Ezcorp Inc (EZPW) 10-Q Quarterly Report May 2019

All amounts in this release are from EZCORP continuing operations and in conformity with U.S. generally accepted accounting principles ("GAAP") unless otherwise noted. Comparisons shown in this release are to the same period in the prior year unless otherwise noted.

HIGHLIGHTS FOR SECOND QUARTER OF FISCAL 2019


•	Strong revenue growth, up 6% to $214.7 million, reflects the company's long-standing focus on best meeting customers' need for cash. Growth in pawn loans outstanding (PLO), pawn service charges (PSC) and merchandise sales in U.S. and Latin America pawn segments contributed to improvement in key pawn operating metrics during the quarter.


–	PLO, the most influential driver of revenue and profitability, expanded 9% to $173.1 million, and PSC rose 10% to $81.8 million.


–	U.S. Pawn segment same store PLO and PSC each rose 5%, driving total ending PLO of $130.6 million and PSC of $61.8 million.


–	Latin America Pawn total PLO grew 20% to $42.6 million (up 27% to $44.7 million on a constant currency basis¹). Same store PLO increased 4% (9% higher on a constant currency basis). PSC rose 33% to $20.0 million (increasing 37% to $20.6 million on a constant currency basis).


•	Income before tax of $5.0 million and diluted earnings per share of $0.06 were each down 71%, impacted by non-cash charges of $6.5 million as well as growth investments and other discrete costs. Excluding those items and adjusting for constant currency, adjusted² income before tax was $16.6 million, down 10%, and adjusted diluted earnings per share was flat to the prior-year quarter at $0.22.


•	The company continued investing to sustain strong competitive advantages, including ongoing progress on developing a new customer-centric digital platform, predictive product and customer analytics, and upgrading its point-of-sale and other systems. Capital and other expenditures related directly to growth initiatives totaled $7.0 million in the quarter.


•	Cash and cash equivalents ended the current quarter at $347.8 million, providing liquidity to retire the $195.0 million cash convertible notes due in June 2019 and continue investment in the company's growth. Fiscal year-to-date operating cash flow increased 11% to $50.6 million and the company collected another $14.6 million of principal under the Alpha Credit / Grupo Finmart notes receivable.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Stuart Grimshaw commented, "Fundamental trends remain healthy, with strong PLO growth driving accelerated revenue for the quarter compared to prior year levels. Rising demand for pawn loans and stable yields bode well for the near-term trajectory of PSC, while our proactive investing initiatives centered on digital engagement and data analytics position us well to increasingly differentiate our services and enhance profitable client acquisition and retention over time.

“As our liquidity and free cash flow continue to build, we maintain financial flexibility to de-lever the balance sheet and enhance our organic growth through incremental acquisitions, assuming our strict strategic and financial criteria are met. We remain committed to delivering accretive, sustainable growth - regardless of the broader economic environment - across multiple avenues to drive long-term shareholder value.”

The following information was filed by Ezcorp Inc (EZPW) on Wednesday, May 8, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Ezcorp Inc's 10-Q Quarterly Report:

Revenue - Product Highlight
Jewelry scrapping sales gross profit remained relatively flat at 1% of current quarter net revenues, in line with our strategy to sell rather than scrap jewelry, with a 300 basis point decline in gross margin to 17% which includes a nominal decline in gold prices.

Revenue - Product Highlight
Jewelry scrapping sales gross profit remained relatively flat at 1% of net revenues, in line with our strategy to sell rather than scrap jewelry, with a 400 basis point decline in gross margin to 16% which includes a nominal decline in gold prices.
Other - Other Highlight
Important risk factors that could cause results or events to differ from current expectations are identified and described in "Part I, Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended September 30, 2018, supplemented by those described in "Part II, Item 1A - Risk Factors" of this Quarterly Report.
Legal - Other Highlight
Actual results could differ materially from those expressed or implied by the forward-looking statements due to a number of risks, uncertainties and other factors, including those identified in "Part I, Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended September 30, 2018, as supplemented by the information set forth in "Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk" and "Part II, Item 1 - Legal Proceedings" of this Quarterly Report.
Revenue - Product Highlight
A 3% increase in net revenue turned into a flat segment contribution primarily as a result of a $2.9 million reserve against a receivable balance from a gold refiner deemed uncollectible due to the refiner's Chapter 11 bankruptcy, in addition to a 3% increase in operations expense primarily due to wage inflation and increases to staffing levels in meeting the loan demand of our customers.
Other - Other
The higher average loan balance...Read more
Financial - Expense
Administrative expenses increased $3.1 million,...Read more
Financial - Expense
Administrative expenses increased $5.3 million,...Read more
Financial - Shares
Segment contribution decreased primarily due...Read more
Financial - Expense
Operations expense increased 21% (25%...Read more
Revenue - Product
36 36 Change in Net...Read more
Financial - Cash Flow
Sources and Uses of Cash...Read more
Revenue - Geography
Most of our customers in...Read more
Revenue - Geography
As a result of these...Read more
Financial - Debt
Effective interest rates on our...Read more
Financial - Debt
Effective interest rates on our...Read more
Revenue - Product
As a result of these...Read more
Revenue - Product
As a result, merchandise sales...Read more
Other - Other
The net effect of these...Read more
Financial - Expense
Operations expense increased 4% primarily...Read more
Other - Other
The average ending monthly pawn...Read more
Other - Other
The average ending monthly pawn...Read more
Revenue - Product
Merchandise sales increased 22% (25%...Read more
Revenue - Geography
37 37 Latin America Pawn...Read more
Revenue - Geography
31 31 Latin America Pawn...Read more
Revenue - Product
Change in Net Revenue Pawn...Read more
Financial - Income
Income tax expense decreased $3.6...Read more
Revenue - Product
Change in Net Revenue Pawn...Read more
Financial - Expense
Operations expense increased 22% (27%...Read more
Financial - Cash Flow
The increase in cash flows...Read more
Other - Other
A portion of the year-over-year...Read more
Revenue - Geography
These items include the net...Read more
Revenue - Geography
These items include the net...Read more
Other - Other
This non-GAAP financial information may...Read more
Revenue - Geography
Due partly to regulatory changes...Read more
Revenue - Geography
Due partly to regulatory changes...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Ezcorp Inc provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Ticker: EZPW
CIK: 876523
Form Type: 10-Q Quarterly Report
Accession Number: 0000876523-19-000025
Submitted to the SEC: Wed May 08 2019 12:27:06 PM EST
Accepted by the SEC: Wed May 08 2019
Period: Sunday, March 31, 2019
Industry: Retail Miscellaneous Retail