Ezcorp, Inc. · NASDAQ:EZPW
Ezcorp — Q1 FY2019 Earnings Presentation
32 slides from Ezcorp's earnings presentation, Jan 31, 2019
Slide 1: Growth Through Superior Customer Experience
Growth Through Superior Customer Experience First Quarter 2019 Conference Call January 31, 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: Initiatives Presented At Investor Day in December 2018
Initiatives Presented At Investor Day in December 2018 INITIATIVES RECENT ACCOMPLISHMENTS1 Customer Focus • Continued strong loan growth To Drive Ongoing • Same Store PLO growth expanded to 11% in LatAm Pawn Market Share Gains and 7% in U.S. Pawn • Total pawn stores: 508 in U.S. and 462 in LatAm (97
Slide 4: Exceptional Pawn Operating Performance in Q1FY19
Exceptional Pawn Operating Performance in Q1FY19 • PLO up 10% to $194m CONSOLIDATED • EBITDA up 11% to $30.6m RESULTS • Leveraged 7% increase in net revenue to a 15% increase in EPS to $0.31 • Net cash from operating activities up 18% to $22.8m • Same Store PLO growth expanded to 7% with PLO per sto
Slide 5: Long-Term EBITDA Growth
Long-Term EBITDA Growth Q1 Growth Market Q2, Q3, Q4 Long-Term Growth Consistent EBITDA Generation Investing For Growth in Q1FY19 EBITDA Consolidated EBITDA U.S. Pawn EBITDA Latin America Pawn $116.1 $100.5 $113.5 $114.9 $85.6 $35.8 $63.0 $19.3 $14.8 $30.6 $33.3 $27.5 $33.3 $29.7 $30.9 Up 8% $10.1 $2
Slide 6: Profit Impacted By Non-Cash Impairments, Discretionary Growth Investments and Discrete Items
Strong PLO and Revenue Growth Profit Impacted By Non-Cash Impairments, Discretionary Growth Investments and Discrete Items EZCORP GAAP Results Relentless focus on serving and satisfying our customers’ needs for cash driving quality PLO growth in the U.S. and Latin America Continued solid PSC growth,
Slide 7: Strong PLO and Revenue Growth, and Operating Leverage
Strong PLO and Revenue Growth, and Operating Leverage $0.31 Diluted EPS, Up 15% EZCORP Continuing Operations Adjusted Results Focus on business fundamentals accelerated PLO growth, up 10% while managing inventory position, up 8% Continued strong performance from quality PLO with PSC up 10%. Merchand
Slide 8: U.S. Pawn Taking Market Share
U.S. Pawn Taking Market Share EXCELLING IN SERVING AND SATISFYING CUSTOMERS’ NEEDS Same Store PLO Growth¹ Two-Year Stacked YOY Change 2 EZCORP 2 2 2 Public Pawn Competitor Dec ‘18 Not Yet Available PLO is the most influential driver of EZCORP revenue and profitability ¹Weighted average based on avai
Slide 9: Sustained Focus on Customers' Need For Cash Drives Significant Loan and Profit Growth
Sustained Focus on Customers’ Need For Cash Drives Significant Loan and Profit Growth U.S. Pawn Q1FY19 ASSETS INCOME STATEMENT SAME SAME Disciplined approach to pawn lending delivered strong STORE STORE UP 7% UP 8% PLO, PSC, and PBT growth Margin expansion through strong operating leverage, net Pawn
Slide 10: Latin America Pawn Taking Market Share
Latin America Pawn Taking Market Share EXCELLING IN SERVING AND SATISFYING CUSTOMERS’ NEEDS Same Store PLO Growth¹ Two-Year Stacked YOY Change EZCORP Public Pawn Competitor Dec ‘18 Not Yet Available PLO is the most influential driver of EZCORP revenue and profitability ¹Weighted average based on ava
Slide 11: Strong Same Store PLO and Net Revenue Growth
Strong Same Store PLO and Net Revenue Growth Latin America Pawn Q1FY19 ASSETS INCOME STATEMENT SAME SAME STORE STORE UP 11% UP 7% Pawn Service Pawn Loans Charges Total Focus on meeting customer’s need for cash and disciplined Outstanding Up 22% to approach drove strong growth in Same Store PLO up 11
Slide 12: Cash Available For Investments
Cash Available For Investments $ Millions A Amount Cash balance as of 12/31/18 $297 Cash convertibles due in June 2019 -195 B Remaining 102 Cash to run daily operations with a safety margin, fund loan growth, etc. -50 to 70 B Resulting capital available for acquisitions, new stores, ~$30 to $50 disc
Slide 13: Evergreen
Evergreen 13 13
Slide 14: EZCORP has partnered with Boston Consulting Group to invest in a customer centric approach
EZCORP has partnered with Boston Consulting Group to invest in a customer centric approach to innovate on and address our current customers’ needs Exploratory research and development conducted with BCG Digital Ventures, leveraging their experience inventing, building and scaling new businesses arou
Slide 15: Disruptive offerings in market have failed to solve our customers' needs
Disruptive offerings in market have failed to solve our customers’ needs as they continue to struggle to access basic financial services Despite increased access to digital services and ongoing investment in disruptive financial product 49M offerings, our customers remain largely unserved ● Customer
Slide 16: In-depth customer research identified strong customer frictions and latent needs
In-depth customer research identified strong customer frictions and latent needs when transacting in pawn High barrier to entry for first time pawn customers New customers lack understanding of asset’s potential value and are faced with an intimidating initial experience Pawn loan management remains
Slide 17: EZCORP's strategic assets uniquely position the company to address customer needs
EZCORP’s strategic assets uniquely position the company to address the needs of our customers EZCORP’s global landscape ~2.4m loan customers served 56% of new EZCORP Proprietary customer of 970 physical pawn p.a. across EZCORP stores, customers are millennials, a behavior and product locations combi
Slide 18: Introducing Evergreen, a single point of access for customers' financial needs
Introducing Evergreen, a single point of access serving the financial solution needs of the EZCORP’s customer base • Global Asset Backed Account Up to date distinct and aggregate views of pawnable goods owned by customer accelerates the pawn experience • Financial Inclusion Financial access via the
Slide 19: Drivers to Growth Creating Long-Term Shareholder Value
Drivers to Growth Creating Long-Term Shareholder Value Excelling In Serving And Satisfying Customers’ Needs CURRENT FUTURE Best-in-class Broaden footprint to serve larger share of global customer experience unbanked and underbanked community and satisfying customers’ need for cash Differentiated dat
Slide 20: Additional Information
Additional Information EZCORP
Slide 21: Receiving Notes Receivable Payments Within Schedule
Receiving Notes Receivable Payments Within Schedule AlphaCredit has already paid $83.9m principal and Notes Receivable (Principal as of 1/30/19) interest owed to EZCORP in connection with the sale of Grupo Finmart As of January 30, 2019 Notes Receivable We have received all payments to-date as contr
Slide 22: Growing Cash Flow From Operating Activities
Growing Cash Flow From Operating Activities Cash Flow and Investment In Business Cash Flow Up 18% YOY in Q1FY19 Q1FY19 Q1FY18 Net Cash From Operating Activities1 $22.8 $19.3 $22.8 $19.3 Fund PLO Growth (9.4) (0.5) Operating Cash Flow 13.4 18.8 AlphaCredit Principal Repayments2 7.3 2.8 Cash Flow Incl
Slide 23: Significant Increase in Latin America Store Count
Significant Increase in Latin America Store Count 88% Increase Since 9/30/17 • 88% increase (+216 stores) in LatAm FY2017 FY2018 Q1FY19 store count in the last 15 months to 462 stores, Beginning 246 453 including nine stores added in Q1FY19 Acquired 196 5 • 48% of EZCORP pawn stores are in Latin Ame
Slide 24: 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 25: Definition of Terms
Definition of Terms 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 total cost o
Slide 26: 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 27: GAAP to Non-GAAP Reconciliation Q1 – Continuing Operations
GAAP to Non-GAAP Reconciliation Q1 – Continuing Operations* (A) (F) (B) (G) (C) (H) (D) (I) (E) (J) Footnote * - Includes immaterial presentation reclassifications and rounding – see final page of reconciliations for constant currency assumptions Footnote (A) Amount includes $0.2m of acquisition and
Slide 28: GAAP to Non-GAAP Reconciliation Q1 – U.S. Pawn
GAAP to Non-GAAP Reconciliation Q1 – U.S. Pawn* (B) (A) Footnote * - Includes immaterial presentation reclassifications and rounding Footnote (A) Amount includes $2.9m reserve on exposure to Republic Metals Corporation bankruptcy 28 Footnote (B) Amount includes $0.3m hurricane store operating expens
Slide 29: GAAP to Non-GAAP Reconciliation Q1 – Latin America Pawn
GAAP to Non-GAAP Reconciliation Q1 – Latin America Pawn* (A) (B) (C) (D) Footnote * - Includes immaterial presentation reclassifications and rounding – see final page of reconciliations for constant currency assumptions Footnote (A) Amount includes $0.2m of acquisition and investment expense as well
Slide 30: Consolidated Growth FY16-FY19 Reconciliation
Consolidated Growth FY16-FY19 Reconciliation* 30 Footnote * - Includes immaterial presentation reclassifications and rounding - see final page of reconciliations for constant currency assumption
Slide 31: Pawn Businesses FY16-FY19 Reconciliation
Pawn Businesses FY16-FY19 Reconciliation* 31 Footnote * - Includes immaterial presentation reclassifications and rounding - see final page of reconciliations for constant currency assumption
Slide 32: 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