EZCORP Reports Second Quarter Fiscal 2024 Results

Record Q2 Revenues Driving Strong Earnings Growth

AUSTIN, Texas, May 01, 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 second quarter ended March 31, 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.

SECOND QUARTER HIGHLIGHTS

• Net income of $21.5 million, up from a net loss of $6.8 million. In the prior-year we recorded our share of the one-time, non-cash goodwill impairment and discrete adjustments recognized by Cash Converters International of $25.6 million. On an adjusted basis1, net income increased $3.6 million or 21%.
• Diluted earnings per share of $0.29, up from diluted loss per share of $0.12. On an adjusted basis, diluted earnings per share of $0.28, compared to $0.23.
• Total revenues increased 11%, and gross profit increased 12%.
• Merchandise sales gross margin remains within our targeted range at 35%.
• Pawn loans outstanding (PLO) up 14% to $235.8 million.
• Return on earning assets (ROEA) remains strong at 165%.

CEO COMMENTARY AND OUTLOOK

Lachie Given, Chief Executive Officer, stated, “We achieved record second quarter revenue and PLO, driven by strong consumer demand and excellent customer service. The challenging macro-economic environment continues to fuel robust customer demand for short-term cash and pre-owned and recycled goods.

“During the second quarter, we opened nine de novo stores in Latin America and acquired six stores in the U.S. We also consolidated six stores, five in Latin America and one in the U.S., which netted an additional nine stores. We now have a total of 1,246 stores across the organization and over 7,800 team members. Our strong balance sheet allows us to continue to build scale, both organically and by acquiring new stores. In addition, we continue to return capital to our shareholders, having repurchased $3.0 million worth of EZCORP shares during the quarter.

“We have 4.6 million EZ+ Rewards members, an increase of 61% over the second quarter of 2023 and 10% over last quarter. Online payments continue to gain traction with customers, and we collected $21.8 million in the U.S., up 72%, and have expanded online payments to our stores in Mexico. These initiatives to increase customer loyalty and engagement and provide a more convenient customer experience are an integral part of our growth in the local neighborhoods in which we operate.

“Thank you to our exceptional EZCORP team members for delivering another outstanding quarter of excellent operating and financial results for our shareholders. We will continue to invest in our team and our stores, focusing on recruitment and retention, while also investing in technology and other initiatives to enhance the customer experience. This focus and investment continues to enhance value for all of our shareholders,” concluded Given.

CONSOLIDATED RESULTS

• Diluted earnings per share of $0.29, up from diluted loss per share of $0.12. On an adjusted basis, diluted earnings per share of $0.28, up from $0.23. The primary difference between GAAP and Adjusted financial results is attributable to our share of the previously announced prior year one-time, non-cash goodwill impairment recognized by Cash Converters International.
• Income before taxes was $28.7 million, up from loss before taxes of $7.3 million, and adjusted EBITDA increased 7% to $36.2 million.
• PLO increased 14% to $235.8 million, up $29.7 million. On a same-store basis2, PLO increased 12% due to improved operational performance and continued strong pawn demand.
• Total revenues increased 11%, 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 35%. Aged general merchandise was 2.3% of total general merchandise inventory.
• Net inventory increased 9%, as expected with the growth in PLO. Inventory turnover increased to 2.9x, from 2.8x.
• Store expenses increased 13%, 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 11%.
• General and administrative expenses increased 17%, primarily due to labor driven by incentive compensation related to an increase in share price and, to a lesser extent, costs related to the implementation of Workday.
• Cash and cash equivalents at the end of the quarter was $229.1 million, down 6% year-over-year. The decrease was due to the increase in PLO and inventory, strategic investments, share repurchases, and the acquisition of new stores, partially offset by cash inflows provided by operating activities.

SEGMENT RESULTS

U.S. Pawn

• PLO ended the quarter at $173.7 million, up 11% or 9% on a same store basis.
• Total revenue and gross profit was up 10%, reflecting increased PSC and higher merchandise sales.
• PSC increased 14% as a result of higher average PLO.
• Merchandise sales increased 6%, and gross margin decreased to 37% from 38%. Aged general merchandise increased to 3.0% of total general merchandise inventory, primarily driven by luxury handbags in our Max Pawn stores.
• Net inventory increased 9%, as expected with the growth in PLO. Inventory turnover remained flat at 2.6x.
• Store expenses increased 12%, primarily due to salaries and benefits as we continue to support our team members as a part of People, Pawn and Passion focus, higher store count and, to a lesser extent, expenses related to our loyalty program.
• Segment contribution increased 8% to $40.7 million.
• During the quarter, net store count increased by five due to the acquisition of six stores and the consolidation of one store.

Latin America Pawn

• PLO improved to $62.0 million, up 26% (19% on constant currency basis). On a same store basis, PLO increased 22% (15% on a constant currency basis) due to improved operational performance and continued strong pawn demand.
• Total revenues was up 12% (4% on constant currency basis), and gross profit increased 18% (10% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
• PSC increased 18% (10% on a constant currency basis) as a result of higher average PLO.
• Merchandise sales gross margin increased to 33% from 32%. Aged general merchandise was 1.4% of total merchandise inventory.
• Net inventory increased 9% (2% on a constant currency basis). Inventory turnover increased to 3.6x from 3.5x.
• Store expenses increased 15% (7% on a constant currency basis), primarily due to higher store count. Same-store expenses increased 10% (2% on a constant currency basis).
• Segment contribution increased 2% (decreased 3% on a constant currency basis). On an adjusted basis, segment contribution was up 38% to $7.7 million, with the primary adjustment being the prior year reversal of contingent consideration liability of $2.5 million in connection with a previously completed acquisition.
• During the quarter, net store count increased by four due to the opening of nine de novo stores and the consolidation of five stores.

FORM 10-Q

EZCORP’s Quarterly Report on Form 10-Q for the quarter ended March 31, 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 CALLEZCORP will host a conference call on Thursday, May 2, 2024, at 8:00 am Central Time to discuss Second Quarter Fiscal 2024 results. Analysts and institutional investors may participate on the conference call by registering online at: https://register.vevent.com/register/BIc16d26b733bc44b7aecc33d2d530fef4. 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: [email protected]Phone: (512) 314-2220

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 six months ended March 31, 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

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.