EZCORP INC
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
EZPW$28.55-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0000876523-24-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0000876523-24-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 108 current paragraphs.
61 unchanged; 38 reworded; 9 added; 7 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 25 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
PSC increased 13% as a result of higher average PLO.
Current report
Store expenses increased 8% and 6% on a same-store basis, primarily due to increased labor in-line with store activity and to a lesser extent, expenses related to our loyalty program.
Current report
Segment contribution increased 12% to $36.1 million, due to the changes noted above.
Current report
Store expenses increased 18% (15% on a constant currency basis) and 14% (12% on a constant currency basis) on a same-store basis, primarily due to increased labor, in line with store activity and to a lesser extent, rent.
Current report
During the quarter, store count increased by six de novo stores.
Current report
Segment contribution was $2.0 million, an increase of $0.5 million primarily due to our interest income from our notes receivable investment in Founders offset by the decrease in our share of equity in income of Cash Converters.
Current report
Income tax expense increased $2.0 million primarily due to an increase in the effective tax rate this quarter compared to the prior year. In the prior year there was a benefit to the effective tax rate due to the reversal of contingent consideration liability in connection with a previously completed acquisition.
Current report
Nine Months Ended June 30, 2024 vs. Nine Months Ended June 30, 2023
Current report
On July 1, 2024, the 2024 Convertible Notes matured and the remaining $34.4 million aggregate principal amount outstanding plus accrued interest was repaid using cash on hand.
Removed paragraphs (7)
Previous report
Store expenses increased 12%, primarily due to salaries and benefits as we continue to support our team members as a part of People, Pawn and Passion focus, higher store count and, to a lesser extent, expenses related to our loyalty program.
Previous report
Segment contribution increased 8% to $40.7 million, due to the changes noted above.
Previous report
Store expenses increased 15% (7% on a constant currency basis), primarily due to higher store count. Same-store expenses increased 10% (2% on a constant currency basis).
Previous report
During the quarter, net store count increased by four due to the opening of nine de novo stores and the consolidation of five stores.
Previous report
Segment contribution was $2.4 million, an increase of $34.9 million primarily due to our share of the net loss from Cash Converters related to their non-cash goodwill impairment charge taken during the prior year quarter.
Previous report
Income tax expense increased $7.7 million primarily due to an increase in income before income taxes of $36.0 million this quarter compared to the prior year quarter. That increase was primarily attributable to our share of the net loss from Cash Converters in the prior year quarter and the improved operating results this quarter within the U.S. Pawn segment and the Latin American Pawn segment.
Previous report
Six Months Ended March 31, 2024 vs. Six Months Ended March 31, 2023
Reworded paragraphs (38)
Previous wording
In the United States, PSC is historically highest in our fourth fiscal quarter (July through September) due to a higher average loan balance during the summer lending season. PSC is historically lowest in our third fiscal quarter (April through June) following the tax refund season and merchandise sales are highest in our first and second fiscal quarters (October through March) due to the holiday season, jewelry sales surrounding Valentine’s Day and the availability of tax refunds. In Latin America, most of our customers receive additional compensation from their employers in December, and many receive additional compensation in June or July, applying downward pressure on loan balances and fueling some merchandise sales in those periods. In Mexico, we saw similar downward pressure in loan balances during the third quarter of fiscal 2023 due to a change in law related to company profit sharing payments to employees. We believe this change will continue to impact pawn loan balances in May and June going forward. As a net effect of these and other factors and excluding discrete charges, our consolidated income before tax is generally highest in our first fiscal quarter (October through December) and lowest in our third fiscal quarter (April through June).
Current wording
In the United States, PSC is historically highest in our fourth fiscal quarter (July through September) due to a higher average loan balance during the summer lending season. PSC is historically lowest in our third fiscal quarter (April through June) following the tax refund season and merchandise sales are highest in our first and second fiscal quarters (October through March) due to the holiday season, jewelry sales surrounding Valentine’s Day and the availability of tax refunds. In Latin America, most of our customers receive additional compensation from their employers in December, and many receive additional compensation in June or July, applying downward pressure on loan balances and fueling some merchandise sales in those periods. In Mexico, we saw similar downward pressure in loan balances during the third quarter of fiscal 2023 due to a change in law related to company profit sharing payments to employees. We anticipated this change would impact pawn loan redemptions annually in May and June; however, in 2024, the demand for pawn loans in Mexico exceeded any downward pressure related to profit sharing payments. As a net effect of these and other factors and excluding discrete charges, our consolidated income before tax is generally highest in our first fiscal quarter (October through December) and lowest in our third fiscal quarter (April through June).
Previous wording
We remain focused on optimizing our balance of pawn loans outstanding (“PLO”) and the resulting higher PSC. The following chart presents sources of gross profit, including PSC, merchandise sales gross profit (“Merchandise sales GP”) and jewelry scrapping gross profit (“Jewelry Scrapping GP”) for the three and six months ended March 31, 2024 and 2023:
Current wording
We remain focused on optimizing our balance of pawn loans outstanding (“PLO”) and the resulting higher PSC. The following chart presents sources of gross profit, including PSC, merchandise sales gross profit (“Merchandise sales GP”) and jewelry scrapping gross profit (“Jewelry Scrapping GP”) for the three and nine months ended June 30, 2024 and 2023:
Previous wording
The following chart presents sources of gross profit by geographic disbursement for the three and six months ended March 31, 2024 and 2023:
Current wording
The following chart presents sources of gross profit by geographic disbursement for the three and nine months ended June 30, 2024 and 2023:
Previous wording
Constant currency results reported herein are calculated by translating consolidated balance sheet and consolidated statement of operations items denominated in local currency to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations. In addition, we have an equity method investment that is denominated in Australian dollars and is translated into U.S. dollars. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate on a monthly basis during the appropriate period for statement of operations items. Our statement of operations constant currency results reflect the monthly exchange rate fluctuations and are not directly calculable from the rates below. Constant currency results, where presented, also exclude the foreign currency gain or loss. The end-of-period and approximate average exchange rates for each applicable currency as compared to U.S. dollars as of and for the three and six months ended March 31, 2024 and 2023 were as follows:
Current wording
Constant currency results reported herein are calculated by translating consolidated balance sheet and consolidated statement of operations items denominated in local currency to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations. In addition, we have an equity method investment that is denominated in Australian dollars and is translated into U.S. dollars. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate on a monthly basis during the appropriate period for statement of operations items. Our statement of operations constant currency results reflect the monthly exchange rate fluctuations and are not directly calculable from the rates below. Constant currency results, where presented, also exclude the foreign currency gain or loss. The end-of-period and approximate average exchange rates for each applicable currency as compared to U.S. dollars as of and for the three and nine months ended June 30, 2024 and 2023 were as follows:
Previous wording
PLO ended the quarter at $173.7 million, up 11% (9% on a same store basis).
Current wording
PLO ended the quarter at $199.3 million, up 11% or 10% on a same-store basis.
Previous wording
Total revenues and gross profit was up 10%, reflecting increased PSC and higher merchandise sales.
Current wording
Total revenues was up 8% and gross profit was up 9%, reflecting increased PSC and higher merchandise sales.
Previous wording
Merchandise sales increased 6% and gross margin decreased to 37% from 38%. Aged general merchandise, which is inventory over one year old, increased to 3.0% of total general merchandise inventory, primarily driven by luxury handbags in our Max Pawn stores.
Current wording
Merchandise sales increased 6%, and gross margin decreased to 38% from 39%. Aged general merchandise, which is inventory over one year old, increased to 5.0% to $2.0 million of total general merchandise inventory. Excluding luxury handbags in our three Max Pawn stores in Las Vegas, aged general merchandise remains under 1%.
Previous wording
Net inventory increased 9%, as expected with the growth in PLO. Inventory turnover remained flat at 2.6x.
Current wording
Net inventory increased 6%, as expected with the growth in PLO. Inventory turnover remained flat at 2.6x.
Previous wording
During the quarter, net store count increased by five due to the acquisition of six stores and the consolidation of one store.
Current wording
During the quarter, store count increased by six, due to the acquisition of five stores and opening of one de novo store.
Previous wording
PLO improved to $62.0 million, up 26% (19% on constant currency basis). On a same store basis, PLO increased 22% (15% on a constant currency basis) due to improved operational performance and continued strong pawn demand.
Current wording
PLO improved to $62.4 million, up 24% (30% on constant currency basis). On a same-store basis, PLO increased 20% (26% on a constant currency basis) due to improved operational performance and increased loan demand.
Previous wording
Total revenues was up 12% (4% on constant currency basis), and gross profit increased 18% (10% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
Current wording
Total revenues was up 15% (13% on constant currency basis), and gross profit increased 21% (19% on a constant currency basis), reflecting increased PSC, higher merchandise sales and improved merchandise sales gross profit.
Previous wording
PSC increased 18% (10% on a constant currency basis) as a result of higher average PLO.
Current wording
PSC increased 22% (19% on a constant currency basis) as a result of higher average PLO.
Previous wording
Merchandise sales gross margin increased to 33% from 32%. Aged general merchandise was 1.4% of total merchandise inventory.
Current wording
Merchandise sales gross margin increased to 32% from 30%. Aged general merchandise was less than 1% of total merchandise inventory.
Previous wording
Net inventory increased 9% (2% on a constant currency basis). Inventory turnover increased to 3.6x from 3.5x.
Current wording
Net inventory increased 25% (32% on a constant currency basis). Inventory turnover decreased to 3.0x, from 3.4x.
Previous wording
Segment contribution increased 2% (decreased 3% on a constant currency basis) to $8.1 million, due to the changes noted above, in addition to the impact of the prior year reversal of contingent consideration liability in connection with a previously completed acquisition, which was recorded to “Other income.”
Current wording
Segment contribution increased 6% (5% on a constant currency basis) to $10.3 million, due to the changes noted above, in addition to the impact of the prior year reversal of contingent consideration liability in connection with a previously completed acquisition, which was recorded to “Other income.”
Previous wording
Segment contribution increased $37.9 million over the prior year quarter. That increase was primarily attributable to the increase in our Other Investments segment due to our share of the net loss from Cash Converters during the prior year quarter and the improved operating results of the U.S. Pawn and Latin America Pawn segments above.
Current wording
Segment contribution increased $4.9 million or 11% over the prior year quarter, primarily due to improved operating results of the U.S. Pawn and Latin America Pawn segments above.
Previous wording
General and administrative expense increased $2.7 million or 17%, primarily due to labor driven by incentive compensation related to an increase in share price and, to a lesser extent, costs related to the implementation of Workday.
Current wording
General and administrative expense increased $2.2 million or 12%, primarily due to labor, incentive compensation and, to a lesser extent, costs related to the implementation and ongoing support of Workday.
Previous wording
During the six months ended March 31, 2024, net store count increased by six due to the acquisition of seven stores and the consolidation of one store.
Current wording
During the nine months ended June 30, 2024, net store count increased by 12 due to the acquisition of 12 stores, opening of one de novo store, and the consolidation of one store.
Previous wording
Store expenses increased 9%, primarily due to primarily due to wage inflationary pressures, higher store count and, to a lesser extent, expenses related to our loyalty program.
Current wording
Store expenses increased 9%, primarily due to increased labor in-line with store activity and to a lesser extent, expenses related to our loyalty program.
Previous wording
Segment contribution increased $11.2 million, or 14%, primarily due to the changes described above.
Current wording
Segment contribution increased $14.9 million, or 14%, primarily due to the changes described above.
Previous wording
During the six months ended March 31, 2024, net store count increased by nine due to the opening of fourteen de novo stores and the consolidation of five stores.
Current wording
During the nine months ended June 30, 2024, net store count increased by 15 due to the opening of twenty de novo stores and the consolidation of five stores.
Previous wording
PSC increased 18% to $54.5 million (9% to $50.6 million on a constant currency basis) as a result of higher average PLO.
Current wording
PSC increased 19% to $84.9 million (13% to $80.4 million on a constant currency basis) as a result of higher average PLO.
Previous wording
Merchandise sales increased 16% (7% on a constant currency basis) and 12% on a same store basis (2% on a constant currency basis). Merchandise sales gross margin increased 200 bps to 33% from 31%.
Current wording
Merchandise sales increased 14% (7% on a constant currency basis) and 11% on a same-store basis (4% on a constant currency basis). Merchandise sales gross margin increased 200 bps to 33% from 31%.
Previous wording
Store expenses increased by 18% (9% on a constant currency basis) primarily due to increases in minimum wage and headcount, higher store count and, to a lesser extent, rent. On a same-store basis, store expenses increased 13% (4% on a constant currency basis).
Current wording
Store expenses increased by 18% (11% on a constant currency basis) and 14% (7% on a constant currency basis) on a same-store basis, primarily due to increased labor, in line with store activity and to a lesser extent, rent.
Previous wording
Segment contribution increased $2.7 million, or 18% ($1.8 million, or 12%, on a constant currency basis), due to the changes noted above, in addition to the impact of the prior year reversal of contingent consideration liability in connection with a previously completed acquisition, which was recorded to “Other income.”
Current wording
Segment contribution increased $3.4 million, or 13% ($2.2 million, or 9%, on a constant currency basis), due to the changes noted above, in addition to the impact of the prior year reversal of contingent consideration liability in connection with a previously completed acquisition, which was recorded to “Other income.”
Previous wording
Segment income was $4.1 million, an increase of $35.0 million from the prior-year six months ended March 31, 2023, primarily due to our share of the prior year net loss from Cash Converters related to their non-cash goodwill impairment charge.
Current wording
Segment income was $6.1 million, an increase of $35.5 million from the prior-year nine months ended June 30, 2023, primarily due to our share of the prior year net loss from Cash Converters related to their non-cash goodwill impairment charge.
Previous wording
The following table reconciles our consolidated segment contribution discussed above to net income (loss) attributable to EZCORP, Inc., including items that affect our consolidated financial results but are not allocated among segments:
Current wording
The following table reconciles our consolidated segment contribution discussed above to net income attributable to EZCORP, Inc., including items that affect our consolidated financial results but are not allocated among segments:
Previous wording
Segment contribution increased $48.9 million or 79% over the prior year six months ended March 31, 2023, primarily due to our share of the net loss from Cash Converters related to their non-cash goodwill impairment charge during the prior year and the improved operating results of the segments above.
Current wording
Segment contribution increased $53.8 million or 51% over the prior year nine months ended June 30, 2023, primarily due to our share of the net loss from Cash Converters related to their non-cash goodwill impairment charge during the prior year and the improved operating results of the segments above.
Previous wording
General and administrative expenses increased $3.7 million or 12%, primarily due to labor driven by incentive compensation related to increase in share price and, to a lesser extent, costs related to the implementation of Workday.
Current wording
General and administrative expenses increased $5.9 million or 12%, primarily due to labor, incentive compensation and, to a lesser extent, costs related to the implementation and ongoing support of Workday.
Previous wording
Interest expense decreased $2.7 million, primarily due to the loss on extinguishment of debt in the prior year. In December 2022, the Company repurchased approximately $109.4 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 for approximately $62.9 million plus accrued interest and recorded a $3.5 million loss on extinguishment of debt.
Current wording
Interest expense decreased $2.6 million, primarily due to the loss on extinguishment of debt in the prior year. In December 2022, the Company repurchased approximately $109.4 million aggregate principal amount of 2.875% Convertible Senior Notes Due 2024 for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of 2.375% Convertible Senior Notes Due 2025 for approximately $62.9 million plus accrued interest and recorded a $3.5 million loss on extinguishment of debt.
Previous wording
Interest income increased $1.2 million, due primarily to our treasury management with increased market interest rates.
Current wording
Interest income increased $0.8 million, due primarily to our treasury management with increased market interest rates.
Previous wording
Income tax expense increased $9.2 million, primarily due to an increase in income before income taxes of $49.2 million for the six months ended March 31, 2024 compared to the same prior year six month period due to our share of the net loss from Cash Converters in the prior year quarter and the non-deductible loss on the convertible debt refinancing during the first quarter of 2023.
Current wording
Income tax expense increased $11.2 million, primarily due to an increase in income before income taxes of $50.8 million for the nine months ended June 30, 2024 compared to the same prior year nine month period due to our share of the net loss from Cash Converters in the prior year quarter, the non-deductible loss on the convertible debt refinancing during the first quarter of 2023, and an increase in the effective tax rate this quarter compared to the prior year. In the prior year there was a benefit to the effective tax rate due to the reversal of contingent consideration liability in connection with a previously completed acquisition.
Previous wording
Our cash and equivalents balance was $229.1 million at March 31, 2024 compared to $220.6 million at September 30, 2023. At March 31, 2024, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.
Current wording
Our cash and equivalents balance was $218.0 million at June 30, 2024 compared to $220.6 million at September 30, 2023. At June 30, 2024, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.
Previous wording
The decrease in cash flows provided by operating activities year-over-year was primarily due to changes in working capital primarily related to the timing of payments of accounts payable, income taxes and prepaid expenses, offset by an increase in net income (when considering adjustments for non-cash items affecting net income).
Current wording
The decrease in cash flows provided by operating activities year-over-year was primarily due to changes in working capital primarily related to the timing of payments of accounts payable and income taxes, offset by an increase in net income (when considering adjustments for non-cash items affecting net income).
Previous wording
The $22.4 million decrease in cash flows used in investing activities year-over-year was primarily due to a $21.1 million decrease in cash flows used to fund acquisitions and strategic investments and a $16.8 million increase in cash inflows from the sale of forfeited collateral, offset by an increase of $22.1 million in net pawn lending outflows.
Current wording
The $11.3 million decrease in cash flows used in investing activities year-over-year was primarily due to a $29.6 million decrease in cash flows used to fund acquisitions, strategic investments and capital expenditures and a $21.2 million increase in cash inflows from the sale of forfeited collateral, offset by an increase of $43.0 million in net pawn lending outflows.
Previous wording
The $39.5 million decrease in cash flows provided by financing activities was primarily related to the December 2022 financing of the 2029 Convertible Notes, in which we issued $230.0 million principal amount of 3.750% Convertible Senior Notes Due 2029 offset by the extinguishment of approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest. In addition, we used approximately $5.0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase 578,703 shares of our Class A common stock from purchasers of the notes in privately negotiated transactions.
Current wording
The $39.6 million decrease in cash flows provided by financing activities was primarily related to the December 2022 financing of the 2029 Convertible Notes, in which we issued $230.0 million principal amount of 3.750% Convertible Senior Notes Due 2029 offset by the extinguishment of approximately $109.4 million aggregate principal amount of our 2024 Convertible Notes for approximately $117.5 million plus accrued interest and approximately $69.1 million aggregate principal amount of our 2025 Convertible Notes for approximately $62.9 million plus accrued interest. In addition, we used approximately $5.0 million of the net proceeds from the 2029 Convertible Notes offering to repurchase 578,703 shares of our Class A common stock from purchasers of the notes in privately negotiated transactions.
Previous wording
The net effect of these changes was an $8.7 million increase in cash on hand during the current year to date period, resulting in a $237.7 million ending cash and restricted cash balance.
Current wording
The net effect of these changes was an $1.7 million decrease in cash on hand during the current year to date period, resulting in a $227.2 million ending cash and restricted cash balance.
Previous wording
On May 3, 2022, our Board authorized the repurchase of up to $50 million of our Class A Common Stock over three years. As of March 31, 2024, we have repurchased 2,287,402 shares of our Class A Common Stock under the program for $20.0 million. Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.
Current wording
On May 3, 2022, our Board authorized the repurchase of up to $50 million of our Class A Common Stock over three years. As of June 30, 2024, we have repurchased 2,572,794 shares of our Class A Common Stock under the program for $23.0 million. Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
PSC increased 14% as a result of higher average PLO.