EZCORP Reports First Quarter Fiscal 2023 Results

Pawn Loans Outstanding and Record Sales Driving Strong Revenue and Earnings Growth

EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn transactions in the United States and Latin America, today announced results for its first quarter ended December 31, 2022.

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.

FIRST QUARTER HIGHLIGHTS

  • Pawn loans outstanding (PLO) up 19% to $209.9 million.
  • Total revenue increased 20%, and gross profit increased 15%.
  • Merchandise sales gross margin remains within our targeted range at 36%.
  • Net income for the quarter was $16.8 million, an increase of $1.1 million.
  • Diluted earnings per share of $0.25 was up from $0.21. On an adjusted basis1, diluted earnings per share was $0.28, compared to $0.22 in the prior-year quarter.
  • Return on earning assets (ROEA) remains strong at 163%.
  • Refinanced convertible debt, that included the repurchase of $109.4 million convertible notes due 2024 and $69.1 million convertible notes due 2025, and the issuance of $230.0 million due 2029.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Lachie Given stated, “We began fiscal 2023 with another outstanding quarter, continuing to execute on our three-year strategic plan. Our PLO was the highest on record for this quarter, and we achieved our strongest ever quarterly sales result. The challenging macro-economic backdrop continues to drive increased demand for our two core products, which are providing solutions for our customers' short-term cash needs and selling second-hand goods. And our team’s relentless focus on improving the performance of every one of our 1,186 stores, continues to drive our excellent financial and operating results.

"We remain committed to market-leading customer service, by investing in our store-based and support teams, technology improvements, process efficiencies and automation, as we provide our customers with a fast, convenient and respectful solution to address their short-term cash needs. Additionally, our neighborhood retail locations provide affordable pre-owned and recycled general merchandise and jewelry to our cost-conscious and environmentally concerned consumers.

“During the first quarter, we acquired nine stores in the Houston, Texas area and one store in Las Vegas, Nevada. We opened two de novo stores in Latin America and expect to open more this quarter. We now have 2.4 million EZ+ Rewards members across all geographies, an increase of 26% over the fourth quarter of 2022.

“We proactively addressed our near-term convertible debt maturities with a successful placement of $230 million of 7-year convertible notes, materially de-risking the balance sheet while providing a stable, low cash-cost capital base from which to continue to grow. We retired approximately $178.5 million of convertible notes maturing in 2024 and 2025 and repurchased approximately $5 million in shares as part of this financing, in addition to the $2 million in shares we acquired during the quarter as part of our announced buy-back program.

“During the quarter, we launched new initiatives to enhance work-life balance for our team members and increase employer competitiveness at all levels. I believe we have the best, most passionate, engaged and productive team members in the industry. We are committed to doing everything we can to retain and incentivize them because it is their operational excellence that drives our financial results and ultimately enhances value for all shareholders,” concluded Given.

CONSOLIDATED RESULTS

Three Months Ended December 31

As Reported

 

Adjusted1

in millions, except per share amounts

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Total revenues

$

264.3

 

$

221.0

 

$

261.6

 

$

221.0

Gross profit

$

152.5

 

$

132.1

 

$

151.1

 

$

132.1

Income before tax

$

24.5

 

$

21.3

 

$

28.0

 

$

21.4

Net income

$

16.8

 

$

15.7

 

$

21.4

 

$

16.0

Diluted earnings per share

$

0.25

 

$

0.21

 

$

0.28

 

$

0.22

EBITDA (non-GAAP measure)

$

38.1

 

$

31.0

 

$

37.9

 

$

31.1

  • Diluted earnings per share were $0.25, up from $0.21. On an adjusted basis, diluted earnings per share were $0.28, up from $0.22.
  • Income before taxes improved to $24.5 million from $21.3 million, while adjusted EBITDA increased 22% to $37.9 million.
  • PLO increased 19% to $209.9 million, up $33.3 million. On a same-store basis2, PLO increased 16% due to increased loan demand, reflecting growth above pre-COVID levels.
  • Total revenues increased 20% and gross profit increased 15%, reflecting improved pawn service charge (PSC) revenue, merchandise sales and merchandise sales gross profit.
  • PSC increased 22% as a result of higher average PLO.
  • Merchandise sales gross margin remains within our targeted range at 36%. Aged general merchandise has increased to 1.6% of total general merchandise inventory.
  • Net inventory increased 31%, reflecting a return towards normalized inventory levels. Inventory turnover remained strong at 2.8x for the quarter, down from 3.0x.
  • Store expenses increased 16%, primarily due to increased labor in-line with store activity, and to a lesser extent, expenses related to our loyalty program and rent associated with lease renewals. On a same-store basis, store expenses increased 14%. General and administrative expenses were flat.
  • Cash and cash equivalents at the end of the quarter was $207.7 million, down 11% year-over-year. The decrease is 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 $166.9 million, up 18% or 15% on a same store basis.
  • Total revenue was up 19% and gross profit increased 13%, reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
  • PSC increased 23% as a result of higher average PLO.
  • Merchandise sales gross margin decreased to 38% from 43%, reflecting a more normalized operating environment. Aged general merchandise remains less than 1% of total general merchandise inventory.
  • Net inventory increased 31% reflecting a return towards normalized inventory levels. Inventory turnover decreased to 2.6x from 2.8x.
  • Store expenses increased 13%, primarily due to increased labor in-line with store activity, and to a lesser extent, expenses related to our loyalty program and rent associated with lease renewals.
  • Segment contribution increased 14% to $39.3 million.
  • Segment store count increased by 10 stores during this quarter due to two acquisitions.

Latin America Pawn

  • PLO improved to $43.0 million, up 21% (17% on constant currency basis). On a same store basis, PLO increased 19% (15% on a constant currency basis).
  • Total revenue was up 21% (16% on constant currency basis) and gross profit increased 23% (18% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
  • PSC increased 20% (15% on a constant currency basis) as a result of higher average PLO.
  • Merchandise sales gross margin increased from 29% to 30%. Aged general merchandise inventory increased to 2.9% from 0.5% of total merchandise inventory.
  • Net inventory increased 32% (27% on a constant currency basis), reflecting a return towards normalized inventory levels. Inventory turnover remains strong at 3.3x, down from 3.6x.
  • Store expenses increased 25% (20% on a constant currency basis), primarily due to increased labor in-line with store activity, and to a lesser extent, expenses related to our loyalty program and rent associated with lease renewals. Same-store expenses increased 22% (18% on a constant currency basis).
  • Segment contribution increased 16% (12% on a constant currency basis) to $7.5 million. On an adjusted basis, segment contribution was up 15% to $7.5 million.
  • Segment store count increased by 1 store due to the net impact of opening 2 de novo stores and consolidating 1 store during the quarter.

FORM 10-Q

EZCORP’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2022 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, February 2, 2023, at 8:00 am Central Time to discuss First Quarter Fiscal 2023 results. Analysts and institutional investors may participate on the conference call by dialing (844) 200-6205, Conference ID: 341829, or internationally by dialing (929) 526-1599. 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/

EZCORP Instagram Official https://www.instagram.com/ezcorp_official/

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

 

 

Three Months Ended

December 31,

(in thousands, except per share amounts)

2022

 

2021

 

(Unaudited)

Revenues:

 

 

 

Merchandise sales

$

163,787

 

 

$

137,720

 

Jewelry scrapping sales

 

7,884

 

 

 

6,944

 

Pawn service charges

 

92,593

 

 

 

76,025

 

Other revenues, net

 

63

 

 

 

305

 

Total revenues

 

264,327

 

 

 

220,994

 

Merchandise cost of goods sold

 

104,877

 

 

 

83,111

 

Jewelry scrapping cost of goods sold

 

6,953

 

 

 

5,772

 

Gross profit

 

152,497

 

 

 

132,111

 

Operating expenses:

 

 

 

Store expenses

 

100,803

 

 

 

86,771

 

General and administrative

 

15,476

 

 

 

15,545

 

Depreciation and amortization

 

7,988

 

 

 

7,574

 

(Gain) loss on sale or disposal of assets and other

 

(16

)

 

 

5

 

Total operating expenses

 

124,251

 

 

 

109,895

 

Operating income

 

28,246

 

 

 

22,216

 

Interest expense

 

6,190

 

 

 

2,431

 

Interest income

 

(664

)

 

 

(304

)

Equity in net income of unconsolidated affiliates

 

(1,584

)

 

 

(1,138

)

Other income

 

(234

)

 

 

(120

)

Income before income taxes

 

24,538

 

 

 

21,347

 

Income tax expense

 

7,760

 

 

 

5,626

 

Net income

$

16,778

 

 

$

15,721

 

 

 

 

 

Basic earnings per share

$

0.30

 

 

$

0.28

 

Diluted earnings per share

$

0.25

 

 

$

0.21

 

 

 

 

 

Weighted-average basic shares outstanding

 

56,308

 

 

 

56,183

 

Weighted-average diluted shares outstanding

 

83,779

 

 

 

81,948

 

EZCORP, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

December 31,

2022

 

December 31,

2021

 

(Unaudited)

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

207,658

 

 

$

233,274

 

Restricted cash

 

8,359

 

 

 

8,692

 

Pawn loans

 

209,855

 

 

 

176,586

 

Pawn service charges receivable, net

 

34,921

 

 

 

29,765

 

Inventory, net

 

156,064

 

 

 

119,313

 

Prepaid expenses and other current assets

 

45,559

 

 

 

31,209

 

Total current assets

 

662,416

 

 

 

598,839

 

Investments in unconsolidated affiliates

 

37,789

 

 

 

42,513

 

Other investments

 

39,220

 

 

 

16,500

 

Property and equipment, net

 

55,612

 

 

 

52,201

 

Right-of-use asset, net

 

230,554

 

 

 

201,527

 

Goodwill

 

297,361

 

 

 

284,619

 

Intangible assets, net

 

58,029

 

 

 

61,458

 

Notes receivable, net

 

1,224

 

 

 

1,190

 

Deferred tax asset, net

 

12,428

 

 

 

15,623

 

Other assets

 

7,682

 

 

 

5,851

 

Total assets

$

1,402,315

 

 

$

1,280,321

 

 

 

 

 

Liabilities and equity:

 

 

 

Current liabilities:

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

69,930

 

 

$

75,531

 

Customer layaway deposits

 

16,276

 

 

 

13,142

 

Operating lease liabilities, current

 

52,799

 

 

 

51,843

 

Total current liabilities

 

139,005

 

 

 

140,516

 

Long-term debt, net

 

358,984

 

 

 

311,844

 

Deferred tax liability, net

 

 

 

 

221

 

Operating lease liabilities

 

188,730

 

 

 

161,841

 

Other long-term liabilities

 

10,261

 

 

 

11,398

 

Total liabilities

 

696,980

 

 

 

625,820

 

Commitments and Contingencies

 

 

 

Stockholders’ equity:

 

 

 

Class A Non-voting Common Stock, par value $0.01per share; shares authorized: 100 million; issued and outstanding: 52,877,930 as of December 31, 2022; 53,344,218 as of December 31, 2021; and 53,454,885 as of September 30, 2022

 

529

 

 

 

533

 

Class B Voting Common Stock, convertible, par value $0.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171

 

30

 

 

 

30

 

Additional paid-in capital

 

343,012

 

 

 

339,955

 

Retained earnings

 

414,929

 

 

 

369,359

 

Accumulated other comprehensive loss

 

(53,165

)

 

 

(55,376

)

Total equity

 

705,335

 

 

 

654,501

 

Total liabilities and equity

$

1,402,315

 

 

$

1,280,321

 

 

EZCORP, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

Three Months Ended

December 31,

(in thousands)

2022

 

2021

 

 

 

(Unaudited)

Operating activities:

 

 

 

Net income

$

16,778

 

 

$

15,721

 

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

 

 

 

Depreciation and amortization

 

7,988

 

 

 

7,574

 

Amortization of debt discount and deferred financing costs

 

378

 

 

 

374

 

Non-cash lease expense

 

13,596

 

 

 

12,694

 

Deferred income taxes

 

656

 

 

 

587

 

Other adjustments

 

(91

)

 

 

(30

)

Provision for inventory reserve

 

532

 

 

 

(820

)

Stock compensation expense

 

1,886

 

 

 

1,698

 

Equity in net income of unconsolidated affiliates

 

(1,584

)

 

 

(1,138

)

Loss on extinguishment of debt

 

3,545

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

Service charges and fees receivable

 

(691

)

 

 

(419

)

Inventory

 

(1,881

)

 

 

(2,314

)

Prepaid expenses, other current assets and other assets

 

(2,280

)

 

 

(2,330

)

Accounts payable, accrued expenses and other liabilities

 

(34,761

)

 

 

(29,531

)

Customer layaway deposits

 

(752

)

 

 

551

 

Income taxes

 

6,574

 

 

 

4,741

 

Dividends from unconsolidated affiliates

 

1,775

 

 

 

1,660

 

Net cash provided by operating activities

 

11,668

 

 

 

9,018

 

Investing activities:

 

 

 

Loans made

 

(189,074

)

 

 

(166,480

)

Loans repaid

 

109,125

 

 

 

95,542

 

Recovery of pawn loan principal through sale of forfeited collateral

 

88,030

 

 

 

65,297

 

Capital expenditures, net

 

(7,182

)

 

 

(4,985

)

Acquisitions, net of cash acquired

 

(12,884

)

 

 

 

Issuance of notes receivable

 

(15,500

)

 

 

(1,000

)

Investment in unconsolidated affiliates

 

(2,133

)

 

 

(2,477

)

Investment in other investments

 

(15,000

)

 

 

(16,500

)

Net cash used in investing activities

 

(44,618

)

 

 

(30,603

)

Financing activities:

 

 

 

Taxes paid related to net share settlement of equity awards

 

(1,138

)

 

 

(792

)

Proceeds from issuance of debt

 

230,000

 

 

 

 

Debt issuance cost

 

(7,403

)

 

 

 

Cash paid on extinguishment of debt

 

(1,951

)

 

 

 

Payments on debt

 

(178,488

)

 

 

 

Repurchase of common stock

 

(7,027

)

 

 

 

Net cash provided by (used in) financing activities

 

33,993

 

 

 

(792

)

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

 

605

 

 

 

719

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

1,648

 

 

 

(21,658

)

Cash, cash equivalents and restricted cash at beginning of period

 

214,369

 

 

 

263,624

 

Cash, cash equivalents and restricted cash at end of period

$

216,017

 

 

$

241,966

 

 

 

 

 

EZCORP, Inc.

OPERATING SEGMENT RESULTS

 

 

Three Months Ended December 31, 2022

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America

Pawn

 

Other

Investments

 

Total

Segments

 

Corporate

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

118,314

 

$

45,473

 

 

$

 

 

$

163,787

 

 

$

 

 

$

163,787

 

Jewelry scrapping sales

 

7,176

 

 

708

 

 

 

 

 

 

7,884

 

 

 

 

 

 

7,884

 

Pawn service charges

 

69,310

 

 

23,283

 

 

 

 

 

 

92,593

 

 

 

 

 

 

92,593

 

Other revenues

 

25

 

 

16

 

 

 

22

 

 

 

63

 

 

 

 

 

 

63

 

Total revenues

 

194,825

 

 

69,480

 

 

 

22

 

 

 

264,327

 

 

 

 

 

 

264,327

 

Merchandise cost of goods sold

 

73,256

 

 

31,621

 

 

 

 

 

 

104,877

 

 

 

 

 

 

104,877

 

Jewelry scrapping cost of goods sold

 

6,216

 

 

737

 

 

 

 

 

 

6,953

 

 

 

 

 

 

6,953

 

Other cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

115,353

 

 

37,122

 

 

 

22

 

 

 

152,497

 

 

 

 

 

 

152,497

 

Store expenses

 

73,304

 

 

27,499

 

 

 

 

 

 

100,803

 

 

 

 

 

 

100,803

 

General and administrative

 

 

 

(3

)

 

 

 

 

 

(3

)

 

 

15,479

 

 

 

15,476

 

Depreciation and amortization

 

2,755

 

 

2,215

 

 

 

 

 

 

4,970

 

 

 

3,018

 

 

 

7,988

 

(Gain) loss on sale or disposal of assets and other

 

3

 

 

(19

)

 

 

 

 

 

(16

)

 

 

 

 

 

(16

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

6,190

 

 

 

6,190

 

Interest income

 

 

 

(169

)

 

 

 

 

 

(169

)

 

 

(495

)

 

 

(664

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

(1,584

)

 

 

(1,584

)

 

 

 

 

 

(1,584

)

Other (income) expense

 

 

 

70

 

 

 

4

 

 

 

74

 

 

 

(308

)

 

 

(234

)

Segment contribution

$

39,291

 

$

7,529

 

 

$

1,602

 

 

$

48,422

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

48,422

 

 

$

(23,884

)

 

$

24,538

 

 

Three Months Ended December 31, 2021

(Unaudited)

(in thousands)

U.S. Pawn

 

Latin America

Pawn

 

Other

Investments

 

Total

Segments

 

Corporate

Items

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

$

102,078

 

$

35,642

 

 

$

 

 

$

137,720

 

 

$

 

 

$

137,720

 

Jewelry scrapping sales

 

4,980

 

 

1,964

 

 

 

 

 

 

6,944

 

 

 

 

 

 

6,944

 

Pawn service charges

 

56,557

 

 

19,468

 

 

 

 

 

 

76,025

 

 

 

 

 

 

76,025

 

Other revenues

 

22

 

 

240

 

 

 

43

 

 

 

305

 

 

 

 

 

 

305

 

Total revenues

 

163,637

 

 

57,314

 

 

 

43

 

 

 

220,994

 

 

 

 

 

 

220,994

 

Merchandise cost of goods sold

 

57,832

 

 

25,279

 

 

 

 

 

 

83,111

 

 

 

 

 

 

83,111

 

Jewelry scrapping cost of goods sold

 

3,975

 

 

1,797

 

 

 

 

 

 

5,772

 

 

 

 

 

 

5,772

 

Gross profit

 

101,830

 

 

30,238

 

 

 

43

 

 

 

132,111

 

 

 

 

 

 

132,111

 

Segment and corporate expenses (income):

 

 

 

 

 

 

 

 

 

 

 

Store expenses

 

64,689

 

 

22,082

 

 

 

 

 

 

86,771

 

 

 

 

 

 

86,771

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

15,545

 

 

 

15,545

 

Depreciation and amortization

 

2,670

 

 

1,980

 

 

 

 

 

 

4,650

 

 

 

2,924

 

 

 

7,574

 

Gain on sale of disposal of assets and other

 

 

 

5

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

2,431

 

 

 

2,431

 

Interest income

 

 

 

(182

)

 

 

 

 

 

(182

)

 

 

(122

)

 

 

(304

)

Equity in net income of unconsolidated affiliates

 

 

 

 

 

 

(1,138

)

 

 

(1,138

)

 

 

 

 

 

(1,138

)

Other (income) expense

 

 

 

(134

)

 

 

(12

)

 

 

(146

)

 

 

26

 

 

 

(120

)

Segment contribution

$

34,471

 

$

6,487

 

 

$

1,193

 

 

$

42,151

 

 

 

 

 

Income (loss) before income taxes

 

 

 

 

 

 

$

42,151

 

 

$

(20,804

)

 

$

21,347

 

EZCORP, Inc.

STORE COUNT ACTIVITY

(Unaudited)

 

 

Three Months Ended December 31, 2022

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

 

 

 

 

As of September 30, 2022

515

 

660

 

 

1,175

 

New locations opened

 

2

 

 

2

 

Locations acquired

10

 

 

 

10

 

Locations sold, combined or closed

 

(1

)

 

(1

)

As of December 31, 2022

525

 

661

 

 

1,186

 

 

 

Three Months Ended December 31, 2021

 

U.S. Pawn

 

Latin America

Pawn

 

Consolidated

 

 

 

 

 

 

As of September 30, 2021

516

 

632

 

1,148

New locations opened

 

1

 

1

Locations acquired

 

 

Locations sold, combined or closed

 

 

As of December 31, 2021

516

 

633

 

1,149

 

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 three months ended December 31, 2022 and 2021 were as follows:

 

 

December 31,

 

Three Months Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Mexican peso

 

19.5

 

20.5

 

19.7

 

20.7

Guatemalan quetzal

 

7.7

 

7.5

 

7.7

 

7.6

Honduran lempira

 

24.4

 

24.1

 

24.3

 

23.9

Australian dollar

 

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

December 31,

(in millions)

2022

 

2021

 

 

 

 

Net income

$

16.8

 

 

$

15.7

 

Interest expense

 

6.2

 

 

 

2.4

 

Interest income

 

(0.7

)

 

 

(0.3

)

Income tax expense

 

7.8

 

 

 

5.6

 

Depreciation and amortization

 

8.0

 

 

 

7.6

 

EBITDA

$

38.1

 

 

$

31.0

 

 

Total

Revenues

 

Gross

Profit

 

Income

Before Tax

 

Tax Effect

 

Net

Income

 

Diluted

EPS

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 Q1 Reported

$

264.3

 

 

$

152.5

 

 

$

24.5

 

 

$

7.8

 

 

$

16.8

 

$

0.25

 

$

38.1

 

Extinguishment of Debt Impact

 

 

 

 

 

3.5

 

 

 

(1.0

)

 

 

4.5

 

 

0.03

 

 

 

FX Impact

 

 

 

 

 

0.2

 

 

 

0.1

 

 

 

0.1

 

 

 

 

0.2

 

Constant currency impact

 

(2.7

)

 

 

(1.4

)

 

 

(0.2

)

 

 

(0.3

)

 

 

 

 

 

 

(0.4

)

2023 Q1 Adjusted

$

261.6

 

 

$

151.1

 

 

$

28.0

 

 

$

6.6

 

 

$

21.4

 

$

0.28

 

$

37.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

Revenues

 

Gross

Profit

 

Income

Before Tax

 

Tax Effect

 

Net

Income

 

Diluted

EPS

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022 Q1 Reported

$

221.0

 

$

132.1

 

$

21.3

 

$

5.6

 

 

$

15.7

 

$

0.21

 

$

31.0

FX Impact

 

 

 

 

 

0.1

 

 

(0.1

)

 

 

0.3

 

 

0.01

 

 

0.1

2022 Q1 Adjusted

$

221.0

 

$

132.1

 

$

21.4

 

$

5.5

 

 

$

16.0

 

$

0.22

 

$

31.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2022

(in millions)

U.S. Dollar

Amount

 

Percentage

Change YOY

 

 

 

 

Consolidated revenue

$

264.3

 

 

20

%

Currency exchange rate fluctuations

 

(2.7

)

 

 

Constant currency consolidated revenue

$

261.6

 

 

18

%

 

 

 

 

Consolidated gross profit

$

152.5

 

 

15

%

Currency exchange rate fluctuations

 

(1.4

)

 

 

Constant currency consolidated gross profit

$

151.1

 

 

14

%

 

 

 

 

Consolidated net inventory

$

156.1

 

 

31

%

Currency exchange rate fluctuations

 

(1.4

)

 

 

Constant currency consolidated net inventory

$

154.7

 

 

30

%

 

 

 

 

Latin America Pawn gross profit

$

37.1

 

 

23

%

Currency exchange rate fluctuations

 

(1.4

)

 

 

Constant currency Latin America Pawn gross profit

$

35.7

 

 

18

%

 

 

 

 

Latin America Pawn PLO

$

43.0

 

 

21

%

Currency exchange rate fluctuations

 

(1.4

)

 

 

Constant currency Latin America Pawn PLO

$

41.6

 

 

17

%

 

 

 

 

Latin America Pawn PSC revenues

$

23.3

 

 

20

%

Currency exchange rate fluctuations

 

(0.8

)

 

 

Constant currency Latin America Pawn PSC revenues

$

22.5

 

 

15

%

 

 

 

 

Latin America Pawn merchandise sales

$

45.5

 

 

28

%

Currency exchange rate fluctuations

 

(1.9

)

 

 

Constant currency Latin America Pawn merchandise sales

$

43.6

 

 

22

%

 

 

 

 

Latin America Pawn segment profit before tax

$

7.5

 

 

16

%

Currency exchange rate fluctuations

 

(0.2

)

 

 

Constant currency Latin America Pawn segment profit before tax

$

7.3

 

 

12

%

 

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