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EZCORP Inc. Reports Operating Results (10-Q)

February 08, 2013 | About:

EZCORP Inc. (NASDAQ:EZPW) filed Quarterly Report for the period ended 2012-12-31.

Ezcorp, Inc. has a market cap of $1.16 billion; its shares were traded at around $21.32 with a P/E ratio of 8.1301 and P/S ratio of 1.076. Ezcorp, Inc. had an annual average earning growth of 29% over the past 10 years. GuruFocus rated Ezcorp, Inc. the business predictability rank of 5-star.

Highlight of Business Operations:

While allowable service charges vary by state and loan size, a majority of our U.S. pawn loans earn 20% per month. Our average U.S. pawn loan amount typically ranges between $135 to $145, but varies depending on the valuation of each item pawned. The total U.S. loan term ranges between 60 and 120 days, consisting of the primary term and grace period. In Mexico, pawn service charges range from 15% to 21% per month, including applicable taxes, with the majority of loans earning 21%. The total Mexico pawn loan term is 40 days, consisting of the primary term and grace period. Individual loans are made in Mexican pesos and vary depending on the valuation of each item pawned, but typically average $65 U.S. dollars.

Outside of Texas, we earn loan fee revenue on our consumer loans. In our U.S. and Canada financial services stores and certain of our U.S. pawn stores, we offer single-payment loans subject to state or provincial law. The average single-payment loan amount is approximately $430 and the term is generally less than 30 days, averaging about 17 days. We typically charge a fee of 15% to 22% of the loan amount. In many of our U.S. financial services stores, we offer multiple-payment loans subject to state law. These multiple-payment 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. Multiple-payment loan principal amounts range from $100 to $3,000, but average approximately $560.

In the current quarter, consolidated total revenues increased 11%, or $28.3 million, to $277.1 million, compared to the prior year quarter. The increase was primarily driven by a 10% increase in pawn service charges, a 44% increase in consumer loan fees and an 10% increase in merchandise sales, partially offset by a 19% decrease in jewelry scrapping sales. Other revenue increased $4.1 million in the current quarter compared to the prior year quarter. Net revenues of $175.4 million, increased $21.3 million, or 14%, and operations expense increased $24.7 million or 30%. Administrative expenses of $13.7 million increased $2.0 million, or 17%. After a $2.4 million increase in depreciation and amortization, a $3.1 million increase in net interest expense, a $3.7 million decrease in income tax expense and the $1.4 million in net income attributable to the noncontrolling interest, net income attributable to EZCORP decreased $8.6 million, or 22%, to $30.7 million.

The U.S. & Canada segment total revenues stayed relatively constant compared to the prior year quarter at $229.6 million. Same store total revenues decreased $13.3 million, or 6%, and new and acquired stores net of closed stores contributed $13.5 million. In the current quarter, we acquired 12 pawn stores in the U.S. for $23.1 million and Go Cash, a U.S. online lender for $50.7 million. As part of these acquisitions, we began store operations in the state of Arizona and online operations in the state of Ohio, bringing the total number of states in which we operate to 26 at December 31, 2012. In the current quarter we opened 51 de novo locations bringing our total number of stores in the U.S. & Canada to 1,050, an 11% increase over the prior year quarter.

Consolidated income before taxes decreased $10.9 million, or 18%, to $48.6 million due to a $4.9 million and $1.1 million increase in contribution from the Latin America and Other International segments respectively, offset by a $14.3 million decrease in contribution from the U.S. & Canada segment and a $2.6 million increase in corporate expenses. The $14.3 million decrease in contribution from the U.S. & Canada segment was due to a combination of reduced gross profit on jewelry scrapped and an increase in operating costs to support a rapidly growing store base.

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