (353) (14) - (14)
Interest
expense 3,150 - 3,150 600 - 600
Equity in net
income of
unconsolidated
affiliates (8,738) - (8,738) (8,058) - (8,058)
Other (317) - (317) (57) - (57)
---- --- ---- --- --- ---
Income before
income taxes 116,734 - 116,734 91,817 10,945 102,762
Income tax
expense 40,009 - 40,009 32,550 3,831 36,381
Net income 76,725 - 76,725 59,267 7,114 66,381
------ --- ------ ------ ----- ------
Attributable
to
noncontrolling
interest 112 - 112 - - -
Net income
attributable
to EZCORP,
Inc. $76,613 $ - $76,613 $59,267 $7,114 $66,381
======= ==================== ======= ======= ====== =======
Net income per
share,
diluted $1.51 $ - $1.51 $1.18 $0.14 $1.32
===== ================== ===== ===== ===== =====
Weighted
average
shares,
diluted 50,887 - 50,887 50,243 - 50,243
SOURCE EZCORP, Inc.
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