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EZCORP Inc. Reports Operating Results (10-Q)

February 08, 2012 | About:

10qk

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EZCORP Inc. (EZPW) filed Quarterly Report for the period ended 2011-12-31.

Ezcorp Inc. has a market cap of $1.42 billion; its shares were traded at around $29.83 with a P/E ratio of 11.3 and P/S ratio of 1.6. Ezcorp Inc. had an annual average earning growth of 27.9% over the past 10 years. GuruFocus rated Ezcorp Inc. the business predictability rank of 4.5-star.

Highlight of Business Operations:

Outside of Texas, we earn signature loan fee revenue on our payday loans. In 15 U.S. pawn stores, 69 U.S. financial services stores and 64 Canadian financial services stores we make payday loans subject to state or provincial law. The average payday loan amount is approximately $445 and the term is generally less than 30 days, averaging about 16 days. We typically charge a fee of 15% to 22% of the loan amount. In 115 of our U.S. financial services stores and three U.S. pawn stores, we make installment loans subject to state law. These installment loans carry a term of four to seven months, with a series of equal installment payments including principal amortization, due monthly, semi-monthly or on the customers paydays. Total interest and fees on these loans vary in accordance with state law and loan terms, but over the entire loan term, total approximately 45% to 130% of the original principal amount of the loan. We began offering installment loans rather than payday loans in Colorado in August 2010, in Wisconsin in January 2011 and in Missouri in June 2011. Installment loan principal amounts range from $100 to $3,000, but average approximately $550.

In the current quarter, consolidated total revenues increased 14%, or $30.0 million, to $248.9 million, compared to the prior year quarter. Same store total revenues increased $3.5 million, or 2%, and new and acquired stores contributed $26.5 million. Net income increased 43% to $39.4 million. Excluding the onetime $10.9 million charge related to the retirement of our former Chief Executive Officer and the related tax benefit in the prior year quarter, net income increased $4.8 million or 14% .

The EZMONEY Operations segment includes our U.S. financial services stores, our Canadian financial services and retail stores as well as our UK online lending business, which was successfully launched in the current year quarter. The EZMONEY Operations segment total revenues decreased $0.7 million, to $45.0 million, compared to the prior year quarter. This was due to a $1.1 million, or 2%, decrease in same store total revenues and $0.4 million of total revenues at new stores net of closed or consolidated stores. The overall decrease in total revenues was comprised of a $0.9 million decrease in signature loan revenues, including installment loans and payday loans, a $0.8 million decrease in auto title loan fees and $1.0 million increase in merchandise, jewelry scrapping sales and other revenues. In January 2011 and July 2011, we introduced installment loans as a replacement product for payday loans in Wisconsin and Missouri, respectively. This contributed to the migration of some of our signature loan balances from payday loans to installment loans.

EZMONEYs total signature loan revenues decreased $0.9 million, or 2%, and same store signature loan revenues decreased $0.7 million, or 2%, almost exclusively due to competitive pressures in Texas. Included in signature loan fees are revenues from installment loans, which increased $3.2 million, or 77%, over the prior year quarter as the product continues to mature in states where it was recently introduced. Signature loan net revenue decreased $0.7 million, or 2%, compared to the prior year quarter to $29.0 million due to decreased loan volume and a 0.2 percentage point increase in bad debt expressed as a percentage of fees to 25.2%.

Administrative expenses in the current quarter were $19.7 million (13% of net revenues) compared to $26.1 million (19% of net revenues) in the prior year quarter. This decrease is primarily due to a pre-tax charge of $10.9 million related to the retirement of our Chief Executive Officer in prior year quarter. This charge included $3.4 million attributable to a cash payment and $7.5 million attributable to the accelerated vesting of restricted stock. Excluding this charge, administrative expense increased $4.5 million over the prior year quarter.

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