EZCORP THIRD QUARTER NET INCOME INCREASES 33%

AUSTIN, Texas, July 21, 2011 /PRNewswire/ -- EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialty consumer financial services, today announced financial results for its third fiscal quarter ended June 30, 2011.

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

Commenting on the results, President and Chief Executive Officer, Paul Rothamel, said, "EZCORP generated another quarter of exceptional results, with net income and EPS growing 33% and 32%, respectively. This growth was driven by strong performance throughout our diverse product portfolio in all of our geographic markets. We remain on track to deliver another outstanding year, including 30% EPS growth in fiscal 2011."

Highlights for the quarter include:

Financials – Three months ended June 30, 2011 versus the prior year quarter

• Net income of $26.5 million, up 33%.
• Diluted earnings per share of $0.53, an increase of 32%.
• Total revenues of $203.2 million, up 17%, with same store revenue up 7%.
• Net revenues of $123.0 million, up 17%.
• Store level operating income of $56.2 million, up 20%, with margins improving 100 bps to 46%.
• Consolidated operating income increased 29% to $37.0 million, with operating margin improving 260 bps to 30%.
• Contribution from strategic affiliates of $4.1 million, an increase of 40%.

Key Operating Metrics – Three months ended June 30, 2011 versus the prior year quarter

• US Pawn:
  • Total revenue increased 16% to $149.4 million.
  • Same store revenue growth of 6% driven by same store growth in merchandise sales, scrap sales and pawn service charges of 8%, 1% and 9%, respectively.
  • Store level operating income increased 24% to $43.0 million with a 230 bps margin improvement to 49%.
• Empeno Facil (Mexico pawn):
  • Total revenue increased 87% to $15.2 million.
  • Same store revenue growth of 32%, driven by same store growth in merchandise sales, scrap sales and pawn service charges of 29%, 32% and 43%, respectively.
  • Store level operating income increased 94% to $2.5 million with a 200 bps improvement in margin to 32%, despite the impact from opening 56 new stores in the past 12 months.
• EZMONEY (US and Canada financial services):
  • Total revenue increased 6% to $38.6 million.
  • Same store revenue growth of 4% driven by increases in signature loan fees and auto title loan fees of 4% and 2%, respectively.
  • Bad debt as a percentage of fees increased to 28%, compared with 26% in the prior year quarter, primarily due to the transition from mature payday loan products to new installment loan products across a number of states.
  • Store level operating income decreased 2% to $10.7 million primarily due to higher bad debt noted above and increased competitive pressures in Texas.  These factors were partially offset by improved expense control in the US and stronger performance in Canada.
• Balance Sheet and Liquidity:
  • Combined pawn, signature and auto title loan balances (including CSO) at June 30 were $175.4 million, an increase of 15%.
  • At June 30, cash and cash equivalents were $27.5 million, with debt outstanding of $26.5 million, compared with debt less cash of $12.6 million a year ago.
  • During the quarter, the Company closed on a four-year $175 million senior secured revolving credit facility.

Strategic Initiatives

• The previously announced strategic alliance with Cash Converters International Limited – designed to develop and introduce a suite of innovative financial services products under the "Cash Converters" brand – is progressing and is expected to close in the first quarter of fiscal 2012. Separately, in April the Company acquired the Cash Converters franchise rights for Canada, including rights to receive fees from 13 stores operated by franchisees. The Company plans to convert its 59 CASHMAX stores into the Cash Converters brand and add the Cash Converters buy / sell model to its existing non-collateralized loan model.
• During the quarter, the Company acquired 23 pawn stores for a total cost of $31.6 million.  These acquisitions included 11 stores in Iowa, seven in Utah, three in Wisconsin, and one in each of Florida and Illinois. Including the five greenfield stores opened and the nine stores acquired in the first half of the fiscal year, the total US Pawn store count at June 30, 2011 was 432, compared to 389 at June 30, 2010.
• Empeno Facil opened eight greenfield stores in the third quarter.  Including the 32 greenfield stores opened in the first half of the fiscal year, the total Empeno Facil store count at June 30, 2011 was 155 compared to 99 at June 30, 2010. In July, Empeno Facil acquired six additional stores in the states of Hidalgo and Tlaxcala.
• Following successful market tests in Colorado and Wisconsin, EZCORP's "Change" card – the Company's general purpose integrated and reloadable debit card – was successfully rolled into the Company's Texas stores, both US Pawn and EZMONEY, in the third quarter. As of June 30, 2011, approximately 69,000 Change cards had been issued to EZCORP customers.

Rothamel added, "Overall, we are pleased with our third quarter results as well as the progress we made toward improving both our near- and long-term competitive position. We also expect our quarterly performance in the US EZMONEY division to improve steadily as we respond to competitive pressures and continue the roll out of our new products. Our customers are under pressure on multiple fronts today and have many choices in the marketplace. We are committed to being the preferred option across all of our businesses and will continue to enhance our offering in order to meet their short-term cash needs."

Outlook for fiscal 2011

The Company reaffirmed that it expects fiscal 2011 earnings per share, excluding the first quarter one-time charge related to the retirement of the former Chief Executive Officer, to increase 30% year-over-year to $2.55 ($2.41 on a GAAP basis).  

About EZCORP

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

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

Special Note Regarding Forward-Looking Statements

This announcement contains certain forward-looking statements regarding the Company's expected operating and financial performance for future periods, including expected future earnings.  These statements are based on the Company's current expectations.  Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including changes in the regulatory environment, changing market conditions in the overall economy and the industry, consumer demand for the Company's services and merchandise, and actions of third parties who offer services and products in the Company's locations.  For a discussion of these and other factors affecting the Company's business and prospects, see the Company's annual, quarterly and other reports filed with the Securities and Exchange Commission.

Change to Presentation and Reclassification of Prior Year Comparatives

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

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP net income and non-GAAP earnings per share for the nine-month period ended June 30, 2011, as well as non-GAAP expected earnings per share for fiscal 2011.  The only difference between the presented non-GAAP measures and the most closely comparable GAAP measures is the exclusion of a one-time charge related to the retirement of the Company's former Chief Executive Officer and the related tax benefit included in the quarter ended December 31, 2011.  The Company's management uses these non-GAAP financial measures to understand its financial performance from period to period.  Management does not believe that the excluded one-time charge is reflective of underlying operating performance.  The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the corresponding GAAP measures, but rather are provided to facilitate an enhanced understanding of the Company's actual and expected performance and to enable more meaningful period-to-period comparisons.  A reconciliation of the non-GAAP financial measures to the most closely comparable GAAP financial measures is provided in the accompanying financial schedules.

EZCORP Investor Relations
(512) 314-2220

SOURCE EZCORP, Inc.