EZCORP (EZPW) 8-K EZCORP Announces Second Quarter Fiscal 2017 Results

EZCORP Announces Second Quarter Fiscal 2017 Results

Earnings per share from continuing operations up 200% year-over-year to $0.15

Austin, Texas (May 3, 2017) — EZCORP, Inc. (NASDAQ: EZPW), a leading provider of pawn loans in the United States and Mexico, today announced results for its second quarter ended March 31, 2017.

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.

HIGHLIGHTS FOR SECOND QUARTER FISCAL 2017

The company achieved its fifth consecutive quarter of year-over-year (YOY) earnings and profit increase with earnings per share up 200% to $0.15 and net income from continuing operations up 219% to $8.4 million.

The company continued to grow its pawn loans outstanding (PLO), the most influential driver to revenue and profitability, with PLO up 2% in the U.S. and 3% in Mexico. The PLO increase in Mexico was a strong 12% when calculated on a constant currency basis¹.

The company exited the quarter with a much stronger balance sheet and liquidity position, with a cash balance at the end of the quarter up 68% YOY to $120.1 million. In addition, the company continues to have access to a further $50 million undrawn availability on its credit facility.

CEO COMMENTARY AND OUTLOOK

Stuart Grimshaw, EZCORP's Chief Executive Officer, said: "It is pleasing to see the continuing trend of strong profit growth after the strategic changes that were implemented over a year ago. We have devoted a lot of management attention and effort in focusing on the needs and experience of our customers. Our continued focus on and investment in satisfying our customers' need for cash whenever they want it drove the acceleration in earnings and sustained growth in pawn loans outstanding.

"We have improved our balance sheet and liquidity position, which provides strategic flexibility to continue our investment in the customer experience and expansion of the pawn loan portfolio to drive increased profit. We continue to invest in the core fabric of the pawn business, including commencement of our upgraded point of sale system rollout, which we expect to be completed in both the U.S. and Mexico this calendar year. We opened two new stores in Mexico this quarter and anticipate opening an additional eight in Mexico during the remainder of this fiscal year.

"We are confident that these initiatives, combined with further investments in product development and customer analytics, in sustained training, coaching and mentoring of our field team, and in disciplined acquisitions and de novo openings, will continue to provide a robust platform for further profitable growth."

CONSOLIDATED RESULTS

Three Months Ended March 31, 2017

• Same store pawn loans outstanding (PLO): up 2% in U.S. and up 3% in Mexico (up 12% in Mexico on a constant currency basis).

• Total revenue up 1% to $189.6 million. On a constant currency basis, total revenue was up 2% to $192.6 million.

• Net revenue up 1% to $109.9 million, as a 5% increase in pawn service charge (PSC) revenue was offset by softer merchandise sales due to tax refund delays in the U.S, which adversely impacted consumers’ disposable income and our sales volume.

• The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.

¹In 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.

• Operations expenses increased 3% to $74.5 million (up 5% to $75.6 million on a constant currency basis).

• Corporate expenses decreased 15% to $13.3 million. The company remains on track to reduce corporate expenses to $50 million in FY18.

• Fifth consecutive quarter of YOY earnings per share increase, with earnings per share from continuing operations up 200% to $0.15.

Six Months Ended March 31, 2017

• Total revenue up 2% to $382.3 million. On a constant currency basis, total revenue was up 4% to $390.0 million.

• Net revenue was consistent at $221.9 million, as a 4% increase in PSC revenue was offset by lower merchandise margin.

• The merchandise sales gross margin was 200bps lower at 36%, within our target range of 35-38%.

• Operations expenses increased 3% to $152.1 million (up 4% to $154.9 million on a constant currency basis). The company expects operations expenses in the second half of FY17 to be similar to the second half of FY16.

• Corporate expenses decreased 24% to $27.2 million.

• Earnings per share from continuing operations up 182% to $0.31.

• The company continues to receive regular payments on the promissory notes it received in connection with the sale of Grupo Finmart in September 2016. It has collected $15.1 million in principal on those notes during the first half of this fiscal year, and expects to collect an additional $30.8 million in the second half (for a total of $45.9 million in FY17), $26.1 million in FY18 and $18.2 million in FY19. Since the end of the second quarter, the company has received $5.2 million, which is part of the $30.8 million to be collected in the second half of this fiscal year.

OPERATING METRICS

U.S. Pawn Segment

Three Months Ended March 31, 2017

• Six consecutive quarters of YOY positive same store PLO increase, with this quarter up 2%. Total PLO was up 2% to $125.4 million.

• Pawn service charges (PSC) increased 5% to $59.7 million, up 5% on a same store basis.

• Merchandise sales increased 1% in total and on a same store basis. The delay in tax refunds adversely impacted sales volume. The merchandise sales gross margin of 37% is within our target range of 35-38%.

• Slight increase in aged inventory to 12% from 10% of total inventory from this time last year due to the previously mentioned delay in consumers’ tax refunds, which adversely impacted sales volume.

• Operations expenses increased 4% to $63.6 million.

• Segment profit was $29.7 million, similar to last year.

• Initiatives are underway to improve net revenue and profitability in the long-term, including investments in upgrading our point of sale system and enhancing product and customer data analytics.

Six Months Ended March 31, 2017

• PSC increased 5% to $120.7 million, up 4% on a same store basis.

• Merchandise sales increased 2% in total and 2% on a same store basis. The merchandise sales gross margin of 37% is within our target range of 35-38%.

• Operations expenses increased 5% to $130.9 million. The company expects operations expenses in the second half of FY17 to be similar to the second half of FY16.

• Segment profit was 3% lower to $56.8 million.

Mexico Pawn Segment

Three Months Ended March 31, 2017

• PLO increased 3% to $17.8 million (up 12% to $19.4 million on a constant currency basis).

• PSC decreased 1% to $7.4 million, up 11% to $8.4 million on a constant currency basis.

• Merchandise sales increased 1% in total and were flat on a same store basis (up 14% in total and 13% in same stores on a constant currency basis). Merchandise margin was 32%, 100bps higher than the prior-year quarter.

• Looting of twelve stores in January impacted not only through increased expenses, but by reducing revenue through stolen pawn loan collateral and inventory affecting PSC and sales.

• Net revenue was up 3% and operations expenses were 1% lower, yielding a 56% increase in segment profit (segment profit up 71% to $3.5 million on a constant currency basis). These results included $0.6 million in incremental expenses attributable to looting of twelve stores during January.

Six Months Ended March 31, 2017

• PSC decreased 1% to $15.4 million (up 15% to $17.8 million on a constant currency basis).

• Merchandise sales were flat in total and on a same store basis (up 17% in total and 16% in same stores on a constant currency basis). Merchandise margin was 31%, 200bps lower than the prior-year six-months.

• Net revenue was 1% lower and operations expenses were 13% lower, yielding a 112% increase in segment profit to $7.5 million (up 144% to $8.6 million on a constant currency basis).

CONFERENCE CALL

EZCORP will host a conference call on Thursday, May 4, 2017, at 7:30am Central Time to discuss second quarter results. Analysts and institutional investors may participate on the conference call by dialing (877) 201-0168, Conference ID: 15658600, international dialing (647) 788-4901. 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.

Contact:

Jeff Christensen

Vice President, Investor Relations

Email: jeff_christensen@ezcorp.com

Phone: (512) 437-3545

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended March 31,						Six Months Ended March 31,
	2017			2016			2017			2016
	(Unaudited)
	(in thousands, except per share amounts)
Revenues:
Merchandise sales	$	110,238		$	109,343		$	221,751		$	217,927
Jewelry scrapping sales	10,219			12,780			20,017			22,401
Pawn service charges	67,092			64,130			136,105			130,724
Other revenues	2,079			1,959			4,379			4,717
Total revenues	189,628			188,212			382,252			375,769
Merchandise cost of goods sold	70,493			68,332			142,225			134,591
Jewelry scrapping cost of goods sold	8,841			11,085			17,185			19,161
Other cost of revenues	397			431			980			1,043
Net revenues	109,897			108,364			221,862			220,974
Operating expenses:
Operations	74,460			72,256			152,106			148,274
Administrative	13,283			15,621			27,210			35,604
Depreciation and amortization	6,030			6,606			12,403			14,148
Loss (gain) on sale or disposal of assets	71			649			(6		)	682
Restructuring	—			218			—			1,910
Total operating expenses	93,844			95,350			191,713			200,618
Operating income	16,053			13,014			30,149			20,356
Interest expense	5,628			3,951			11,193			8,078
Interest income	(2,240		)	(7		)	(4,856		)	(16		)
Equity in net income of unconsolidated affiliate	(1,243		)	(1,877		)	(2,721		)	(3,932		)
Other expense (income)	228			213			(195		)	315
Income from continuing operations before income taxes	13,680			10,734			26,728			15,911
Income tax expense	5,449			8,427			10,231			10,185
Income from continuing operations, net of tax	8,231			2,307			16,497			5,726
Loss from discontinued operations, net of tax	(375		)	(78,250		)	(1,603		)	(89,935		)
Net income (loss)	7,856			(75,943		)	14,894			(84,209		)
Net loss attributable to noncontrolling interest	(167		)	(5,131		)	(294		)	(5,923		)
Net income (loss) attributable to EZCORP, Inc.	$	8,023		$	(70,812	)	$	15,188		$	(78,286	)
Basic earnings per share attributable to EZCORP, Inc. — continuing operations	$	0.15		$	0.05		$	0.31		$	0.11
Diluted earnings per share attributable to EZCORP, Inc. — continuing operations	$	0.15		$	0.05		$	0.31		$	0.11
Weighted-average basic shares outstanding	54,291			54,843			54,224			54,869
Weighted-average diluted shares outstanding	54,346			54,936			54,278			54,943
Net income from continuing operations attributable to EZCORP, Inc.	$	8,398		$	2,630		$	16,791		$	6,049
Net loss from discontinued operations attributable to EZCORP, Inc.	(375		)	(73,442		)	(1,603		)	(84,335		)
Net income (loss) attributable to EZCORP, Inc.	$	8,023		$	(70,812	)	$	15,188		$	(78,286	)

EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)
	March 31, 2017			September 30, 2016
	(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	120,099		$	65,737
Pawn loans	143,267			167,329
Pawn service charges receivable, net	27,028			31,062
Inventory, net	137,008			140,224
Notes receivable, net	29,978			41,946
Prepaid expenses and other current assets	31,011			35,845
Total current assets	488,391			482,143
Investment in unconsolidated affiliate	38,334			37,128
Property and equipment, net	53,630			58,455
Goodwill	254,217			253,976
Intangible assets, net	31,768			30,681
Non-current notes receivable, net	40,319			41,119
Deferred tax asset, net	37,134			35,303
Other assets, net	18,174			44,439
Total assets	$	961,967		$	983,244
Liabilities and equity:
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	62,339		$	84,285
Customer layaway deposits	10,992			10,693
Total current liabilities	73,331			94,978
Long-term debt, net	266,724			283,611
Other long-term liabilities	8,448			10,450
Total liabilities	348,503			389,039
Commitments and contingencies
Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of March 31, 2017 and September 30, 2016; issued and outstanding: 51,321,915 as of March 31, 2017 and 51,129,144 as of September 30, 2016	513			511
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171	30			30
Additional paid-in capital	321,531			318,723
Retained earnings	334,996			319,808
Accumulated other comprehensive loss	(42,544		)	(44,089		)
EZCORP, Inc. stockholders’ equity	614,526			594,983
Noncontrolling interest	(1,062		)	(778		)
Total equity	613,464			594,205
Total liabilities and equity	$	961,967		$	983,244

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Six Months Ended March 31,
	2017			2016
	(Unaudited)
	(in thousands)
Operating activities:
Net income (loss)	$	14,894		$	(84,209	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	12,403			15,141
Amortization of debt discount and deferred financing costs	5,755			5,932
Amortization of prepaid commissions	—			7,754
Accretion of notes receivable discount	(1,928		)	—
Consumer loan loss provision	980			18,662
Deferred income taxes	(664		)	(12,635		)
Impairment of goodwill	—			73,244
Other adjustments	(63		)	(2,149		)
(Gain) loss on sale or disposal of assets	(6		)	682
Stock compensation	3,575			2,149
Income from investment in unconsolidated affiliate	(2,721		)	(3,932		)
Changes in operating assets and liabilities:
Service charges and fees receivable	4,151			10,140
Inventory	708			(993		)
Prepaid expenses, other current assets and other assets	3,171			(10,795		)
Accounts payable, accrued expenses and other liabilities	(30,120		)	(8,702		)
Customer layaway deposits	240			851
Income taxes receivable and payable, current, net of excess tax benefit from stock compensation	7,590			51,300
Payments of restructuring charges	—			(6,701		)
Net cash provided by operating activities	17,965			55,739
Investing activities:
Loans made	(300,604		)	(323,980		)
Loans repaid	199,080			225,138
Recovery of pawn loan principal through sale of forfeited collateral	128,238			121,830
Additions to property and equipment	(5,293		)	(2,950		)
Acquisitions, net of cash acquired	—			(6,000		)
Principal collections on notes receivable	15,051			—
Net cash provided by investing activities	36,472			14,038
Financing activities:
Taxes paid related to net share settlement of equity awards	(767		)	—
Payout of deferred consideration	—			(14,875		)
Repurchase of redeemable common stock issued due to acquisitions	—			(11,750		)
Proceeds from settlement of forward currency contracts	—			3,557
Change in restricted cash	—			6,519
Proceeds from borrowings, net of issuance costs	—			14,302
Payments on borrowings	—			(47,698		)
Net cash used in financing activities	(767		)	(49,945		)
Effect of exchange rate changes on cash and cash equivalents	692			(3,620		)
Net increase in cash and cash equivalents	54,362			16,212
Cash and cash equivalents at beginning of period	65,737			59,124
Cash and cash equivalents at end of period	$	120,099		$	75,336
Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory	$	125,165		$	122,709
Dividend reinvestment acquisition of additional ownership in unconsolidated affiliate	1,153			—

EZCORP, Inc.

OPERATING SEGMENT RESULTS (UNAUDITED)

	Three Months Ended March 31, 2017
	U.S. Pawn			Mexico Pawn			Other International			Total Segments			Corporate Items			Consolidated
	(in thousands)
Revenues:
Merchandise sales	$	95,550		$	14,688		$	—		$	110,238		$	—		$	110,238
Jewelry scrapping sales	9,056			1,163			—			10,219			—			10,219
Pawn service charges	59,661			7,431			—			67,092			—			67,092
Other revenues	56			147			1,876			2,079			—			2,079
Total revenues	164,323			23,429			1,876			189,628			—			189,628
Merchandise cost of goods sold	60,499			9,994			—			70,493			—			70,493
Jewelry scrapping cost of goods sold	7,890			951			—			8,841			—			8,841
Other cost of revenues	—			—			397			397			—			397
Net revenues	95,934			12,484			1,479			109,897			—			109,897
Segment and corporate expenses (income):
Operations	63,556			8,901			2,003			74,460			—			74,460
Administrative	—			—			—			—			13,283			13,283
Depreciation and amortization	2,660			660			50			3,370			2,660			6,030
Loss (gain) on sale or disposal of assets	(3		)	74			—			71			—			71
Interest expense	—			3			—			3			5,625			5,628
Interest income	—			(342		)	—			(342		)	(1,898		)	(2,240		)
Equity in net income of unconsolidated affiliate	—			—			(1,243		)	(1,243		)	—			(1,243		)
Other expense (income)	(4		)	(48		)	41			(11		)	239			228
Segment contribution	$	29,725		$	3,236		$	628		$	33,589
Income from continuing operations before income taxes										$	33,589		$	(19,909	)	$	13,680

EZCORP, Inc.

OPERATING SEGMENT RESULTS (UNAUDITED)

	Six Months Ended March 31, 2017
	U.S. Pawn			Mexico Pawn			Other International			Total Segments			Corporate Items			Consolidated
	(in thousands)
Revenues:
Merchandise sales	$	190,411		$	31,340		$	—		$	221,751		$	—		$	221,751
Jewelry scrapping sales	17,901			2,116			—			20,017			—			20,017
Pawn service charges	120,706			15,399			—			136,105			—			136,105
Other revenues	107			278			3,994			4,379			—			4,379
Total revenues	329,125			49,133			3,994			382,252			—			382,252
Merchandise cost of goods sold	120,747			21,478			—			142,225			—			142,225
Jewelry scrapping cost of goods sold	15,440			1,745			—			17,185			—			17,185
Other cost of revenues	—			—			980			980			—			980
Net revenues	192,938			25,910			3,014			221,862			—			221,862
Segment and corporate expenses (income):
Operations	130,906			17,541			3,659			152,106			—			152,106
Administrative	—			—			—			—			27,210			27,210
Depreciation and amortization	5,277			1,291			100			6,668			5,735			12,403
(Gain) loss on sale or disposal of assets	(74		)	68			—			(6		)	—			(6		)
Interest expense	—			5			—			5			11,188			11,193
Interest income	—			(409		)	—			(409		)	(4,447		)	(4,856		)
Equity in net income of unconsolidated affiliate	—			—			(2,721		)	(2,721		)	—			(2,721		)
Other (income) expense	(9		)	(37		)	40			(6		)	(189		)	(195		)
Segment contribution	$	56,838		$	7,451		$	1,936		$	66,225
Income from continuing operations before income taxes										$	66,225		$	(39,497	)	$	26,728

EZCORP, Inc.

OPERATING SEGMENT RESULTS (UNAUDITED)

	Three Months Ended March 31, 2016
	U.S. Pawn		Mexico Pawn			Other International			Total Segments			Corporate Items			Consolidated
	(in thousands)
Revenues:
Merchandise sales	$	94,740	$	14,603		$	—		$	109,343		$	—		$	109,343
Jewelry scrapping sales	11,599		1,181			—			12,780			—			12,780
Pawn service charges	56,614		7,516			—			64,130			—			64,130
Other revenues	49		(117		)	2,027			1,959			—			1,959
Total revenues	163,002		23,183			2,027			188,212			—			188,212
Merchandise cost of goods sold	58,241		10,090			1			68,332			—			68,332
Jewelry scrapping cost of goods sold	10,128		957			—			11,085			—			11,085
Other cost of revenues	—		—			431			431			—			431
Net revenues	94,633		12,136			1,595			108,364			—			108,364
Segment and corporate expenses (income):
Operations	61,240		9,024			1,992			72,256			—			72,256
Administrative	—		—			—			—			15,621			15,621
Depreciation and amortization	3,042		764			56			3,862			2,744			6,606
Loss on sale or disposal of assets	546		103			—			649			—			649
Restructuring	91		215			(2		)	304			(86		)	218
Interest expense	39		38			—			77			3,874			3,951
Interest income	—		—			—			—			(7		)	(7		)
Equity in net income of unconsolidated affiliate	—		—			(1,877		)	(1,877		)	—			(1,877		)
Other expense (income)	—		(79		)	6			(73		)	286			213
Segment contribution	$	29,675	$	2,071		$	1,420		$	33,166
Income from continuing operations before income taxes									$	33,166		$	(22,432	)	$	10,734

EZCORP, Inc.

OPERATING SEGMENT RESULTS (UNAUDITED)

	Six Months Ended March 31, 2016
	U.S. Pawn			Mexico Pawn		Other International			Total Segments			Corporate Items			Consolidated
	(in thousands)
Revenues:
Merchandise sales	$	186,734		$	31,189	$	4		$	217,927		$	—		$	217,927
Jewelry scrapping sales	21,199			1,181		21			22,401			—			22,401
Pawn service charges	115,235			15,489		—			130,724			—			130,724
Other revenues	242			74		4,401			4,717			—			4,717
Total revenues	323,410			47,933		4,426			375,769			—			375,769
Merchandise cost of goods sold	113,702			20,888		1			134,591			—			134,591
Jewelry scrapping cost of goods sold	18,188			957		16			19,161			—			19,161
Other cost of revenues	—			—		1,043			1,043			—			1,043
Net revenues	191,520			26,088		3,366			220,974			—			220,974
Segment and corporate expenses (income):
Operations	124,785			20,217		3,272			148,274			—			148,274
Administrative	—			—		—			—			35,604			35,604
Depreciation and amortization	6,602			1,565		107			8,274			5,874			14,148
Loss on sale or disposal of assets	553			129		—			682			—			682
Restructuring	982			543		202			1,727			183			1,910
Interest expense	125			78		—			203			7,875			8,078
Interest income	(1		)	—		—			(1		)	(15		)	(16		)
Equity in net income of unconsolidated affiliate	—			—		(3,932		)	(3,932		)	—			(3,932		)
Other expense	—			49		3			52			263			315
Segment contribution	$	58,474		$	3,507	$	3,714		$	65,695
Income from continuing operations before income taxes									$	65,695		$	(49,784	)	$	15,911

EZCORP, Inc.

STORE COUNT ACTIVITY (UNAUDITED)

	Three Months Ended March 31, 2017
	Company-owned Stores
	U.S. Pawn	Mexico Pawn		Other International	Consolidated
As of December 31, 2016	517	239		27	783
New locations opened	—	2		—	2
Locations sold, combined or closed	—	(1	)	—	(1	)
As of March 31, 2017	517	240		27	784

	Three Months Ended March 31, 2016
	Company-owned Stores
	U.S. Pawn	Mexico Pawn	Other International	Consolidated	Franchises
As of December 31, 2015	516	237	27	780	1
New locations opened	6	—	—	6	—
Locations sold, combined or closed	—	—	—	—	(1	)
As of March 31, 2016	522	237	27	786	—

	Six Months Ended March 31, 2017
	Company-owned Stores
	U.S. Pawn		Mexico Pawn		Other International	Consolidated
As of September 30, 2016	520		239		27	786
New locations opened	—		2		—	2
Locations sold, combined or closed	(3	)	(1	)	—	(4	)
As of March 31, 2017	517		240		27	784

	Six Months Ended March 31, 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	6		1		—	7		—
Locations sold, combined or closed	(6	)	(1	)	—	(7	)	(1	)
As of March 31, 2016	522		237		27	786		—

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 on a monthly basis during the appropriate period for statement of operations items. The end-of-period exchange rate as of March 31, 2017 and 2016 was 18.7 to 1 and 17.3 to 1, respectively. The approximate average exchange rate for the three months ended March 31, 2017 and 2016 was 20.4to 1 and 18.0 to 1. The approximate average exchange rate for the six months ended March 31, 2017 and 2016 was 20.1 to 1 and 17.4 to 1, respectively, however our statement of operations constant currency results reflect the impact of monthly effects of exchange rates and so are not directly calculable from the above rates. 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 as of and for the three and six months ended March 31, 2017.

Miscellaneous Non-GAAP Financial Measures

	U.S. Dollar Amount		Percentage Change YOY
	(in millions)
Consolidated revenue (three months ended March 31, 2017)	$	189.6	1	%
Currency exchange rate fluctuations (three months ended March 31, 2017)	3.0
Constant currency consolidated revenue (three months ended March 31, 2017)	$	192.6	2	%
Consolidated revenue (six months ended March 31, 2017)	$	382.3	2	%
Currency exchange rate fluctuations (six months ended March 31, 2017)	7.7
Constant currency consolidated revenue (six months ended March 31, 2017)	$	390.0	4	%
Consolidated operations expenses (three months ended March 31, 2017)	$	74.5	3	%
Currency exchange rate fluctuations (three months ended March 31, 2017)	1.1
Constant currency consolidated operations expenses (three months ended March 31, 2017)	$	75.6	5	%
Consolidated operations expenses (six months ended March 31, 2017)	$	152.1	3	%
Currency exchange rate fluctuations (six months ended March 31, 2017)	2.8
Constant currency consolidated operations expenses (six months ended March 31, 2017)	$	154.9	4	%
Mexico Pawn loans outstanding	$	17.8	3	%
Currency exchange rate fluctuations	1.6
Constant currency Mexico Pawn loans outstanding	$	19.4	12	%
Mexico Pawn service charges (three months ended March 31, 2017)	$	7.4	(1	)%
Currency exchange rate fluctuations (three months ended March 31, 2017)	1.0
Constant currency Mexico Pawn service charges (three months ended March 31, 2017)	$	8.4	11	%
Mexico Pawn service charges (six months ended March 31, 2017)	$	15.4	(1	)%
Currency exchange rate fluctuations (six months ended March 31, 2017)	2.4
Constant currency Mexico Pawn service charges (six months ended March 31, 2017)	$	17.8	15	%
Mexico Pawn merchandise revenue (three months ended March 31, 2017)	$	14.7	1	%
Currency exchange rate fluctuations (three months ended March 31, 2017)	1.9
Constant currency Mexico Pawn merchandise revenue (three months ended March 31, 2017)	$	16.6	14	%
Mexico Pawn merchandise revenue (six months ended March 31, 2017)	$	31.3	—	%
Currency exchange rate fluctuations (six months ended March 31, 2017)	5.1
Constant currency Mexico Pawn merchandise revenue (six months ended March 31, 2017)	$	36.4	17	%
Mexico Pawn same store merchandise revenue (three months ended March 31, 2017)	$	14.3	—	%
Currency exchange rate fluctuations (three months ended March 31, 2017)	1.9
Constant currency Mexico Pawn same store merchandise revenue (three months ended March 31, 2017)	$	16.2	13	%
Mexico Pawn same store merchandise revenue (six months ended March 31, 2017)	$	30.4	—	%
Currency exchange rate fluctuations (six months ended March 31, 2017)	4.9
Constant currency Mexico Pawn same store merchandise revenue (six months ended March 31, 2017)	$	35.3	16	%
Mexico Pawn segment profit before tax (three months ended March 31, 2017)	$	3.2	56	%
Currency exchange rate fluctuations (three months ended March 31, 2017)	0.3
Constant currency Mexico Pawn segment profit before tax (three months ended March 31, 2017)	$	3.5	71	%
Mexico Pawn segment profit before tax (six months ended March 31, 2017)	$	7.5	112	%
Currency exchange rate fluctuations (six months ended March 31, 2017)	1.1
Constant currency Mexico Pawn segment profit before tax (six months ended March 31, 2017)	$	8.6	144	%