EZCORP Announces Fourth Quarter and Full-Year Fiscal 2016 Results

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| Source: EZCORP, Inc.

AUSTIN, Texas, Dec. 07, 2016 (GLOBE NEWSWIRE) -- EZCORP, Inc. (NASDAQ:EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its fourth quarter and fiscal year ended September 30, 2016.

CEO COMMENTARY AND OUTLOOK

Stuart Grimshaw, EZCORP's Chief Executive Officer, said: "Fiscal 2016 was an important year for our company.  Our intense focus on market leadership in meeting our customers' desire for cash whenever they want it, combined with consistent execution, delivered strong operating results for our pawn businesses in the U.S. and Mexico.  We achieved market leading growth in same store pawn loans outstanding (PLO), the most influential driver of revenue and profitability, and continued to improve our customer experience metrics.

“In September, we completed the divestiture of Grupo Finmart, which frees up capital, management attention and other resources that we can now deploy to grow our pawn businesses.  We exit the year in a strong liquidity position, including $66 million of cash, $50 million available on our credit facility and $89.8 million in notes receivable from the Grupo Finmart sale, over half of which we expect to receive in fiscal 2017.

“From a financial standpoint, the positive pawn operating results were offset by $16.8 million of non-cash charges associated with our minority equity investment in Cash Converters International Limited recorded in the fourth quarter.

"Our intense focus on customer leadership and delivering an outstanding customer experience will continue with investments in process improvements, product and customer data analytics and feedback, technology, targeted incentives, and coaching and mentoring for our field team.  We are confident these initiatives will continue to improve our core pawn operating performance, which will provide our platform for profitable growth."

All amounts in this release are from EZCORP continuing operations and in conformity with U.S. generally accepted accounting principles ("GAAP") unless otherwise noted. Comparisons shown in this release are to the same period in the prior year unless otherwise noted.

OPERATIONAL HIGHLIGHTS

  • Strong pawn fundamentals:
    • For the year, pawn loans outstanding (PLO) up 4% to $149.8 million in the U.S. and up 7% to $17.5 million in Mexico.
    • Leading the U.S. market with average PLO of $288,100 per store.
    • Pawn service charges (PSC) up 5% to $60.3 million in the quarter and up 6% to $229.9 million for the year in the U.S., and up 5% to $8.3 million in the quarter and up 3% to $31.9 million for the year in Mexico.
    • Merchandise sales gross margin up 200bps to 35% in the quarter and up 400bps to 37% for the year.
  • Revenue growth from strong customer engagement and continued focus on expense management drove underlying business improvement:
    • Total revenue up $14.3 million in the fourth quarter and $10.5 million for the year.
    • Net revenue up $7.3 million (7%) in the fourth quarter and $25.2 million (6%) for the year.
    • Total operating expenses down $32.6 million (24%) in the quarter and $19.6 million (5%) for the year.
  • Strong liquidity position to support growth with $66 million cash balance at year-end plus $50 million undrawn on our credit facility.  Of the $89.8 million in notes receivable from the Grupo Finmart sale, EZCORP anticipates receiving $45.7 million in fiscal 2017. To date, $6.4 million has been received, consistent with the terms of the notes.

CONSOLIDATED RESULTS

Three-Months Ended September 30, 2016

  • Net loss from continuing operations attributable to EZCORP was $16.9 million ($(0.31) per share), compared to a net loss of $57.1 million ($(1.04) per share) in the prior year quarter. This improvement was driven by revenue growth and continued focus on expense management. The fourth quarter results included a $16.8 million non-cash impairment and equity loss on our investment in Cash Converters International Limited.
  • Total revenue was $184.6 million, up 8%, and net revenue was $106.9 million, up 7%. On a constant currency basis1, total revenue was $188.2 million, up 11%, with net revenue of $108.8 million, up 9%. Higher PLO balances drove increased PSC, and improved inventory management drove increased merchandise margins.
  • Total operating expenses for the fourth quarter decreased 24% (23% decrease a constant currency basis) as we continue to implement operational efficiencies. Corporate administrative expense decreased $10.8 million to $18.0 million, down 37%.

Fiscal Year Ended September 30, 2016

  • Net loss from continuing operations attributable to EZCORP was $8.0 million ($(0.15) per share), compared to a net loss of $51.3 million ($(0.94) per share). This increase reflects continued improvement in our U.S. and Mexico pawn businesses (as discussed below). Fiscal year 2016 results included $11.0 million non-cash impairment on our investment in Cash Converters International Limited, $4.2 million in restatement related expenses and $1.9 million in restructuring costs.
  • Total revenue was $730.5 million, 1% higher, with net revenue of $428.2 million, a 6% increase. On a constant currency basis, total revenue was $748.1 million, 4% higher, and net revenue was $437.9 million, 9% higher. The net revenue increases were driven by growth in PSC as a result of higher PLO balances, as well as improved merchandise sales margins.
  • Total operating expenses decreased 5% (3% on a constant currency basis), with store operating expenses up due to the addition of new stores during the year.

1 In addition to the financial information prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), we provide certain financial information on a “constant currency” basis, which excludes the impact of foreign currency exchange rate fluctuations. For additional information about the constant currency calculations, as well as a reconciliation of the constant currency financial measures to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

OPERATING METRICS

U.S. Pawn Segment

Three-Months Ended September 30, 2016

  • Enhanced focus on lending operations resulted in an increase in total PLO of 4% to $149.8 million, up 4% on a same store basis.
  • Same store sales were strong in the quarter, up 8%. Merchandise sales gross margin improved to 36% from 35% attributable to efficiently pricing and selling aged inventory, driving merchandise sales gross profit growth of 9% to $29.2 million.
  • Total PSC increased 5% to $60.3 million; 4% on a same store basis. Average monthly yield on PLO decreased to 13% from 14% in the prior-year quarter.
  • Net revenue gains along with reduced expenses led to an increase in segment profit before tax of 136% to $21.4 million.
  • Inventory aged over one year reduced to 8% of total inventory from 10%.

Fiscal Year Ended September 30, 2016

  • PSC of $229.9 million, up 6%, with same store PSC growth of 4%.
  • Average monthly PLO yield remained flat to the prior-year period at 14%.
  • Same store sales increased 3%. Merchandise sales gross margin increased to 38% from 35%, resulting in a 14% increase in merchandise sales gross profit to $131.5 million.
  • Net revenue increased 7% to $369.4 million and segment expenses increased 2%, resulting in a 25% increase in segment profit before tax to $100.1 million.

Mexico Pawn Segment

Three-Months Ended September 30, 2016

  • PLO increased 7% to $17.5 million (up 21% on a constant currency basis). PSC grew 5% to $8.3 million (up 21% on a constant currency basis). Average monthly PLO yield was consistent with the prior-year at 16%
  • Same store sales increased 4% (19% in constant currency). Merchandise sales gross margin increased to 29% from 21% as a result of more disciplined pawn loan valuations and pricing cadence. Merchandise sales gross profit increased 32% to $4.4 million (up 52% on a constant currency basis).
  • Segment profit before tax increased $5.6 million to $2.3 million (up $6.5 million on a constant currency basis).
  • Inventory aged over one year reduced to 3% of total inventory from 4%.

Fiscal Year Ended September 30, 2016

  • PSC increase of 3% to $31.9 million (up 22% on a constant currency basis). Annualized yield on pawn loans remained unchanged to the prior-year period at 16%.
  • Same store sales were flat (19% increase on a constant currency basis). Merchandise sales gross margin increased to 32% from 28%, resulting in a 7% increase in merchandise sales gross profit to $19.3 million (up 27% on a constant currency basis).
  • Expense management leveraged a 3% growth in net revenue to $52.0 million into a $9.5 million increase in segment profit before tax to $8.5 million (net revenue up 22% and segment profit before tax up $12.6 million on a constant currency basis to $11.6 million).

DISCONTINUED OPERATIONS: GRUPO FINMART

During the fourth quarter of fiscal 2016 as a result of the Grupo Finmart disposition, we recorded a gain of $34.2 million. The gain does not take into consideration the total costs associated with the transaction, which were $9.8 million, approximately $8.0 million of which were recorded in our consolidated statements of operations in fiscal 2016 and the remaining $1.8 million of which will be recorded in our consolidated statements of operations in future periods due to ongoing employee service requirements.

CONFERENCE CALL

EZCORP will host a conference call on Thursday, December 8, 2016, at 7:30am Central Time to discuss fourth quarter and fiscal year results.  Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 29660657, International dialing (678) 894-3054. 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 call.

ABOUT EZCORP

EZCORP is a leading provider of pawn loans in the United States and Mexico. At our pawn stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.

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 or current or future litigation. 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.


EZCORP, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Three Months Ended
September 30,
 Fiscal Year Ended
September 30,
 2016 2015 2016 2015
        
   As
Corrected
   As
Corrected
 (in thousands, except per share amounts)
Revenues:       
Merchandise sales$97,166  $91,490  $409,107  $402,118 
Jewelry scrapping sales16,482  10,452  50,113  57,973 
Pawn service charges68,603  65,208  261,800  247,204 
Other revenues2,334  3,141  9,485  12,705 
Total revenues184,585  170,291  730,505  720,000 
Merchandise cost of goods sold63,540  61,359  258,271  267,789 
Jewelry scrapping cost of goods sold13,768  8,457  42,039  46,066 
Other cost of revenues416  928  1,965  3,125 
Net revenues106,861  99,547  428,230  403,020 
Operating expenses:       
Operations79,941  81,604  301,387  294,939 
Administrative18,016  28,774  68,101  72,986 
Depreciation and amortization6,120  8,511  26,542  30,959 
Loss on sale or disposal of assets465  1,934  1,106  2,659 
Restructuring11  16,317  1,921  17,080 
Total operating expenses104,553  137,140  399,057  418,623 
Operating income (loss)2,308  (37,593) 29,173  (15,603)
Interest expense4,463  3,929  16,477  16,385 
Interest income(15) (55) (81) (278)
Loss from investment in unconsolidated affiliates5,881  5,811  255  5,473 
Impairment of investments10,957  26,837  10,957  26,837 
Other expense387  1,234  1,202  2,187 
(Loss) income from continuing operations before income taxes(19,365) (75,349) 363  (66,207)
Income tax (benefit) expense(1,863) (18,242) 9,361  (14,025)
Loss from continuing operations, net of tax(17,502) (57,107) (8,998) (52,182)
Income (loss) from discontinued operations, net of tax19,636  (36,998) (79,432) (42,045)
Net income (loss)2,134  (94,105) (88,430) (94,227)
Net loss attributable to noncontrolling interest(1,097) (1,805) (7,686) (5,035)
Net income (loss) attributable to EZCORP, Inc.$3,231  $(92,300) $(80,744) $(89,192)
        
Basic loss per share attributable to EZCORP, Inc. — continuing operations$(0.31) $(1.04) $(0.15) $(0.94)
Diluted loss per share attributable to EZCORP, Inc. — continuing operations$(0.31) $(1.04) $(0.15) $(0.94)
        
Weighted-average basic shares outstanding53,991  54,821  54,427  54,369 
        
Net loss from continuing operations attributable to EZCORP, Inc.$(16,927) $(57,105) $(7,973) $(51,298)
Income (loss) from discontinued operations attributable to EZCORP, Inc.20,158  (35,195) (72,771) (37,894)
Net income (loss) attributable to EZCORP, Inc.$3,231  $(92,300) $(80,744) $(89,192)

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.


EZCORP, Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
 September 30,
 2016 2015
    
   As
Corrected
Assets:   
Current assets:   
Cash and cash equivalents$65,737  $56,244 
Pawn loans167,329  159,964 
Pawn service charges receivable, net31,062  30,852 
Inventory, net140,224  124,084 
Notes receivable, net41,946   
Income taxes receivable2,533  42,231 
Current assets held for sale  72,849 
Prepaid expenses and other current assets33,312  25,077 
Total current assets482,143  511,301 
Investment in unconsolidated affiliate37,128  56,182 
Property and equipment, net58,455  73,938 
Goodwill253,976  251,646 
Intangible assets, net30,681  30,778 
Non-current notes receivable, net41,119   
Deferred tax asset, net35,303  34,176 
Non-current assets held for sale  217,233 
Other assets, net44,439  13,736 
Total assets$983,244  $1,188,990 
    
Liabilities, temporary equity and equity:   
Current liabilities:   
Accounts payable, accrued expenses and other current liabilities$84,285  $109,875 
Current liabilities held for sale  87,329 
Customer layaway deposits10,693  10,470 
Total current liabilities94,978  207,674 
Long-term debt, net283,611  197,976 
Non-current liabilities held for sale  101,644 
Deferred gains and other long-term liabilities10,450  9,929 
Total liabilities389,039  517,223 
Commitments and contingencies   
Temporary equity:   
Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; none as of September 30, 2016 and 1,168,456 shares issued and outstanding at redemption value as of September 30, 2015  11,696 
Redeemable noncontrolling interest  4,040 
Total temporary equity  15,736 
Stockholders’ equity:   
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of September 30, 2016 and 2015; issued and outstanding: 51,129,144 as of September 30, 2016 and 50,726,289 as of September 30, 2015511  507 
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,17130  30 
Additional paid-in capital318,723  310,038 
Retained earnings319,808  400,552 
Accumulated other comprehensive loss(44,089) (55,096)
EZCORP, Inc. stockholders’ equity594,983  656,031 
Noncontrolling interest(778)  
Total equity594,205  656,031 
Total liabilities, temporary equity and equity$983,244  $1,188,990 

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.


EZCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Fiscal Year Ended September 30,
 2016 2015
    
   As Corrected
 (in thousands)
Operating activities:   
Net loss$(88,430) $(94,227)
Loss from discontinued operations*78,872  14,728 
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation and amortization26,542  34,450 
Amortization of debt discount8,928  8,888 
Amortization of deferred financing costs1,763  1,657 
Consumer loan loss provision704  22,303 
Deferred income taxes849  (6,050)
Impairment of goodwill  12,253 
Impairment of long-lived assets  18,529 
Other adjustments969  (95)
Loss on sale or disposal of assets1,106  2,893 
Stock compensation5,346  2,374 
Loss from investments in unconsolidated affiliates255  5,473 
Impairment of investments10,957  26,837 
Changes in operating assets and liabilities, net of business acquisitions:   
Service charges and fees receivable286  5,181 
Inventory(3,735) 433 
Prepaid expenses, other current assets and other assets(14,875) 7,475 
Accounts payable and other, deferred gains and other long-term liabilities(3,505) 22,079 
Customer layaway deposits329  1,997 
Income taxes receivable42,108  (18,298)
Payments of restructuring charges(8,478) (5,376)
Dividends from unconsolidated affiliate2,197  4,842 
Net cash provided by operating activities — continuing operations62,188  68,346 
Net cash provided by operating activities — discontinued operations*2,215  11,052 
Investing activities:   
Loans made(640,977) (756,463)
Loans repaid385,333  528,733 
Recovery of pawn loan principal through sale of forfeited collateral235,168  243,692 
Additions to property and equipment(9,486) (23,174)
Acquisitions, net of cash acquired(6,000) (7,802)
Investments in unconsolidated affiliate  (12,140)
Proceeds from sale of assets  564 
Net cash used in investing activities — continuing operations(35,962) (26,590)
Net cash provided by (used in) investing activities — discontinued operations*42,678  (41,103)
Financing activities:   
Taxes paid related to net share settlement of equity awards(172) (210)
Debt issuance costs(740)  
Payout of deferred consideration(15,000) (6,000)
Purchase of subsidiary shares from noncontrolling interest  (32,411)
Proceeds from borrowings and line of credit48,688   
Payments on borrowings, line of credit and capital lease obligations(48) (418)
Repurchase of common stock(11,750)  
Net cash provided by (used in) financing activities — continuing operations20,978  (39,039)
Net cash (used in) provided by financing activities — discontinued operations*(84,134) 41,441 
Effect of exchange rate changes on cash and cash equivalents(1,350) (10,308)
Net increase in cash and cash equivalents6,613  3,799 
Cash and cash equivalents at beginning of period, excluding held for sale56,244  52,294 
Cash and cash equivalents held for sale at beginning of period2,880  3,031 
Cash and cash equivalents at end of period65,737  59,124 
Less: cash and cash equivalents held for sale at end of period  (2,880)
Cash and cash equivalents at end of period, excluding held for sale$65,737  $56,244 

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.

*  Represents operations discontinued subsequent to the adoption of FASB ASU 2014-08. Amounts are exclusive of intercompany loans.


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
 Three Months Ended September 30, 2016
 U.S. Pawn Mexico
Pawn
 Other
International
 Total
Segments
 Corporate
Items
 Consolidated
            
 (in thousands)
Revenues:           
Merchandise sales$82,211  $14,955  $  $97,166  $  $97,166 
Jewelry scrapping sales15,693  789    16,482    16,482 
Pawn service charges60,263  8,340    68,603    68,603 
Other revenues50  154  2,130  2,334    2,334 
Total revenues158,217  24,238  2,130  184,585    184,585 
Merchandise cost of goods sold52,980  10,560    63,540    63,540 
Jewelry scrapping cost of goods sold13,105  663    13,768    13,768 
Other cost of revenues    416  416    416 
Net revenues92,132  13,015  1,714  106,861    106,861 
Operating expenses (income):           
Operations67,803  9,520  2,618  79,941    79,941 
Administrative        18,016  18,016 
Depreciation and amortization2,753  680  55  3,488  2,632  6,120 
Loss on sale or disposal of assets162  53  4  219  246  465 
Restructuring11      11    11 
Interest expense  6    6  4,457  4,463 
Interest income  (7)   (7) (8) (15)
Loss from investment in unconsolidated affiliate    5,881  5,881    5,881 
Impairment of investment    10,957  10,957    10,957 
Other expense (income)  465  (1) 464  (77) 387 
Segment contribution (loss)$21,403  $2,298  $(17,800) $5,901     
Loss from continuing operations before income taxes          $5,901  $(25,266) $(19,365)



EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
 Three Months Ended September 30, 2015
 U.S. Pawn Mexico
Pawn
 Other
International
 Total
Segments
 Corporate
Items
 Consolidated
            
 (in thousands)
Revenues:           
Merchandise sales$75,595  $15,498  $397  $91,490  $  $91,490 
Jewelry scrapping sales10,331  57  64  10,452    10,452 
Pawn service charges57,250  7,958    65,208    65,208 
Other revenues375  238  2,528  3,141    3,141 
Total revenues143,551  23,751  2,989  170,291    170,291 
Merchandise cost of goods sold48,763  12,180  416  61,359    61,359 
Jewelry scrapping cost of goods sold8,401  6  50  8,457    8,457 
Other cost of revenues    928  928    928 
Net revenues86,387  11,565  1,595  99,547    99,547 
Operating expenses (income):           
Operations67,903  12,200  1,501  81,604    81,604 
Administrative        28,774  28,774 
Depreciation and amortization4,461  998  103  5,562  2,949  8,511 
Loss (gain) on sale or disposal of assets918  (6)   912  1,022  1,934 
Restructuring4,016  799  2,563  7,378  8,939  16,317 
Interest expense44  6    50  3,879  3,929 
Interest income(1) (24)   (25) (30) (55)
Loss from investment in unconsolidated affiliate    5,811  5,811    5,811 
Impairment of investment    26,837  26,837    26,837 
Other expense (income)(12) 916  7  911  323  1,234 
Segment (loss) contribution$9,058  $(3,324) $(35,227) $(29,493)    
Loss from continuing operations before income taxes          $(29,493) $(45,856) $(75,349)


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
 Fiscal Year Ended September 30, 2016
 U.S. Pawn Mexico
Pawn
 Other
International
 Total
Segments
 Corporate
Items
 Consolidated
            
 (in thousands)
Revenues:           
Merchandise sales$348,771  $60,331  $5  $409,107  $  $409,107 
Jewelry scrapping sales47,810  2,282  21  50,113    50,113 
Pawn service charges229,893  31,907    261,800    261,800 
Other revenues331  385  8,769  9,485    9,485 
Total revenues626,805  94,905  8,795  730,505    730,505 
Merchandise cost of goods sold217,268  41,002  1  258,271    258,271 
Jewelry scrapping cost of goods sold40,138  1,885  16  42,039    42,039 
Other cost of revenues    1,965  1,965    1,965 
Net revenues369,399  52,018  6,813  428,230    428,230 
Operating expenses (income):           
Operations255,321  38,481  7,585  301,387    301,387 
Administrative        68,101  68,101 
Depreciation and amortization12,242  2,965  218  15,425  11,117  26,542 
Loss on sale or disposal of assets664  169  4  837  269  1,106 
Restructuring993  543  202  1,738  183  1,921 
Interest expense125  109    234  16,243  16,477 
Interest income(2) (30)   (32) (49) (81)
Loss from investment in unconsolidated affiliate    255  255    255 
Impairment of investment    10,957  10,957    10,957 
Other expense (income)  1,273  2  1,275  (73) 1,202 
Segment contribution (loss)$100,056  $8,508  $(12,410) $96,154     
Income from continuing operations before income taxes      $96,154  $(95,791) $363 


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
 
 Fiscal Year Ended September 30, 2015
 U.S. Pawn Mexico
Pawn
 Other
International
 Total
Segments
 Corporate
Items
 Consolidated
            
 (in thousands)
Revenues:           
Merchandise sales                                                              $334,635  $65,408  $2,075  $402,118  $  $402,118 
Jewelry scrapping sales54,343  3,267  363  57,973    57,973 
Pawn service charges216,211  30,993    247,204    247,204 
Other revenues945  1,021  10,739  12,705    12,705 
Total revenues606,134  100,689  13,177  720,000    720,000 
Merchandise cost of goods sold218,953  47,371  1,465  267,789    267,789 
Jewelry scrapping cost of goods sold42,845  2,954  267  46,066    46,066 
Other cost of revenues    3,125  3,125    3,125 
Net revenues344,336  50,364  8,320  403,020    403,020 
Operating expenses (income):           
Operations244,232  43,927  6,780  294,939    294,939 
Administrative        72,986  72,986 
Depreciation and amortization15,227  4,440  616  20,283  10,676  30,959 
Loss (gain) on sale or disposal of assets995  258  (1) 1,252  1,407  2,659 
Restructuring4,016  799  2,563  7,378  9,702  17,080 
Interest expense60  15    75  16,310  16,385 
Interest income(42) (78)   (120) (158) (278)
Loss from investment in unconsolidated affiliate    5,473  5,473    5,473 
Impairment of investments    26,837  26,837    26,837 
Other expense  1,988  7  1,995  192  2,187 
Segment contribution (loss)$79,848  $(985) $(33,955) $44,908     
Loss from continuing operations before income taxes      $44,908  $(111,115) $(66,207)


EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
 
 Company-owned Stores  
 U.S.
Pawn
 Mexico
Pawn
 Other
International
 Consolidated Franchises
          
As of September 30, 2013502  258  39  799  8 
New locations opened9  3    12   
Locations sold, combined or closed(7)     (7) (3)
As of September 30, 2014504  261  39  804  5 
New locations opened5  3    8   
Locations acquired25      25   
Locations sold, combined or closed(12) (27) (12) (51) (4)
As of September 30, 2015522  237 *27  786  1 
New locations opened  3    3   
Locations acquired6  1    7   
Locations sold, combined or closed(8) (2)   (10) (1)
As of September 30, 2016520  239  27  786   

*  Includes five buy/sell stores reflected in fiscal 2015 ending count which were converted to Mexico Pawn stores during the three-months ended March 31, 2016.

NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we provide certain other non-GAAP financial information on a constant currency basis ("constant currency"). We use constant currency and ongoing segment contribution results to evaluate results of our Mexico Pawn operations, which are denominated in Mexican pesos and believe that presentation of constant currency results are meaningful and useful in understanding the activities and business metrics of our Mexico Pawn 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 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 Mexican pesos 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. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate during the appropriate period for statement of operations items. The end-of-period exchange rate as of September 30, 2016 and 2015 was 19.4 to 1 and 17.1 to 1, respectively. The average exchange rate for the years ended September 30, 2016, 2015 and 2014 was 17.9 to 1, 15.1 to 1, and 13.1 to 1, respectively. Constant currency results, where presented, also exclude the foreign currency gain or loss and the related foreign currency derivative gain or loss impact.

The following information provides reconciliations of certain non-GAAP financial measures presented in this press release to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Miscellaneous Non-GAAP Financial Measures

 U.S.
Dollar
Amount
 Percentage
Change
YOY
    
 (in thousands)  
Consolidated revenue (three-months ended September 30, 2016)$184,585  8%
Currency exchange rate fluctuations3,656   
Constant currency consolidated revenue (three-months ended September 30, 2016)$188,241  11%
    
Consolidated net revenue (three-months ended September 30, 2016)$106,861  7%
Currency exchange rate fluctuations1,950   
Constant currency consolidated net revenue (three-months ended September 30, 2016)$108,811  9%
    
Consolidated operating expenses (three-months ended September 30, 2016)$104,553  (24)%
Currency exchange rate fluctuations1,524   
Constant currency consolidated operating expenses (three-months ended September 30, 2016)$106,077  (23)%
    
Consolidated revenue (year ended September 30, 2016)$730,505  1%
Currency exchange rate fluctuations17,598   
Constant currency consolidated revenue (year ended September 30, 2016)$748,103  4%
    
Consolidated net revenue (year ended September 30, 2016)$428,230  6%
Currency exchange rate fluctuations9,645   
Constant currency consolidated net revenue (year ended September 30, 2016)$437,875  9%
    
Consolidated operating expenses (year ended September 30, 2016)$399,057  (5)%
Currency exchange rate fluctuations7,818   
Constant currency consolidated operating expenses (year ended September 30, 2016)$406,875  (3)%
    
Mexico Pawn loans outstanding as of September 30, 2016$17,538  7%
Currency exchange rate fluctuations2,359   
Constant currency Mexico Pawn loans outstanding as of September 30, 2016$19,897  21%
    
Mexico Pawn service charges (three-months ended September 30, 2016)$8,340  5%
Currency exchange rate fluctuations1,268   
Constant currency Mexico Pawn service charges (three-months ended September 30, 2016)$9,608  21%
    
Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016)$14,559  4%
Currency exchange rate fluctuations2,144   
Constant currency Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016)$16,703  19%
    
Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016)$4,395  32%
Currency exchange rate fluctuations638   
Constant currency Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016)$5,033  52%
    
Mexico Pawn segment profit before tax (three-months ended September 30, 2016)$2,298  N/A        
Currency exchange rate fluctuations922   
Constant currency Mexico Pawn segment profit before tax (three-months ended September 30, 2016)$3,220  N/A        
    
Mexico Pawn service charges (year ended September 30, 2016)$31,907  3%
Currency exchange rate fluctuations5,917   
Constant currency Mexico Pawn service charges (year ended September 30, 2016)$37,824  22%
    
Mexico Pawn same store merchandise revenue (year ended September 30, 2016)$58,636  %
Currency exchange rate fluctuations10,873   
Constant currency Mexico Pawn same store merchandise revenue (year ended September 30, 2016)$69,509  19%
    
Mexico Pawn merchandise sales gross profit (year ended September 30, 2016)$19,329  7%
Currency exchange rate fluctuations3,584   
Constant currency Mexico Pawn merchandise sales gross profit (year ended September 30, 2016)$22,913  27%
    
Mexico Pawn net revenue (year ended September 30, 2016)$52,018  3%
Currency exchange rate fluctuations9,645   
Constant currency Mexico Pawn net revenue (year ended September 30, 2016)$61,663  22%
    
Mexico Pawn segment profit before tax (year ended September 30, 2016)$8,508  N/A      
Currency exchange rate fluctuations3,116   
Constant currency Mexico Pawn segment profit before tax (year ended September 30, 2016)$11,624  N/A      
Jeff Christensen
Vice President, Investor Relations
Email: jeff_christensen@ezcorp.com
Phone: (512) 437-3545