Ezcorp, Inc. · NASDAQ:EZPW
Ezcorp — Q3 FY2020 Earnings Presentation
29 slides from Ezcorp's earnings presentation, Aug 5, 2020
Slide 1: Third Quarter Fiscal 2020 Earnings
Third Quarter Fiscal 2020 Earnings August 5, 2020
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: Company Overview
Company Overview Formed in 1989, EZCORP has grown into a leading provider of pawn loans in the United States and Latin America. We also sell merchandise through a broad network of retail locations. We are dedicated to building shareholder value by satisfying the short-term cash needs of our customer
Slide 4: Management Actions in the Current Environment
Management Actions in the Current Environment Resilient through the crisis Team Members Customers Financial Focus on Team Member Balance Sheet Strength & Retention & Well Being Consistent Service Cost Optimization • Strict adherence to CDC safety • Recession-resilient business • Strong balance sheet
Slide 5: F3Q20 Highlights
F3Q20 Highlights K E Y F I N AN C I A L T H E M E S Q U AR T E R LY H I G H L I G H T S • Total revenue up 5% driven by higher merchandise and scrap sales offset by lower pawn service charges (PSC) Revenue Growth • Merchandise sales up 31% Y/Y reflecting ongoing demand for affordable merchandise for
Slide 6: State of the Consumer
State of the Consumer Recent Trends Expected to Drive Increased Cash Needs Post Any Subsequent Stimulus Jobless Claims1 20,140 10,667 10,432 7,893 6,908 1,111 890 869 1,087 868 885 1,069 867 852 860 862 904 1,052 856 Consumer Confidence2 91.2 93.8 98.4 97.2 100 98.2 98.4 89.8 93.2 95.5 96.8 99.3 99.
Slide 7: The Path Forward To Strengthen And Grow The Core
The Path Forward To Strengthen And Grow The Core As we continue to be our customers’ first and best choice for their short-term cash needs 1 2 3 Optimize Cost Strengthen Core Innovate Structure Business Operations and Grow • The Company is targeting • Foster high performance • Giving our customers t
Slide 8: Optimize Cost Structure
1 Optimize Cost Structure Management is identifying opportunities to improve the cost structure while growing the core business • Reducing corporate costs • Reducing operational expenses in accordance with lower transaction volume • Selectively reducing the spending on digital assets • Taking a bala
Slide 9: Strengthen Core Business Operations
2 Strengthen Core Business Operations Strategic focus on operating disciplines and modernization of critical IT systems Continuous Optimization Modernize IT • Investing in system-generated pricing to improve • POS rollout across core markets well progressed, the overall customer experience, team mem
Slide 10: Innovate and Grow
3 Innovate and Grow Creating competitive advantage through superior customer experience Leverage Digital to Create Customer Choice Capture New Customers • Account servicing through Lana – see next • Over 15M brand impressions and 5M page unique consumers engaged via Social Media, driving 100,000 con
Slide 11: Innovate and Grow (continued)
3 Innovate and Grow (continued) Creating competitive advantage through superior customer experience Store Growth Lana • LatAm de novo efforts on track to open • Organization-wide focus on Lana as 23 new stores in FY20, forecast to the Digital loan servicing platform for open 25 new stores in FY21 cu
Slide 12: Long-Term EBITDA Growth/Margins
Long-Term EBITDA Growth/Margins Recent performance reflects paydown of pawn loans. Pre-COVID growth is strong. Long-Term Growth Consistent EBITDA Growth Market 14% CAGR (F2016-F2019) 1% CAGR (F2016-F2019) 35% CAGR (F2016-F2019) Consolidated EBITDA excludes Other International segments as well as Cor
Slide 13: Financial Highlights - Consolidated
Financial Highlights - Consolidated • PLO balance of $117m down 39% Y/Y largely related to the impact of stimulus payments depressing pawn loan demand and headwinds from COVID-19 • Merchandise sales grew 31% • Same store sales growth (SSSG) of 34% • Led by merchandise helpful in a shelter-at-home si
Slide 14: Financial Highlights – U.S. Pawn
Financial Highlights – U.S. Pawn • Quarter-end PLO down 42% YoY reflecting COVID-related headwinds • PSC down 30% driven by lower average PLO for the quarter partially offset by Y/Y improvement in PLO yield • Merchandise sales grew 41% Y/Y • Same store sales grew 38% • Annualized inventory turns gre
Slide 15: Financial Highlights – Latin America Pawn
Financial Highlights – Latin America Pawn • PLO down 28% to $30m largely reflecting COVID-19 headwinds including ongoing store closures at GPMX, as well as continuing social welfare programs in Mexico • PSC down 35% Y/Y driven by lower average PLO for the quarter and a lower yield due primarily to C
Slide 16: Appendix
Appendix EZCORP
Slide 17: EZCORP GAAP Results
Pause in Pawn Loan Demand Weighs on EBITDA/EPS EZCORP GAAP Results Q3 %∆ YTD %∆ $ Millions FY20 FY19 B/(W) FY20 FY19 B/(W) Pawn Loans Outstanding $113.3 $190.3 -40% Total revenue growth driven by a 33% increase in merchandise sales partially offset by a significant Total Rev enue $210.2 $202.5 4% $6
Slide 18: EZCORP Continuing Operations Adjusted Results
Pause in Pawn Loan Demand Weighs on EBITDA/EPS EZCORP Continuing Operations Adjusted Results Q3 %∆ YTD %∆ $ Millions FY20 FY19 B/(W) FY20 FY19 B/(W) Pawn Loans Outstanding $116.8 $190.3 -39% Total Rev enue $216.5 $207.0 5% $662.0 $636.3 4% Q3 revenue growth driven by higher merchandise and scrap sal
Slide 19: 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 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 Q3 – Continuing Operations
GAAP to Non-GAAP Reconciliation Q3 – Continuing Operations* (A) (F) (B) (C) (G) (H) (D) (E) (I) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amounts include $2.2 million in civil unrest robbery losses. Footnote (B) Amounts include $0.5 million in COVID-19
Slide 22: GAAP to Non-GAAP Reconciliation Q3 – U.S. Pawn
GAAP to Non-GAAP Reconciliation Q3 – U.S. Pawn* (A) (B) (C) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amounts include $2.2 million in civil unrest robbery losses. Footnote (B) Amounts include $0.5 million in COVID-19 related expenses 22 Footnote (C) Am
Slide 23: GAAP to Non-GAAP Reconciliation Q3 – Latin America Pawn
GAAP to Non-GAAP Reconciliation Q3 – Latin America Pawn* (B) (A) (C) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amounts include $0.1 million FX loss Footnote (B) Amount includes $4.6m of historical VAT recorded as merchandise COGS. Footnote (C) Amount i
Slide 24: GAAP to Non-GAAP Reconciliation YTD – Continuing Operations
GAAP to Non-GAAP Reconciliation YTD – Continuing Operations* (G) (A) (H) (B) (I) (C) (J) (D) (K) (E) (L) (F) (M) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amounts include $2.2 million in civil unrest robbery losses. Footnote [B] Amounts include $41.3 m
Slide 25: GAAP to Non-GAAP Reconciliation YTD – U.S. Pawn
GAAP to Non-GAAP Reconciliation YTD – U.S. Pawn* (A) (B) (C) (D) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amounts include $2.2m of total shrink / robbery losses due to stores impacted by civil unrest Footnote (B) Amount includes $$10m Goodwill Impairm
Slide 26: GAAP to Non-GAAP Reconciliation YTD – Latin America Pawn
GAAP to Non-GAAP Reconciliation YTD – Latin America Pawn* (D) (E) (A) (F) (B) (G) (C) (H) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote [A] Amounts include $31.3 million goodwill impairment of our GPMX reporting unit and $4.6 million intangible impairment Foot
Slide 27: Consolidated Growth FY17-FY20 Reconciliation
Consolidated Growth FY17-FY20 Reconciliation* FY17 FY17 FY17 FY17 FY17 FY18 FY18 FY18 FY18 FY18 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Continuing Ops PBT 13.0 13.7 8.8 7.2 42.7 19.7 17.5 15.5 2.9 55.5 Add Back Net Interest 2.9 3.4 3.6 5.8 15.7 1.6 1.6 3.0 4.6 10.8 Add Back Deprciation and Amort
Slide 28: Pawn Businesses FY17-FY20 Reconciliation
Pawn Businesses FY17-FY20 Reconciliation* FY17 FY17 FY17 FY17 FY17 FY18 FY18 FY18 FY18 FY18 FY19 FY19 FY19 FY19 FY19 FY20 FY20 FY20 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 U.S. Pawn PBT 27.2 29.8 23.9 22.8 103.6 27.8 28.2 21.3 25.5 102.7 27.4 28.4 23.6 22.2 101.7 2
Slide 29: 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