EZCORP Inc(EZPW) 2023Q2 Earnings Summary
Bullish Points:
1. Total revenues for the nine months ended June 30, 2023, increased to $778,562,000 compared to $652,818,000 for the same period in 2022.
2. Operating income for the nine months ended June 30, 2023, increased to $75,591,000 compared to $60,038,000 for the same period in 2022.
3. Acquired nine pawn stores in Houston, Texas, and one luxury pawn store in Las Vegas, Nevada for a total cash consideration of $13.0 million.
4. U.S. Pawn segment gross profit increased by 12% to $110,192,000.
5. Pawn loans outstanding (PLO) increased by 12% to $178,900,000.
6. Pawn service charges (PSC) increased by 16%.
7. Merchandise sales increased by 9%.
8. Net inventory increased by 13%, and inventory turnover increased to 2.6x from 2.5x.
9. Latin America Pawn segment PSC increased 22% (15% on a constant currency basis) due to higher average PLO.
10. Latin America Pawn segment merchandise sales increased 31% (22% on a constant currency basis) and 25% on a same-store basis (17% on a constant currency basis).
11. Latin America Pawn segment merchandise sales gross margin increased 200 bps from 29% to 31%.
12. Latin America Pawn segment contribution increased $7.9 million, or 46%, to $25.2 million.
13. Net cash provided by operating activities increased by 53% or $74,309 thousand.
Bearish Points:
1. Net income for the nine months ended June 30, 2023, decreased to $28,210,000 compared to $42,823,000 for the same period in 2022.
2. Operating lease cost for the three months ended June 30, 2023, was $18.7 million, and for the nine months ended June 30, 2023, was $54.2 million.
3. Total long-term debt as of June 30, 2023: $359,686,000.
4. Interest expense for the nine months ended June 30, 2023: 2029 Convertible Notes ($5,232,000), 2025 Convertible Notes (-$2,790,000), and 2024 Convertible Notes ($10,523,000).
5. Company recorded a $2.0 million charge during the quarter ended June 30, 2022, for a settlement related to a legal case.
6. Store expenses increased by 14%, primarily due to increased labor, higher store count, and expenses related to the loyalty program.
7. Segment contribution decreased by 10% or $11.7 million compared to the prior year nine months ended June 30, 2022, mainly due to net loss on share of losses in Cash Converters' net results.
8. General and administrative expenses increased by 5% or $2.5 million, primarily due to the impact related to the reversal of incentive compensation for the departed CEO and an overall increase in incentive-based compensation and costs.
9. Interest expense increased by 70% or $5.3 million, mainly due to the net loss recorded on the partial extinguishments of the 2024 and 2025 convertible notes and higher average total debt outstanding at higher average effective interest rates.
10. Income tax expense decreased by 12% or $1.4 million, primarily due to a decrease in income before income taxes of $16.0 million for the nine months ended June 30, 2023 compared to the same prior year nine month period.
In summary, EZCORP Inc (EZPW) has shown growth in revenues, operating income, and expansion in the pawn store business. However, the company has experienced a decrease in net income, increased expenses, and higher long-term debt. For more information, you can read the original text of EZCORP Inc's financial report: https://www.sec.gov/Archives/edgar/data/876523/000087652323000032/ezpw-20230630.htm
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