Ezcorp, Inc. · NASDAQ:EZPW
Ezcorp — Q3 FY2019 Earnings Presentation
28 slides from Ezcorp's earnings presentation, Aug 1, 2019
Slide 1: Growth Through Superior Customer Experience
Growth Through Superior Customer Experience Third Quarter Fiscal 2019 Earnings August 1, 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. F3Q19 Highlights II. Strategic Initiatives Progress Report III. Financial Highlights A. Consolidated B. Long-Term EBITDA Growth/Margins C. US Pawn D. Latin America Pawn IV. Strong Balance Sheet + Available Capital to Fund Growth V. Operating Cash Flow VI. Investment Highlights VII. Appendi
Slide 4: F3Q19 Highlights
F3Q19 Highlights KEY THEMES QUARTERLY HIGHLIGHTS • Pawn Loans Outstanding (PLO) growth of 4% to $190m Favorable • Same-store loan growth (SSLG) of 3% Pawn Metrics • PLO Consolidated yield improved slightly to 14% • Total revenue up 4% • Pawn service charges (PSC) up 9% Ongoing • Merchandise sales up
Slide 5: Strategic Initiatives Progress Report
Strategic Initiatives Progress Report INITIATIVES RECENT ACCOMPLISHMENTS1 • Ongoing PLO growth reflecting customer-centric approach Best at Serving • Same Store PLO growth of 3% (2% in US, 3% in LatAm) Customers’ Need for Cash • Same store sales flat in US and up 7% in LatAm • Acquired 7 stores in t
Slide 6: Financial Highlights – Consolidated
Financial Highlights – Consolidated • PLO up 4% to $190m • Same store loan growth (SSLG) of 3% • PSC up 9% to $79.0m reflecting higher PLO and pawn yields • Merchandise sales grew 4% • Same store sales growth (SSSG) of 1% • Total inventory increase of 16% inclusive of de novo growth and GM expansion
Slide 7: 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) 7 EBITDA figures adjusted for discrete items. See Appendix for reconciliations.
Slide 8: Financial Highlights – US Pawn
Financial Highlights – US Pawn • Ending same store PLO growth of 2% with PLO per store of $289k (GAAP) • PSC up 6% to $58.6m on 4% average PLO growth and a slightly improved yield • Merchandise sales flat Y/Y • SSSG flat • Merchandise margin remains strong at 37% • Aged GM inventory improved to 6% f
Slide 9: Financial Highlights – Latin America Pawn
Financial Highlights – Latin America Pawn • Added 17 stores (12 de novo and 5 acquired) YTD • PLO up 4% to $41.0m with Same Store PLO growth of 3% • 5+ years of quarterly SSLG • PSC up 20% to $20.3m • Merchandise sales grew 17% • SSSG of 7% • Inventory up 43% as acquired stores continue to expand GM
Slide 10: Strong Balance Sheet + Available Capital to Fund Growth
Strong Balance Sheet + Available Capital to Fund Growth DRIVERS UPDATES • Cash balance of $139m as of June 30, 2019 Cash/Liquidity • Net debt of $179m with 1.7x leverage ratio • Forecast $9-10m of maintenance CapEx for FY19; $6.8m incurred YTD Capital Expenditures/ • Expect ~$12m of expenditures rel
Slide 11: Operating Cash Flow
Operating Cash Flow DRIVERS UPDATES • $14.3m of cash flow from operations in F3Q19 • Expect an additional $6.1m principal from Alpha Credit in F4Q19 plus Operating Cash Flow/ interest (not included in cash flow from operations) Notes Receivable • Expect the first $6m payment of the deferred compensa
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: Revenue and Profit Impacted By Discrete Items and Discretionary Growth Investments
Healthy PLO Growth Revenue and Profit Impacted By Discrete Items and Discretionary Growth Investments EZCORP GAAP Results Q3 %∆ Year-to-Date %∆ $ Millions FY19 FY18 B/(W) FY19 FY18 B/(W) Focus on customer service continues to drive Pawn Loans Outstanding $190.3 $183.1 4% ongoing PLO growth Total Rev
Slide 15: Healthy PLO and Revenue Growth
Healthy PLO and Revenue Growth EZCORP Continuing Operations Adjusted Results Q3 %∆ Year-to-Date %∆ $ Millions FY19 FY18 B/(W) FY19 FY18 B/(W) Focus on customer service continues to drive Pawn Loans Outstanding $189.6 $183.1 4% ongoing PLO growth Total Revenue $206.9 $199.6 4% $639.9 $606.2 6% Health
Slide 16: 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 17: 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 18: 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 19: 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 20: GAAP to Non-GAAP Reconciliation Q3 – Continuing Operations
GAAP to Non-GAAP Reconciliation Q3 – Continuing Operations* (I) (E) (A) (B) (F) (C), (I) (G) (D), (I) (H) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $1.4m of discretionary strategic investment in the development of a digital platform rep
Slide 21: GAAP to Non-GAAP Reconciliation Q3 – U.S. Pawn
GAAP to Non-GAAP Reconciliation Q3 – U.S. Pawn* Actuals Prior Year Actuals Plus Equals Plus Equals Discrete Discrete Item Item Base Adjustments Adjusted Base Adjustments Adjusted $ Millions FY19 FY19 FY19 FY18 FY18 FY18 Revenues 156.5 0.0 156.5 157.3 0.0 157.3 PSC Rev enues 58.6 0.0 58.6 55.5 0.0 55
Slide 22: GAAP to Non-GAAP Reconciliation Q3 – Latin America Pawn
GAAP to Non-GAAP Reconciliation Q3 – Latin America Pawn* (E) (A) (C) (B), (E) (D) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes minimal loss on FX Footnote (B) Amount includes $0.2m in non-cash interest income regarding our notes receivable
Slide 23: GAAP to Non-GAAP Reconciliation YTD – Continuing Operations
GAAP to Non-GAAP Reconciliation YTD – Continuing Operations* (A) (K) (B) (C) (G) (D) (H) (E), (K) (I) (F), (K) (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 F
Slide 24: GAAP to Non-GAAP Reconciliation YTD – U.S. Pawn
GAAP to Non-GAAP Reconciliation YTD – U.S. Pawn* Actuals Prior Year Actuals Plus Equals Plus Equals Discrete Discrete Item Item Base Adjustments Adjusted Base Adjustments Adjusted $ Millions FY19 FY19 FY19 FY18 FY18 FY18 Revenues 488.8 0.0 488.8 479.0 0.0 479.0 PSC Rev enues 184.7 0.0 184.7 174.2 0.
Slide 25: GAAP to Non-GAAP Reconciliation YTD – Latin America Pawn
GAAP to Non-GAAP Reconciliation YTD – Latin America Pawn* (A) (H) (B) (E) (C) (F) (D), (H) (G) 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 i
Slide 26: Consolidated Growth FY16-FY19 Reconciliation
Consolidated Growth FY16-FY19 Reconciliation* Latin America Same Store PLO Growth Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 GAAP 4% 24% 0% 1% -1% -3% 14% 11% -2% 3% -5% 1% 16
Slide 27: Pawn Businesses FY16-FY19 Reconciliation
Pawn Businesses FY16-FY19 Reconciliation* 27 Footnote * - Includes immaterial presentation reclassifications and rounding - see final page of reconciliations for constant currency assumption
Slide 28: Constant Currency
Constant Currency 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