Delivering Significant Growth Second Quarter Fiscal 2018 Conference Call May 3, 2018
Preliminary Statements Forward Looking Statements This document contains certain forward-looking statements. 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, that address activities or results that the company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future 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 and 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. Other Information This information should be read in conjunction with, and not in lieu of, the company’s annual, quarterly and other reports filed with the Securities and Exchange Commission. Those reports contain important information about the company’s business and performance, including financial statements prepared in accordance with U.S. generally accepted accounting principles, as well as a description of the important risk factors that may materially and adversely affect our business, financial condition or results of operations. All market comparisons are based on available information from similar publicly traded companies. 2
Q2FY18 Highlights Business Execution Drives Outstanding Profit Growth • Net Income up 47% and basic EPS up 53% to $0.23 (GAAP); 1 ninth consecutive quarter of YOY earnings growth • PLO up 11% to $159m and PSC up 11% to $74m (GAAP) Net Income up 47% • Net revenue up 10% to $121m, merchandise margin increase of 100bps with strong cash flow to 37% and retail sales gross profit up 9% (GAAP) • Strong balance sheet with cash balance up 33% YOY to $160m (GAAP) 2 • Adjusted profit before tax up 5%* • Significant scale and strong segment contribution U.S. Pawn leading • Same Store PLO up 2% in stores unaffected by hurricanes; led the market in 10 consecutive quarters. PLO recovery from hurricanes continues the market • Strong PLO per store at $243k (GAAP), despite hurricane impact; led the market in 7 consecutive quarters 3 • LatAm profit before tax up 112% to $7m; more than doubled YOY for the Latin America Pawn second consecutive quarter earnings more than • PLO increased 96% to $35m • 16 th consecutive quarter of positive Same Store PLO growth, up 9% doubled • PLO per store up 21% to $90k; led the market • Opened four stores in LatAm in Q2FY18, 57% increase in LatAm 4 stores in FY18 to 387 stores Business expansion • High growth LatAm segment is now 43% of total pawn stores provides springboard for • Strong store presence in five LatAm countries – Mexico, Guatemala, El Salvador, Honduras, and Peru – springboard to growth within continued growth these countries and other high growth LatAm markets • Relatively low capital investment and high return *Excludes estimated impact of hurricanes on PSC and discrete technology change related costs. Amounts in this presentation are continuing operations only and comparisons are Q2FY18 relative to same period in prior year unless stated. Amounts in this slide are adjusted for discrete items and constant currency unless identified as GAAP. 3 EZCORP Same Store amounts in this presentation exclude pawn stores acquired. See “EZCORP GAAP Results” and “GAAP to Non - GAAP Reconciliation.”
Successful Execution of Business Strategy Drives Strong EBITDA Growth Focused Execution Delivers PLO Proven Pawn Expertise and Growth Potential Being Realized Outstanding Results in Growth Market and Strong EBITDA Growth EBITDA Latin America Pawn EBITDA Consolidated EBITDA U.S. Pawn Geographic Diversification and Significant Growth Potential in Latin America EZCORP Pawn Store Count 3/31/18 Latin America Stores on 43% of EZCORP total pawn stores are in Latin America as of March 31, 2018, 9/30/17 specifically Mexico, Guatemala, El Salvador, Honduras, and Peru 27% Acquired U.S. Pawn and built 57% stores in Acquired 133 pawn stores and built eight pawn stores in Latin America in 1HFY18 LatAm in 1HFY18 16% *Excludes estimated impact of hurricanes on PSC and discrete technology change related costs. Amounts in this slide are in millions except for store count and are adjusted for discrete items and constant currency. 4 See “EZCORP GAAP Results” and “GAAP to Non - GAAP Reconciliation.”
47% Net Income Growth EZCORP GAAP Results Strong performance in Q2 despite impact of hurricanes Growth and expansion in Latin America driving significant increase in PLO 11% growth in PSC revenues and 9% increase in retail gross profit produced strong net revenue growth Merchandise margin increased 100bps to 37% Increased operations expenses due primarily to acquired stores. Operations expenses in Q2FY18 consistent with Q1FY18 at 68% of Net Revenue Strong operating leverage as 25% of net revenue growth flows to EBITDA Reduction in net interest expense due to continued interest income on promissory note associated with Grupo Finmart sale Successful pawn store acquisitions, strong organic growth, and cost control deliver strong profit before tax increase 47% net income growth Nine consecutive quarters of YOY net income growth 5 NM = not meaningful.
Adjusted Net Income Up 38% EZCORP Continuing Operations Adjusted Results* 10% PSC growth and 6% Merchandise Gross Profit increase produced strong net revenue growth Merchandise margin increased 120bps to 37% Increased operations expenses due primarily to acquired stores. Operations expenses in Q2FY18 consistent with Q1FY18 at 68% of Net Revenue Continued compounded growth in EBITDA and Profit Before Tax 38% net income growth Nine consecutive quarters of YOY profit growth *Adjusted for discrete items and constant currency. See “EZCORP GAAP Results” and “GAAP to Non - GAAP Reconciliation.” 6 NM = not meaningful.
Continued Focus on Business Execution and Pawn Fundamentals U.S. Pawn • Solid results excluding lingering short-term impacts of FY17 Hurricanes Harvey and Irma • Merchandise margin of 38%, up 150bps; within our target range of 35-38% Strong Business Execution YOY Change U.S. Pawn *1HFY18 was affected by Hurricanes Harvey and Irma Excludes estimated impact of hurricanes on PSC and discrete technology change related costs. Amounts in this slide are adjusted for discrete items. 7 See “EZCORP GAAP Results” and “GAAP to Non - GAAP Reconciliation.”
Continued Focus on Business Execution and Pawn Fundamentals U.S. Pawn Q2FY18 ASSETS INCOME STATEMENT SAME SAME STORE STORE UP 2% 1 3% increase in Same Store PLO drove similar increase in pawn service UP 2% 1 Continued recovery from FY17 hurricanes negatively affected PLO, charges Pawn Loans Pawn Service PSC and sales relative to prior year Outstanding Charges Total Serving and satisfying customers’ need for cash fuels continued Same Total Down 1% to Same store PLO increased 2% in stores unaffected by hurricanes Store PLO growth Down 1% $59m ADJUSTED ADJUSTED ADJUSTED NET REVENUE TOTAL EXPENSES PROFIT BEFORE TAX Purchases Quality = + - = Store + UP 4% TO $100m 1 Up 3% to $69m 1 Up 5% to $31m 1 Manager Forfeitures ------------------- ----------------- -------------------- GROSS Up 1% to $97m Up 4% to $69m Down 6% to $28m SAME Same Store PROFIT STORE SAME STORE Sales Flat UP 16% 1 UP 8% 1 Inventory Sales Gross Profit Sales gross profit up 5% during annual tax refund season with Total Up 5% merchandise margin up 150bps to 38%, within our target range of Up 11% to $38m 35% to 38% Merchandise Margin 38% Market leading PLO per store at $243k (GAAP), as business PLO monthly yield of 15% vs. 14% (GAAP) • • continues recovery from hurricanes Inventory turns of 1.9x vs 2.2x (GAAP) • Continued focus on customer experience and business execution • led to Same Store PLO growth in stores unaffected by hurricanes Return on Earning Assets of 143% vs 147% (GAAP) • 1 Excludes estimated impact of hurricanes and discrete technology change related costs. Amounts in this slide are adjusted for discrete items. See “EZCORP GAAP Results” and “GAAP to Non - GAAP Reconciliation.” 8 Sales Gross Profit includes Merchandise, Scrap Gross Profit, and Other Revenue.
Recommend
More recommend
