EZCORP Reports Third Quarter Fiscal 2024 Results

Record PLO and Q3 Revenues

AUSTIN, Texas, July 31, 2024 (GLOBE NEWSWIRE) -- 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, 2024.

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 14% to $261.7 million.
• Total revenues increased 10% and gross profit increased 12%, while merchandise sales gross margin remains within our targeted range at 36%.
• Net income of $18.0 million, compared to $18.2 million. On an adjusted basis1, net income increased $2.2 million or 14%.
• Diluted earnings per share of $0.25, up from $0.24. On an adjusted basis, diluted earnings per share of $0.23, compared to $0.20.
• Return on earning assets (ROEA) remains strong at 160%.
  

CEO COMMENTARY AND OUTLOOK

Lachie Given, Chief Executive Officer, stated, “Our team delivered another outstanding quarter for our shareholders, driven by strong customer demand and continued focus on operational execution at the store level. As a result, we achieved record Q3 revenues and our highest level of PLO in Company history. The challenging macro-economic climate continues to fuel robust customer interest in short-term cash solutions and high-quality pre-owned goods, and the team’s focus on market-leading customer service drove excellent operational and financial results, increasing adjusted EBITDA by 15% with expanded margin.

“During the quarter, we grew our footprint by adding twelve new stores, including six de novo stores in Latin America and one in the U.S., as well as acquiring five stores in the U.S. We now operate 1,258 stores and employ over 8,000 team members. Our strong, liquid balance sheet enables us to continue scaling the business, organically through new store openings and through strategic acquisitions. Additionally, we demonstrated our commitment to returning capital to shareholders by repurchasing $3.0 million worth of shares during the quarter. Subsequent to quarter end, we also settled our convertible notes that matured in 2024 with $34.4 million in cash and 77,328 shares.

“We continue to prioritize convenience and a seamless customer experience to drive loyalty and engagement. Our EZ+ Rewards program now boasts 5 million members globally, up 51% year-over-year. These members accounted for 76% of unique customer transactions during the quarter, illustrating the ongoing success of the program. Online payments also continue to gain traction with a 49% increase to $21.7 million collected in the U.S.

“We remain committed to a balanced capital allocation strategy in which we invest in our people and business to drive strong organic growth, execute value-enhancing acquisitions and investments, return capital to shareholders via strategic share repurchases, and maintain substantial liquidity to manage debt. The business is performing exceptionally well and I thank the team for their relentless focus on operational excellence to produce these results for all of our stakeholders,” concluded Given.

CONSOLIDATED RESULTS

• PLO increased 14% to $261.7 million, up $32.3 million. On a same-store basis, PLO increased 12% due to improved operational performance and continued strong pawn demand.
• Total revenues increased 10%, and gross profit increased 12%, reflecting improved pawn service charge (PSC) revenues, merchandise sales and merchandise sales gross profit.
• PSC increased 15% as a result of higher average PLO.
• Merchandise sales gross margin remains within our target range at 36%. Aged general merchandise was 3.2% of total general merchandise inventory.
• Net inventory increased 11%, as expected with the growth in PLO. Inventory turnover decreased to 2.7x, from 2.8x.
• Store expenses increased 11% and 8% on a same-store basis, primarily due to increased labor in-line with store activity and, to a lesser extent, expenses related to our loyalty program.
• General and administrative expenses increased 12%, primarily due to labor, incentive compensation and, to a lesser extent, costs related to the implementation and ongoing support of Workday.
• Income before taxes was $23.0 million, up from $21.3 million, and adjusted EBITDA increased 15% to $31.6 million, with the primary adjustment being in the prior year for the reversal of contingent consideration liability in connection with a previously completed acquisition.
• Diluted earnings per share of $0.25, up from $0.24. On an adjusted basis, diluted earnings per share of $0.23, up from $0.20.
• Cash and cash equivalents at the end of the quarter was $218.0 million, down 8% year-over-year. The decrease was due to the increase in PLO and inventory, strategic investments and acquisitions, and share repurchases, partially offset by cash from operating activities.

SEGMENT RESULTS

U.S. Pawn

• PLO ended the quarter at $199.3 million, up 11% or 10% on a same-store basis.
• Total revenues were up 8% and gross profit was up 9%, reflecting increased PSC and higher merchandise sales.
• PSC increased 13% as a result of higher average PLO.
• Merchandise sales increased 6%, and gross margin decreased to 38% from 39%. Aged general merchandise increased to 5.0% to $2.0 million of total general merchandise inventory. Excluding luxury handbags in our three Max Pawn stores in Las Vegas, aged general merchandise remains under 1%.
• Net inventory increased 6%, as expected with the growth in PLO. Inventory turnover remained flat at 2.6x.
• Store expenses increased 8% and 6% on a same-store basis, primarily due to increased labor in-line with store activity and to a lesser extent, expenses related to our loyalty program.
• Segment contribution increased 12% to $36.1 million.
• During the quarter, store count increased by six, due to the acquisition of five stores and opening of one de novo store.
  

Latin America Pawn

• PLO improved to $62.4 million, up 24% (30% on constant currency basis). On a same-store basis, PLO increased 20% (26% on a constant currency basis) due to improved operational performance and increased loan demand.
• Total revenues were up 15% (13% on constant currency basis), and gross profit increased 21% (19% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
• PSC increased 22% (19% on a constant currency basis) as a result of higher average PLO.
• Merchandise sales gross margin increased to 32% from 30%. Aged general merchandise was less than 1% of total merchandise inventory.
• Net inventory increased 25% (32% on a constant currency basis). Inventory turnover decreased to 3.0x, from 3.4x.
• Store expenses increased 18% (15% on a constant currency basis) and 14% (12% on a constant currency basis) on a same-store basis, primarily due to increased labor, in line with store activity and to a lesser extent, rent.
• Segment contribution increased 6% (5% on a constant currency basis). On an adjusted basis, segment contribution was up 43% to $10.2 million, with the primary adjustment being the prior year reversal of contingent consideration liability in connection with a previously completed acquisition.
• During the quarter, store count increased by six de novo stores.

FORM 10-Q

EZCORP’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 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 1, 2024, at 8:00 am Central Time to discuss Third Quarter Fiscal 2024 results. Analysts and institutional investors may participate on the conference call by registering online at https://register.vevent.com/register/BId4b5469876114f61a4e1f86df672523c. Once registered you will receive the dial-in details with a unique PIN to join the call. 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 pre-owned and recycled merchandise, primarily collateral forfeited from pawn lending operations and 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.

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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.

Contact:
Email: Investor_Relations@ezcorp.com
Phone: (512) 314-2220

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. 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

EZCORP, Inc.
OPERATING SEGMENT RESULTS

EZCORP, Inc.
STORE COUNT ACTIVITY
(Unaudited)

Non-GAAP Financial Information (Unaudited)

In addition to the financial information prepared in conformity with accounting U.S. generally accepted accounting principles (“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, 2024 and 2023 were as follows:

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