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Jun 30, 2020
EZCORP Q3 2020 Earnings Report
EZCORP's Q3 2020 performance was marked by revenue growth driven by retail sales, but impacted by decreased pawn loan demand and related pawn service charge revenue.
Key Takeaways
EZCORP reported a 4% increase in total revenues to $210.2 million, driven by strong retail sales growth of 31%. However, net revenues decreased by 12% due to a 34% decline in pawn service revenue, which was attributed to lower pawn loan demand influenced by stimulus payments and restrictions in Latin America. The company's loss before taxes was $10.2 million, and diluted loss per share was $0.10.
Total revenues increased by 4% to $210.2 million, while retail sales grew by 31% due to demand for work-from-home and school-from-home merchandise.
Net revenues decreased by 12% due to a 34% reduction in pawn service revenue, partially offset by a 33% increase in merchandise sales gross profit.
Loss before taxes was $10.2 million, and diluted loss per share was $0.10, impacted by lower pawn loan volume and shifts in revenue mix.
Cash and cash equivalents increased to $311 million, driven by a decline in new pawn loan originations and increased merchandise and scrap sales.
EZCORP
EZCORP
Forward Guidance
EZCORP anticipates that it will take time for PLO and PSC to rebuild, but remains confident that demand for pawn loans will accelerate, thereby driving higher revenue growth and increased earnings power, particularly as expenses are rationalized and investments are made in value-added initiatives.
Positive Outlook
- Demand for pawn loans will accelerate.
- Higher revenue growth.
- Increased earnings power.
- Rationalizing expenses.
- Investments in value-added initiatives.
Challenges Ahead
- It will take time for PLO to rebuild.
- It will take time for PSC to rebuild.
- Customers’ needs for cash were lower in the quarter.
- Shutdown of CashMax business will result in charges of approximately $8.0 - $10.0 million.
- Uncertain times regarding safety of team members and customers.