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Sep 30, 2020
EZCORP Q4 2020 Earnings Report
EZCORP's financial performance was impacted by lower pawn service charges and COVID-19 headwinds, alongside strategic initiatives to streamline the business.
Key Takeaways
EZCORP reported a decrease in total revenues by 22% to $166.9 million and a net loss of $23.3 million, impacted by lower pawn service charges and COVID-19 effects. Strategic initiatives to reduce costs are underway, with expected annual corporate expense reductions of over $12 million and store-level operating cost reductions of $14 million. PLO increased $18.0 million during the quarter as compared to the third quarter of fiscal 2020.
Total revenues declined 22% to $166.9 million, driven by a 34% decrease in pawn service charges.
PLO balance at the end of the quarter was $131.3 million, a 34% decrease compared to the prior-year quarter, but increased $18.0 million during the quarter as compared to the third quarter of fiscal 2020.
The company implemented strategic initiatives to reduce annual corporate expenses by over $12 million beginning in fiscal 2021 and store-level operating costs by $14 million.
Net loss was $23.3 million, or $0.42 per share, compared to a net loss of $0.6 million, or $0.01 per share in the prior-year quarter.
EZCORP
EZCORP
EZCORP Revenue by Segment
EZCORP Revenue by Geographic Location
Revenue by Segment
U.S. Pawn Revenue
CapyFin.comLatin America Pawn Revenue
CapyFin.comRevenue by Geographic Location
Latin America Pawn Revenue
CapyFin.com Forward Guidance
EZCORP is focused on optimizing its core pawn business and continuous operational improvements to drive operating leverage and improve earnings power. The company is also focused on innovation to broaden customer engagement and improve the customer experience.
Positive Outlook
- Implemented initiatives to reduce annual corporate expenses by more than $12 million beginning in fiscal 2021.
- Lowered store-level operating costs by $14 million on an annualized basis.
- Strengthening core pawn business by leveraging data analytics to optimize pricing, productivity and returns.
- Rationalizing non-core activities, including closing the CASHMAX business in Canada.
- Refocusing digital pawn servicing platform, Lana, and other digital efforts to broaden customer engagement and improve customer experience.
Challenges Ahead
- Results for the fourth quarter of fiscal 2020 were impacted by lower pawn service charges related to stimulus payments and ongoing COVID-19 headwinds.
- Charges and non-cash write-downs associated with efforts to simplify and streamline the business and other COVID-19 impacts.
- Near-term pawn service charge revenue trends will continue to lag the recent stabilization and rebound in new loans made and pawn loans outstanding.
- Merchandise sales gross margin decreased 200 bps, but when excluding a $2.6 million increase in reserves resulting from the impact of COVID-19, merchandise sales gross margin was flat at 33%.
- PLO balance at the end of the quarter was 34% below the prior-year quarter.
Revenue & Expenses
Visualization of income flow from segment revenue to net income