EZCORP Reports 31% Increase in Earnings per Share for Second Quarter and Raises Guidance for Fiscal 2011

AUSTIN, Texas, April 21, 2011 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced results for its second fiscal quarter ended March 31, 2011.

(Logo:  http://photos.prnewswire.com/prnh/20090713/EZCORPLOGO)

Commenting on the results, President and Chief Executive Officer, Paul Rothamel, said, "We had another quarter of great performance with all segments delivering robust results.  Our diversified growth initiatives and innovative product changes, coupled with solid core business metrics, were key to our success.  The underlying demand for our products and services remains strong."

Highlights for the quarter include:

Financials – Three months ended March 31, 2011 versus the prior year quarter

• Diluted earnings per share of $0.63, an increase of 31%.
• Net income of $31.8 million, up 34%.
• Net revenues of $131.0 million, up 19%.  Same store revenue increased 12%.
• Store level operating income of $64.9 million, up 26% with margins improving 260 bps to 50%.
• Consolidated operating income of $44.9 million (operating margin of 34%) compared with operating income of $34.1 million (operating margin of 31%).
• Pre-tax contribution from strategic affiliates of $4.7 million, up 42%.

Key Operating Metrics – Three months ended March 31, 2011 versus the prior year quarter

• US Pawn:
  • Same store revenue growth of 11% driven by same store growth in merchandise sales, scrap sales and pawn service charge of 8%, 17% and 12%, respectively.
  • Store level operating income increased 28% to $46.4 million with a 390 bps improvement in margin to 51%.
• Empeno Facil:
  • Same store revenue growth of 23% driven by same store growth in merchandise sales, scrap sales and pawn service charge of 22%, 15% and 37%, respectively.
  • Store level operating income increased 82% to $1.6 million with a margin of 25% compared to 26%, despite the impact from opening 68 new stores in the past 12 months.
• EZMONEY:
  • Same store revenue was up 13% driven by increases in signature loan fees and auto title loan fees of 9% and 44%, respectively.
  • Bad debt as a percentage of fees was 14%, compared with 13% in the prior year quarter primarily due to product mix.
  • Store level operating income increased 17% to $16.9 million with a 130 bps improvement in margin to 49%.
• Balance Sheet:
  • Pawn loan balance at March 31 of $106.5 million, an increase of $17.5 million over a year ago.  Pawn loan balances increased 11% on a same store basis.
  • The combined signature and auto title loan balances at March 31 of $11.9 million increased 30% over the prior year quarter.
  • At March 31, 2011, cash and cash equivalents were $59.8 million with debt outstanding of $20.0 million compared with net cash of $21.2 million a year ago.

Strategic Initiatives

• US Pawn acquired five stores for a total cost of $17.8 million and opened two greenfield stores in the second quarter.  Including the three greenfield stores opened and the four stores acquired in the first quarter, the total US Pawn store count at March 31, 2011 was 403.
• Empeno Facil opened 15 greenfield stores in the second quarter.  Including the 17 greenfield stores opened in the first quarter, the total Empeno Facil store count at March 31, 2011 was 147.
• EZMONEY opened 5 greenfield stores, all in Canada, in the second fiscal quarter.  Including the five stores opened in Canada in the first fiscal quarter, the total EZMONEY store count at March 31, 2011 was 507.
• In April, the Company acquired the Cash Converters franchise rights for Canada, including rights to receive fees from 13 stores operated by franchisees in Canada.  The Company plans to convert the majority of its existing Cashmax stores into the Cash Converters brand and add the Cash Converters buy / sell model to its existing non-collateralized loan model.
• Also in April, the Company signed an agreement to acquire 15 pawn stores from Mister Money for $18.5 million, including assumption of debt.  The stores are located in Iowa, Wisconsin, and Illinois and will bring the number of states in which EZCORP operates pawn shops to 15 compared to 12 at this time last year.  The acquisition is pending shareholder approval and is expected to close in May.
• The market test in Colorado and Wisconsin of EZCORP's "Change" card – the Company's general purpose integrated debit card – successfully concluded in the second fiscal quarter.  As of March 31, 2011, approximately 14,000 Change cards have been issued to EZCORP customers.  The product is being rolled into the Company's Texas stores, both US Pawn and EZMONEY, in the second half of the year.

Cash Converters International Limited (CCV.ASX)

• In March 2011, EZCORP and Cash Converters announced a proposed global strategic alliance with two key elements:
  • EZCORP plans to purchase 30% of Cash Converters' shares the Company does not already own for a total cost of approximately $70 million, taking its ownership interest in Cash Converters to 53%; and
  • EZCORP and Cash Converters plan to establish two joint ventures, under which the two companies will roll out a suite of financial services products globally under the Cash Converters brand.
• The joint ventures are conditional upon the share purchase which, in turn, requires the approval of Cash Converters' shareholders.
• The transaction is expected to close in the fourth quarter.

Outlook for fiscal 2011

The Company also announced that it expects fiscal 2011 earnings per share, excluding the first quarter one-time charge related to the retirement of the former Chief Executive Officer, to increase 30% year-over-year to $2.55 ($2.41 on a GAAP basis).  This is an increase from the Company's previous estimate of $2.40 per share ($2.26 on a GAAP basis).  The revised guidance includes the acquisition of the Cash Converters franchise rights in Canada which closed on April 8^th and the acquisition of the 15 Mister Money stores expected to close in early May.  Pending the Cash Converters shareholder vote, it does not yet include the impact of the proposed global strategic alliance with Cash Converters International Limited.

Rothamel concluded, "Without losing focus or momentum in our core businesses, we were able to continue driving our key growth initiatives to seize opportunities and reduce risks to our business long term.  Our US and Mexico growth remain on track, we are very optimistic about our new growth strategy in Canada, and we are similarly excited about our future in Australia, the United Kingdom, Europe, and beyond."

About EZCORP

EZCORP is a leading provider of specialty consumer financial services.  It provides collateralized non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans, including payday loans, installment loans and auto title loans, or fee-based credit services to customers seeking loans.  At its pawn stores, the company also sells merchandise, primarily collateral forfeited from its pawn lending operations.

EZCORP operates more than 1,000 stores, including over 500 pawn stores in the U.S. and Mexico and over 500 short-term consumer loan stores in the U.S. and Canada.  The company also has significant investments in Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a worldwide network of over 600 stores in 21 countries that provide financial services and sell pre-owned merchandise, and Albemarle & Bond Holdings PLC (ABM.L), one of the U.K.'s largest pawnbroking businesses with over 140 stores.

Special Note Regarding Forward-Looking Statements

This announcement contains certain forward-looking statements regarding the Company's expected operating and financial performance for future periods, including expected future earnings.  These statements are based on the Company's current expectations.  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 changes in the regulatory environment, changing market conditions in the overall economy and the industry, consumer demand for the Company's services and merchandise, and actions of third parties who offer services and products in the Company's locations.  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.

Change to Presentation and Reclassification of Prior Year Comparatives

The Company has historically included fees from its Product Protection Plan and Jewelry VIP Program as well as layaway fees in "Other revenue" in its Consolidated Statements of Operations and its Operating Segment Results.  Beginning in the second fiscal quarter of 2011 the Company has included these fees in "Merchandise sales" on the basis that fees from these products are incidental to sales of merchandise.  Prior year figures have been reclassified to conform to this presentation and margins have been recalculated accordingly.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP net income and non-GAAP earnings per share for the six-month period ended March 31, 2001, as well as non-GAAP expected earnings per share for fiscal 2011.  The only difference between the presented non-GAAP measures and the most closely comparable GAAP measures is the exclusion of a one-time charge related to the retirement of the Company's former Chief Executive Officer and the related tax benefit included in the quarter ended December 31, 2011.  The Company's management uses these non-GAAP financial measures to understand its financial performance from period to period.  Management does not believe that the excluded one-time charge is reflective of underlying operating performance.  The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the corresponding GAAP measures, but rather are provided to facilitate an enhanced understanding of the Company's actual and expected performance and to enable more meaningful period-to-period comparisons.  A reconciliation of the non-GAAP financial measures to the most closely comparable GAAP financial measures is provided in the accompanying financial schedules.

EZCORP Investor Relations
(512) 314-2220

SOURCE EZCORP, Inc.