AUSTIN, Texas--(BUSINESS WIRE)-- EZCORP, Inc. (NASDAQ: EZPW) today announced results for its fourth quarter and fiscal year ended September 30, 2018.

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

HIGHLIGHTS

• Profit before tax was $3.7 million in the quarter and $57.1 million for the year. Adjusted profit before tax1 increased 38% to $16.2 million in the quarter and increased 33% to $64.4 million in the year. The adjusted profit before tax improvement in both periods reflects successful pawn store acquisitions and strong organic growth in Latin America.
• Pawn fundamentals remain strong:
  • Pawn loans outstanding (PLO) expanded 17% to $198.5 million, and pawn service charges (PSC) rose 16% in the quarter driven by the contribution of acquired stores in Latin America and same store growth in both the U.S. and Latin America. For the full year, PSC increased 12%.
  • Latin America Pawn's quarterly segment contribution expanded 63% to $9.4 million (69% higher to $9.8 million on a constant currency basis2). For the year, segment contribution grew 84% to $34.3 million (up 83% to $34.2 million on a constant currency basis).
  • U.S. Pawn's quarterly segment contribution grew 13% on industry-high same store PLO growth of 5%, monthly PLO yield improvement of 54 basis points (bps) to 14%, and a 240bps expansion of merchandise sales margin to 39%. The segment posted industry leading PLO per store at $305,000, the highest year-end balance in seven years.
• Latin America Pawn store count increased 84% in the year. This segment now comprises 47% of the company's total consolidated pawn stores, up from 32% a year ago. It produced 25% of consolidated pawn contribution in fiscal 2018, up from 15%.
• Cash and cash equivalents rose 74% to $286.0 million, enhancing the company's ability to capitalize on attractive acquisition opportunities. The improved liquidity was driven by $167.0 million of net proceeds from a convertible debt issuance combined with strong cash flow from operations and $38.0 million of collections under two notes receivable.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Stuart Grimshaw commented, "It was pleasing to see our fourth quarter earnings momentum accelerating, underlining the important progress we have made this year in customer service excellence. The biggest contributor to the company's outstanding performance was our terrific execution in Latin America, through both acquisitions and organic growth. Profit improvement was exceptional and our pawn store count in Latin America jumped 84%, growing by 207 stores. Those acquired stores have exceeded our expectations, providing strategic bases for further penetration and expansion in existing and neighboring geographies.

"In the U.S. Pawn segment, our disciplined lending and relentless focus on servicing and satisfying our customers' needs for cash delivered industry leading same store PLO growth, PLO yield, and per store averages of both PLO and PSC. We effectively managed our inventory again this quarter in relation to the PLO growth, while maintaining industry leading merchandise sales margins. These results reflect a well-balanced execution in excelling in customer service that underpins the growth of the business.

“We’ll begin fiscal 2019 with strong momentum as a result of the improved activity coming out of this year’s fourth quarter and will continue to leverage opportunities that will further our successful growth strategy. By maintaining our intense focus on outstanding customer service and meeting customers' desire for cash, this will underpin our industry leading store operating performance for the future. We will invest in the core pawn businesses, and open and acquire more pawn stores, particularly in Latin America, to further expand our geographically diversified earnings platform, where the right opportunities present themselves. We will continue to support our customers where they have a strong need for cash and there are many more locations where we believe we can be relevant to them. We maintain a discipline in assessment of opportunities that when coupled with our proven customer service focus, will drive long-term shareholder value."

CONSOLIDATED RESULTS

• Profit before tax was $3.7 million in the quarter and $57.1 million for the year. Adjusted profit before tax increased 38% to $16.2 million in the quarter. For the year, adjusted profit before tax increased 33% to $64.4 million. Successful pawn store acquisitions and strong organic growth in Latin America drove the improvements in both the quarter and the full fiscal year.
• A 10% increase in average PLO during the year led to a 12% improvement in annual PSC and 11% higher net revenues to $482.9 million (up 11% to $482.9 million on a constant currency basis). PLO ended the year 17% above the balance at the end of fiscal 2017. Consolidated merchandise sales gross profit for the year grew 9% to $161.8 million on a 6% rise in merchandise sales, while merchandise sales margin increased 120bps to 37%. On a constant currency basis, PSC expanded 12% and merchandise sales gross profit grew 9%.
• Operations expenses rose 10% to $334.6 million for the year (the same on a constant currency basis) due primarily to acquired stores. As a percentage of net revenues, operations expenses improved to 69% for the year from 70% in fiscal 2017, and to 69% in the quarter from 72% in the prior-year quarter.
• Included in the quarter was an $11.7 million�($9.2 million net of tax) non-cash impairment of our investment in Cash Converters International Limited, an unconsolidated affiliate. This revalued our investments made in prior years to the value of the Cash Converters' stock at fiscal year-end, equaling the price at which Cash Converters raised additional equity in June 2018.
• Cash and cash equivalents at the end of the year improved 74% to $286.0 million. During the year, the company completed a $172.5 million offering of convertible senior notes due 2025, yielding net proceeds of $167.0 million, and collected $38.0 million in principal and interest, as scheduled, on the notes receivable related to the 2016 sale of Grupo Finmart.
• Basic EPS grew 18% to $0.73 and diluted EPS rose 11% to $0.69 for the year. On an adjusted basis, basic EPS was $0.84 (up 31%) and diluted EPS was $0.79 (up 23%). The fully diluted shares calculation includes the hypothetical conversion of our convertible notes to the extent the company's average share price in the period exceeded the conversion price of the notes. However, the 2019 convertible notes must be settled in cash and the company may choose to satisfy all or some of its 2024 and 2025 convertible notes with cash rather than shares to minimize actual share dilution.

SEGMENT RESULTS

U.S. Pawn

• The U.S. Pawn segment reported a 5% increase in same store PLO, with improved monthly yield, indicating the quality of loan growth. The segment delivered industry leading PLO per store at $305,000. This was driven by disciplined lending practices and our focus on meeting customers' need for cash. In stores unaffected by hurricanes in the prior year, same store PLO increased 2%.
• Merchandise sales gross profit increased 9% in the quarter to $31.1 million and 5% for the year to $134.3 million. Merchandise margins increased 240bps to an industry high 39% in the quarter, and were 38% for the full year.
• Net revenues improved 5% and profit rose 13% in the quarter. For the year, net revenues were up 1% and profit remained relatively flat. This reflected the PSC impact of last year's hurricanes on PLO, as well as higher expenses. Expenses reflect a higher number of team members per store and other investments implemented in our third quarter to improve customer experience and drive future profit growth.

Latin America Pawn

• Latin America Pawn continued to deliver outstanding growth. Its contribution increased 63% in the quarter to $9.4 million (up 69% to $9.8 million on a constant currency basis) and rose 84% for the year to $34.3 million (up 83% to $34.2 million on a constant currency basis).
• Pawn store count expanded 84% in fiscal 2018, with 196 stores acquired and 12 stores opened.
• The acquired stores offer significant opportunity for higher revenue and profit by increasing focus on general merchandise pawn loan and retail activities, and implementing EZCORP's systems and operating practices. The company continues to see a robust pipeline of acquisition opportunities in Latin America.
• As a percentage of net revenues, segment operating expenses improved 200bps in both the quarter and the full year, at 62% and 63%, respectively.
• PLO rose 106% to $43.5 million (up 110% to $44.3 million on a constant currency basis). Industry leading same store PLO increased 4% (7% higher on a constant currency basis).
• Net revenues expanded 74% to $26.8 million in the quarter (up 82% to $28.0 million on a constant currency basis). PSC jumped 90% to $19.3 million (increasing 99% to $20.1 million on a constant currency basis), reflecting the significantly higher PLO from acquired stores and organic growth at same stores. For the full year, net revenues increased 74%.
• Merchandise sales improved 50% in total and 4% on a same store basis in the quarter (up 57% in total and 4% in same stores on a constant currency basis). Combined with a 90bps improvement in merchandise sales margins, this drove a 54% increase in merchandise sales gross profit (63% on a constant currency basis). For the year, merchandise sales increased 39% and 7% on a same store basis (39% and 6%, respectively, on a constant currency basis).

CONFERENCE CALL

EZCORP will host a conference call on Thursday, November 15, 2018, at 7:30 a.m. Central Time to discuss fourth quarter and fiscal year-end results. Analysts and institutional investors may participate by dialing (877) 201-0168, Conference ID: 1292208, international dialing (647) 788-4901. The call will be webcast simultaneously to the public through this link: http://investors.ezcorp.com/. A replay will be available online at http://investors.ezcorp.com/ shortly after the call.

ABOUT EZCORP

Formed in 1989, EZCORP has grown into a leading provider of pawn loans in the United States and Latin America. It also sells merchandise, primarily collateral forfeited from pawn lending operations and used 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 Russell 2000 Index, S&P SmallCap 600 Index, S&P 1000 Index and Nasdaq Composite Index.

FORWARD LOOKING STATEMENTS

This news release contains forward-looking statements on the company’s strategy, initiatives and expected performance. These statements are based on management’s current expectations on the outcome and timing of future events. All statements other than historical facts-including those on the company's strategy, initiatives and future performance, which 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 here, due to a number of uncertainties and other factors. These include 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 EZCORP’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.

All industry comparisons are based on available information from similar publicly traded companies.

1 Adjusted basis, which is a non-GAAP measure, excludes certain items. For additional information about these calculations, as well as a reconciliation to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

2 “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 comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

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EZCORP, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
�
	�	�	Three Months Ended								�	�	Fiscal Year Ended
			September 30,										September 30,
			�	2018	�	�	�	�	2017	�			�	2018	�	�	�	�	2017	�
																		�
			(Unaudited)
			(in thousands, except per share amounts)
Revenues:
Merchandise sales			$	105,102				$	95,166				$	438,372				$	414,838
Jewelry scrapping sales				16,586					13,531					60,752					51,189
Pawn service charges				82,335					71,097					305,936					273,080
Other revenues			�	2,308	�			�	2,275	�			�	8,455	�			�	8,847	�
Total revenues				206,331					182,069					813,515					747,954
Merchandise cost of goods sold				66,335					61,685					276,618					266,525
Jewelry scrapping cost of goods sold				14,754					11,736					52,290					43,931
Other cost of revenues			�	424	�			�	555	�			�	1,697	�			�	1,988	�
Net revenues				124,818					108,093					482,910					435,510
Operating expenses:
Operations				85,847					78,284					334,649					304,636
Administrative				13,726					11,949					53,653					53,254
Depreciation and amortization				7,186					5,415					25,484					23,661
Loss on sale or disposal of assets			�	10	�			�	348	�			�	463	�			�	359	�
Total operating expenses			�	106,769	�			�	95,996	�			�	414,249	�			�	381,910	�
Operating income				18,049					12,097					68,661					53,600
Interest expense				8,764					10,956					27,834					27,803
Interest income				(4,145	)				(5,194	)				(17,041	)				(12,103	)
Equity in net income of unconsolidated affiliate				(2,052	)				(1,148	)				(5,529	)				(4,916	)
Impairment of investment				11,712					—					11,712					—
Other expense (income)			�	82	�			�	(129	)			�	(5,391	)			�	(423	)
Income from continuing operations before income taxes				3,688					7,612					57,076					43,239
Income tax expense (benefit)			�	3,238	�			�	(2,457	)			�	18,149	�			�	11,206	�
Income from continuing operations, net of tax				450					10,069					38,927					32,033
(Loss) income from discontinued operations, net of tax			�	(225	)			�	43	�			�	(856	)			�	(1,825	)
Net income				225					10,112					38,071					30,208
Net income (loss) attributable to noncontrolling interest			�	360	�			�	(1,298	)			�	(988	)			�	(1,650	)
Net (loss) income attributable to EZCORP, Inc.			$	(135	)			$	11,410	�			$	39,059	�			$	31,858	�
																		�
Basic earnings per share attributable to EZCORP, Inc. — continuing operations			$	—				$	0.21				$	0.73				$	0.62
Diluted earnings per share attributable to EZCORP, Inc. — continuing operations			$	—				$	0.21				$	0.69				$	0.62
																		�
Weighted-average basic shares outstanding				54,466					54,298					54,456					54,260
Weighted-average diluted shares outstanding				57,390					54,428					57,896					54,368

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EZCORP, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
�
	�	�	September 30,
			�	2018	�	�	�	�	2017	�
								�
Assets:
Current assets:
Cash and cash equivalents			$	286,015				$	164,393
Pawn loans				198,463					169,242
Pawn service charges receivable, net				38,318					31,548
Inventory, net				166,997					154,411
Notes receivable, net				34,199					32,598
Prepaid expenses and other current assets			�	33,154	�			�	28,765	�
Total current assets				757,146					580,957
Investment in unconsolidated affiliate				49,500					43,319
Property and equipment, net				73,649					57,959
Goodwill				297,448					254,760
Intangible assets, net				54,923					32,420
Notes receivable, net				3,226					28,377
Deferred tax asset, net				7,165					16,856
Other assets, net			�	3,863	�			�	9,715	�
Total assets			$	1,246,920	�			$	1,024,363	�
								�
Liabilities and equity:
Current liabilities:
Accounts payable, accrued expenses and other current liabilities			$	57,800				$	61,543
Current Maturities of long-term debt				190,181					—
Customer layaway deposits			�	11,824	�			�	11,032	�
Total current liabilities				259,805					72,575
Long-term debt, net				226,702					284,807
Deferred tax liability				8,817					—
Other long-term liabilities			�	6,890	�			�	7,055	�
Total liabilities				502,214					364,437
Stockholders’ equity:
Class A Non-Voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued and outstanding: 51,614,746 as of September 30, 2018 and 51,427,832 as of September 30, 2017				516					514
Class B Voting Common Stock, convertible, par value $.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171				30					30
Additional paid-in capital				397,927					348,532
Retained earnings				392,180					351,666
Accumulated other comprehensive loss			�	(42,616	)			�	(38,367	)
EZCORP, Inc. stockholders’ equity				748,037					662,375
Noncontrolling interest			�	(3,331	)			�	(2,449	)
Total equity			�	744,706	�			�	659,926	�
Total liabilities and equity			$	1,246,920	�			$	1,024,363	�

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EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
�
	�	�	Fiscal Year Ended
			September 30,
			�	2018	�	�	�	�	2017	�
								�
			(in thousands)
Operating activities:
Net income			$	38,071				$	30,208
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization				25,484					23,661
Amortization of debt discount and deferred financing costs				17,595					12,303
Accretion of notes receivable discount				(9,150	)				(3,788	)
Deferred income taxes				7,978					6,046
Other adjustments				2,607					2,364
Gain on restructured notes receivable				—					(3,048	)
Loss on extinguishment of debt and other				—					5,250
Stock compensation expense				10,784					5,866
Income from investment in unconsolidated affiliate				(5,529	)				(4,916	)
Impairment of investments in unconsolidated affiliate				11,712					—
Changes in operating assets and liabilities:
Service charges and fees receivable				(3,153	)				(224	)
Inventory				(1,074	)				721
Prepaid expenses, other current assets and other assets				214					11,314
Accounts payable, accrued expenses and other liabilities				(3,902	)				(31,041	)
Customer layaway deposits				709					241
Income taxes, net of excess tax benefit from stock compensation			�	(3,622	)			�	3,027	�
Net cash provided by operating activities				88,724					57,984
Investing activities:
Loans made				(707,220	)				(646,625	)
Loans repaid				421,331					386,383
Recovery of pawn loan principal through sale of forfeited collateral				266,962					244,632
Additions to property and equipment				(40,474	)				(25,001	)
Acquisitions, net of cash acquired				(93,165	)				(2,250	)
Investment in unconsolidated affiliate				(14,036	)				—
Principal collections on notes receivable			�	32,396	�			�	29,458	�
Net cash used in investing activities				(134,206	)				(13,403	)
Financing activities:
Taxes paid related to net share settlement of equity awards				(311	)				(767	)
Proceeds from borrowings, net of issuance costs				171,409					139,506
Payments on borrowings			�	(3,510	)			�	(85,388	)
Net cash provided by financing activities				167,588					53,351
Effect of exchange rate changes on cash and cash equivalents			�	(484	)			�	724	�
Net increase in cash and cash equivalents				121,622					98,656
Cash and cash equivalents at beginning of period			�	164,393	�			�	65,737	�
Cash and cash equivalents at end of period			$	286,015	�			$	164,393	�
Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory			$	274,590				$	257,388

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EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
�
	�	�	Three Months Ended September 30, 2018
					�	�	Latin			�	�				�	�				�	�				�	�
							America					Other					Total					Corporate
			U.S. Pawn				Pawn					International					Segments					Items					Consolidated
																											�
			(in thousands)
Revenues:
Merchandise sales			$	80,554			$	24,548				$	—				$	105,102				$	—				$	105,102
Jewelry scrapping sales				13,230				3,356					—					16,586					—					16,586
Pawn service charges				63,022				19,313					—					82,335					—					82,335
Other revenues			�	45			�	(503	)			�	2,766	�			�	2,308	�			�	—	�			�	2,308	�
Total revenues				156,851				46,714					2,766					206,331					—					206,331
Merchandise cost of goods sold				49,443				16,892					—					66,335					—					66,335
Jewelry scrapping cost of goods sold				11,734				3,020					—					14,754					—					14,754
Other cost of revenues			�	—			�	—	�			�	424	�			�	424	�			�	—	�			�	424	�
Net revenues				95,674				26,802					2,342					124,818					—					124,818
Segment and corporate expenses (income):
Operations				66,346				16,583					2,918					85,847					—					85,847
Administrative				—				—					—					—					13,726					13,726
Depreciation and amortization				3,529				1,356					42					4,927					2,259					7,186
Loss (gain) on sale or disposal of assets				6				(4	)				—					2					8					10
Interest expense				71				19					—					90					8,674					8,764
Interest income				—				(547	)				—					(547	)				(3,598	)				(4,145	)
Equity in net income of unconsolidated affiliate				—				—					(2,052	)				(2,052	)				—					(2,052	)
Impairment of investment				—				—					11,712					11,712					—					11,712
Other income			�	—			�	(53	)			�	(14	)			�	(67	)			�	149	�			�	82	�
Segment contribution (loss)			$	25,722			$	9,448	�			$	(10,264	)			$	24,906	�
Income from continuing operations before income taxes																	$	24,906	�			$	(21,218	)			$	3,688	�

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EZCORP, Inc.
OPERATING SEGMENT RESULTS
�
	�	�	Twelve Months Ended September 30, 2018
						�	�	Latin			�	�				�	�				�	�				�	�
								America					Other					Total					Corporate
			U.S. Pawn					Pawn					International					Segments					Items					Consolidated
																												�
			(in thousands)
Revenues:
Merchandise sales			$	350,699				$	87,673				$	—				$	438,372				$	—				$	438,372
Jewelry scrapping sales				47,745					13,007					—					60,752					—					60,752
Pawn service charges				237,461					68,475					—					305,936					—					305,936
Other revenues			�	250	�			�	85	�			�	8,120	�			�	8,455	�			�	—	�			�	8,455	�
Total revenues				636,155					169,240					8,120					813,515					—					813,515
Merchandise cost of goods sold				216,408					60,210					—					276,618					—					276,618
Jewelry scrapping cost of goods sold				40,417					11,873					—					52,290					—					52,290
Other cost of revenues			�	—	�			�	—	�			�	1,697	�			�	1,697	�			�	—	�			�	1,697	�
Net revenues				379,330					97,157					6,423					482,910					—					482,910
Segment and corporate expenses (income):
Operations				263,094					61,361					10,194					334,649					—					334,649
Administrative				—					—					—					—					53,653					53,653
Depreciation and amortization				12,869					4,068					184					17,121					8,363					25,484
Loss on sale or disposal of assets				203					27					—					230					233					463
Interest expense				71					25					—					96					27,738					27,834
Interest income				—					(2,619	)				—					(2,619	)				(14,422	)				(17,041	)
Equity in net income of unconsolidated affiliate				—					—					(5,529	)				(5,529	)				—					(5,529	)
Impairment of investments				—					—					11,712					11,712					—					11,712
Other income			�	(3	)			�	(42	)			�	(132	)			�	(177	)			�	(5,214	)			�	(5,391	)
Segment contribution (loss)			$	103,096	�			$	34,337	�			$	(10,006	)			$	127,427	�
Income from continuing operations before income taxes																		$	127,427	�			$	(70,351	)			$	57,076	�

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EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
�
	�	�	Three Months Ended September 30, 2017
						�	�	Latin			�	�				�	�				�	�			�	�
								America					Other					Total					Corporate
			U.S. Pawn					Pawn					International					Segments					Items				Consolidated
																											�
			(in thousands)
Revenues:
Merchandise sales			$	78,753				$	16,410				$	3				$	95,166				$	—				$	95,166
Jewelry scrapping sales				13,045					486					—					13,531					—					13,531
Pawn service charges				60,957					10,140					—					71,097					—					71,097
Other revenues			�	62	�			�	188	�			�	2,025	�			�	2,275	�			�	—	�			�	2,275	�
Total revenues				152,817					27,224					2,028					182,069					—					182,069
Merchandise cost of goods sold				50,240					11,445					—					61,685					—					61,685
Jewelry scrapping cost of goods sold				11,320					416					—					11,736					—					11,736
Other cost of revenues			�	—	�			�	—	�			�	555	�			�	555	�			�	—	�			�	555	�
Net revenues				91,257					15,363					1,473					108,093					—					108,093
Segment and corporate expenses (income):
Operations				65,478					9,772					3,034					78,284					—					78,284
Administrative				—					—					—					—					11,949					11,949
Depreciation and amortization				2,684					765					47					3,496					1,919					5,415
Loss on sale or disposal of assets				252					69					—					321					27					348
Interest expense				—					2					—					2					10,954					10,956
Interest income				—					(1,041	)				—					(1,041	)				(4,153	)				(5,194	)
Equity in net income of unconsolidated affiliate				—					—					(1,148	)				(1,148	)				—					(1,148	)
Impairment of investments				—					—					—					—					—					—
Other income			�	(5	)			�	(8	)			�	(68	)			�	(81	)			�	(48	)			�	(129	)
Segment contribution (loss)			$	22,848	�			$	5,804	�			$	(392	)			$	28,260	�
Income from continuing operations before income taxes																		$	28,260	�			$	(20,648	)			$	7,612	�

�
�
EZCORP, Inc.
OPERATING SEGMENT RESULTS
�
	�	�	Twelve Months Ended September 30, 2017
						�	�	Latin			�	�				�	�				�	�				�	�
								America					Other					Total					Corporate
			U.S. Pawn					Pawn					International					Segments					Items					Consolidated
																												�
			(in thousands)
Revenues:
Merchandise sales			$	351,878				$	62,957				$	3				$	414,838				$	—				$	414,838
Jewelry scrapping sales				48,203					2,986					—					51,189					—					51,189
Pawn service charges				238,437					34,643					—					273,080					—					273,080
Other revenues			�	219	�			�	645	�			�	7,983	�			�	8,847	�			�	—	�			�	8,847	�
Total revenues				638,737					101,231					7,986					747,954					—					747,954
Merchandise cost of goods sold				223,475					43,050					—					266,525					—					266,525
Jewelry scrapping cost of goods sold				41,434					2,497					—					43,931					—					43,931
Other cost of revenues			�	—	�			�	—	�			�	1,988	�			�	1,988	�			�	—	�			�	1,988	�
Net revenues				373,828					55,684					5,998					435,510					—					435,510
Segment and corporate expenses (income):
Operations				259,977					36,211					8,448					304,636					—					304,636
Administrative				—					—					—					—					53,254					53,254
Depreciation and amortization				10,171					2,675					191					13,037					10,624					23,661
Loss on sale or disposal of assets				198					134					—					332					27					359
Interest expense				—					9					—					9					27,794					27,803
Interest income				—					(1,930	)				—					(1,930	)				(10,173	)				(12,103	)
Equity in net income of unconsolidated affiliate				—					—					(4,916	)				(4,916	)				—					(4,916	)
Other income			�	(19	)			�	(69	)			�	(96	)			�	(184	)			�	(239	)			�	(423	)
Segment contribution			$	103,501	�			$	18,654	�			$	2,371	�			$	124,526	�
Income from continuing operations before income taxes																		$	124,526	�			$	(81,287	)			$	43,239	�

�
�
EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
�
	�	�	Three Months Ended September 30, 2018
					�	�	Latin America		�	�	Other	�	�
			U.S. Pawn				Pawn				International			Consolidated
														�
As of June 30, 2018			510				451				27			988
New locations opened			—				2				—			2
Locations sold, combined or closed			(2	)			—	�			—			(2	)
As of September 30, 2018			508	�			453	�			27			988	�
			�
			Three Months Ended September 30, 2017
							Latin America				Other
			U.S. Pawn				Pawn				International			Consolidated
														�
As of June 30, 2017			515				244				27			786
New locations opened			—				4				—			4
Locations acquired			2				—				—			2
Locations sold, combined or closed			(4	)			(2	)			—			(6	)
As of September 30, 2017			513	�			246	�			27			786	�
			�
			Twelve Months Ended September 30, 2018
							Latin America				Other
			U.S. Pawn				Pawn				International			Consolidated
														�
As of September 30, 2017			513				246				27			786
New locations opened			—				12				—			12
Locations acquired			—				196				—			196
Locations sold, combined or closed			(5	)			(1	)			—			(6	)
As of September 30, 2018			508	�			453	�			27			988	�
			�
			Twelve Months Ended September 30, 2017
							Latin America				Other
			U.S. Pawn				Pawn				International			Consolidated
														�
As of September 30, 2016			520				239				27			786
New locations opened			—				10				—			10
Locations acquired			2				—				—			2
Locations sold, combined or closed			(9	)			(3	)			—			(12	)
As of September 30, 2017			513	�			246	�			27			786	�
															�
															�

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") and on an adjusted basis. We use constant currency results to evaluate our Latin America Pawn operations, which are denominated primarily in Mexican pesos and other Latin American currencies. As GPMX was not acquired until fiscal 2018, such results included on a constant currency basis reflect the actual exchange rates in effect during the year ended�September�30, 2018�without adjustment. We believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Latin America 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 believe that presentation of results on an adjusted basis 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 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 on a monthly basis during the appropriate period for statement of operations items. The end-of-period Mexican peso to U.S. dollar exchange rate as of�September�30, 2018 and 2017 was 18.7 to 1 and 18.2 to 1, respectively. The approximate average Mexican peso to U.S. dollar exchange rate for the years ended September�30, 2018, 2017 and 2016 was 19 to 1, 19.1 to 1, and 17.9, respectively.

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. We have experienced a prolonged weakening of the Mexican peso to the U.S. dollar and may continue to experience further weakening in future reporting periods, which may adversely impact our future operating results when stated on a GAAP basis.

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 as of and for the September�30, 2018.

�
�
Miscellaneous Non-GAAP Financial Measures (Unaudited)
�
	�	�	Three Months Ended							�	�	Fiscal Year Ended
			September 30,									September 30,
			2018		�	�	2017					2018			�	�	2017
																	�
			(in millions)
Income from continuing operations before income taxes			$	3.7			$	7.6				$	57.1				$	43.2
Impairment of investment				11.7				—					11.7					—
Acquisition expenses				0.2				0.8					0.8					1.1
Currency exchange rate fluctuations				0.6				—					0.1					(0.4	)
Net revenue impact from Hurricanes Harvey and Irma				—				0.2					—					0.2
Operating expense impact from Hurricanes Harvey and Irma				—				0.9					—					0.9
Impact from restructuring of Grupo Finmart notes receivable				—				(3.0	)				—					(3.0	)
Debt extinguishment costs				—				5.2					—					5.2
Litigation settlement				—				—					(5.2	)				—
Asset disposal				—				—					(0.1	)				0.2
Organizational realignment expenses			�	—			�	—	�			�	—	�			�	1.1	�
Adjusted income from continuing operations before income taxes			$	16.2			$	11.7	�			$	64.4	�			$	48.5	�
																	�
Basic earnings per share												$	0.73				$	0.62
Impairment of investment, net of tax impact per share													0.16					—
Acquisition expenses, net of tax impact per share													0.01					0.02
Operating expense impact from Hurricanes Harvey and Irma, net of tax impact per share													—					0.02
Impact from restructuring of Grupo Finmart notes receivable, net of tax impact per share													—					(0.09	)
Debt extinguishment costs, net of tax impact per share													—					0.06
Litigation settlement, net of tax impact per share													(0.06	)				—
Organizational realignment expenses, net of tax impact per share												�	—	�			�	0.01	�
Adjusted basic earnings per share												$	0.84	�			$	0.64	�
																	�
Diluted earnings per share												$	0.69				$	0.62
Impairment of investment, net of tax impact per share													0.15					—
Acquisition expenses, net of tax impact per share													0.01					0.02
Operating expense impact from Hurricanes Harvey and Irma, net of tax impact per share													—					0.02
Impact from restructuring of Grupo Finmart notes receivable, net of tax impact per share													—					(0.09	)
Debt extinguishment costs, net of tax impact per share													—					0.06
Litigation settlement, net of tax impact per share													(0.06	)				—
Organizational realignment expenses, net of tax impact per share												�	—	�			�	0.01	�
Adjusted diluted earnings per share												$	0.79	�			$	0.64	�

	�	�				�	�
								�
			U.S. Dollar					Percentage
			Amount					Change YOY
								�
			(in millions)
Latin America Pawn segment profit before tax (three months ended September 30, 2018)			$	9.4				63	%
Currency exchange rate fluctuations			�	0.4	�			�
Constant currency Latin America Pawn segment profit before tax (three months ended September 30, 2018)			$	9.8				69	%
								�
Latin America Pawn segment profit before tax (twelve months ended September 30, 2018)			$	34.3				84	%
Currency exchange rate fluctuations			�	(0.1	)			�
Constant currency Latin America Pawn segment profit before tax (twelve months ended September 30, 2018)			$	34.2				83	%
								�
Consolidated net revenue (twelve months ended September 30, 2018)			$	482.9				11	%
Currency exchange rate fluctuations			�	0.1	�			�
Constant currency consolidated net revenue (twelve months ended September 30, 2018)			$	482.9				11	%
								�
Consolidated PSC revenue (twelve months ended September 30, 2018)			$	305.9				12	%
Currency exchange rate fluctuations			�	0.4	�			�
Constant currency consolidated PSC revenue (twelve months ended September 30, 2018)			$	306.3				12	%
								�
Consolidated merchandise sales gross profit (twelve months ended September 30, 2018)			$	161.8				9	%
Currency exchange rate fluctuations			�	(0.1	)			�
Constant currency consolidated merchandise sales gross profit (twelve months ended September 30, 2018)			$	161.7				9	%
								�
Consolidated operations expenses (twelve months ended September 30, 2018)			$	334.6				10	%
Currency exchange rate fluctuations			�	—	�			�
Constant currency consolidated operations expenses (twelve months ended September 30, 2018)			$	334.6				10	%
								�
U.S. Pawn same store PLO			$	155.0				5	%
U.S. Pawn same store PLO for Hurricanes Harvey and Irma impacted			�	(50.8	)			�
U.S. Pawn adjusted same store PLO			$	104.2				2	%
								�
Latin America Pawn PLO			$	43.5				106	%
Currency exchange rate fluctuations			�	0.8	�			�
Constant currency Latin America Pawn PLO			$	44.3				110	%
								�
Latin American Pawn same store PLO			$	22.0				4	%
Currency exchange rate fluctuations			�	0.6	�			�
Constant currency Latin America Pawn same store PLO			$	22.6				7	%
								�
Latin America Pawn net revenue (three months ended September 30, 2018)			$	26.8				74	%
Currency exchange rate fluctuations			�	1.2	�			�
Constant currency Latin America Pawn net revenue (three months ended September 30, 2018)			$	28.0				82	%
								�
Latin America Pawn PSC revenue (three months ended September 30, 2018)			$	19.3				90	%
Currency exchange rate fluctuations			�	0.8	�			�
Constant currency Latin America Pawn PSC revenue (three months ended September 30, 2018)			$	20.1				99	%
								�
Latin America Pawn merchandise sales (three months ended September 30, 2018)			$	24.5				50	%
Currency exchange rate fluctuations			�	1.3	�			�
Constant currency Latin America Pawn merchandise sales (three months ended September 30, 2018)			$	25.8				57	%
								�
Latin America Pawn same store merchandise sales (three months ended September 30, 2018)			$	17.0				4	%
Currency exchange rate fluctuations			�	1.0	�			�
Constant currency Latin America Pawn same store merchandise sales (three months ended September 30, 2018)			$	18.0				4	%
								�
Latin America Pawn merchandise sales gross profit (three months ended September 30, 2018)			$	7.7				54	%
Currency exchange rate fluctuations			�	0.4	�			�
Constant currency Latin America Pawn merchandise sales gross profit (three months ended September 30, 2018)			$	8.1				63	%
								�
Latin America Pawn merchandise sales (twelve months ended September 30, 2018)			$	87.7				39	%
Currency exchange rate fluctuations			�	(0.2	)			�
Constant currency Latin America Pawn merchandise sales (twelve months ended September 30, 2018)			$	87.5				39	%
								�
Latin America Pawn same store merchandise sales (twelve months ended September 30, 2018)			$	66.8				7	%
Currency exchange rate fluctuations			�	(0.3	)			�
Constant currency Latin America Pawn same store merchandise sales (twelve months ended September 30, 2018)			$	66.5				6	%
									�

View source version on businesswire.com: https://www.businesswire.com/news/home/20181114005887/en/

Jeff Christensen

Vice President, Investor Relations

Email: [email protected]

Phone: (512) 437-3545

Source: EZCORP, Inc.

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EZCORP (EZPW) Reports Q4 Revenues BeatNovember 14, 2018 4:02 PM