Ezcorp Inc (EZPW) 10-Q Quarterly Report July 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 THIRD QUARTER OF FISCAL 2019

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Total revenues for the quarter were up 1% to $202.5 million. Included in the GAAP results is a discrete $6.1 million adjustment in Latin America to correct the calculation of certain transaction tax liabilities in prior periods ($4.6 million of which reduced merchandise sales and $1.5 million of which increased interest expense). Adjusted¹total revenues increased 4% to $206.9 million, driven by continued growth in key pawn operating metrics including pawn loans outstanding (PLO), pawn service charges (PSC) and merchandise sales, across U.S. and Latin America.

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Income before tax was $3.5 million, down 78%, and diluted earnings per share were $0.06, down 76%. These year-over-year comparisons were impacted primarily by a favorable litigation settlement in the prior-year quarter, the inclusion in the current quarter of costs related to certain growth investments, and other discrete items. Excluding those items and adjusting for constant currency², adjusted income before tax was $15.0 million, up 16%, and adjusted diluted earnings per share were $0.18, up 13%.

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Cash and cash equivalents ended the current quarter at $138.9 million, after the retirement of $195.0 million of convertible notes in June 2019 using cash on hand and continued investment in growth initiatives. During the quarter, the company completed the acquisition of seven pawn stores in Nevada for $7.0 million and collected another $7.3 million of principal under the Alpha Credit / Grupo Finmart notes.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Stuart Grimshaw commented, "Current quarter activities delivered solid operating results highlighted by ongoing momentum across all geographies. Steady growth in PLO and slightly improving yields, reflecting the health of the loan balance, drove strong growth in our primary net revenue component, PSC. On an adjusted basis, EBITDA and EPS growth accelerated as a result of rising operating leverage during the quarter.

“We remain focused on longer-term strategic initiatives centered on best serving our customers’ need for cash, expanding our footprint both here in the U.S. and across Latin America via de novo store growth and capitalizing on higher-return M&A opportunities, and proactively investing in differentiated digital engagement and data analytics programs. We are doing this while maintaining financial flexibility to fund growth to enhance long-term shareholder value. Focusing on efficient and effective capital deployment, we recently acquired seven pawn stores expanding our presence in Nevada, opened four Latin America de novo stores in the quarter and retired a material tranche of convertible debt with cash on hand.”

The following information was filed by Ezcorp Inc (EZPW) on Wednesday, July 31, 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
36 36 Jewelry scrapping sales gross profit remained relatively flat at 2% of net revenues, but down 20% from the prior year-to-date period, in line with our strategy to sell rather than scrap jewelry, with a 100 basis point decline in gross margin to 16%.

Financial - Earnings Highlight
39 39 Other Items The following table reconciles our consolidated segment contribution discussed above to net income attributable to EZCORP, Inc., including items that affect our consolidated financial results but are not allocated among segments: Segment contribution decreased primarily due to a $19.7 million impairment of our investment in Cash Converters International, a $2.9 million charge included in our ordinary estimated share of earnings from Cash Converters International for charges relating to settlement of a Queensland class action litigation in October 2018 and the impact of a $6.1 million discrete transaction tax adjustment in our Latin America Pawn segment, partially offset by improved operating performance in our U.S. Pawn segment.
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.
Revenue - Geography Highlight
As a result of these factors and foreign currency impacts, merchandise sales gross profit was down 59% to $2.6 million (56% to $2.8 million on a constant currency basis).
Other - 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 1A - Risk Factors" of this Quarterly Report.
Financial - Expense
Higher store labor costs and...Read more
Revenue - Product
Merchandise sales remained flat with...Read more
Revenue - Product
As a result of these...Read more
Other - Other
The higher average loan balance...Read more
Financial - Expense
Administrative expenses increased $7.1 million,...Read more
Financial - Expense
Administrative expenses increased $1.8 million,...Read more
Revenue - Product
A 3% increase in net...Read more
Financial - Expense
Reflecting more stores, higher labor,...Read more
Financial - Income
Interest income decreased $0.9 million,...Read more
Financial - Income
Interest income decreased $2.4 million,...Read more
Financial - Expense
We expect interest expense to...Read more
Financial - Expense
Reflecting more stores, higher labor,...Read more
Other - Other
The average ending monthly pawn...Read more
Financial - Cash Flow
Sources and Uses of Cash...Read more
Revenue - Product
Excluding the adjustment, merchandise sales...Read more
Revenue - Geography
Most of our customers in...Read more
Financial - Debt
Effective interest rates on our...Read more
Financial - Debt
Effective interest rates on our...Read more
Financial - Income
Segment loss was $23.2 million...Read more
Revenue - Product
Jewelry scrapping sales gross profit...Read more
Financial - Earnings
Margins were down as we...Read more
Revenue - Product
As a result, merchandise sales...Read more
Revenue - Product
Jewelry scrapping sales decreased 1%...Read more
Other - Other
The average ending monthly pawn...Read more
Financial - Cash Flow
Change in Cash and Cash...Read more
Revenue - Product
As a result, we leveraged...Read more
Revenue - Product
Merchandise sales decreased 4% (4%...Read more
Revenue - Geography
Latin America Pawn The following...Read more
Revenue - Geography
30 30 Latin America Pawn...Read more
Financial - Expense
We expect interest expense to...Read more
Revenue - Geography
Segment contribution decreased primarily due...Read more
Other - Other
The higher average loan balance...Read more
Financial - Expense
Operating expenses decreased as a...Read more
Financial - Cash Flow
The increase in cash flows...Read more
Revenue - Product
Net revenues decreased 3% (2%...Read more
Financial - Income
Income tax expense decreased $1.4...Read more
Revenue - Product
Excluding the discrete transaction tax...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: 0000876523-19-000044
Submitted to the SEC: Wed Jul 31 2019 12:52:44 PM EST
Accepted by the SEC: Wed Jul 31 2019
Period: Sunday, June 30, 2019
Industry: Retail Miscellaneous Retail