EZCORP Announces Fourth Quarter and Full-Year Fiscal 2016 Results

AUSTIN, Texas, Dec. 07, 2016 (GLOBE NEWSWIRE) -- EZCORP, Inc. (NASDAQ:EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its fourth quarter and fiscal year ended September 30, 2016.

CEO COMMENTARY AND OUTLOOK

Stuart Grimshaw, EZCORP's Chief Executive Officer, said: "Fiscal 2016 was an important year for our company. Our intense focus on market leadership in meeting our customers' desire for cash whenever they want it, combined with consistent execution, delivered strong operating results for our pawn businesses in the U.S. and Mexico. We achieved market leading growth in same store pawn loans outstanding (PLO), the most influential driver of revenue and profitability, and continued to improve our customer experience metrics.

“In September, we completed the divestiture of Grupo Finmart, which frees up capital, management attention and other resources that we can now deploy to grow our pawn businesses. We exit the year in a strong liquidity position, including $66 million of cash, $50 million available on our credit facility and $89.8 million in notes receivable from the Grupo Finmart sale, over half of which we expect to receive in fiscal 2017.

“From a financial standpoint, the positive pawn operating results were offset by $16.8 million of non-cash charges associated with our minority equity investment in Cash Converters International Limited recorded in the fourth quarter.

"Our intense focus on customer leadership and delivering an outstanding customer experience will continue with investments in process improvements, product and customer data analytics and feedback, technology, targeted incentives, and coaching and mentoring for our field team. We are confident these initiatives will continue to improve our core pawn operating performance, which will provide our platform for profitable growth."

All amounts in this release are from EZCORP continuing operations and in conformity with U.S. generally accepted accounting principles ("GAAP") unless otherwise noted. Comparisons shown in this release are to the same period in the prior year unless otherwise noted.

OPERATIONAL HIGHLIGHTS

  • Strong pawn fundamentals:
    • For the year, pawn loans outstanding (PLO) up 4% to $149.8 million in the U.S. and up 7% to $17.5 million in Mexico.
    • Leading the U.S. market with average PLO of $288,100 per store.
    • Pawn service charges (PSC) up 5% to $60.3 million in the quarter and up 6% to $229.9 million for the year in the U.S., and up 5% to $8.3 million in the quarter and up 3% to $31.9 million for the year in Mexico.
    • Merchandise sales gross margin up 200bps to 35% in the quarter and up 400bps to 37% for the year.
  • Revenue growth from strong customer engagement and continued focus on expense management drove underlying business improvement:
    • Total revenue up $14.3 million in the fourth quarter and $10.5 million for the year.
    • Net revenue up $7.3 million (7%) in the fourth quarter and $25.2 million (6%) for the year.
    • Total operating expenses down $32.6 million (24%) in the quarter and $19.6 million (5%) for the year.
  • Strong liquidity position to support growth with $66 million cash balance at year-end plus $50 million undrawn on our credit facility. Of the $89.8 million in notes receivable from the Grupo Finmart sale, EZCORP anticipates receiving $45.7 million in fiscal 2017. To date, $6.4 million has been received, consistent with the terms of the notes.

CONSOLIDATED RESULTS

Three-Months Ended September 30, 2016

  • Net loss from continuing operations attributable to EZCORP was $16.9 million ($(0.31) per share), compared to a net loss of $57.1 million ($(1.04) per share) in the prior year quarter. This improvement was driven by revenue growth and continued focus on expense management. The fourth quarter results included a $16.8 million non-cash impairment and equity loss on our investment in Cash Converters International Limited.
  • Total revenue was $184.6 million, up 8%, and net revenue was $106.9 million, up 7%. On a constant currency basis1, total revenue was $188.2 million, up 11%, with net revenue of $108.8 million, up 9%. Higher PLO balances drove increased PSC, and improved inventory management drove increased merchandise margins.
  • Total operating expenses for the fourth quarter decreased 24% (23% decrease a constant currency basis) as we continue to implement operational efficiencies. Corporate administrative expense decreased $10.8 million to $18.0 million, down 37%.

Fiscal Year Ended September 30, 2016

  • Net loss from continuing operations attributable to EZCORP was $8.0 million ($(0.15) per share), compared to a net loss of $51.3 million ($(0.94) per share). This increase reflects continued improvement in our U.S. and Mexico pawn businesses (as discussed below). Fiscal year 2016 results included $11.0 million non-cash impairment on our investment in Cash Converters International Limited, $4.2 million in restatement related expenses and $1.9 million in restructuring costs.
  • Total revenue was $730.5 million, 1% higher, with net revenue of $428.2 million, a 6% increase. On a constant currency basis, total revenue was $748.1 million, 4% higher, and net revenue was $437.9 million, 9% higher. The net revenue increases were driven by growth in PSC as a result of higher PLO balances, as well as improved merchandise sales margins.
  • Total operating expenses decreased 5% (3% on a constant currency basis), with store operating expenses up due to the addition of new stores during the year.

1 In addition to the financial information prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), we provide certain financial information on a “constant currency” basis, which excludes the impact of foreign currency exchange rate fluctuations. For additional information about the constant currency calculations, as well as a reconciliation of the constant currency financial measures to the comparable GAAP financial measures, see “Non-GAAP Financial Information” at the end of this release.

OPERATING METRICS

U.S. Pawn Segment

Three-Months Ended September 30, 2016

  • Enhanced focus on lending operations resulted in an increase in total PLO of 4% to $149.8 million, up 4% on a same store basis.
  • Same store sales were strong in the quarter, up 8%. Merchandise sales gross margin improved to 36% from 35% attributable to efficiently pricing and selling aged inventory, driving merchandise sales gross profit growth of 9% to $29.2 million.
  • Total PSC increased 5% to $60.3 million; 4% on a same store basis. Average monthly yield on PLO decreased to 13% from 14% in the prior-year quarter.
  • Net revenue gains along with reduced expenses led to an increase in segment profit before tax of 136% to $21.4 million.
  • Inventory aged over one year reduced to 8% of total inventory from 10%.

Fiscal Year Ended September 30, 2016

  • PSC of $229.9 million, up 6%, with same store PSC growth of 4%.
  • Average monthly PLO yield remained flat to the prior-year period at 14%.
  • Same store sales increased 3%. Merchandise sales gross margin increased to 38% from 35%, resulting in a 14% increase in merchandise sales gross profit to $131.5 million.
  • Net revenue increased 7% to $369.4 million and segment expenses increased 2%, resulting in a 25% increase in segment profit before tax to $100.1 million.

Mexico Pawn Segment

Three-Months Ended September 30, 2016

  • PLO increased 7% to $17.5 million (up 21% on a constant currency basis). PSC grew 5% to $8.3 million (up 21% on a constant currency basis). Average monthly PLO yield was consistent with the prior-year at 16%
  • Same store sales increased 4% (19% in constant currency). Merchandise sales gross margin increased to 29% from 21% as a result of more disciplined pawn loan valuations and pricing cadence. Merchandise sales gross profit increased 32% to $4.4 million (up 52% on a constant currency basis).
  • Segment profit before tax increased $5.6 million to $2.3 million (up $6.5 million on a constant currency basis).
  • Inventory aged over one year reduced to 3% of total inventory from 4%.

Fiscal Year Ended September 30, 2016

  • PSC increase of 3% to $31.9 million (up 22% on a constant currency basis). Annualized yield on pawn loans remained unchanged to the prior-year period at 16%.
  • Same store sales were flat (19% increase on a constant currency basis). Merchandise sales gross margin increased to 32% from 28%, resulting in a 7% increase in merchandise sales gross profit to $19.3 million (up 27% on a constant currency basis).
  • Expense management leveraged a 3% growth in net revenue to $52.0 million into a $9.5 million increase in segment profit before tax to $8.5 million (net revenue up 22% and segment profit before tax up $12.6 million on a constant currency basis to $11.6 million).

DISCONTINUED OPERATIONS: GRUPO FINMART

During the fourth quarter of fiscal 2016 as a result of the Grupo Finmart disposition, we recorded a gain of $34.2 million. The gain does not take into consideration the total costs associated with the transaction, which were $9.8 million, approximately $8.0 million of which were recorded in our consolidated statements of operations in fiscal 2016 and the remaining $1.8 million of which will be recorded in our consolidated statements of operations in future periods due to ongoing employee service requirements.

CONFERENCE CALL

EZCORP will host a conference call on Thursday, December 8, 2016, at 7:30am Central Time to discuss fourth quarter and fiscal year results. Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 29660657, International dialing (678) 894-3054. The conference call will be webcast simultaneously to the public through this link: http://investors.ezcorp.com/. A replay of the conference call will be available online at http://investors.ezcorp.com/ shortly after the call.

ABOUT EZCORP

EZCORP is a leading provider of pawn loans in the United States and Mexico. At our pawn stores, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.

FORWARD LOOKING STATEMENTS

This announcement contains certain forward-looking statements regarding the company’s strategy, initiatives and expected performance. 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, including all statements regarding the company's strategy, initiatives and future performance, that address activities or results that the company plans, expects, believes, projects, estimates or anticipates, will, should or may occur in the future, including future financial or operating results, are forward-looking statements. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including operating risks, liquidity risks, legislative or regulatory developments, market factors or current or future litigation. For a discussion of these and other factors affecting the company’s business and prospects, see the company’s annual, quarterly and other reports filed with the Securities and Exchange Commission. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.


EZCORP, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
September 30,
Fiscal Year Ended
September 30,
2016 2015 2016 2015
As
Corrected
As
Corrected
(in thousands, except per share amounts)
Revenues:
Merchandise sales$97,166 $91,490 $409,107 $402,118
Jewelry scrapping sales16,482 10,452 50,113 57,973
Pawn service charges68,603 65,208 261,800 247,204
Other revenues2,334 3,141 9,485 12,705
Total revenues184,585 170,291 730,505 720,000
Merchandise cost of goods sold63,540 61,359 258,271 267,789
Jewelry scrapping cost of goods sold13,768 8,457 42,039 46,066
Other cost of revenues416 928 1,965 3,125
Net revenues106,861 99,547 428,230 403,020
Operating expenses:
Operations79,941 81,604 301,387 294,939
Administrative18,016 28,774 68,101 72,986
Depreciation and amortization6,120 8,511 26,542 30,959
Loss on sale or disposal of assets465 1,934 1,106 2,659
Restructuring11 16,317 1,921 17,080
Total operating expenses104,553 137,140 399,057 418,623
Operating income (loss)2,308 (37,593) 29,173 (15,603)
Interest expense4,463 3,929 16,477 16,385
Interest income(15) (55) (81) (278)
Loss from investment in unconsolidated affiliates5,881 5,811 255 5,473
Impairment of investments10,957 26,837 10,957 26,837
Other expense387 1,234 1,202 2,187
(Loss) income from continuing operations before income taxes(19,365) (75,349) 363 (66,207)
Income tax (benefit) expense(1,863) (18,242) 9,361 (14,025)
Loss from continuing operations, net of tax(17,502) (57,107) (8,998) (52,182)
Income (loss) from discontinued operations, net of tax19,636 (36,998) (79,432) (42,045)
Net income (loss)2,134 (94,105) (88,430) (94,227)
Net loss attributable to noncontrolling interest(1,097) (1,805) (7,686) (5,035)
Net income (loss) attributable to EZCORP, Inc.$3,231 $(92,300) $(80,744) $(89,192)
Basic loss per share attributable to EZCORP, Inc. — continuing operations$(0.31) $(1.04) $(0.15) $(0.94)
Diluted loss per share attributable to EZCORP, Inc. — continuing operations$(0.31) $(1.04) $(0.15) $(0.94)
Weighted-average basic shares outstanding53,991 54,821 54,427 54,369
Net loss from continuing operations attributable to EZCORP, Inc.$(16,927) $(57,105) $(7,973) $(51,298)
Income (loss) from discontinued operations attributable to EZCORP, Inc.20,158 (35,195) (72,771) (37,894)
Net income (loss) attributable to EZCORP, Inc.$3,231 $(92,300) $(80,744) $(89,192)

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.


EZCORP, Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
September 30,
2016 2015
As
Corrected
Assets:
Current assets:
Cash and cash equivalents$65,737 $56,244
Pawn loans167,329 159,964
Pawn service charges receivable, net31,062 30,852
Inventory, net140,224 124,084
Notes receivable, net41,946
Income taxes receivable2,533 42,231
Current assets held for sale 72,849
Prepaid expenses and other current assets33,312 25,077
Total current assets482,143 511,301
Investment in unconsolidated affiliate37,128 56,182
Property and equipment, net58,455 73,938
Goodwill253,976 251,646
Intangible assets, net30,681 30,778
Non-current notes receivable, net41,119
Deferred tax asset, net35,303 34,176
Non-current assets held for sale 217,233
Other assets, net44,439 13,736
Total assets$983,244 $1,188,990
Liabilities, temporary equity and equity:
Current liabilities:
Accounts payable, accrued expenses and other current liabilities$84,285 $109,875
Current liabilities held for sale 87,329
Customer layaway deposits10,693 10,470
Total current liabilities94,978 207,674
Long-term debt, net283,611 197,976
Non-current liabilities held for sale 101,644
Deferred gains and other long-term liabilities10,450 9,929
Total liabilities389,039 517,223
Commitments and contingencies
Temporary equity:
Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; none as of September 30, 2016 and 1,168,456 shares issued and outstanding at redemption value as of September 30, 2015 11,696
Redeemable noncontrolling interest 4,040
Total temporary equity 15,736
Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of September 30, 2016 and 2015; issued and outstanding: 51,129,144 as of September 30, 2016 and 50,726,289 as of September 30, 2015511 507
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,17130 30
Additional paid-in capital318,723 310,038
Retained earnings319,808 400,552
Accumulated other comprehensive loss(44,089) (55,096)
EZCORP, Inc. stockholders’ equity594,983 656,031
Noncontrolling interest(778)
Total equity594,205 656,031
Total liabilities, temporary equity and equity$983,244 $1,188,990

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.


EZCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Fiscal Year Ended September 30,
2016 2015
As Corrected
(in thousands)
Operating activities:
Net loss$(88,430) $(94,227)
Loss from discontinued operations*78,872 14,728
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization26,542 34,450
Amortization of debt discount8,928 8,888
Amortization of deferred financing costs1,763 1,657
Consumer loan loss provision704 22,303
Deferred income taxes849 (6,050)
Impairment of goodwill 12,253
Impairment of long-lived assets 18,529
Other adjustments969 (95)
Loss on sale or disposal of assets1,106 2,893
Stock compensation5,346 2,374
Loss from investments in unconsolidated affiliates255 5,473
Impairment of investments10,957 26,837
Changes in operating assets and liabilities, net of business acquisitions:
Service charges and fees receivable286 5,181
Inventory(3,735) 433
Prepaid expenses, other current assets and other assets(14,875) 7,475
Accounts payable and other, deferred gains and other long-term liabilities(3,505) 22,079
Customer layaway deposits329 1,997
Income taxes receivable42,108 (18,298)
Payments of restructuring charges(8,478) (5,376)
Dividends from unconsolidated affiliate2,197 4,842
Net cash provided by operating activities — continuing operations62,188 68,346
Net cash provided by operating activities — discontinued operations*2,215 11,052
Investing activities:
Loans made(640,977) (756,463)
Loans repaid385,333 528,733
Recovery of pawn loan principal through sale of forfeited collateral235,168 243,692
Additions to property and equipment(9,486) (23,174)
Acquisitions, net of cash acquired(6,000) (7,802)
Investments in unconsolidated affiliate (12,140)
Proceeds from sale of assets 564
Net cash used in investing activities — continuing operations(35,962) (26,590)
Net cash provided by (used in) investing activities — discontinued operations*42,678 (41,103)
Financing activities:
Taxes paid related to net share settlement of equity awards(172) (210)
Debt issuance costs(740)
Payout of deferred consideration(15,000) (6,000)
Purchase of subsidiary shares from noncontrolling interest (32,411)
Proceeds from borrowings and line of credit48,688
Payments on borrowings, line of credit and capital lease obligations(48) (418)
Repurchase of common stock(11,750)
Net cash provided by (used in) financing activities — continuing operations20,978 (39,039)
Net cash (used in) provided by financing activities — discontinued operations*(84,134) 41,441
Effect of exchange rate changes on cash and cash equivalents(1,350) (10,308)
Net increase in cash and cash equivalents6,613 3,799
Cash and cash equivalents at beginning of period, excluding held for sale56,244 52,294
Cash and cash equivalents held for sale at beginning of period2,880 3,031
Cash and cash equivalents at end of period65,737 59,124
Less: cash and cash equivalents held for sale at end of period (2,880)
Cash and cash equivalents at end of period, excluding held for sale$65,737 $56,244

Certain immaterial corrections have been made to the fiscal 2015 amounts from those as previously filed.

* Represents operations discontinued subsequent to the adoption of FASB ASU 2014-08. Amounts are exclusive of intercompany loans.


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Three Months Ended September 30, 2016
U.S. Pawn Mexico
Pawn
Other
International
Total
Segments
Corporate
Items
Consolidated
(in thousands)
Revenues:
Merchandise sales$82,211 $14,955 $ $97,166 $ $97,166
Jewelry scrapping sales15,693 789 16,482 16,482
Pawn service charges60,263 8,340 68,603 68,603
Other revenues50 154 2,130 2,334 2,334
Total revenues158,217 24,238 2,130 184,585 184,585
Merchandise cost of goods sold52,980 10,560 63,540 63,540
Jewelry scrapping cost of goods sold13,105 663 13,768 13,768
Other cost of revenues 416 416 416
Net revenues92,132 13,015 1,714 106,861 106,861
Operating expenses (income):
Operations67,803 9,520 2,618 79,941 79,941
Administrative 18,016 18,016
Depreciation and amortization2,753 680 55 3,488 2,632 6,120
Loss on sale or disposal of assets162 53 4 219 246 465
Restructuring11 11 11
Interest expense 6 6 4,457 4,463
Interest income (7) (7) (8) (15)
Loss from investment in unconsolidated affiliate 5,881 5,881 5,881
Impairment of investment 10,957 10,957 10,957
Other expense (income) 465 (1) 464 (77) 387
Segment contribution (loss)$21,403 $2,298 $(17,800) $5,901
Loss from continuing operations before income taxes $5,901 $(25,266) $(19,365)



EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Three Months Ended September 30, 2015
U.S. Pawn Mexico
Pawn
Other
International
Total
Segments
Corporate
Items
Consolidated
(in thousands)
Revenues:
Merchandise sales$75,595 $15,498 $397 $91,490 $ $91,490
Jewelry scrapping sales10,331 57 64 10,452 10,452
Pawn service charges57,250 7,958 65,208 65,208
Other revenues375 238 2,528 3,141 3,141
Total revenues143,551 23,751 2,989 170,291 170,291
Merchandise cost of goods sold48,763 12,180 416 61,359 61,359
Jewelry scrapping cost of goods sold8,401 6 50 8,457 8,457
Other cost of revenues 928 928 928
Net revenues86,387 11,565 1,595 99,547 99,547
Operating expenses (income):
Operations67,903 12,200 1,501 81,604 81,604
Administrative 28,774 28,774
Depreciation and amortization4,461 998 103 5,562 2,949 8,511
Loss (gain) on sale or disposal of assets918 (6) 912 1,022 1,934
Restructuring4,016 799 2,563 7,378 8,939 16,317
Interest expense44 6 50 3,879 3,929
Interest income(1) (24) (25) (30) (55)
Loss from investment in unconsolidated affiliate 5,811 5,811 5,811
Impairment of investment 26,837 26,837 26,837
Other expense (income)(12) 916 7 911 323 1,234
Segment (loss) contribution$9,058 $(3,324) $(35,227) $(29,493)
Loss from continuing operations before income taxes $(29,493) $(45,856) $(75,349)


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Fiscal Year Ended September 30, 2016
U.S. Pawn Mexico
Pawn
Other
International
Total
Segments
Corporate
Items
Consolidated
(in thousands)
Revenues:
Merchandise sales$348,771 $60,331 $5 $409,107 $ $409,107
Jewelry scrapping sales47,810 2,282 21 50,113 50,113
Pawn service charges229,893 31,907 261,800 261,800
Other revenues331 385 8,769 9,485 9,485
Total revenues626,805 94,905 8,795 730,505 730,505
Merchandise cost of goods sold217,268 41,002 1 258,271 258,271
Jewelry scrapping cost of goods sold40,138 1,885 16 42,039 42,039
Other cost of revenues 1,965 1,965 1,965
Net revenues369,399 52,018 6,813 428,230 428,230
Operating expenses (income):
Operations255,321 38,481 7,585 301,387 301,387
Administrative 68,101 68,101
Depreciation and amortization12,242 2,965 218 15,425 11,117 26,542
Loss on sale or disposal of assets664 169 4 837 269 1,106
Restructuring993 543 202 1,738 183 1,921
Interest expense125 109 234 16,243 16,477
Interest income(2) (30) (32) (49) (81)
Loss from investment in unconsolidated affiliate 255 255 255
Impairment of investment 10,957 10,957 10,957
Other expense (income) 1,273 2 1,275 (73) 1,202
Segment contribution (loss)$100,056 $8,508 $(12,410) $96,154
Income from continuing operations before income taxes $96,154 $(95,791) $363


EZCORP, Inc.
OPERATING SEGMENT RESULTS (UNAUDITED)
Fiscal Year Ended September 30, 2015
U.S. Pawn Mexico
Pawn
Other
International
Total
Segments
Corporate
Items
Consolidated
(in thousands)
Revenues:
Merchandise sales $334,635 $65,408 $2,075 $402,118 $ $402,118
Jewelry scrapping sales54,343 3,267 363 57,973 57,973
Pawn service charges216,211 30,993 247,204 247,204
Other revenues945 1,021 10,739 12,705 12,705
Total revenues606,134 100,689 13,177 720,000 720,000
Merchandise cost of goods sold218,953 47,371 1,465 267,789 267,789
Jewelry scrapping cost of goods sold42,845 2,954 267 46,066 46,066
Other cost of revenues 3,125 3,125 3,125
Net revenues344,336 50,364 8,320 403,020 403,020
Operating expenses (income):
Operations244,232 43,927 6,780 294,939 294,939
Administrative 72,986 72,986
Depreciation and amortization15,227 4,440 616 20,283 10,676 30,959
Loss (gain) on sale or disposal of assets995 258 (1) 1,252 1,407 2,659
Restructuring4,016 799 2,563 7,378 9,702 17,080
Interest expense60 15 75 16,310 16,385
Interest income(42) (78) (120) (158) (278)
Loss from investment in unconsolidated affiliate 5,473 5,473 5,473
Impairment of investments 26,837 26,837 26,837
Other expense 1,988 7 1,995 192 2,187
Segment contribution (loss)$79,848 $(985) $(33,955) $44,908
Loss from continuing operations before income taxes $44,908 $(111,115) $(66,207)


EZCORP, Inc.
STORE COUNT ACTIVITY (UNAUDITED)
Company-owned Stores
U.S.
Pawn
Mexico
Pawn
Other
International
Consolidated Franchises
As of September 30, 2013502 258 39 799 8
New locations opened9 3 12
Locations sold, combined or closed(7) (7) (3)
As of September 30, 2014504 261 39 804 5
New locations opened5 3 8
Locations acquired25 25
Locations sold, combined or closed(12) (27) (12) (51) (4)
As of September 30, 2015522 237 *27 786 1
New locations opened 3 3
Locations acquired6 1 7
Locations sold, combined or closed(8) (2) (10) (1)
As of September 30, 2016520 239 27 786

* Includes five buy/sell stores reflected in fiscal 2015 ending count which were converted to Mexico Pawn stores during the three-months ended March 31, 2016.

NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

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 currency and ongoing segment contribution results to evaluate results of our Mexico Pawn operations, which are denominated in Mexican pesos and believe that presentation of constant currency results are meaningful and useful in understanding the activities and business metrics of our Mexico Pawn operations and reflect an additional way of viewing aspects of our business that, when viewed with GAAP results, provide a more complete understanding of factors and trends affecting our business. We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. We use this non-GAAP financial information to evaluate and compare operating results across accounting periods. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Constant currency results reported herein are calculated by translating consolidated balance sheet and consolidated statement of operations items denominated in Mexican pesos to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations. We used the end-of-period rate for balance sheet items and the average closing daily exchange rate during the appropriate period for statement of operations items. The end-of-period exchange rate as of September 30, 2016 and 2015 was 19.4 to 1 and 17.1 to 1, respectively. The average exchange rate for the years ended September 30, 2016, 2015 and 2014 was 17.9 to 1, 15.1 to 1, and 13.1 to 1, respectively. Constant currency results, where presented, also exclude the foreign currency gain or loss and the related foreign currency derivative gain or loss impact.

The following information provides reconciliations of certain non-GAAP financial measures presented in this press release to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Miscellaneous Non-GAAP Financial Measures

U.S.
Dollar
Amount
Percentage
Change
YOY
(in thousands)
Consolidated revenue (three-months ended September 30, 2016)$184,585 8%
Currency exchange rate fluctuations3,656
Constant currency consolidated revenue (three-months ended September 30, 2016)$188,241 11%
Consolidated net revenue (three-months ended September 30, 2016)$106,861 7%
Currency exchange rate fluctuations1,950
Constant currency consolidated net revenue (three-months ended September 30, 2016)$108,811 9%
Consolidated operating expenses (three-months ended September 30, 2016)$104,553 (24)%
Currency exchange rate fluctuations1,524
Constant currency consolidated operating expenses (three-months ended September 30, 2016)$106,077 (23)%
Consolidated revenue (year ended September 30, 2016)$730,505 1%
Currency exchange rate fluctuations17,598
Constant currency consolidated revenue (year ended September 30, 2016)$748,103 4%
Consolidated net revenue (year ended September 30, 2016)$428,230 6%
Currency exchange rate fluctuations9,645
Constant currency consolidated net revenue (year ended September 30, 2016)$437,875 9%
Consolidated operating expenses (year ended September 30, 2016)$399,057 (5)%
Currency exchange rate fluctuations7,818
Constant currency consolidated operating expenses (year ended September 30, 2016)$406,875 (3)%
Mexico Pawn loans outstanding as of September 30, 2016$17,538 7%
Currency exchange rate fluctuations2,359
Constant currency Mexico Pawn loans outstanding as of September 30, 2016$19,897 21%
Mexico Pawn service charges (three-months ended September 30, 2016)$8,340 5%
Currency exchange rate fluctuations1,268
Constant currency Mexico Pawn service charges (three-months ended September 30, 2016)$9,608 21%
Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016)$14,559 4%
Currency exchange rate fluctuations2,144
Constant currency Mexico Pawn same store merchandise revenue (three-months ended September 30, 2016)$16,703 19%
Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016)$4,395 32%
Currency exchange rate fluctuations638
Constant currency Mexico Pawn merchandise sales gross profit (three-months ended September 30, 2016)$5,033 52%
Mexico Pawn segment profit before tax (three-months ended September 30, 2016)$2,298 N/A
Currency exchange rate fluctuations922
Constant currency Mexico Pawn segment profit before tax (three-months ended September 30, 2016)$3,220 N/A
Mexico Pawn service charges (year ended September 30, 2016)$31,907 3%
Currency exchange rate fluctuations5,917
Constant currency Mexico Pawn service charges (year ended September 30, 2016)$37,824 22%
Mexico Pawn same store merchandise revenue (year ended September 30, 2016)$58,636 %
Currency exchange rate fluctuations10,873
Constant currency Mexico Pawn same store merchandise revenue (year ended September 30, 2016)$69,509 19%
Mexico Pawn merchandise sales gross profit (year ended September 30, 2016)$19,329 7%
Currency exchange rate fluctuations3,584
Constant currency Mexico Pawn merchandise sales gross profit (year ended September 30, 2016)$22,913 27%
Mexico Pawn net revenue (year ended September 30, 2016)$52,018 3%
Currency exchange rate fluctuations9,645
Constant currency Mexico Pawn net revenue (year ended September 30, 2016)$61,663 22%
Mexico Pawn segment profit before tax (year ended September 30, 2016)$8,508 N/A
Currency exchange rate fluctuations3,116
Constant currency Mexico Pawn segment profit before tax (year ended September 30, 2016)$11,624 N/A

Jeff Christensen Vice President, Investor Relations Email: jeff_christensen@ezcorp.com Phone: (512) 437-3545

Source:EZCORP, Inc.