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Second Quarter Fiscal 2017 Conference Call
May 4, 2017
Preliminary Statements
2
Forward Looking Statements
This document contains certain forward-looking statements. 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, that address activities or results that the company plans, expects,
believes, projects, estimates or anticipates will, should or may occur in the future 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 and 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.
Other Information
This information should be read in conjunction with, and not in lieu of, the company’s annual,
quarterly and other reports filed with the Securities and Exchange Commission. Those reports contain
important information about the company’s business and performance, including financial
statements prepared in accordance with U.S. generally accepted accounting principles, as well as a
description of the important risk factors that may materially and adversely affect our business,
financial condition or results of operations.
All market comparisons are based on available information from similar publicly traded companies.
Second Quarter FY17
Key Messages – Momentum Builds!
3
Amounts in this slide are adjusted for restructuring and restatement charges, other discrete items and constant currency. Mexico Pawn excludes closed buy/sell businesses.
See “EZCORP GAAP Results” and “GAAP to non-GAAP Reconciliation.”
Comparisons in this presentation are Q2FY17 relative to same period in prior year.
*Calculated in constant currency. Mexico PLO balance both increased and decreased over the same period on a GAAP basis.
**Q2 is low point of the year in PLO due to loan pay downs from federal tax refunds.
1 Strong profit growth
• Earnings Per Share from continuing operations up 200% to $0.15; growth in five consecutive quarters
• EBITDA up 9% to $23.1m from $21.3m
Strengthened balance
sheet and liquidity 2
Track record of PLO growth
• Track record of positive Same Store PLO growth:– Six consecutive quarters in U.S.– Eleven consecutive double-digit quarters in Mexico*
• Market leading U.S. PLO of $243k per store in Q2**3Investing in customer experience driving future profitable growth
• Commenced rollout of upgraded POS in Q2, expect deployment to
be completed this calendar year
• Store refresh program commences in 2HFY17
• Deployment of upgraded labor scheduling & timekeeping system
began in Q2 4
• Cash balance up 68% to $120m plus $50m undrawncredit facility
• Receiving regular payments on promissory notes created as a result of Grupo Finmart sale in September 2016. Collected $15.1m in 1HFY17 and expect to collect a total of $45.9m in FY17
4
Reduction in net interest expense due
to notes receivable income from Grupo
Finmart sale
EZCORP GAAP Results
Earnings Per Share Up 200% to $0.15
Five consecutive quarters of YOY profit
growth
Continued focus and investment in
customer experience and cost
management driving EPS up 200%
Continued focus and investment in
customer-facing team. Expect 2HFY17
operations expense similar to 2HFY16
Corporate expense reduction of 15%,
on track to $50m corporate expense in
FY18
Q2 Net Revenue up 1% as 4% increase
in PSC revenue was offset by softer sales
due to tax refund delays
*Net income attributable to EZCORP from Continuing Operations
5
*Adjusted for restructuring and restatement charges, other discrete items and constant currency. Mexico Pawn excludes closed buy/sell businesses. GAAP financials are included in the “GAAP to Non-GAAP Reconciliation.”
Corporate expense reduction of 15%;
on track to $50m corporate expense in
FY18
Reduction in net interest expense due
to notes receivable income from Grupo
Finmart sale
Continued focus and investment in
customer experience and cost
management driving profit up 19%
Focus on meeting customers’ need for
cash delivered both PLO and Net
Revenue growth
Consolidated merchandise margin of
36%, in our target range of 35-38%
EZCORP Continuing Operations Adjusted Results*
Continued Focus and Investment in Customer Experience
Driving Profit Growth
Purchases+
Forfeitures
Serving and Satisfying Customers’ Need for Cash
Fuels Continued Same Store PLO Growth
6
+ -= =
INCOME STATEMENT
Pawn Service Charges Total
Up 5% to $60m
Sales Up 1%
Sales Gross Profit Total Down 5%
to $36m
Merchandise Margin 37%
ASSETSSAME STORE UP 5%
GROSS PROFITSAME STORE
DOWN 5%Inventory
Total Up 10%
to $120m
NET REVENUEUp 1% to $96m
• Continued growth in PLO, up 2%; Same Store PLO up 2%
• Average PLO per store improved 3% to $243k
• PLO monthly yield consistent at 14%
• Inventory aged over one year increased to 12% from 10%
TOTAL EXPENSESUp 2% to $66m
PROFIT BEFORE TAXFlat at $30m
• Pawn service charges up 5%
• Merchandise margin of 37%, in our target range of 35% to 38%
• Inventory turns of 2.2 compared to 2.4
• Return on Earnings Assets of 147% compared to 152%
U.S. Pawn Q2FY17*
Pawn Loans Outstanding
Total Up 2%
to $125m
SAME STORE UP
2%
QualityStore
Manager
SAME STORE UP 11%
* Adjusted for restructuring charges and other discrete items. See “EZCORP GAAP Results” and “GAAP to Non-GAAP Reconciliation.” Sales Gross Profit includes Merchandise and Scrap Gross Profit.
Delay in tax refunds adversely impacted consumers’ disposable income and our sales volume
Initiatives underway to improve Net Revenue and profitability in the long term, including upgrading POS and product & customer data analytics
Expect operating expense in 2HFY17 to be similar to 2HFY16
Six consecutive quarters of positive Same Store PLO growth
Six Consecutive Quarters of Market Leading
U.S. Same Store PLO Growth
7
U.S. Pawn
EZCORP Strategic
Plan Announcement
• Six consecutive quarters of positive U.S. Pawn same
store PLO growth YOY led the market each quarter
• Market leading U.S. PLO of $243k per store in Q2
(Q2 is low point of the year in PLO due to loan pay
downs from federal tax refunds)
• Merchandise margin of 37%, in our target range of 35% to
38%
• Inventory aged over one year increased to 12% from 10%
Positive same store PLO and merchandise margin after strategic plan
announcement in July 2015
Strategic Plan
Announcement
Market Leading U.S. Same Store PLO Growth
8
(10)
(8)
(6)
(4)
(2)
0
2
4
6
8
10
March Qtr 2016 March Qtr 2017
• EZCORP continued focus on and investment in satisfying
customers’ need for cash whenever they need it is driving
market leading same store PLO growth. PLO is the most
influential driver to long-term revenue and profit growth
• EZCORP’s six consecutive quarters of positive U.S. Pawn
same store PLO growth YOY led the market each quarter
• Market leading U.S. PLO of $243k per store in Q2
(Q2 is low point of the year in PLO due to loan pay downs
from federal tax refunds)
YOY Growth
U.S. Pawn
Two-Year Stacked Same Store PLO Change*
* Weighted average based on available information from each company’s public filings
EZCORP+9%
FirstCash-8%
+2%
+7%
-8%
0% in March Qtr 2016 YOY
Strong Compounded PLO Growth Increases
Drives Profitable Growth
9
+ -= =
INCOME STATEMENT
Pawn Service Charges Total
Up 12% to $8m
Sales Up 13%
Sales Gross ProfitTotal Up 15%
to $6m
Merchandise Margin 32%
ASSETS
SAME STORE
UP 10%
Purchases+
Forfeitures
Pawn Loans Outstanding
Total Up 11% to $19m
InventoryTotal
Up 7% to $19m
SAME STORE UP 10%
NET REVENUEUp 13% to $14m
TOTAL EXPENSES
Up 8% to $10m3
-------------------------Up 14% to $10.5m4
PROFIT BEFORE TAX2
Up 25% to $4m3
-------------------------Up 11% to $3.5m4
• Continued growth in PLO, up 11%; Same Store PLO up 10%
• PLO monthly yield consistent at 16%
• Pawn service charges up 12%
• Merchandise margin consistent at 32%
• Inventory turns consistent at 2.6
• Return on earning assets 154% compared to 156%
Mexico Pawn Q2FY171
1 Adjusted for restructuring charges, other discrete items and constant currency. Excludes closed Mexico buy/sell business.
See “EZCORP GAAP Results” and “GAAP to Non-GAAP Reconciliation.”
2 Calculated in constant currency. Mexico PLO balance both increased and decreased over the same period on a GAAP basis.
3 Excluding $0.5m looting expense impact
4 Including $0.5m looting expense impact
Sales Gross Profit includes Merchandise and Scrap Gross Profit.
QualityStore
Manager
SAME STORE UP 5%
GROSS PROFITSAME STORE
UP 12%
Eleven consecutive double-digit quarters of PLO growth in Mexico2
Looting of 12 stores in January reduced revenue through stolen pawn loan collateral and inventory effecting PSC and sales in addition to $0.5m in expenses
Added two de novo stores in Q2FY17, and expect to add 10 total de novo stores in FY17
Eleven Consecutive Quarters of Double-Digit Same Store
PLO Growth*
10
Mexico Pawn
EZCORP Strategic
Plan Announcement
• Eleven consecutive quarters of Mexico Pawn
double-digit same store PLO growth YOY*
• Strong compounded growth in same store PLO, up 10%
in Q2FY17, up 28% in Q2FY16, and up 15% in Q2FY15
• Looting of 12 stores in January reduced revenue
through stolen pawn loan security and inventory
affecting PSC and sales in addition to $0.5m in
expenses
Strong compounded growth in same store PLO and higher merchandise margin
after strategic plan announcement in July 2015
Strategic Plan
Announcement
• Merchandise margin consistent at 32% in
Q2FY17
• Higher merchandise margin after strategic
plan announcement in July 2015
10% same store PLO growth
in Q2FY17 on top of +28%
and +15% in Q2FY16 and
Q2FY15, respectively
*Calculated in constant currency. Mexico PLO balance both increased and decreased over the same period on a GAAP basis.
11
• Strong compounded growth in EZCORP same store PLO,
up 10% in Q2FY17 and up 28% in Q2FY16
• EZCORP’s focus on customer experience led to eleven
consecutive quarters of Mexico Pawn double-digit same
store PLO growth YOY**
• PLO is the most influential driver to long-term revenue
and profit growth
Mexico Pawn
*Based on available information from each company’s public filings
**Calculated in constant currency. Mexico PLO balance both increased and decreased over the same period on a GAAP basis.
Strong Compounded PLO Increases
Drives Profitable Growth
0
5
10
15
20
25
30
35
40
March Qtr 2016 March Qtr 2017
EZCORP+38%
FirstCash+16%
+10%
+28%
+11%
+5%
YOY Growth
Two-Year Stacked Same Store PLO Change*
2.8
3.23.4
3.5
2.5
Q2FY16 3QFY16 4QFY16 1QFY17 2QFY17
Net Debt / Adjusted EBITDA Ratio (LTM)
12Amounts on this slide excludes the impact of cash and debt of Grupo Finmart in FY16.NM = Not Meaningful
Cash balance up 68% to $120m plus $50m undrawn
credit facility
Strengthening balance sheet and liquidity supports
continued investment in customer experience and
expansion to drive increased profit
Strengthening Balance Sheet and Liquidity
Earnings growth improving Net Debt / Adjusted
EBITDA ratio
Receiving regular payments on promissory notes
created as a result of Grupo Finmart sale in
September 2016
Q2
$ Millions FY17 FY16 $∆ %∆
Unrestricted Cash 120.1 71.3 48.8 68%
Restricted Cash 7.1 5.0 2.1 42%
Total Cash 127.2 76.3 50.9 67%
Notes Receivable From Sale of Grupo Finmart 75.1 0.0 75.1 NM
Received $15m of $90m Grupo Sale Receivable
13
Slide is notes receivable that are secured by loan portfolio as of 3/31/17.Amounts above are in U.S. dollars and based on exchange rates in effect historically or as of March 31, 2017 for all future amounts.
$90.2m USD of Notes Receivable plus interest created as a result of Grupo Finmart sale in September 2016
Collected $15.1m in1HFY17 and expect to collect an additional $30.8m in 2HFY17, for a total of $45.9m in FY17, $26.1m in FY18, and $18.2m in FY19
Since the end of the second quarter, received $5.2 million, which is part of the
$30.8 million to be collected in 2HFY17
$15.1 $15.1
$30.8
$26.1
$18.2
$75.1
$0
$20
$40
$60
$80
$100
FY17 FY18 FY19 Total
U.S
. $M
IL
Notes Receivable
Cash Received
As of March 31, 2017
$45.9
$90.2
% of Notes Secured Remaining Balance 31% 7% 0% 15%
Cash Interest Income $4.3 $1.9 $0.8 $7.0
14
Drivers to Long-Term Growth
Investing in Pawn Fundamentals
Updating and evolving incentive program,
coupled with training, coaching & mentoring
of field team,to improve customer
engagement and sustained results
Disciplinedstore acquisitions and
de novo store openings, drive profitable growth
through efficient utilization of capital on
productive assets
Targeted investments in market leadership to meet our
customers’ need for cash
Product & customer data analytics and feedbackimproves understanding of customer behaviors
and product pricing to drive higher profitability
Strengthening balance sheet and
liquidity position
Process analysis and
improvements will deliver greater consistency and improved productivity
Technology upgrades, including deployment of
upgraded POS, will deliver improved
customer and Team Member experience and
increase productivity
Store refurbishment program commences in 2HFY17 to improve customer and team member
experience, and merchandise capacity
and flexibility
Optimizing loan values and merchandise pricingto sustain PSC, sales gross profit and sales margins
within target range of 35-38%
15
• Initiatives to improve customer experience and deliver profitable growth:
– Deployment of upgraded POS
– Further investment in product and customer analytics
• Continuous measurement of customer experience and feedback relative to
competitors driving higher revenue and profitability
Market Leadership in
PLO Growth
Disciplined Growth &
Strong Performance
Attractive Industry
Dynamics
• Continue to assess acquisition opportunities in U.S. and Mexico against strict
investment criteria:– Further Mexico expansion with ~10 de novo stores planned in FY17;
added two de novo stores in Q2FY17
• Cash balance at March 31, 2017 up 68% YOY to $120.1m, plus $50m undrawn credit
facility
EZCORP Strengths
Successful Focus on
Customer Leadership
• Six consecutive quarters of market leading U.S. Pawn Same Store PLO growth YOY
• Eleven consecutive quarters of Mexico Pawn double-digit Same Store PLO growth YOY*
• Five consecutive quarters of YOY profit before tax growth
• Solid demand for pawn services across economic cycles
• Fully collateralized loan portfolio
• Large and highly fragmented consumer market in U.S. and Mexico
• Stable pawn regulatory environment
*Calculated in constant currency. Mexico PLO balance both increased and decreased over the same period on a GAAP basis.
16
Additional Information
Company Overview
* Continuing operations excluding closed Mexico buy/sell business
17
U.S. Pawn
84%
Other
1%
Mexico
Pawn
15%
EZCORP Revenue by Type
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.
KEY STATISTICS
IPO Date 8/27/1991
Headquarters Austin, TX
52 Week Market Capitalization Range (as of 5/2/17)
$249m to $638m
52 Week Share Price Range
(as of 5/2/17)$4.64 to $11.80
52 Week Convertible Debt Bond Price Range (as of 5/2/17)
74 to 100
Adjusted Total Revenue in FY16* $747.9m
Adjusted Profit Before Tax in FY16* $23.1m
Institutional Holdings 88%
Index inclusion:Russell 2000, S&P SmallCap 600, S&P 1000,NASDAQ Composite
PAWN STORE LOCATIONS as of 3/31/17
United States 517
Mexico 240
FINANCIAL SERVICES LOCATIONS as of 3/31/17*
Cash Max in Canada 27
U.S. Financial Servicesbusiness closed
Renewed Executive Leadership Team including
CEO, CFO, President of Pawn
Track Record of Consistent Execution
18
25 Pawn Stores acquired in FY15
Closed 25 underperforming pawn stores in U.S.
and Mexico in FY15
Sold Grupo Finmart
Investment in field management enabling more coaching & mentoring
6 U.S. pawn stores acquired in Q2FY16
Procurement opportunities identified Store incentive
plans evolving
INITIATIVES TO DRIVE
CONTINUED
PROFITABLE GROWTH
1. POS will deliver improved customer experience and increase productivity
2. Further Investment in product and customer data analytics
3. Store refurbishment program to improve customer experience and merchandise capacity and flexibility
4. Investing in process analysis and improvements
5. Tracking toward annual corporate expense of$50m in FY18
Mexico Buy/Sell business closed
Transformational customer focused
3-year strategic plan released
JULY
2015
New $100 million secured credit facility to support business growth
MARCH
2017
Initiated deployment of upgraded POS
Pawn 101: Understanding Pawn Growth Drivers
19
+ -= =
INCOME STATEMENTASSETS
Purchases+
ForfeituresNET REVENUE
Pawn Loans Outstanding are secured loans, typically small, and fully collateralized by tangible personal property. No personal recourse to customers or negative credit reporting.
We earn Pawn Service Charge revenue on pawn loans which varies primarily based upon statutory rates by state and loan valuations.
Inventory for retail sales occur through pawn loan forfeitures and purchases of customers’ merchandise. If customer does not repay, renew or extend a loan, the collateral is forfeited to us and becomes inventory available for sale to drive sales gross profit.
Same Store basis is the most effective measure of pawn growth.
TOTAL EXPENSES Profit Before Tax
Key Growth Drivers
Pawn Service Charges
#3
Pawn Loans Outstanding
#2
SalesGross Profit
#5
Pawn Loans Outstanding (PLO) is the most influential driver to revenue and profitability. EZCORP continued focus and investment in satisfying customers’ need for cash whenever they need it is driving PLO growth
Inventory
#4
QualityStore
Manager
#1
20
Strategic Plan
Announcement
• Continued focus on customer experience led to Same Store PLO
up 2%; Same Store PSC up 5% in Q2
• Six consecutive quarters of market leading Same Store PLO growth
• Delay in tax refunds adversely impacted consumers’ disposable income
and our sales volume
• U.S. merchandise margin of 37%, in our target range of 35-38%
• Inventory aged over one year increased to 12% from 10%
U.S. Pawn*
* Adjusted for restructuring charges and other discrete items. See “EZCORP GAAP Results” and “GAAP to Non-GAAP Reconciliation.”
Serving and Satisfying Customers’ Need for Cash
Fuels Continued Same Store PLO Growth
Strategic Plan
Announcement
*Adjusted for discrete items and constant currency. Excludes Mexico buy/sell business. See “EZCORP GAAP Results” and “GAAP to Non-GAAP Reconciliation.”**Calculated in constant currency. Mexico PLO balance both increased and decreased over the same period on a GAAP basis. 21
• Continued focus on customer experience led to eleven consecutive quarters of Same Store PLO, up 10% and 28% in Q2FY17 YOY and Q2FY16 YOY, respectively**
• Looting of 12 stores in January reduced revenue through stolen pawn
loan security and inventory affecting PSC and sales in addition to $0.5m in expenses
• Added two de novo stores in Q2FY17, and expect to add 10 total de novo stores in FY17
Mexico Pawn*
Strong Compounded PLO Increases
Drives Profitable Growth
Strategic Plan
Announcement
Profit before tax up 25% and total expenses up 8%, excluding $0.5m expense impact of looting
Strategic Plan
Announcement
22
Definition of Terms:
PLO Yield =
pawn service chargesdays in periodaverage PLO
X 365
Inventory Yield =
Sales Gross Profitdays in period
average net inventory
X 365
Return on Earning Assets
Sales Gross Profit + PSCdays in period
average net inventory + average PLO
X 365
Inventory Turnover =
total cost of salesdays in period
average net inventory
X 365
=
23
GAAP to Non-GAAP Reconciliation
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 financial information that is adjusted to exclude the impact of restructuring and restatement charges and other discreet items and to reflect the results of our Mexico Pawn operations on a constant currency basis. We believe that presentation of the non-GAAP financial information is meaningful and useful in evaluating and comparing our operating results across accounting periods and understanding the operating and financial performance of our business. We believe that the non-GAAP financial information reflects an additional way of viewing aspects of our business that, when viewed with our GAAP results, provides 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.
You should consider the non-GAAP information in addition to, but not instead of or superior to, our results prepared in accordance with GAAP. Non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of that information for comparative purposes.
24
GAAP to Non-GAAP Reconciliation Q2 – Continuing Operations*
Footnote * - Includes immaterial presentation reclassifications and rounding
Footnote (A) Amount includes $0.2m Loss on FX
Footnote (B) Amount includes $0.1m of discrete adjustments in Corporate
Footnote (C) Amount includes $0.1m Loss on FX
*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 20.4 to 1 and 18.0 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.
(B)
(A) (C)
25
GAAP to Non-GAAP Reconciliation Q2 – U.S. Pawn*
Footnote * - Includes immaterial presentation reclassifications and rounding
Footnote (A) Amount includes $0.1m restructuring expense
(A)
26
GAAP to Non-GAAP Reconciliation Q2 – Mexico Pawn*
Footnote * - Includes immaterial presentation reclassifications and rounding
*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 20.4 to 1 and 18.0 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.
27
GAAP to Non-GAAP Reconciliation YTD – Continuing Operations*
Footnote * - Includes immaterial presentation reclassifications and rounding
Footnote (A) Amount includes $0.2m Gain on FX
Footnote (B) Amount includes $3.9m of discrete adjustments in Corporate ($4.2m Grupo Restatement and -$0.3m discrete adjustments)
Footnote (C) Amount includes $1.4m loss on restructuring related expenses (U.S. Pawn $1.0m, Corporate $0.2m, Other International $0.2m) and $0.1m Loss on FX
*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 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.
(B)
(A) (C)
28
GAAP to Non-GAAP Reconciliation YTD – U.S. Pawn*
Footnote * - Includes immaterial presentation reclassifications and rounding
Footnote (A) Amount includes $1.0m restructuring expense
(A)
29
GAAP to Non-GAAP Reconciliation YTD – Mexico Pawn*
Footnote * - Includes immaterial presentation reclassifications and rounding
*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 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.
30
Net Debt/Adjusted EBITDA Reconciliation*
Footnote * - Includes immaterial presentation reclassifications and rounding