Ezcorp, Inc. · NASDAQ:EZPW
Ezcorp — Q2 FY2019 Earnings Presentation
29 slides from Ezcorp's earnings presentation, May 9, 2019
Slide 1: Growth Through Superior Customer Experience
Growth Through Superior Customer Experience Second Quarter Fiscal 2019 Earnings May 9, 2019
Slide 2: Preliminary Statements
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 activit
Slide 3: Agenda
Agenda I. F2Q19 Highlights II. Strategic Initiatives Progress Report III. Digital/Data Platform IV. Financial Highlights A. Consolidated B. Long-Term EBITDA Growth/Margins C. US Pawn D. Latin America Pawn V. Balance Sheet & Capital Management VI. Investment Highlights VII. Appendix 3
Slide 4: F2Q19 Highlights
F2Q19 Highlights KEY THEMES QUARTERLY HIGHLIGHTS • Pawn Loans Outstanding (PLO) balance up 10% to $175m; same store Favorable loan growth of 6% Pawn Metrics • Pawn service charges (PSC) up 10% • PLO Consolidated yield held steady at 15% • F2Q19 Adjusted EPS of $0.22, flat to F2Q18 Ongoing • Total an
Slide 5: Strategic Initiatives Progress Report
Strategic Initiatives Progress Report INITIATIVES RECENT ACCOMPLISHMENTS1 • Customer-centric approach reflected throughout financial results Best Serving • Total PLO up 10% Customers’ Need for Cash • Same Store PLO growth of 6% (5% in US, 9% in LatAm) • Same store sales up 2% in US and 12% in LatAm
Slide 6: Digital/Data Platform
Digital/Data Platform INITIATIVES EXPECTED COMPETITIVE ADVANTAGES • Differentiated customer-centric engagement • Expand customer acquisition/retention Evergreen • Integrate broader services capabilities • Market launch expected by end of calendar 2019 • Developing with Boston Consulting Group Digita
Slide 7: Financial Highlights – Consolidated
Financial Highlights – Consolidated • PLO up 10% to $175m • Same store loan growth (SSLG) of 6% • PSC up 10% to $81.3m reflecting higher PLO • Merchandise sales grew 6% • Same store sales growth (SSSG) of 4% • At 36%, merchandise margins remain in target range. Overall margin slightly lower due to L
Slide 8: Long-Term EBITDA Growth/Margins
Long-Term EBITDA Growth/Margins Long-Term Growth Consistent EBITDA Growth Market 26% CAGR (F2016-F2018) 1% CAGR (F2016-F2018) 55% CAGR (F2016-F2018) 8 EBITDA figures adjusted for discrete items. See Appendix for reconciliations.
Slide 9: Financial Highlights – US Pawn
Financial Highlights – US Pawn • Same Store PLO growth expanded to 5% with PLO per store of $257k (GAAP) • PSC up 5% to $61.8m • Merchandise sales grew 2% • SSSG of 2% • Merchandise margin remains strong at 37% • Aged GM inventory improved to 7% from 9% at the beginning of the quarter • EBITDA flat
Slide 10: Financial Highlights – Latin America Pawn
Financial Highlights – Latin America Pawn • PLO up 27% to $44.7m with Same Store PLO growth of 9% • 5 years of quarterly SSLG • PSC up 30% to $19.5m • Merchandise sales grew 25% • SSSG of 12% • Inventory up 45% as acquired stores continue to expand GM business • Merchandise margin held steady at 31%
Slide 11: Balance Sheet & Capital Management
Balance Sheet & Capital Management DRIVERS UPDATES • Cash balance of $348m as of March 31, 2019 Cash/Liquidity • Net debt of $166m with 1.6x leverage ratio • $27.2m of cash flow from operations in F2Q19 • Expect an additional $13.5m principal from Alpha Credit in 2HF19 plus Cash Flow/ interest Notes
Slide 12: Investment Highlights
Investment Highlights Secular Growth Story Strong Digital Financial Engagement Performance Geographic Expansion/ M&A Catalysts Diversification 12
Slide 13: Appendix
Appendix EZCORP
Slide 14: EZCORP GAAP Results
Strong PLO and Revenue Growth Profit Impacted By Non-Cash Impairment, Discretionary Growth Investments and Discrete Items EZCORP GAAP Results Q2 %∆ Year-to-Date %∆ $ Millions FY19 FY18 B/(W) FY19 FY18 B/(W) Focus on customer service continues to drive Pawn Loans Outstanding $173.1 $159.4 9% strong P
Slide 15: EZCORP Continuing Operations Adjusted Results
Strong PLO and Revenue Growth EZCORP Continuing Operations Adjusted Results Q2 %∆ Year-to-Date %∆ $ Millions FY19 FY18 B/(W) FY19 FY18 B/(W) Focus on customer service continues to drive Pawn Loans Outstanding $175.3 $159.4 10% strong PLO growth, up 10% Total Revenue $215.0 $202.4 6% $433.0 $406.6 6%
Slide 16: Cash Available For Investments
Cash Available For Investments $ Millions A Amount Cash balance as of 3/31/19 $348 Cash convertibles due in June 2019 -195 B Remaining 153 Cash to run daily operations with a safety margin, fund loan growth, etc. -50 to 70 B Resulting capital available for acquisitions, new stores, discretionary ~$8
Slide 17: Convertible Senior Notes Potential EPS Dilution
Convertible Senior Notes Potential EPS Dilution The following is provided for purposes of calculating the potentially dilutive shares to be included in accounting for diluted EPS at a hypothetical conversion price of $10.00 on the convertible notes due 2024, and $15.90 on the convertible notes due 2
Slide 18: Definition of Terms
Definition of Terms PLO Pawn loan outstanding PSC Pawn service charges Latin America, including Mexico, Central America and South LatAm America POS2 Second generation point-of-sale system Same store loan growth (stores open the entirety of SSLG comparable periods) Same store sales growth (stores ope
Slide 19: Definition of Terms, Continued
Definition of Terms, Continued pawn service charges X 365 days in period / 12 Monthly PLO Yield = average PLO sales gross profit days in period X 365 Inventory Yield = average net inventory sales gross profit + PSC Return on Earning X 365 = days in period Assets average net inventory + average PLO t
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation 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 financial information that is adjusted to exclude the impact of restructuring and restateme
Slide 21: GAAP to Non-GAAP Reconciliation Q2 – Continuing Operations
GAAP to Non-GAAP Reconciliation Q2 – Continuing Operations* (A) (B) (G) (C) (D) (H) (E) (I) (F) (J) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $1.1m of PSC Revenue for settlement of GPMX PSC-related indemnification claim Footnote (B) Amo
Slide 22: GAAP to Non-GAAP Reconciliation Q2 – U.S. Pawn
GAAP to Non-GAAP Reconciliation Q2 – U.S. Pawn* (A) (B) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $0.3m Hurricane store operating expense Impact 22 Footnote (B) Amount includes $0.1m of asset disposal related to sold stores
Slide 23: GAAP to Non-GAAP Reconciliation Q2 – Latin America Pawn
GAAP to Non-GAAP Reconciliation Q2 – Latin America Pawn* (A) (B) (C) (D) (E) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $1.1m of PSC Revenue for settlement of GPMX PSC-related indemnification claim Footnote (B) Amount includes $0.1m of a
Slide 24: GAAP to Non-GAAP Reconciliation YTD – Continuing Operations
GAAP to Non-GAAP Reconciliation YTD – Continuing Operations* (A) (B) (C) (G) (D) (H) (E) (I) (F) (J) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $1.1m of PSC Revenue for settlement of GPMX PSC-related indemnification claim Footnote (B) Am
Slide 25: GAAP to Non-GAAP Reconciliation YTD – U.S. Pawn
GAAP to Non-GAAP Reconciliation YTD – U.S. Pawn* (A) (B) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $2.9m asset disposal as a result of Republic Metals Corporation bankruptcy 25 Footnote (B) Amount includes $0.1m of asset disposal relate
Slide 26: GAAP to Non-GAAP Reconciliation YTD – Latin America Pawn
GAAP to Non-GAAP Reconciliation YTD – Latin America Pawn* (A) (B) (C) (D) (E) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $1.1m of PSC Revenue for settlement of GPMX PSC-related indemnification claim Footnote (B) Amount includes $0.3m of
Slide 27: Consolidated Growth FY16-FY19 Reconciliation
Consolidated Growth FY16-FY19 Reconciliation* 27 Footnote * - Includes immaterial presentation reclassifications and rounding - see final page of reconciliations for constant currency assumption
Slide 28: Pawn Businesses FY16-FY19 Reconciliation
Pawn Businesses FY16-FY19 Reconciliation* 28 Footnote * - Includes immaterial presentation reclassifications and rounding - see final page of reconciliations for constant currency assumption
Slide 29: Constant Currency
Constant Currency 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"). We use constant curren