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EZCORP Reports Second Quarter Fiscal 2023 Results

Record Second Quarter Pawn Loans Outstanding and Sales Driving Strong Revenue Growth

EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn transactions in the United States and Latin America, today announced results for its second quarter ended March 31, 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.

SECOND QUARTER HIGHLIGHTS

  • Pawn loans outstanding (PLO) up 19% to $206.1 million.
  • Total revenue increased 20%, and gross profit increased 16%.
  • Merchandise sales gross margin remains within our targeted range at 36%.
  • Net loss of $6.8 million, was down from Net Income of $14.9 million, primarily driven by our $25.6 million share of the one-time, non-cash goodwill impairment and discrete adjustments recognized by Cash Converters International in its half-year period ended December 31, 2022.
  • Diluted loss per share of $0.12 was down from diluted earnings per share of $0.20. On an adjusted basis1, diluted earnings per share was $0.23, compared to $0.22 in the prior-year quarter.
  • Return on earning assets (ROEA) remains strong at 165%.

CEO COMMENTARY AND OUTLOOK

Lachie Given, Chief Executive Officer, stated, "We achieved record second quarter PLO and merchandise sales as we continue to execute our three-year plan, put in place at the end of fiscal 2020. The macro-economic environment continues to support increased core demand for our products and services, including providing our environmentally conscious consumers with a more sustainable way to shop. Our team's relentless commitment to serving our customers with passion and respect and to operational excellence in all that we do, continues to drive our strong operating and financial results.

"During the second quarter, we expanded our store footprint, opening 13 de novo stores. Two of these stores were opened in Las Vegas, the first under our newly acquired luxury brand Max Pawn, and the other under the core EZPAWN brand. We are very excited to be growing our presence in this important pawn market. The other 11 new stores were opened across LatAm – 8 in Mexico and 3 in Guatemala, where we are extending our market leadership, with 103 stores there.

“EZ+ Rewards, our loyalty program, continues to be very well received by our customers and has grown to 2.9 million members globally, an increase of 17% over the first quarter of 2023. We are extremely happy with the increases here and are working hard on strategies to win and retain more customers in all of the local communities in which we operate.

"We continue to believe that investing in our teams and technology is essential. To ensure the continuous improvement of our Field Teams' bench strength, we completed talent and succession processes for all global operations. In Latin America we are enhancing recruiting strategies and implementing development programs for Lead Pawnbrokers and Store Managers. In the US we launched a new SharePoint in store communications program, to enhance our daily program execution and performance management strategies across all stores. We have deployed store system and network upgrades to support digital initiatives and are building out our e-commerce capabilities in a disciplined way.

"During the quarter, we repurchased $3.9 million worth of EZCORP shares as part of the up to $50 million share repurchase program announced in the second quarter of fiscal 2022.

"Our focus on People, Pawn, and Passion, along with the disciplined execution of our enhanced operating model has yielded another quarter of strong results for our shareholders. We will continue to invest in our people and technology with the goal of serving more customers, more frequently, across more locations, in an environmentally sustainable way, to ultimately drive value to our shareholders," Given concluded.

CONSOLIDATED RESULTS

Three Months Ended March 31

As Reported

 

Adjusted1

in millions, except per share amounts

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Total revenues

$

258.4

 

 

$

216.0

 

 

$

253.8

 

 

$

216.0

 

Gross profit

$

149.2

 

 

$

128.9

 

 

$

146.7

 

 

$

128.9

 

(Loss) income before tax

$

(7.3

)

 

$

20.1

 

 

$

24.0

 

 

$

22.3

 

Net (loss) income

$

(6.8

)

 

$

14.9

 

 

$

17.0

 

 

$

16.7

 

Diluted (loss) earnings per share

$

(0.12

)

 

$

0.20

 

 

$

0.23

 

 

$

0.22

 

EBITDA (non-GAAP measure)

$

2.1

 

 

$

29.8

 

 

$

33.3

 

 

$

32.1

 

  • Diluted loss per share was $0.12, down from diluted earnings per share of $0.20. On an adjusted basis, diluted earnings per share were $0.23, up from $0.22. The primary difference between GAAP and Adjusted financial results is attributable to our share of the previously announced one-time, non-cash goodwill impairment recognized by Cash Converters International in its half-year period ended December 31 2022.
  • Loss before taxes was $7.3 million, down from profit before taxes of $20.1 million, while adjusted EBITDA increased 4% to $33.3 million.
  • PLO increased 19% to $206.1 million, up $32.5 million. On a same-store basis2, PLO increased 16% due to increased loan demand, reflecting continuing growth.
  • Total revenues increased 20% and gross profit increased 16%, reflecting improved pawn service charge (PSC) revenue, merchandise sales and merchandise sales gross profit.
  • PSC increased 21% as a result of higher average PLO and yields.
  • Merchandise sales gross margin remains within our targeted range at 36%. Aged general merchandise has increased to 2.2% of total general merchandise inventory.
  • Net inventory increased 25%, reflecting a return towards normalized inventory levels. Inventory turnover remained strong at 2.8x for the quarter, down from 2.9x.
  • Store expenses increased 18%, primarily due to increased labor in-line with store activity, higher store count and, to a lesser extent, expenses related to our loyalty program. On a same-store basis, store expenses increased 12%. General and administrative expenses increased 28%, primarily due to the reversal of incentive compensation for the departed CEO in the prior period and, to a lesser extent, increase in accrued incentive compensation.
  • Cash and cash equivalents at the end of the quarter was $243.1 million, down 5% year-over-year. The decrease was primarily due to the increase in PLO and inventory, the acquisition of new stores, and strategic investments, partially offset by the net cash proceeds associated with the convertible debt refinancing.

SEGMENT RESULTS

U.S. Pawn

  • PLO ended the quarter at $157.0 million, up 18% or 14% on a same store basis.
  • Total revenue was up 16% and gross profit increased 11%, reflecting increased PSC and higher merchandise sales.
  • PSC increased 19% as a result of higher average PLO.
  • Merchandise sales gross margin decreased to 38% from 41%, reflecting a more normalized operating environment. Aged general merchandise increased to 1.4% of total general merchandise inventory primarily driven by recent acquisitions.
  • Net inventory increased 20% reflecting a return towards normalized inventory levels. Inventory turnover remained flat at 2.6x.
  • Store expenses increased 12%, 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 12% to $37.8 million.
  • Segment store count increased by 2 de novo stores during the quarter.

Latin America Pawn

  • PLO improved to $49.1 million, up 22% (14% on constant currency basis). On a same store basis, PLO increased 19% (12% on a constant currency basis).
  • Total revenue was up 30% (22% on constant currency basis) and gross profit increased 32% (23% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
  • PSC increased 29% (21% on a constant currency basis) as a result of higher average PLO and yield.
  • Merchandise sales gross margin increased from 29% to 32%. Aged general merchandise inventory increased to 3.2% from 1.0% of total merchandise inventory.
  • Net inventory increased 44% (33% on a constant currency basis), reflecting a return towards normalized inventory levels. Inventory turnover remains strong at 3.5x, down from 3.8x.
  • Store expenses increased 38% (29% on a constant currency basis), primarily due to increased labor in-line with store activity and higher store count. Same-store expenses increased 32% (24% on a constant currency basis).
  • Segment contribution increased 68% (57% on a constant currency basis) to $8.0 million. On an adjusted basis, segment contribution was up 10% to $5.4 million, with the primary adjustment being the reversal of contingent consideration liability in connection with a previously completed acquisition.
  • Segment store count increased by 11 de novo stores during the quarter.

FORM 10-Q

EZCORP’s Quarterly Report on Form 10-Q for the quarter ended March 31, 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, May 4, 2023, at 8:00 am Central Time to discuss Second Quarter Fiscal 2023 results. Analysts and institutional investors may participate on the conference call by dialing (833) 470-1428, Conference ID: 721380, 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

March 31,

 

Six Months Ended

March 31,

(in thousands, except per share amounts)

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

 

 

Merchandise sales

$

152,507

 

 

$

133,556

 

 

$

316,294

 

 

$

271,276

 

Jewelry scrapping sales

 

12,825

 

 

 

5,690

 

 

 

20,709

 

 

 

12,634

 

Pawn service charges

 

93,030

 

 

 

76,683

 

 

 

185,623

 

 

 

152,708

 

Other revenues, net

 

61

 

 

 

53

 

 

 

124

 

 

 

358

 

Total revenues

 

258,423

 

 

 

215,982

 

 

 

522,750

 

 

 

436,976

 

Merchandise cost of goods sold

 

97,339

 

 

 

82,246

 

 

 

202,216

 

 

 

165,357

 

Jewelry scrapping cost of goods sold

 

11,902

 

 

 

4,808

 

 

 

18,855

 

 

 

10,580

 

Gross profit

 

149,182

 

 

 

128,928

 

 

 

301,679

 

 

 

261,039

 

Operating expenses:

 

 

 

 

 

 

 

Store expenses

 

101,269

 

 

 

85,743

 

 

 

202,072

 

 

 

172,514

 

General and administrative

 

15,609

 

 

 

12,227

 

 

 

31,085

 

 

 

27,772

 

Depreciation and amortization

 

7,963

 

 

 

7,450

 

 

 

15,951

 

 

 

15,024

 

Loss (gain) on sale or disposal of assets

 

73

 

 

 

(697

)

 

 

57

 

 

 

(692

)

Other

 

(2,465

)

 

 

 

 

 

(2,465

)

 

 

 

Total operating expenses

 

122,449

 

 

 

104,723

 

 

 

246,700

 

 

 

214,618

 

Operating income

 

26,733

 

 

 

24,205

 

 

 

54,979

 

 

 

46,421

 

Interest expense

 

3,390

 

 

 

2,527

 

 

 

9,580

 

 

 

4,958

 

Interest income

 

(1,898

)

 

 

(255

)

 

 

(2,562

)

 

 

(559

)

Equity in net loss of unconsolidated affiliates

 

32,501

 

 

 

1,439

 

 

 

30,917

 

 

 

301

 

Other expense (income)

 

80

 

 

 

371

 

 

 

(154

)

 

 

251

 

(Loss) income before income taxes

 

(7,340

)

 

 

20,123

 

 

 

17,198

 

 

 

41,470

 

Income (benefit) tax expense

 

(550

)

 

 

5,236

 

 

 

7,210

 

 

 

10,862

 

Net (loss) income

$

(6,790

)

 

$

14,887

 

 

$

9,988

 

 

$

30,608

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

(0.12

)

 

$

0.26

 

 

$

0.18

 

 

$

0.54

 

Diluted earnings per share

$

(0.12

)

 

$

0.20

 

 

$

0.11

 

 

$

0.42

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

55,648

 

 

 

56,561

 

 

 

55,981

 

 

 

56,370

 

Weighted-average diluted shares outstanding

 

55,648

 

 

 

82,407

 

 

 

65,269

 

 

 

82,270

 

EZCORP, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

(in thousands, except share and per share amounts)

March 31,

2023

 

March 31,

2022

 

September 30,

2022

 

 

 

 

 

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

243,128

 

 

$

254,964

 

 

$

206,028

 

Restricted cash

 

8,451

 

 

 

8,713

 

 

 

8,341

 

Pawn loans

 

206,096

 

 

 

173,618

 

 

 

210,009

 

Pawn service charges receivable, net

 

33,116

 

 

 

28,319

 

 

 

33,476

 

Inventory, net

 

150,297

 

 

 

119,890

 

 

 

151,615

 

Prepaid expenses and other current assets

 

45,564

 

 

 

27,267

 

 

 

34,694

 

Total current assets

 

686,652

 

 

 

612,771

 

 

 

644,163

 

Investments in unconsolidated affiliates

 

10,681

 

 

 

42,002

 

 

 

37,733

 

Other investments

 

39,220

 

 

 

18,000

 

 

 

24,220

 

Property and equipment, net

 

59,775

 

 

 

50,874

 

 

 

56,725

 

Right-of-use asset, net

 

234,287

 

 

 

204,343

 

 

 

221,405

 

Goodwill

 

300,078

 

 

 

286,214

 

 

 

286,828

 

Intangible assets, net

 

59,620

 

 

 

62,145

 

 

 

56,819

 

Notes receivable, net

 

1,233

 

 

 

1,198

 

 

 

1,215

 

Deferred tax asset, net

 

19,127

 

 

 

15,908

 

 

 

12,145

 

Other assets

 

9,859

 

 

 

6,541

 

 

 

6,625

 

Total assets

$

1,420,532

 

 

$

1,299,996

 

 

$

1,347,878

 

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

72,695

 

 

$

69,695

 

 

$

84,509

 

Customer layaway deposits

 

18,761

 

 

 

15,046

 

 

 

16,023

 

Operating lease liabilities, current

 

53,921

 

 

 

52,446

 

 

 

52,334

 

Total current liabilities

 

145,377

 

 

 

137,187

 

 

 

152,866

 

Long-term debt, net

 

359,287

 

 

 

312,168

 

 

 

312,903

 

Deferred tax liability, net

 

368

 

 

 

179

 

 

 

373

 

Operating lease liabilities

 

191,874

 

 

 

163,506

 

 

 

180,756

 

Other long-term liabilities

 

11,038

 

 

 

11,940

 

 

 

8,749

 

Total liabilities

 

707,944

 

 

 

624,980

 

 

 

655,647

 

Commitments and Contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A Non-voting Common Stock, par value $0.01 per share; shares authorized: 100 million; issued and outstanding: 52,561,071 as of March 31, 2023; 53,685,333 as of March 31, 2022; and 53,454,885 as of September 30, 2022

 

526

 

 

 

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

 

343,088

 

 

 

341,913

 

 

 

345,330

 

Retained earnings

 

405,961

 

 

 

384,246

 

 

 

402,006

 

Accumulated other comprehensive loss

 

(37,017

)

 

 

(51,710

)

 

 

(55,669

)

Total equity

 

712,588

 

 

 

675,016

 

 

 

692,231

 

Total liabilities and equity

$

1,420,532

 

 

$

1,299,996

 

 

$

1,347,878

 

EZCORP, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended

March 31,

(in thousands)

2023

 

2022

 

 

Operating activities:

 

 

 

Net income

$

9,988

 

 

$

30,608

 

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

 

 

 

Depreciation and amortization

 

15,951

 

 

 

15,024

 

Amortization of debt discount and deferred financing costs

 

736

 

 

 

698

 

Non-cash lease expense

 

27,546

 

 

 

25,746

 

Deferred income taxes

 

(6,987

)

 

 

212

 

Other adjustments

 

(2,386

)

 

 

(708

)

Provision for inventory reserve

 

280

 

 

 

(1,780

)

Stock compensation expense

 

3,741

 

 

 

2,158

 

Equity in net loss of unconsolidated affiliates

 

30,917

 

 

 

301

 

Net loss on extinguishment of debt

 

3,545

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Service charges and fees receivable

 

1,357

 

 

 

687

 

Inventory

 

(2,306

)

 

 

(2,779

)

Prepaid expenses, other current assets and other assets

 

(3,639

)

 

 

88

 

Accounts payable, accrued expenses and other liabilities

 

(43,969

)

 

 

(50,258

)

Customer layaway deposits

 

1,426

 

 

 

2,342

 

Income taxes

 

8,852

 

 

 

6,576

 

Dividends from unconsolidated affiliates

 

1,775

 

 

 

1,660

 

Net cash provided by operating activities

 

46,827

 

 

 

30,575

 

Investing activities:

 

 

 

Loans made

 

(378,717

)

 

 

(329,459

)

Loans repaid

 

230,604

 

 

 

199,836

 

Recovery of pawn loan principal through sale of forfeited collateral

 

171,504

 

 

 

129,311

 

Capital expenditures, net

 

(18,439

)

 

 

(10,498

)

Acquisitions, net of cash acquired

 

(12,968

)

 

 

 

Issuance of notes receivable

 

(15,500

)

 

 

(1,000

)

Investment in unconsolidated affiliates

 

(2,133

)

 

 

(3,577

)

Investment in other investments

 

(15,000

)

 

 

(16,500

)

Net cash used in investing activities

 

(40,649

)

 

 

(31,887

)

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

 

(10,978

)

 

 

 

Net cash provided by (used in) financing activities

 

29,976

 

 

 

(792

)

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

 

1,056

 

 

 

2,157

 

Net increase in cash, cash equivalents and restricted cash

 

37,210

 

 

 

53

 

Cash, cash equivalents and restricted cash at beginning of period

 

214,369

 

 

 

263,624

 

Cash, cash equivalents and restricted cash at end of period

$

251,579

 

 

$

263,677

 

EZCORP, Inc.

OPERATING SEGMENT RESULTS

 

 

 

Three Months Ended March 31, 2023

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America

Pawn

 

Other

Investments

 

Total Segments

 

Corporate

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

108,740

 

 

$

43,767

 

 

$

 

 

$

152,507

 

 

$

 

 

$

152,507

 

Jewelry scrapping sales

 

9,814

 

 

 

3,011

 

 

 

 

 

 

12,825

 

 

 

 

 

 

12,825

 

Pawn service charges

 

69,945

 

 

 

23,085

 

 

 

 

 

 

93,030

 

 

 

 

 

 

93,030

 

Other revenues

 

32

 

 

 

19

 

 

 

10

 

 

 

61

 

 

 

 

 

 

61

 

Total revenues

 

188,531

 

 

 

69,882

 

 

 

10

 

 

 

258,423

 

 

 

 

 

 

258,423

 

Merchandise cost of goods sold

 

67,643

 

 

 

29,696

 

 

 

 

 

 

97,339

 

 

 

 

 

 

97,339

 

Jewelry scrapping cost of goods sold

 

8,550

 

 

 

3,352

 

 

 

 

 

 

11,902

 

 

 

 

 

 

11,902

 

Other cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

112,338

 

 

 

36,834

 

 

 

10

 

 

 

149,182

 

 

 

 

 

 

149,182

 

Store expenses

 

71,946

 

 

 

29,323

 

 

 

 

 

 

101,269

 

 

 

 

 

 

101,269

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

15,609

 

 

 

15,609

 

Depreciation and amortization

 

2,560

 

 

 

2,332

 

 

 

 

 

 

4,892

 

 

 

3,071

 

 

 

7,963

 

Loss (gain) loss on sale or disposal of assets

 

81

 

 

 

(8

)

 

 

 

 

 

73

 

 

 

 

 

 

73

 

Other

 

 

 

 

(2,465

)

 

 

 

 

 

(2,465

)

 

 

 

 

 

(2,465

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

3,390

 

 

 

3,390

 

Interest income

 

(1

)

 

 

(298

)

 

 

 

 

 

(299

)

 

 

(1,599

)

 

 

(1,898

)

Equity in net loss of unconsolidated affiliates

 

 

 

 

 

 

 

32,501

 

 

 

32,501

 

 

 

 

 

 

32,501

 

Other (income) expense

 

 

 

 

(46

)

 

 

6

 

 

 

(40

)

 

 

120

 

 

 

80

 

Segment contribution (loss)

$

37,752

 

 

$

7,996

 

 

$

(32,497

)

 

$

13,251

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

13,251

 

 

$

(20,591

)

 

$

(7,340

)

 

Three Months Ended March 31, 2022

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America

Pawn

 

Other

Investments

 

Total Segments

 

Corporate

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

100,064

 

$

33,492

 

 

$

 

 

$

133,556

 

 

$

 

 

$

133,556

 

Jewelry scrapping sales

 

3,480

 

 

 

2,210

 

 

 

 

 

 

5,690

 

 

 

 

 

 

5,690

 

Pawn service charges

 

58,772

 

 

 

17,911

 

 

 

 

 

 

76,683

 

 

 

 

 

 

76,683

 

Other revenues

 

24

 

 

 

 

 

 

29

 

 

 

53

 

 

 

 

 

 

53

 

Total revenues

 

162,340

 

 

 

53,613

 

 

 

29

 

 

 

215,982

 

 

 

 

 

 

215,982

 

Merchandise cost of goods sold

 

58,613

 

 

 

23,633

 

 

 

 

 

 

82,246

 

 

 

 

 

 

82,246

 

Jewelry scrapping cost of goods sold

 

2,798

 

 

 

2,010

 

 

 

 

 

 

4,808

 

 

 

 

 

 

4,808

 

Gross profit

 

100,929

 

 

 

27,970

 

 

 

29

 

 

 

128,928

 

 

 

 

 

 

128,928

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

64,492

 

 

 

21,251

 

 

 

 

 

 

85,743

 

 

 

 

 

 

85,743

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

12,227

 

 

 

12,227

 

Depreciation and amortization

 

2,625

 

 

 

1,891

 

 

 

 

 

 

4,516

 

 

 

2,934

 

 

 

7,450

 

Gain on sale of disposal of assets and other

 

 

 

 

(9

)

 

 

 

 

 

(9

)

 

 

(688

)

 

 

(697

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

2,527

 

 

 

2,527

 

Interest income

 

 

 

 

(255

)

 

 

 

 

 

(255

)

 

 

 

 

 

(255

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

 

1,439

 

 

 

1,439

 

 

 

 

 

 

1,439

 

Other (income) expense

 

 

 

 

334

 

 

 

8

 

 

 

342

 

 

 

29

 

 

 

371

 

Segment contribution

$

33,812

 

 

$

4,758

 

 

$

(1,418

)

 

$

37,152

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

37,152

 

 

$

(17,029

)

 

$

20,123

 

 

Six Months Ended March 31, 2023

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America

Pawn

 

Other

Investments

 

Total Segments

 

Corporate

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

227,054

 

 

$

89,240

 

 

$

 

 

$

316,294

 

 

$

 

 

$

316,294

 

Jewelry scrapping sales

 

16,990

 

 

 

3,719

 

 

 

 

 

 

20,709

 

 

 

 

 

 

20,709

 

Pawn service charges

 

139,255

 

 

 

46,368

 

 

 

 

 

 

185,623

 

 

 

 

 

 

185,623

 

Other revenues

 

57

 

 

 

35

 

 

 

32

 

 

 

124

 

 

 

 

 

 

124

 

Total revenues

 

383,356

 

 

 

139,362

 

 

 

32

 

 

 

522,750

 

 

 

 

 

 

522,750

 

Merchandise cost of goods sold

 

140,899

 

 

 

61,317

 

 

 

 

 

 

202,216

 

 

 

 

 

 

202,216

 

Jewelry scrapping cost of goods sold

 

14,766

 

 

 

4,089

 

 

 

 

 

 

18,855

 

 

 

 

 

 

18,855

 

Gross profit

 

227,691

 

 

 

73,956

 

 

 

32

 

 

 

301,679

 

 

 

 

 

 

301,679

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

145,250

 

 

 

56,822

 

 

 

 

 

 

202,072

 

 

 

 

 

 

202,072

 

General and administrative

 

 

 

 

(3

)

 

 

 

 

 

(3

)

 

 

31,088

 

 

 

31,085

 

Depreciation and amortization

 

5,315

 

 

 

4,547

 

 

 

 

 

 

9,862

 

 

 

6,089

 

 

 

15,951

 

Loss (gain) on sale or disposal of assets

 

84

 

 

 

(27

)

 

 

 

 

 

57

 

 

 

 

 

 

57

 

Other charges

 

 

 

 

(2,465

)

 

 

 

 

 

(2,465

)

 

 

 

 

 

(2,465

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

9,580

 

 

 

9,580

 

Interest income

 

(1

)

 

 

(467

)

 

 

 

 

 

(468

)

 

 

(2,094

)

 

 

(2,562

)

Equity in net loss of unconsolidated affiliates

 

 

 

 

 

 

 

30,917

 

 

 

30,917

 

 

 

 

 

 

30,917

 

Other expense (income)

 

 

 

 

24

 

 

 

10

 

 

 

34

 

 

 

(188

)

 

 

(154

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment contribution (loss)

$

77,043

 

 

$

15,525

 

 

$

(30,895

)

 

$

61,673

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

61,673

 

 

$

(44,475

)

 

$

17,198

 

 

Six Months Ended March 31, 2022

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America

Pawn

 

Other

Investments

 

Total Segments

 

Corporate

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

202,142

 

$

69,134

 

 

$

 

 

$

271,276

 

 

$

 

 

$

271,276

 

Jewelry scrapping sales

 

8,460

 

 

 

4,174

 

 

 

 

 

 

12,634

 

 

 

 

 

 

12,634

 

Pawn service charges

 

115,329

 

 

 

37,379

 

 

 

 

 

 

152,708

 

 

 

 

 

 

152,708

 

Other revenues

 

46

 

 

 

240

 

 

 

72

 

 

 

358

 

 

 

 

 

 

358

 

Total revenues

 

325,977

 

 

 

110,927

 

 

 

72

 

 

 

436,976

 

 

 

 

 

 

436,976

 

Merchandise cost of goods sold

 

116,445

 

 

 

48,912

 

 

 

 

 

 

165,357

 

 

 

 

 

 

165,357

 

Jewelry scrapping cost of goods sold

 

6,773

 

 

 

3,807

 

 

 

 

 

 

10,580

 

 

 

 

 

 

10,580

 

Gross profit

 

202,759

 

 

 

58,208

 

 

 

72

 

 

 

261,039

 

 

 

 

 

 

261,039

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

129,181

 

 

 

43,333

 

 

 

 

 

 

172,514

 

 

 

 

 

 

172,514

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

27,772

 

 

 

27,772

 

Depreciation and amortization

 

5,295

 

 

 

3,871

 

 

 

 

 

 

9,166

 

 

 

5,858

 

 

 

15,024

 

Gain on sale or disposal of assets and other

 

 

 

 

(4

)

 

 

 

 

 

(4

)

 

 

(688

)

 

 

(692

)

Other Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

4,958

 

 

 

4,958

 

Interest income

 

 

 

 

(437

)

 

 

 

 

 

(437

)

 

 

(122

)

 

 

(559

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

 

301

 

 

 

301

 

 

 

 

 

 

301

 

Other (income) expense

 

 

 

 

200

 

 

 

(4

)

 

 

196

 

 

 

55

 

 

 

251

 

Segment contribution

$

68,283

 

 

$

11,245

 

 

$

(225

)

 

$

79,303

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

79,303

 

 

$

(37,833

)

 

$

41,470

 

EZCORP, Inc.

STORE COUNT ACTIVITY

(Unaudited)

 

Three Months Ended March 31, 2023

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

 

 

 

 

As of December 31, 2022

525

 

661

 

1,186

New locations opened

2

 

 

11

 

 

13

 

As of March 31, 2023

527

 

 

672

 

 

1,199

 

 

Three Months Ended March 31, 2022

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

 

 

 

 

As of December 31, 2021

516

 

633

 

1,149

New locations opened

 

 

3

 

 

3

 

As of March 31, 2022

516

 

 

636

 

 

1,152

 

 

Six Months Ended March 31, 2023

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

 

 

 

 

As of September 30, 2022

515

 

660

 

 

1,175

 

New locations opened

2

 

 

13

 

 

15

 

Locations acquired

10

 

 

 

 

10

 

Locations sold, combined or closed

 

 

(1

)

 

(1

)

As of March 31, 2023

527

 

 

672

 

 

1,199

 

 

Six Months Ended March 31, 2022

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

 

 

 

 

As of September 30, 2021

516

 

632

 

1,148

New locations opened

 

 

4

 

 

4

 

As of March 31, 2022

516

 

 

636

 

 

1,152

 

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 six months ended March 31, 2023 and 2022 were as follows:

 

 

March 31,

 

Three Months Ended

March 31,

 

Six Months Ended

March 31,

 

 

2023

 

2022

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexican peso

 

18.1

 

 

19.9

 

 

18.7

 

 

20.5

 

 

19.2

 

 

20.6

 

Guatemalan quetzal

 

7.6

 

 

7.5

 

 

7.6

 

 

7.5

 

 

7.6

 

 

7.5

 

Honduran lempira

 

24.4

 

 

24.1

 

 

24.3

 

 

24.2

 

 

24.3

 

 

24.0

 

Australian dollar

 

1.5

 

 

1.3

 

 

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

March 31,

(in millions)

2023

 

2022

 

 

 

 

Net income

$

(6.8

)

 

$

14.9

 

Interest expense

 

3.4

 

 

 

2.5

 

Interest income

 

(1.9

)

 

 

(0.3

)

Income tax expense

 

(0.6

)

 

 

5.2

 

Depreciation and amortization

 

8.0

 

 

 

7.5

 

EBITDA

$

2.1

 

 

$

29.8

 

 

Total

Revenues

 

Gross

Profit

 

Income

Before Tax

 

Tax Effect

 

Net

Income

 

Diluted

EPS

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 Q2 Reported

$

258.4

 

 

$

149.2

 

 

$

(7.3

)

 

$

7.8

 

 

$

(6.8

)

 

$

(0.12

)

 

$

2.1

 

CCV Impairment and discrete adjustments

 

 

 

 

 

 

 

34.0

 

 

 

8.4

 

 

 

25.6

 

 

 

0.29

 

 

 

34.0

 

Contingent consideration liability

 

 

 

 

 

 

 

(2.2

)

 

 

(0.6

)

 

 

(1.6

)

 

 

(0.02

)

 

 

(2.2

)

Impact of dilutive instruments*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.08

 

 

 

 

FX impact

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

Constant currency impact

 

(4.7

)

 

 

(2.4

)

 

 

(0.6

)

 

 

(0.3

)

 

 

(0.3

)

 

 

 

 

 

(0.7

)

2023 Q2 Adjusted

$

253.8

 

 

$

146.7

 

 

$

24.0

 

 

$

7.0

 

 

$

17.0

 

 

$

0.23

 

 

$

33.3

 

*Q2 Reported Diluted EPS calculated based on 55.6 million weighted average diluted shares outstanding and Q2 Adjusted Diluted EPS calculated based on weighted average diluted shares outstanding of 87.1 million

 

Total

Revenues

 

Gross

Profit

 

Income

Before Tax

 

Tax Effect

 

Net

Income

 

Diluted

EPS

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022 Q2 Reported

$

216.0

 

$

128.9

 

$

20.1

 

$

5.2

 

$

14.9

 

$

0.20

 

$

29.8

CCV Adjustment

 

 

 

 

 

 

 

2.1

 

 

 

0.4

 

 

 

1.7

 

 

 

0.02

 

 

 

2.1

 

Non cash Interest

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

 

 

 

0.1

 

2022 Q2 Adjusted

$

216.0

 

 

$

128.9

 

 

$

22.3

 

 

$

5.7

 

 

$

16.7

 

 

$

0.22

 

 

$

32.1

 

 

Three Months Ended

March 31, 2023

 

Six Months Ended

March 31, 2023

(in millions)

U.S. Dollar

Amount

 

Percentage

Change YOY

 

U.S. Dollar

Amount

 

Percentage

Change YOY

 

 

 

 

 

 

 

 

Consolidated revenue

$

258.4

 

 

20

%

 

$

522.8

 

 

20

%

Currency exchange rate fluctuations

 

(4.6

)

 

 

 

 

(7.4

)

 

 

Constant currency consolidated revenue

$

253.8

 

 

17

%

 

$

515.4

 

 

18

%

 

 

 

 

 

 

 

 

Consolidated gross profit

$

149.2

 

 

16

%

 

$

301.7

 

 

16

%

Currency exchange rate fluctuations

 

(2.5

)

 

 

 

 

(3.8

)

 

 

Constant currency consolidated gross profit

$

146.7

 

 

14

%

 

$

297.9

 

 

14

%

 

 

 

 

 

 

 

 

Consolidated net inventory

$

150.3

 

 

25

%

 

$

150.3

 

 

25

%

Currency exchange rate fluctuations

 

(2.8

)

 

 

 

 

(2.8

)

 

 

Constant currency consolidated net inventory

$

147.5

 

 

23

%

 

$

147.5

 

 

23

%

 

 

 

 

 

 

 

 

Latin America Pawn gross profit

$

36.8

 

 

32

%

 

$

74.0

 

 

27

%

Currency exchange rate fluctuations

 

(2.4

)

 

 

 

 

(3.8

)

 

 

Constant currency Latin America Pawn gross profit

$

34.4

 

 

23

%

 

$

70.2

 

 

21

%

 

 

 

 

 

 

 

 

Latin America Pawn PLO

$

49.1

 

 

22

%

 

$

49.1

 

 

22

%

Currency exchange rate fluctuations

 

(3.2

)

 

 

 

 

(3.2

)

 

 

Constant currency Latin America Pawn PLO

$

45.9

 

 

14

%

 

$

45.9

 

 

14

%

 

 

 

 

 

 

 

 

Latin America Pawn PSC revenues

$

23.1

 

 

29

%

 

$

46.4

 

 

24

%

Currency exchange rate fluctuations

 

(1.4

)

 

 

 

 

(2.2

)

 

 

Constant currency Latin America Pawn PSC revenues

$

21.7

 

 

21

%

 

$

44.2

 

 

18

%

 

 

 

 

 

 

 

 

Latin America Pawn merchandise sales

$

43.8

 

 

31

%

 

$

89.2

 

 

29

%

Currency exchange rate fluctuations

 

(3.1

)

 

 

 

 

(5.0

)

 

 

Constant currency Latin America Pawn merchandise sales

$

40.7

 

 

22

%

 

$

84.2

 

 

22

%

 

 

 

 

 

 

 

 

Latin America Pawn segment profit before tax

$

8.0

 

 

68

%

 

$

15.5

 

 

38

%

Currency exchange rate fluctuations

 

(0.5

)

 

 

 

 

(0.7

)

 

 

Constant currency Latin America Pawn segment profit before tax

$

7.5

 

 

57

%

 

$

14.8

 

 

31

%

 

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