EZPW EZCORP Inc

EZCORP Announces 32% Earnings Growth for Second Quarter AUSTIN, Texas, April 20 /PRNewswire-FirstCall/ -- EZCORP, Inc. (NASDAQ:EZPW) announced today results for its second fiscal quarter and six month period, which ended March 31, 2005. For the quarter ended March 31, 2005, EZCORP's net income improved 32% to $3,969,000 (twenty-nine cents per share) compared to $3,007,000 (twenty-three cents per share) for the prior year period. Total revenues for the second fiscal quarter increased 8% to $63,098,000 compared to $58,289,000 for the prior year second fiscal quarter. After higher cost of goods sold, due to higher levels of sales, and higher operating expense, operating income improved 31% to $5,847,000. Operating income margins for the quarter, measured as a percent of net revenues, improved approximately three percentage points to 15%. For the six months ended March 31, 2005, EZCORP generated net income of $8,918,000 (sixty-six cents per share) compared to $5,997,000 (forty-six cents per share) for the same six month period a year ago. Total revenues increased 11% to $124,726,000 while operating income increased 48% to $13,496,000. Operating income margins for the six months, measured as a percent of net revenue, improved approximately four percentage points to 17%. Commenting on these results, President and Chief Executive Officer, Joe Rotunda, stated, "Our results for the quarter continued our trend of strong year-over-year earnings growth with net income up 32% over the prior year quarter. Once again, payday loans were the strongest contributor to this growth with payday loan service charges up 54%, while our payday loan bad debt and direct transaction expenses increased only 16%. Modest increases in pawn service charge revenue and gross profit on the sale of forfeited collateral also contributed to our performance." Rotunda continued, "While we believe our performance to date has been outstanding, our results are overshadowed by the potential impact on our payday loan business of the FDIC's payday loan guideline change. As we work to understand the full effect of this change, we also are working on several fronts to mitigate any adverse financial impact the changes may have. These fronts include new loan products as well as programs to enhance our pawn business when these changes are implemented. We also are cautiously optimistic about the passing of Texas payday loan legislation." Rotunda concluded, "Given the uncertainty surrounding the FDIC's changes and the impact on our business, we are broadening our range of earnings guidance for the year to $0.95 to $1.05. To the extent that the timing and circumstances surrounding the implementation of the revised guideline are more or less favorable, we would expect to be at the upper or lower end of this earnings guidance range. Until the timing and circumstances of the guideline change are resolved, the potential earnings impact cannot be fully determined." EZCORP meets the short-term cash needs of the cash and credit constrained consumer by offering convenient, non-recourse loans collateralized by tangible personal property, commonly known as pawn loans, and short-term non- collateralized loans, often referred to as payday loans. The Company also sells merchandise, primarily collateral forfeited from its pawn lending operations, to consumers looking for good value. As of March 31, 2005, the Company operated 280 EZPAWN and 192 EZMONEY Payday Loan stores, 135 of which adjoin an EZPAWN location. This announcement contains certain forward-looking statements regarding the Company's expected performance for future periods including, but not limited to, expected future earnings. Actual results for these periods may materially differ from these statements. Such forward-looking statements involve risks and uncertainties such as changing market conditions in the overall economy and the industry, consumer demand for the Company's services and merchandise, changes in regulatory environment, and other factors periodically discussed in the Company's annual, quarterly and other reports filed with the Securities and Exchange Commission. You are invited to listen to a conference call discussing these results on April 20, 2005 at 3:30 pm Central Time. The conference call can be accessed over the Internet (or replay it at your convenience) at the following address. http://phx.corporate-ir.net/playerlink.zhtml?c=69434&s=wm&e=1050585 For additional information, contact Dan Tonissen at (512) 314-2289. EZCORP, Inc. Highlights of Consolidated Statements of Operations (Unaudited) (in thousands, except per share data) Three Months Ended March 31, 2005 2004 1 Revenues: 2 Merchandise sales $33,293 $33,188 3 Jewelry scrapping sales 6,966 5,186 4 Pawn service charges 14,682 14,488 5 Payday loan service charges 7,828 5,072 6 Other 329 355 7 Total revenues 63,098 58,289 8 Cost of goods sold: 9 Cost of merchandise sales 18,961 18,858 10 Cost of jewelry scrapping sales 4,940 3,659 11 Total cost of goods sold 23,901 22,517 12 Net revenues 39,197 35,772 13 14 Operations expense 23,988 21,775 15 Bad debt and other payday loan direct expenses 1,495 1,286 16 Administrative expense 5,796 6,378 17 Depreciation and amortization 2,071 1,865 18 Operating income 5,847 4,468 19 20 Interest expense, net 275 373 21 Equity in net income of unconsolidated affiliate (636) (496) 22 Loss on sale/disposal of assets 6 --- 23 Income before income taxes 6,202 4,591 24 Income tax expense 2,233 1,584 25 Net income $ 3,969 $ 3,007 26 27 Net income per share, assuming dilution $ 0.29 $ 0.23 28 29 Weighted average shares - assuming dilution 13,755 13,209 EZCORP, Inc. Highlights of Consolidated Statements of Operations (Unaudited) (in thousands, except per share data) Six Months Ended March 31, 2005 2004 1 Revenues: 2 Merchandise sales $65,311 $64,250 3 Jewelry scrapping sales 11,272 7,679 4 Pawn service charges 31,351 30,040 5 Payday loan service charges 16,118 9,933 6 Other 674 701 7 Total revenues 124,726 112,603 8 Cost of goods sold: 9 Cost of merchandise sales 37,741 36,441 10 Cost of jewelry scrapping sales 8,073 5,349 11 Total cost of goods sold 45,814 41,790 12 Net revenues 78,912 70,813 13 14 Operations expense 46,691 42,552 15 Bad debt and other payday loan direct expenses 3,104 3,125 16 Administrative expense 11,663 12,240 17 Depreciation and amortization 3,958 3,780 18 Operating income 13,496 9,116 19 20 Interest expense, net 614 821 21 Equity in net income of unconsolidated affiliate (1,096) (861) 22 Loss on sale/disposal of assets 43 --- 23 Income before income taxes 13,935 9,156 24 Income tax expense 5,017 3,159 25 Net income $ 8,918 $ 5,997 26 27 Net income per share, assuming dilution $ 0.66 $ 0.46 28 29 Weighted average shares - assuming dilution 13,542 13,101 EZCORP, Inc. Highlights of Consolidated Balance Sheets (Unaudited) (in thousands, except per share data and store counts) As of March 31, 2005 2004 1 Assets: 2 Current assets: 3 Cash and cash equivalents $ 1,405 $ 202 4 Pawn loans 40,081 42,079 5 Payday loans, net 7,711 4,643 6 Pawn service charges receivable, net 7,720 7,825 7 Payday loan service charges receivable, net 1,573 928 8 Inventory, net 26,967 29,492 9 Deferred tax asset 9,711 8,163 10 Prepaid expenses and other assets 5,418 3,054 11 Total current assets 100,586 96,386 12 Investment in unconsolidated affiliate 17,094 15,417 13 Property and equipment, net 26,132 24,642 14 Deferred tax asset, non-current 4,946 4,391 15 Other assets, net 3,914 5,366 16 Total assets $152,672 $146,202 17 Liabilities and stockholders' equity: 18 Current liabilities: 19 Accounts payable and other accrued expenses $ 13,359 $ 11,668 20 Customer layaway deposits 1,848 1,842 21 Federal income taxes payable 271 771 22 Total current liabilities 15,478 14,281 23 24 Long-term debt 6,825 15,000 25 Deferred gains and other long-term liabilities 3,778 4,139 26 Total long-term liabilities 10,603 19,139 27 Total stockholders' equity 126,591 112,782 28 Total liabilities and stockholders' equity $152,672 $146,202 29 30 Pawn loan balance per ending pawn store $ 143 $ 150 31 Inventory per ending pawn store $ 96 $ 105 32 Book value per share $ 10.19 $ 9.25 33 Tangible book value per share $ 9.99 $ 9.04 34 Pawn store count - end of period 280 280 35 Mono-line payday loan store count - end of period 192 55 36 Shares outstanding - end of period 12,428 12,198 DATASOURCE: EZCORP, Inc. CONTACT: Dan Tonissen of EZCORP, Inc., +1-512-314-2289 Web site: http://www.ezcorp.com/ http://phx.corporate-ir.net/playerlink.zhtml?c=69434&s=wm&e=1050585

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