EZCORP (EZPW) 8-K EZCORP Announces Third Quarter Fiscal 2016 Results

EZCORP Announces Third Quarter Fiscal 2016 Results

▪ Net Revenue up $6.6 million to $100.4 million, and Income From Continuing Operations Before Income Taxes up $7.6 millionto $3.8 million, driven by strong pawn performance in both U.S. and Mexico.

▪ Pawn loans outstanding (PLO) up 11% to $160.3 million; same store PLO up 9%.

▪ Pawn service charges (PSC) up 8% to $62.5 million; same store PSC up 8%.

▪ Merchandise sales gross margin on both consolidated and same store basis increased 200bps to 36%.

▪ Definitive agreement to sell Grupo Finmart announced July 6, 2016; close expected by September 30, 2016.

▪ Received commitment for a $100 million secured credit facility to support the business.

All amounts in this release are EZCORP continuing operations 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.

Austin, Texas (August 9, 2016) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its third quarter ended June 30, 2016.

CEO COMMENTARY AND OUTLOOK

Stuart Grimshaw, EZCORP’s Chief Executive Officer, said: "We have been consistently executing the three year strategic program announced in July 2015 to lead the market in serving and satisfying customers’ need for cash. Pawn momentum remains strong with four consecutive quarters of improvement in same store PLO in the U.S. and eight consecutive quarters in Mexico.

"Our focus on customer engagement and optimizing our U.S. and Mexico pawn businesses will continue, including investments in technology to improve innovation and productivity, reduce costs, and leverage investments. We are confident these initiatives, along with the quality pawn performance we have demonstrated in recent quarters, will help us continue to build our platform for profitable growth.

"We recently announced an agreement to sell Grupo Finmart, and we expect to close that transaction by the end of our fiscal year. After the sale of Grupo Finmart, 99% of our revenue will be generated from our U.S. and Mexico pawn businesses."

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.

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CONSOLIDATED RESULTS

Three-Months Ended June 30, 2016

• Net income from continuing operations attributable to EZCORP was $2.9 million ($0.05 per share), compared to a net loss of $0.7 million ($0.01 per share). This increase was driven by revenue growth from strong customer engagement and continued focus on expense management.

• Total revenue for the current quarter was $170.2 million, up 3%, and net revenue was $100.4 million, up 7%. On a constant currency basis¹, total revenue was $174.3 million, up 6%, with net revenue of $102.8 million, up 10%. The increase in both total revenue and net revenue (stated on a GAAP and constant currency basis) is primarily due to higher pawn service charges and merchandise margin.

• Total operating expenses for the current quarter decreased 2% (flat on a constant currency basis) as we continue to implement operational efficiencies. Corporate administrative expense was $14.5 million, down 14%.

Nine-Months Ended June 30, 2016

• Net income from continuing operations attributable to EZCORP was $9.0 million ($0.16 per share), compared to net income of $5.8 million ($0.11 per share). This increase reflects continued improvement in our U.S. and Mexico pawn businesses (as discussed below).

• Total revenue for the nine-months ended June 30, 2016 was $545.9 million, 1% lower, with net revenue of $321.4 million, a 6% increase. On a constant currency basis, total revenue was $559.9 million, 2% higher, and net revenue was $329.1 million, 8% higher. Higher pawn service charges and merchandise margins drove the increase in total revenue and net revenue on a constant currency basis.

• Total operating expenses for the nine-months ended June 30, 2016 increased 5% (7% on a constant currency basis), primarily due to new store costs offset by store rationalization, accrued incentives at both field and corporate levels, as well as restatement expenses.

OPERATING METRICS

U.S. Pawn Segment

Three-Months Ended June 30, 2016

• Enhanced focus on customers drove pawn lending, resulting in an increase in total PLO of 13% to $143.9 million, up 10% on a same store basis. The pawn loan redemption rate for the quarter was 85%, consistent with the prior-year period.

• Total PSC increased 10% to $54.4 million, up 8% on a same store basis, as a result of strong same store PLO growth of 10%. Annualized yield on PLO decreased slightly to 164%, from 167% in the prior year quarter. The lower PLO yield is primarily due to shift in portfolio composition.

• Merchandise sales gross margin improved to 37% from 35% attributable to discipline in pawn loan valuations and pricing cadence, driving merchandise sales gross profit growth of 8% to $29.2 million.

• Store expenses were tightly managed, leveraging 9% growth in net revenue to $85.7 millioninto a 25% increase in segment profit before tax to $20.2 million.

• Aged inventory reduced to 9% of total inventory from 11%.

Nine-Months Ended June 30, 2016

• Same store PLO growth continues, increasing to 10% as compared to a decrease of 11% in the prior-year period, generating same store PSC growth of 5% in the nine-month period ended June 30, 2016.

• Annualized PLO yield and pawn loan redemption rate both decreased slightly from the prior-year period to 164% from 165%, and to 84% from 85%, respectively.

• Merchandise sales gross margin increased to 38% from 34%, resulting in a 15% increase in merchandise sales gross profit to $102.3 million.

• Expense management leveraged a 7% growth in net revenue to $277.3 millioninto an 11% increase in segment profit before tax to $78.7 million.

Mexico Pawn Segment

Three-Months Ended June 30, 2016

• Focusing on customer engagement drove the increase in PSC and PLO on a constant currency basis. PSC grew 1% to $8.1 million(up 20% on a constant currency basis). PLO decreased 1% to $16.3 million (up 19% on a constant currency basis). The pawn loan redemption rate increased to 77% from 76% in the prior-year period. Annualized PLO yield was a strong 192% compared to 194%.

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• Merchandise sales gross margin increased to 33% from 29% as the result of disciplined pawn loan valuations and pricing cadence. Merchandise sales gross profit increased 5% to $4.6 million(up 24% on a constant currency basis).

• Store expenses were tightly managed, leveraging 2% growth in net revenue to $12.9 million into a 476% increase in segment profit before tax to $2.7 million (net revenue up 20% and segment profit before tax up 773% on a constant currency basis).

• Aged inventory reduced to 3% of total inventory from 8%.

Nine-Months Ended June 30, 2016

• PSC increased 2% to $23.6 million(up 22% on a constant currency basis). Annualized yield on pawn loans decreased to 194% from 196%. The pawn loan redemption rate on pawn loans year-to-date increased slightly to 78% from 77%.

• Merchandise sales gross margin increased to 33% from 29%, resulting in a 1% increase in merchandise sales gross profit to $14.9 million (up 21% on a constant currency basis).

• Expense management leveraged a 1% growth in net revenue to $39.0 million into a 165% increase in segment profit before tax to $6.2 million (net revenue up 20% and segment profit before tax up 259% on a constant currency basis).

DISCONTINUED OPERATIONS: GRUPO FINMART

On July 6, 2016, we announced that we had entered into a definitive agreement to sell Prestaciones Finmart, S.A.P.I. DE C.V., SOFOM, E.N.R. (“Grupo Finmart”) to Alpha Holding, S.A. de C.V. (“AlphaCredit”), a leader in consumer lending in Mexico and Colombia. We currently own 94% of Grupo Finmart, a provider of consumer loans to government agency employees in Mexico.

The decision to divest Grupo Finmart is a result of the continued execution of our three-year strategic program and is expected to provide us with additional capital to invest in our U.S. and Mexico pawn businesses.

As a result of the decision to sell the Grupo Finmart business, we have classified our Grupo Finmart segment as held for sale as of June 30, 2016 and recast all operations of Grupo Finmart as discontinued operations for the three and nine-months ended June 30, 2016.

CONFERENCE CALL

EZCORP will host a conference call on Wednesday, August 10, 2016, at 7:30am Central Time to discuss third quarter results. Analysts and institutional investors may participate on the conference call by dialing (888) 734-0328, Conference ID: 58992016, 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.

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Contact:

Jeff Christensen

Vice President, Investor Relations

Email: jeff_christensen@ezcorp.com

Phone: (512) 437-3545

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended June 30,						Nine Months Ended June 30,
	2016			2015			2016			2015
	(Unaudited)
	(in thousands, except per share amounts)
Revenues:
Merchandise sales	$	94,014		$	93,137		$	311,941		$	310,628
Jewelry scrapping sales	11,230			10,588			33,631			47,521
Pawn service charges	62,473			57,599			193,197			181,996
Consumer loan fees and interest	2,201			2,708			6,603			7,517
Other revenues	232			587			548			2,047
Total revenues	170,150			164,619			545,920			549,709
Merchandise cost of goods sold	60,140			61,460			194,731			206,430
Jewelry scrapping cost of goods sold	9,110			8,580			28,271			37,609
Consumer loan bad debt	506			771			1,549			2,197
Net revenues	100,394			93,808			321,369			303,473
Operating expenses:
Operations	73,172			71,455			221,446			213,335
Administrative	14,481			16,860			50,085			44,212
Depreciation and amortization	6,274			7,537			20,422			22,448
(Gain) loss on sale or disposal of assets	(41		)	82			641			725
Restructuring	—			37			1,910			763
Total operating expenses	93,886			95,971			294,504			281,483
Operating income (loss)	6,508			(2,163		)	26,865			21,990
Interest expense	3,936			3,783			12,014			12,456
Interest income	(50		)	(84		)	(66		)	(223		)
Equity in net income of unconsolidated affiliate	(1,694		)	(1,822		)	(5,626		)	(338		)
Other expense (income)	500			(222		)	815			953
Income (loss) from continuing operations before income taxes	3,816			(3,818		)	19,728			9,142
Income tax expense (benefit)	1,038			(3,035		)	11,224			4,217
Income (loss) from continuing operations, net of tax	2,778			(783		)	8,504			4,925
Loss from discontinued operations, net of tax	(9,133		)	(9,454		)	(100,916		)	(5,047		)
Net loss	(6,355		)	(10,237		)	(92,412		)	(122		)
Net loss attributable to noncontrolling interest	(666		)	(390		)	(5,124		)	(3,230		)
Net (loss) income attributable to EZCORP, Inc.	$	(5,689	)	$	(9,847	)	$	(87,288	)	$	3,108
Basic earnings per share attributable to EZCORP, Inc. — continuing operations	$	0.05		$	(0.01	)	$	0.16		$	0.11
Diluted earnings per share attributable to EZCORP, Inc. — continuing operations	$	0.05		$	(0.01	)	$	0.16		$	0.11
Weighted-average basic shares outstanding	53,980			54,820			54,574			54,216
Net income (loss) from continuing operations attributable to EZCORP, Inc.	$	2,904		$	(683	)	$	8,954		$	5,807
Net loss from discontinued operations attributable to EZCORP, Inc.	(8,593		)	(9,164		)	(96,242		)	(2,699		)
Net (loss) income attributable to EZCORP, Inc.	$	(5,689	)	$	(9,847	)	$	(87,288	)	$	3,108

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EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)
	June 30, 2016			June 30, 2015			September 30, 2015
	(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	29,380		$	113,405		$	56,244
Restricted cash	5,000			218			144
Pawn loans	160,269			144,377			159,964
Pawn service charges receivable, net	29,643			26,989			30,852
Inventory, net	130,368			115,283			124,084
Income taxes receivable	—			2,745			40,657
Current assets held for sale	156,587			82,845			72,858
Prepaid expenses and other current assets	20,734			57,644			24,933
Total current assets	531,981			543,506			509,736
Investment in unconsolidated affiliate	57,656			90,423			56,182
Property and equipment, net	61,201			99,353			73,938
Goodwill	254,273			249,174			251,646
Intangible assets, net	30,569			37,951			30,778
Deferred tax asset, net	33,386			39,569			24,405
Non-current assets held for sale	—			231,977			226,623
Other assets, net	18,950			26,493			13,736
Total assets	$	988,016		$	1,318,446		$	1,187,044
Liabilities, temporary equity and equity:
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	59,239		$	77,966		$	109,875
Current liabilities held for sale	130,627			81,248			87,725
Customer layaway deposits	11,201			9,635			10,470
Income taxes payable	4,842			—			—
Total current liabilities	205,909			168,849			208,070
Long-term debt, net	211,421			207,925			197,976
Non-current liabilities held for sale	—			125,378			101,644
Deferred gains and other long-term liabilities	3,321			4,752			3,703
Total liabilities	420,651			506,904			511,393
Commitments and contingencies
Temporary equity:
Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; none as of June 30, 2016 and 1,168,456 shares issued and outstanding at redemption value as of June 30, 2015 and September 30, 2015	—			11,696			11,696
Redeemable noncontrolling interest	(2,410		)	16,318			2,532
Total temporary equity	(2,410		)	28,014			14,228
Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of June 30, 2016 and 2015 and September 30, 2015; issued and outstanding: 51,019,332 as of June 30, 2016; 50,681,477 as of June 30, 2015; and 50,726,289 as of September 30, 2015	510			506			507
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171	30			30			30
Additional paid-in capital	313,607			327,018			307,080
Retained earnings	320,537			498,360			407,825
Accumulated other comprehensive loss	(64,703		)	(42,386		)	(54,019		)
EZCORP, Inc. stockholders’ equity	569,981			783,528			661,423
Noncontrolling interest	(206		)	—			—
Total equity	569,775			783,528			661,423
Total liabilities, temporary equity and equity	$	988,016		$	1,318,446		$	1,187,044

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended June 30,
	2016			2015
	(Unaudited)
	(in thousands)
Operating activities:
Net loss	$	(92,412	)	$	(122	)
Loss from discontinued operations*	100,172			7,819
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	20,422			25,316
Amortization of debt discount and consumer loan premium, net	6,574			6,099
Consumer loan loss provision	278			18,652
Deferred income taxes	(321		)	(5,742		)
Impairment of goodwill	—			10,550
Amortization of deferred financing costs	1,318			1,213
Other adjustments	961			1,348
Loss on sale or disposal of assets	641			956
Stock compensation expense (benefit)	3,206			(1,319		)
Income from investment in unconsolidated affiliate	(5,626		)	(338		)
Changes in operating assets and liabilities, net of business acquisitions:
Service charges and fees receivable	1,838			5,329
Inventory	(1,349		)	926
Prepaid expenses, other current assets and other assets	(1,038		)	(5,124		)
Accounts payable and other, deferred gains and other long-term liabilities	(22,902		)	(13,029		)
Customer layaway deposits	781			1,127
Restricted cash	(4,861		)	(459		)
Income taxes receivable	45,499			17,459
Payments of restructuring charges	(8,367		)	(3,668		)
Dividends from unconsolidated affiliate	2,197			4,842
Net cash provided by operating activities — continuing operations	47,011			71,835
Net cash provided by (used in) operating activities — discontinued operations*	10,926			(21,523		)
Investing activities:
Loans made	(469,133		)	(575,038		)
Loans repaid	291,704			409,793
Recovery of pawn loan principal through sale of forfeited collateral	173,710			191,170
Additions to property and equipment	(6,408		)	(21,914		)
Acquisitions, net of cash acquired	(6,000		)	(4,120		)
Investment in unconsolidated affiliate	—			(12,140		)
Net cash used in investing activities — continuing operations	(16,127		)	(12,249		)
Net cash provided by (used in) investing activities — discontinued operations*	4,590			(1,894		)
Financing activities:
Payout of deferred consideration	(14,875		)	(6,000		)
Repurchase of redeemable common stock issued due to acquisitions	(11,750		)	—
Purchase of subsidiary shares from noncontrolling interest	—			(2,774		)
Payments on capital lease obligations	(48		)	(355		)
Net cash used in financing activities — continuing operations	(26,673		)	(9,129		)
Net cash (used in) provided by financing activities — discontinued operations*	(41,237		)	37,713
Effect of exchange rate changes on cash and cash equivalents	(6,506		)	(5,691		)
Net (decrease) increase in cash and cash equivalents	(28,016		)	59,062
Cash and cash equivalents at beginning of period, excluding held for sale	56,244			52,294
Cash and cash equivalents held for sale at beginning of period	2,880			3,031
Cash and cash equivalents at end of period	31,108			114,387

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Less: cash and cash equivalents held for sale at end of period	(1,728		)	(982		)
Cash and cash equivalents at end of period, excluding held for sale	$	29,380		$	113,405
Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory	$	179,394		$	170,185
Issuance of common stock, subject to possible redemption, due to acquisition	—			11,696
Deferred consideration	—			124
Payable to purchase additional shares of noncontrolling interest	—			322

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EZCORP, Inc.

SELECTED OPERATING SEGMENT RESULTS (UNAUDITED)

U.S. Pawn

The following table presents selected summary financial data from continuing operations for the U.S. Pawn segment:

	Three Months Ended June 30,						Percentage Change
	2016			2015
	(in thousands)
Net revenues:
Pawn service charges	$	54,395		$	49,609		10	%
Merchandise sales	79,826			77,126			4	%
Merchandise sales gross profit	29,240			27,043			8	%
Gross margin on merchandise sales	37		%	35		%	200bps
Jewelry scrapping sales	10,918			9,614			14	%
Jewelry scrapping sales gross profit	2,073			1,966			5	%
Gross margin on jewelry scrapping sales	19		%	20		%	(100)bps
Other revenues	39			162			(76	)%
Net revenues	85,747			78,780			9	%
Segment operating expenses:
Operations	62,733			58,902			7	%
Depreciation and amortization	2,888			3,707			(22	)%
Segment operating contribution	20,126			16,171			24	%
Other segment (income) expenses	(52		)	65			*
Segment contribution	$	20,178		$	16,106		25	%
Other data:
Net earning assets — continuing operations	$	257,396		$	223,941		15	%
Inventory turnover — general merchandise (b)	2.5			2.9			(14	)%
Inventory turnover — jewelry (b)	1.1			1.1			—	%
Average monthly ending pawn loan balance per store (a)	$	262		$	235		11	%
Average annual yield on pawn loans outstanding	164		%	167		%	(300)bps
Pawn loan redemption rate (c)	85		%	85		%	—

*	Represents an increase or decrease in excess of 100% or not meaningful.
(a)	Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(b)	Calculation of inventory turnover excludes the effects of scrapping.
(c)	Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.

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Mexico Pawn

The following table presents selected summary financial data from continuing operations for the Mexico Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.

	Three Months Ended June 30,
	2016 (GAAP)			2015 (GAAP)			Percentage Change (GAAP)		2016 (Constant Currency)			Percentage Change (Constant Currency)
	(in USD thousands)								(in USD thousands)
Net revenues:
Pawn service charges	$	8,078		$	7,990		1	%	$	9,556		20	%
Merchandise sales	14,187			15,447			(8	)%	16,783			9	%
Merchandise sales gross profit	4,633			4,420			5	%	5,481			24	%
Gross margin on merchandise sales	33		%	29		%	400bps		33		%	400bps
Jewelry scrapping sales	312			886			(65	)%	369			(58	)%
Jewelry scrapping sales gross profit	47			19			*		56			*
Gross margin on jewelry scrapping sales	15		%	2		%	1,300bps		15		%	1,300bps
Other revenues	157			274			(43	)%	186			(32	)%
Net revenues	12,915			12,703			2	%	15,279			20	%
Segment operating expenses:
Operations	8,744			10,801			(19	)%	10,344			(4	)%
Depreciation and amortization	720			1,097			(34	)%	852			(22	)%
Segment operating contribution	3,451			805			*		4,083			*
Other segment expenses (income) (a)	748			336			*		(12		)	*
Segment contribution	$	2,703		$	469		*		$	4,095		*
Other data:
Net earning assets — continuing operations	$	33,214		$	35,464		(6	)%	$	39,349		11	%
Inventory turnover (b)	2.3			2.6			(12	)%	2.3			(12	)%
Average monthly ending pawn loan balance per store (c)	$	71		$	70		1	%	$	84		20	%
Average annual yield on pawn loans outstanding	192		%	194		%	(200)bps		194		%	—
Pawn loan redemption rate (d)	77		%	76		%	100bps		77		%	100bps

*	Represents an increase or decrease in excess of 100% or not meaningful.
(a)	The three-months ended June 30, 2016 constant currency balance excludes $0.8 million of net foreign currency transaction losses resulting from movement in exchange rates. The three-months ended June 30, 2015 includes net foreign currency transaction losses totaling $0.4 million that are not excluded from the above results.
(b)	Calculation of inventory turnover excludes the effects of scrapping.
(c)	Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(d)	Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.

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U.S. Pawn

The following table presents selected summary financial data from continuing operations for the U.S. Pawn segment:

	Nine Months Ended June 30,						Percentage Change
	2016			2015
	(in thousands)
Net revenues:
Pawn service charges	$	169,630		$	158,961		7	%
Merchandise sales	266,560			259,040			3	%
Merchandise sales gross profit	102,272			88,850			15	%
Gross margin on merchandise sales	38		%	34		%	400bps
Jewelry scrapping sales	32,117			44,012			(27	)%
Jewelry scrapping sales gross profit	5,084			9,568			(47	)%
Gross margin on jewelry scrapping sales	16		%	22		%	(600)bps
Other revenues	281			570			(51	)%
Net revenues	277,267			257,949			7	%
Segment operating expenses:
Operations	187,518			176,329			6	%
Depreciation and amortization	9,489			10,766			(12	)%
Segment operating contribution	80,260			70,854			13	%
Other segment expenses	1,607			64			*
Segment contribution	$	78,653		$	70,790		11	%
Other data:
Average monthly ending pawn loan balance per store (a)	$	264		$	248		6	%
Average annual yield on pawn loans outstanding	164		%	165		%	(100)bps
Pawn loan redemption rate (b)	84		%	85		%	(100)bps

*	Represents an increase or decrease in excess of 100% or not meaningful.
(a)	Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(b)	Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.

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Mexico Pawn

The following table presents selected summary financial data from continuing operations for the Mexico Pawn segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso. See “Non-GAAP Financial Information” below.

	Nine Months Ended June 30,
	2016 (GAAP)			2015 (GAAP)			Percentage Change (GAAP)		2016 (Constant Currency)			Percentage Change (Constant Currency)
	(in USD thousands)								(in USD thousands)
Net revenues:
Pawn service charges	$	23,567		$	23,035		2	%	$	28,216		22	%
Merchandise sales	45,376			49,910			(9	)%	54,328			9	%
Merchandise sales gross profit	14,934			14,719			1	%	17,880			21	%
Gross margin on merchandise sales	33		%	29		%	400bps		33		%	400bps
Jewelry scrapping sales	1,493			3,210			(53	)%	1,788			(44	)%
Jewelry scrapping sales gross profit	271			262			3	%	325			24	%
Gross margin on jewelry scrapping sales	18		%	8		%	1,000bps		18		%	1,000bps
Other revenues	231			783			(70	)%	277			(65	)%
Net revenues	39,003			38,799			1	%	46,698			20	%
Segment operating expenses:
Operations	28,961			31,727			(9	)%	34,674			9	%
Depreciation and amortization	2,285			3,442			(34	)%	2,736			(21	)%
Segment operating contribution	7,757			3,630			*		9,288			*
Other segment expenses (a)	1,547			1,291			20	%	884			*
Segment contribution	$	6,210		$	2,339		*		$	8,404		*
Other data:
Average monthly ending pawn loan balance per store (b)	$	68		$	64		6	%	$	81		27	%
Average annual yield on pawn loans outstanding	194		%	196		%	(200)bps		194		%	(200)bps
Pawn loan redemption rate (c)	78		%	77		%	100bps		78		%	100bps

*	Represents an increase or decrease in excess of 100% or not meaningful.
(a)	The nine-months ended June 30, 2016 constant currency balance excludes $0.8 million net foreign currency transaction losses resulting from movement in exchange rates. The net foreign currency transaction losses for the nine-months ended June 30, 2015 were $1.1 million and are not excluded from the above results.
(b)	Balance is calculated based upon the average of the monthly ending balance averages during the applicable period.
(c)	Our pawn loan redemption rate represents the percentage of loans made that are repaid, renewed or extended.

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EZCORP, Inc.

STORE COUNT ACTIVITY

	Three Months Ended June 30, 2016
	Company-owned Stores
	U.S. Pawn	Mexico Pawn	Other International	Consolidated	Franchises
As of March 31, 2016	522	237	27	786	—
New locations opened	—	1	—	1	—
As of June 30, 2016	522	238	27	787	—

	Three Months Ended June 30, 2015
	Company-owned Stores
	U.S. Pawn	Mexico Pawn			Other International	Consolidated		Franchises
As of March 31, 2015	519	262		*	39	820		2
Locations sold, combined or closed	—	(1	)	*	—	(1	)	(1	)
As of June 30, 2015	519	261			39	819		1

* Includes 21 buy/sell stores. One buy/sell store was closed during the period.

	Nine Months Ended June 30, 2016
	Company-owned Stores
	U.S. Pawn		Mexico Pawn			Other International	Consolidated		Franchises
As of September 30, 2015	522		237		*	27	786		1
New locations opened	—		1			—	1		—
Locations acquired	6		1			—	7		—
Locations sold, combined or closed	(6	)	(1	)		—	(7	)	(1	)
As of June 30, 2016	522		238			27	787		—

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

	Nine Months Ended June 30, 2015
	Company-owned Stores
	U.S. Pawn		Mexico Pawn			Other International	Consolidated		Franchises
As of September 30, 2014	504		261		*	39	804		5
New locations opened	5		2		*	—	7		—
Locations acquired	12		—			—	12		—
Locations sold, combined or closed	(2	)	(2	)	*	—	(4	)	(4	)
As of June 30, 2015	519		261			39	819		1

* Includes 19 buy/sell stores. Two buy/sell stores were opened and one buy/sell store was closed during the period.

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NON-GAAP FINANCIAL INFORMATION

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 its 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 condensed 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 condensed consolidated balance sheet and condensed 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 comparable period, in order to exclude the effects of foreign currency rate fluctuations. For condensed consolidated balance sheet items, the end of period rate as of June 30, 2016 of 18.6 to 1 was used, compared to the end of period rate as of June 30, 2015 of 15.7 to 1. For condensed consolidated statement of operations items, the average closing daily exchange rate for the appropriate period was used. The average exchange rates for the current three and nine-months ended June 30, 2016 were 18.1 to 1 and 17.6 to 1, respectively, as compared to the prior year three and nine-months ended June 30, 2015 rates of 15.3 to 1 and 14.7 to 1, respectively. Constant currency results, where presented, also exclude foreign currency gain or loss.

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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, where not already included in constant currency segment results above.

Miscellaneous Non-GAAP Financial Measures

	U.S. Dollar Amount		Percentage Change YOY
	(in thousands)
Consolidated revenue (three-months ended June 30, 2016)	$	170,150	3	%
Currency exchange rate fluctuations	4,160
Constant currency consolidated revenue (three-months ended June 30, 2016)	$	174,310	6	%
Consolidated net revenue (three-months ended June 30, 2016)	$	100,394	7	%
Currency exchange rate fluctuations	2,364
Constant currency consolidated net revenue (three-months ended June 30, 2016)	$	102,758	10	%
Consolidated operating expenses (three-months ended June 30, 2016)	$	93,886	(2	)%
Currency exchange rate fluctuations	1,730
Constant currency consolidated operating expenses (three-months ended June 30, 2016)	$	95,616	—	%
Consolidated revenue (nine-months ended June 30, 2016)	$	545,920	(1	)%
Currency exchange rate fluctuations	13,942
Constant currency consolidated revenue (nine-months ended June 30, 2016)	$	559,862	2	%
Consolidated net revenue (nine-months ended June 30, 2016)	$	321,369	6	%
Currency exchange rate fluctuations	7,695
Constant currency consolidated net revenue (nine-months ended June 30, 2016)	$	329,064	8	%
Consolidated operating expenses (nine-months ended June 30, 2016)	$	294,504	5	%
Currency exchange rate fluctuations	6,294
Constant currency consolidated operating expenses (nine-months ended June 30, 2016)	$	300,798	7	%
Mexico Pawn loans outstanding as of June 30, 2016	$	16,332	(1	)%
Currency exchange rate fluctuations	3,017
Constant currency Mexico Pawn loans outstanding as of June 30, 2016	$	19,349	18	%

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