AUSTIN, Texas--(BUSINESS WIRE)-- EZCORP, Inc. (NASDAQ: EZPW) today announced results for its third quarter ended June 30, 2019.

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.

HIGHLIGHTS FOR THIRD QUARTER OF FISCAL 2019

• Total revenues for the quarter were up 1% to $202.5 million. Included in the GAAP results is a discrete $6.1 million adjustment in Latin America to correct the calculation of certain transaction tax liabilities in prior periods ($4.6 million of which reduced merchandise sales and $1.5 million of which increased interest expense). Adjusted1 total revenues increased 4% to $206.9 million, driven by continued growth in key pawn operating metrics including pawn loans outstanding (PLO), pawn service charges (PSC) and merchandise sales, across U.S. and Latin America.

• Income before tax was $3.5 million, down 78%, and diluted earnings per share were $0.06, down 76%. These year-over-year comparisons were impacted primarily by a favorable litigation settlement in the prior-year quarter, the inclusion in the current quarter of costs related to certain growth investments, and other discrete items. Excluding those items and adjusting for constant currency2, adjusted income before tax was $15.0 million, up 16%, and adjusted diluted earnings per share were $0.18, up 13%.

• Cash and cash equivalents ended the current quarter at $138.9 million, after the retirement of $195.0 million of convertible notes in June 2019 using cash on hand and continued investment in growth initiatives. During the quarter, the company completed the acquisition of seven pawn stores in Nevada for $7.0 million and collected another $7.3 million of principal under the Alpha Credit / Grupo Finmart notes.

CEO COMMENTARY AND OUTLOOK

Chief Executive Officer Stuart Grimshaw commented, "Current quarter activities delivered solid operating results highlighted by ongoing momentum across all geographies. Steady growth in PLO and slightly improving yields, reflecting the health of the loan balance, drove strong growth in our primary net revenue component, PSC. On an adjusted basis, EBITDA and EPS growth accelerated as a result of rising operating leverage during the quarter.

“We remain focused on longer-term strategic initiatives centered on best serving our customers’ need for cash, expanding our footprint both here in the U.S. and across Latin America via de novo store growth and capitalizing on higher-return M&A opportunities, and proactively investing in differentiated digital engagement and data analytics programs. We are doing this while maintaining financial flexibility to fund growth to enhance long-term shareholder value. Focusing on efficient and effective capital deployment, we recently acquired seven pawn stores expanding our presence in Nevada, opened four Latin America de novo stores in the quarter and retired a material tranche of convertible debt with cash on hand.”

CONSOLIDATED RESULTS

Three Months Ended June 30 in thousands, except per share amounts
			As Reported										Adjusted1
			2019					2018					2019					2018
Total Revenues			$		202,465			$		199,612			$		206,917			$		199,612
Net Revenues			$		115,853			$		114,742			$		120,382			$		114,742
Income from Continuing Operations, Before Tax			$		3,459			$		15,506			$		14,979			$		12,924
Net Income from Continuing Operations			$		3,361			$		14,004			$		10,094			$		9,512
Diluted Earnings Per Share from Continuing Operations			$		0.06			$		0.25			$		0.18			$		0.16
Adjusted EBITDA1			$		17,373			$		24,666			$		23,334			$		19,588

• Net revenues were up 1% to $115.9 million on both a GAAP and constant currency basis. Adjusted net revenues increased 5% to $120.4 million. PLO growth of 4% (based on ending balance) and 7% (based on average balances), combined with a slight improvement in yields drove a 9% increase in PSC to $79.0 million. Consolidated merchandise sales gross profit declined 11% to $33.6 million on a 1% decrease in merchandise sales. Adjusted sales gross profit improved 1% to $38.1 million and sales margins decreased 90 basis points to 35.2%, reflecting the effective liquidation of aged general merchandise in U.S. Pawn from 7% to 6% in the current quarter.

• Consolidated operations expenses rose 2% to $84.7 million on both a GAAP and constant currency basis. Total store count also increased 2%, consisting of a net 18 stores acquired or opened since the prior year quarter (19 new and acquired stores in Latin America and seven acquired stores in the U.S., net of eight store closures in Canada and the U.S.). Same store operations expense increased 1% primarily due to labor and benefit cost increases, including reduced vacancies and increased staffing for expanded stores, an increase in robbery losses in Mexico, and other smaller items.
• Administrative expense increased 13%, or $1.8 million to $15.1 million principally as a result of a $1.3 million strategic investment in the development of the Evergreen customer-centric digital platform. Another $2.9 million related to this project was capitalized in the quarter, based on the nature of the specific work performed.
• The company’s global pawn businesses (consisting of U.S. Pawn and Latin America Pawn) generated consolidated segment contribution of $25.7 million, down 14% from the prior year quarter. On an adjusted basis, global pawn generated consolidated segment contribution of $31.7 million, up 6%.

• Contribution from the Other International segment improved $1.2 million to $0.9 million.

• Net interest expense increased $3.6 million. Excluding the $1.5 million of interest related to the transaction tax adjustment, net interest expense increased $2.1 million driven by additional debt issued in May 2018 and lower interest income on the declining balance of notes receivable from Alpha Credit as principal collections are received monthly, offset by the June 2019 repayment of our $195.0 million cash convertible senior notes.

SEGMENT RESULTS

U.S. Pawn

• Same store PSC rose 6%, with ending PLO per store of $289,000, up 3% on a year-over-year basis. The growth reflected disciplined lending practices and a focus on meeting customers' need for cash.
• Merchandise margins remained strong at 37%. The 60 basis point margin reduction from the prior-year quarter reflects effective liquidation of aged general merchandise inventory, reduced during the quarter from 7% to 6%. Jewelry scrapping net revenues decreased $0.2 million on $3.9 million lower scrap proceeds, reflecting lower current market prices for scrap diamonds and an effort to sell more jewelry in store rather than to refiners at lower margins. Scrap margins improved 250 basis points to 16%.
• U.S. Pawn's net revenues rose 3% to $92.0 million, with flat combined operating expenses and depreciation, resulting in an 11% increase in segment contribution to $23.6 million.

Latin America Pawn

• Net revenues declined 3% to $23.2 million ($23.3 million on a constant currency basis). Adjusted net revenues increased 16% to $27.7 million reflecting growth in new, acquired and same stores.
• PSC rose 20% to $20.3 million on both a GAAP and a constant currency basis, reflecting an 18% increase in average PLO for the quarter. Ending PLO grew 6% to $41.7 million (up 4% to $41.0 million on a constant currency basis), with ending PLO per store of $89,000, up 2%.
• Merchandise sales decreased 4%, or $0.8 million (4% or $1.0 million constant currency). On an adjusted basis, merchandise sales increased 17%, or $3.6 million and gross margin on merchandise sales declined 100 basis points to 29%.

• Operations expense increased 22% to $18.3 million, including stores acquired or opened since the prior-year quarter and stores expanded or relocated, for which the revenue improvement is expected to lag the incremental costs. Same store operations expense increased 12%, primarily as a result of store licensing requirements recently enacted in Mexico, an increase in robbery losses and related security costs, and labor costs that increased at a rate slightly lower than the total revenue growth.
• The company added four de novo stores in the quarter. New stores drive attractive long-term profit enhancement but create a short-term drag on earnings as they ramp. Acquired stores are generally less efficient than our same stores until fully integrated, but typically are accretive in their first full quarter of ownership.

• Segment contribution decreased 76% to $2.1 million (72% on a constant currency basis). Adjusted segment contribution decreased 4% to $8.0 million as a result of new and acquired stores, recently expanded and relocated stores, and the operations expense increase previously described combined with administrative costs to support the growth.

CONFERENCE CALL

EZCORP will host a conference call on Thursday, August 1, 2019, at 7:30am Central Time to discuss first quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 3967714, or internationally by dialing (647) 788-4901. 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 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 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.

1	“Adjusted basis, which is a nonGAAP measure, excludes certain items. For additional information about these calculations, as well as a reconciliation to the most comparable GAAP financial measures, see “NonGAAP Financial Information” at the end of this release.
2	“Constant currency” basis, which is a nonGAAP measure, excludes the impact of foreign currency exchange rate fluctuations. For additional information about these calculations, as well as a reconciliation to the most comparable GAAP financial measures, see “NonGAAP Financial Information” at the end of this release.

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		Three Months Ended June 30,											Nine Months Ended June 30,
		2019					2018						2019					2018
		(Unaudited)
		(in thousands, except per share amounts)
Revenues:
Merchandise sales		$		103,902			$		104,737				$		346,186			$		333,270
Jewelry scrapping sales				18,212					20,428						37,873					44,166
Pawn service charges				78,980					72,544						244,298					222,597
Other revenues				1,371					1,903						4,533					6,147
Total revenues				202,465					199,612						632,890					606,180
Merchandise cost of goods sold				70,271					66,896						225,183					210,283
Jewelry scrapping cost of goods sold				15,765					17,625						32,648					37,536
Other cost of revenues				576					349						1,467					1,273
Net revenues				115,853					114,742						373,592					357,088
Operating expenses:
Operations				84,727					82,932						261,756					248,758
Administrative				15,053					13,268						46,795					39,688
Depreciation and amortization				7,254					6,124						21,114					18,298
Loss on sale or disposal of assets and other				24					314						3,643					453
Total operating expenses				107,058					102,638						333,308					307,197
Operating income				8,795					12,104						40,284					49,891
Interest expense				9,832					7,394						27,212					19,070
Interest income				(3,172	)				(4,358	)					(9,637	)				(12,896	)
Equity in net income of unconsolidated affiliates				(1,320	)				(1,151	)					(632	)				(3,477	)
Impairment of investment in unconsolidated affiliates		—					—								19,725			—
Other income				(4	)				(5,287	)					(121	)				(5,473	)
Income from continuing operations before income taxes				3,459					15,506						3,737					52,667
Income tax expense				98					1,502						1,377					14,710
Income from continuing operations, net of tax				3,361					14,004						2,360					37,957
(Loss) income from discontinued operations, net of tax				(203	)				91						(404	)				(631	)
Net income				3,158					14,095						1,956					37,326
Net loss attributable to noncontrolling interest		—							(359	)					(1,230	)				(1,348	)
Net income attributable to EZCORP, Inc.		$		3,158			$		14,454				$		3,186			$		38,674
Basic earnings per share attributable to EZCORP, Inc. — continuing operations		$		0.06			$		0.26				$		0.06			$		0.72
Diluted earnings per share attributable to EZCORP, Inc. — continuing operations		$		0.06			$		0.25				$		0.06			$		0.69
Weighted-average basic shares outstanding				55,445					54,464						55,306					54,453
Weighted-average diluted shares outstanding				55,487					57,954						55,327					57,080

EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)
		June 30, 2019					June 30, 2018					September 30, 2018
		(Unaudited)
Assets:
Current assets:
Cash and cash equivalents		$		138,922			$		284,493			$		285,311
Pawn loans				190,299					183,054					198,463
Pawn service charges receivable, net				29,847					26,439					30,959
Inventory, net				175,802					151,145					166,997
Notes receivable, net				16,166					37,906					34,199
Prepaid expenses and other current assets				37,365					43,708					33,456
Total current assets				588,401					726,745					749,385
Investments in unconsolidated affiliates				30,922					61,056					49,500
Property and equipment, net				66,214					71,587					73,649
Goodwill				300,700					294,335					299,248
Intangible assets, net				63,646					59,678					54,923
Notes receivable, net				10,912					13,432					3,226
Deferred tax asset, net				3,956					6,146					7,986
Other assets				4,472					3,575					3,863
Total assets		$		1,069,223			$		1,236,554			$		1,241,780
Liabilities and equity:
Current liabilities:
Current maturities of long-term debt, net		$		215			$		195,796			$		190,181
Accounts payable, accrued expenses and other current liabilities				59,981					61,595					57,958
Customer layaway deposits				12,750					11,938					11,824
Total current liabilities				72,946					269,329					259,963
Long-term debt, net				235,449					222,897					226,702
Deferred tax liability, net				7,522					4,285					8,817
Other long-term liabilities				5,990					7,458					6,890
Total liabilities				321,907					503,969					502,372
Commitments and contingencies
Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued and outstanding: 52,475,070 as of June 30, 2019; 51,494,246 as of June 30, 2018; and 51,614,746 as of September 30, 2018				524					515					516
Class B Voting Common Stock, convertible, par value $.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171				30					30					30
Additional paid-in capital				404,880					395,428					397,927
Retained earnings				389,808					388,014					386,622
Accumulated other comprehensive loss				(47,926	)				(47,712	)				(42,356	)
EZCORP, Inc. stockholders’ equity				747,316					736,275					742,739
Noncontrolling interest		—							(3,690	)				(3,331	)
Total equity				747,316					732,585					739,408
Total liabilities and equity		$		1,069,223			$		1,236,554			$		1,241,780

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		Nine Months Ended June 30,
		2019					2018
		(Unaudited)
		(in thousands)
Operating activities:
Net income		$		1,956			$		37,326
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization				21,114					18,298
Amortization of debt discount and deferred financing costs				16,613					12,126
Accretion of notes receivable discount and deferred compensation fee				(3,788	)				(7,222	)
Deferred income taxes				5,003					3,135
Impairment of investment in unconsolidated affiliate				19,725			—
Other adjustments				1,875					1,948
Reserve on jewelry scrap receivable				3,646			—
Stock compensation expense				7,036					8,216
Income from investment in unconsolidated affiliates				(632	)				(3,477	)
Changes in operating assets and liabilities, net of business acquisitions:
Service charges and fees receivable				1,301					2,609
Inventory				1,377					988
Prepaid expenses, other current assets and other assets				(4,194	)				(3,356	)
Accounts payable, accrued expenses and other liabilities				(1,477	)				(4,624	)
Customer layaway deposits				949					935
Income taxes, net of excess tax benefit from stock compensation				(5,527	)				2,419
Net cash provided by operating activities				64,977					69,321
Investing activities:
Loans made				(542,512	)				(512,914	)
Loans repaid				328,079					318,636
Recovery of pawn loan principal through sale of forfeited collateral				211,979					202,078
Additions to property and equipment, net				(24,568	)				(33,917	)
Acquisitions, net of cash acquired				(8,116	)				(93,165	)
Investment in unconsolidated affiliate		—							(14,036	)
Principal collections on notes receivable				21,900					16,210
Net cash used in investing activities				(13,238	)				(117,108	)
Financing activities:
Taxes paid related to net share settlement of equity awards				(3,288	)				(311	)
Proceeds from borrowings, net of issuance costs				1,064					170,496
Payments on borrowings				(195,877	)				(28	)
Net cash (used in) provided by financing activities				(198,101	)				170,157
Effect of exchange rate changes on cash and cash equivalents and restricted cash				(294	)				(1,493	)
Net (decrease) increase in cash, cash equivalents and restricted cash				(146,656	)				120,877
Cash, cash equivalents and restricted cash at beginning of period				285,578					163,868
Cash, cash equivalents and restricted cash at end of period		$		138,922			$		284,745
Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory		$		221,940			$		197,163

EZCORP, Inc. OPERATING SEGMENT RESULTS (Unaudited and in thousands)
		Three Months Ended June 30, 2019
		U.S. Pawn					Latin America Pawn					Other International					Total Segments					Corporate Items					Consolidated
Revenues:
Merchandise sales		$		83,904			$		19,998			$		—			$		103,902			$		—			$		103,902
Jewelry scrapping sales				13,889					4,323			—							18,212			—							18,212
Pawn service charges				58,635					20,345			—							78,980			—							78,980
Other revenues				34					67					1,270					1,371			—							1,371
Total revenues				156,462					44,733					1,270					202,465			—							202,465
Merchandise cost of goods sold				52,855					17,416			—							70,271			—							70,271
Jewelry scrapping cost of goods sold				11,599					4,166			—							15,765			—							15,765
Other cost of revenues		—					—							576					576			—							576
Net revenues				92,008					23,151					694					115,853			—							115,853
Segment and corporate expenses (income):
Operations				65,449					18,284					994					84,727			—							84,727
Administrative		—					—					—					—							15,053					15,053
Depreciation and amortization				2,934					1,626					72					4,632					2,622					7,254
Loss (gain) on sale or disposal of assets and other				4					(8	)				6					2					22					24
Interest expense		—							1,491					76					1,567					8,265					9,832
Interest income		—							(376	)		—							(376	)				(2,796	)				(3,172	)
Equity in net income of unconsolidated affiliates		—					—							(1,320	)				(1,320	)		—							(1,320	)
Other (income) expense		—							34					6					40					(44	)				(4	)
Segment contribution		$		23,621			$		2,100			$		860			$		26,581
Income from continuing operations before income taxes																	$		26,581			$		(23,122	)		$		3,459

		Three Months Ended June 30, 2018
		U.S. Pawn				Latin America Pawn				Other International				Total Segments				Corporate Items				Consolidated
Revenues:
Merchandise sales		$	83,898			$	20,839			$	—			$	104,737			$	—			$	104,737
Jewelry scrapping sales		17,813				2,615				—				20,428				—				20,428
Pawn service charges		55,536				17,008				—				72,544				—				72,544
Other revenues		55				245				1,603				1,903				—				1,903
Total revenues		157,302				40,707				1,603				199,612				—				199,612
Merchandise cost of goods sold		52,340				14,556				—				66,896				—				66,896
Jewelry scrapping cost of goods sold		15,329				2,296				—				17,625				—				17,625
Other cost of revenues		—				—				349				349				—				349
Net revenues		89,633				23,855				1,254				114,742				—				114,742
Segment and corporate expenses (income):
Operations		65,257				14,997				2,678				82,932				—				82,932
Administrative		—				—				—				—				13,268				13,268
Depreciation and amortization		3,010				951				48				4,009				2,115				6,124
Loss on sale or disposal of assets and other		74				26				—				100				214				314
Interest expense		—				3				—				3				7,391				7,394
Interest income		—				(672		)		—				(672		)		(3,686		)		(4,358		)
Equity in net income of unconsolidated affiliates		—				—				(1,151		)		(1,151		)		—				(1,151		)
Other income		—				(103		)		—				(103		)		(5,184		)		(5,287		)
Segment contribution (loss)		$	21,292			$	8,653			$	(321	)		$	29,624
Income from continuing operations before income taxes														$	29,624			$	(14,118	)		$	15,506

		Nine Months Ended June 30, 2019
		U.S. Pawn				Latin America Pawn				Other International				Total Segments				Corporate Items				Consolidated
Revenues:
Merchandise sales		$	275,639			$	70,547			$	—			$	346,186			$	—			$	346,186
Jewelry scrapping sales		28,357				9,516				—				37,873				—				37,873
Pawn service charges		184,658				59,640				—				244,298				—				244,298
Other revenues		125				134				4,274				4,533				—				4,533
Total revenues		488,779				139,837				4,274				632,890				—				632,890
Merchandise cost of goods sold		172,931				52,252				—				225,183				—				225,183
Jewelry scrapping cost of goods sold		23,680				8,968				—				32,648				—				32,648
Other cost of revenues		—				—				1,467				1,467				—				1,467
Net revenues		292,168				78,617				2,807				373,592				—				373,592
Segment and corporate expenses (income):
Operations		200,884				54,703				6,169				261,756				—				261,756
Administrative		—				—				—				—				46,795				46,795
Depreciation and amortization		8,951				4,543				190				13,684				7,430				21,114
Loss on sale or disposal of assets and other		2,856				743				22				3,621				22				3,643
Interest expense		—				1,570				280				1,850				25,362				27,212
Interest income		—				(1,226		)		—				(1,226		)		(8,411		)		(9,637		)
Equity in net income of unconsolidated affiliates		—				—				(632		)		(632		)		—				(632		)
Impairment of investment in unconsolidated affiliates		—				—				19,725				19,725				—				19,725
Other (income) expense		—				(63		)		290				227				(348		)		(121		)
Segment contribution (loss)		$	79,477			$	18,347			$	(23,237	)		$	74,587
Income from continuing operations before income taxes														$	74,587			$	(70,850	)		$	3,737

		Nine Months Ended June 30, 2018
		U.S. Pawn					Latin America Pawn					Other International					Total Segments					Corporate Items					Consolidated
Revenues:
Merchandise sales		$		270,145			$		63,125			$		—			$		333,270			$		—			$		333,270
Jewelry scrapping sales				34,515					9,651			—							44,166			—							44,166
Pawn service charges				174,180					48,417			—							222,597			—							222,597
Other revenues				205					588					5,354					6,147			—							6,147
Total revenues				479,045					121,781					5,354					606,180			—							606,180
Merchandise cost of goods sold				166,965					43,318			—							210,283			—							210,283
Jewelry scrapping cost of goods sold				28,683					8,853			—							37,536			—							37,536
Other cost of revenues		—					—							1,273					1,273			—							1,273
Net revenues				283,397					69,610					4,081					357,088			—							357,088
Segment and corporate expenses (income):
Operations				196,635					44,847					7,276					248,758			—							248,758
Administrative		—					—					—					—							39,688					39,688
Depreciation and amortization				9,340					2,712					142					12,194					6,104					18,298
Loss on sale or disposal of assets and other				197					31			—							228					225					453
Interest expense		—							6			—							6					19,064					19,070
Interest income		—							(2,072	)		—							(2,072	)				(10,824	)				(12,896	)
Equity in net income of unconsolidated affiliates		—					—							(3,477	)				(3,477	)		—							(3,477	)
Other (income) expense				(3	)				11					(118	)				(110	)				(5,363	)				(5,473	)
Segment contribution		$		77,228			$		24,075			$		258			$		101,561
Income from continuing operations before income taxes																	$		101,561			$		(48,894	)		$		52,667

EZCORP, Inc. STORE COUNT ACTIVITY (Unaudited)
		Three Months Ended June 30, 2019
		U.S. Pawn			Latin America Pawn			Other International			Consolidated
As of March 31, 2019		508			466			24			998
New locations opened		—			4			—			4
Locations acquired		7			—			—			7
Locations sold, combined or closed		(1	)		—			(2	)		(3	)
As of June 30, 2019		514			470			22			1,006

		Three Months Ended June 30, 2018
		U.S. Pawn			Latin America Pawn			Other International			Consolidated
As of March 31, 2018		510			387			27			924
New locations opened		—			2			—			2
Locations acquired		—			63			—			63
Locations sold, combined or closed		—			(1	)		—			(1	)
As of June 30, 2018		510			451			27			988

		Nine Months Ended June 30, 2019
		U.S. Pawn			Latin America Pawn			Other International			Consolidated
As of September 30, 2018		508			453			27			988
New locations opened		—			12			—			12
Locations acquired		7			5			—			12
Locations sold, combined or closed		(1	)		—			(5	)		(6	)
As of June 30, 2019		514			470			22			1,006

		Nine Months Ended June 30, 2018
		U.S. Pawn			Latin America Pawn			Other International			Consolidated
As of September 30, 2017		513			246			27			786
New locations opened		—			10			—			10
Locations acquired		—			196			—			196
Locations sold, combined or closed		(3	)		(1	)		—			(4	)
As of June 30, 2018		510			451			27			988

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 basis ("constant currency"). We use constant currency results to evaluate our Latin America Pawn operations, which are denominated primarily in Mexican pesos and other Latin American currencies. 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 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, Guatemalan quetzals, Honduran lempiras and Peruvian sols 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 and approximate average exchange rates for each currency as compared to U.S. dollars as of and for the three and nine months ended June 30, 2019 and 2018 were as follows:

		June 30,						Three Months Ended June 30,						Nine Months Ended June 30,
		2019			2018			2019			2018			2019			2018
Mexican peso		19.2			19.9			19.1			19.4			19.4			19.0
Guatemalan quetzal		7.5			7.4			7.5			7.3			7.6			7.3
Honduran lempira		24.3			23.9			24.2			23.6			24.1			23.5
Peruvian sol		3.3			3.3			3.3			3.2			3.3			3.2

The constant currency results of our statement of operations 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.

Miscellaneous Non-GAAP Financial Measures
		2019 Q3				2018 Q3
		(in millions)
Net income		$	3.2			$	14.1
Loss from discontinued operations, net of tax		0.2				—
Interest expense		9.8				7.4
Interest income		(3.2		)		(4.4		)
Income tax expense		0.1				1.5
Depreciation and amortization		7.3				6.1
Adjusted EBITDA		$	17.4			$	24.7

		Consolidated Revenues					Consolidated Net Revenues					Consolidated Sales Gross Profit					Consolidated Sales Gross Profit Margin
		(in millions)
2019 Q3 reported		$		202.5			$		115.9			$		33.6			32.4	%
Discrete transaction tax adjustment				4.6					4.6					4.6
Currency exchange rate fluctuations				(0.2	)				(0.1	)				(0.1	)
2019 Q3 adjusted		$		206.9			$		120.4			$		38.1			35.2	%

		U.S. Pawn					Latin America Pawn					Total					Percentage Change YOY
		(in millions)
2019 Q3 reported segment contribution		$		23.6			$		2.1			$		25.7			(14.0	)%
Discrete transaction tax adjustment		—							6.0					6.0
2019 Q3 adjusted segment contribution		$		23.6			$		8.1			$		31.7			6.0	%

		Latin America Pawn Net Revenues				Latin America Pawn Merchandise Sales				Latin America Pawn Sales Gross Profit				Consolidated Sales Gross Profit Margin
		(in millions)
2019 Q3 reported		$	23.2			$	20.0			$	2.6			13	%
Discrete transaction tax adjustment		4.6				4.6				4.6
Currency exchange rate fluctuations		(0.1		)		(0.2		)		(0.1		)
2019 Q3 adjusted		$	27.7			$	24.4			$	7.1			29	%

		Income from Continuing Operations, Before Tax					Tax Effect					Net Income from Continuing Operations					Adjusted EBITDA					Continuing Operations Diluted EPS
		(in millions)
2019 Q3 reported		$		3.5			$		(0.1	)		$		3.4			$		17.4			$		0.06
Discrete transaction tax adjustment				6.1					(1.9	)				4.2					4.5					0.08
Non-recurring income tax benefit		—							(1.8	)				(1.8	)		—							(0.03	)
Currency exchange rate fluctuations				(0.1	)		—							(0.1	)		—					—
Non-cash net interest expense				4.1					(0.8	)				3.3			—							0.05
Discretionary strategic investment in digital platform				1.4					(0.3	)				1.1					1.4					0.02
2019 Q3 adjusted		$		15.0			$		(4.9	)		$		10.1			$		23.3			$		0.18

		Income from Continuing Operations, Before Tax					Tax Effect					Net Income from Continuing Operations					Adjusted EBITDA					Continuing Operations Diluted EPS
		(in millions)
2018 Q3 reported		$		15.5			$		(1.5	)		$		14.0			$		24.7			$		0.25
Gain on litigation settlement, net of tax impact				(5.2	)				1.6					(3.6	)				(5.2	)				(0.07	)
Non-recurring income tax benefit		—							(3.3	)				(3.3	)		—							(0.06	)
Acquisition expenses, net of tax impact				0.1			—							0.1					0.1			—
Non-cash net interest expense				2.5					(0.2	)				2.3			—							0.04
2018 Q3 adjusted		$		12.9			$		(3.4	)		$		9.5			$		19.6			$		0.16

2019 Q3:		U.S. Dollar Amount					Percentage Change YOY
		(in millions)
Latin America Pawn PLO		$		41.7			6 %
Currency exchange rate fluctuations				(0.7	)
Constant currency Latin America Pawn PLO		$		41.0			4%
Consolidated operations expenses (three months ended June 30, 2019)		$		84.7			2%
Currency exchange rate fluctuations		—
Constant currency consolidated operations expenses (three months ended June 30, 2019)		$		84.7			2%
Latin America Pawn PSC revenues (three months ended June 30, 2019)		$		20.3			20%
Currency exchange rate fluctuations		—
Constant currency Latin America Pawn PSC revenues (three months ended June 30, 2019)		$		20.3			20%
Latin America Pawn merchandise sales (three months ended June 30, 2019)		$		20.0			(4)%
Currency exchange rate fluctuations (three months ended June 30, 2019)				0.1
Constant currency Latin America Pawn merchandise sales (three months ended June 30, 2019)		$		20.1			(4)%
Latin America Pawn segment profit before tax (three months ended June 30, 2019)		$		2.1			(76)%
Currency exchange rate fluctuations				0.3
Constant currency Latin America Pawn segment profit before tax (three months ended June 30, 2019)		$		2.4			(72)%

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Email: [email protected]

Phone: (512) 314-2220

Source: EZCORP, Inc.