EZCORP Posts Slower Growth as Pawn Loans Reach Record
Third-quarter revenue rose 35% to $418.7 million, even as growth cooled from the prior period.
EZCORP Inc. (EZPW), the pawn-services operator, reported slower profit growth as diluted earnings declined sequentially to $0.48 a share from $0.61. Earnings per share still rose 41% from a year earlier, compared with 85% growth in the prior quarter.
The slowdown followed two quarters of uneven acceleration. Revenue growth had climbed from 19% two quarters earlier to 46% in the prior period before easing to 35%, while adjusted EBITDA growth moved from 36% to 76% and then 48%.
Revenue fell 6% sequentially to $418.7 million from $446.9 million, and gross profit declined 5% to $246.2 million. Net income attributable to EZCORP dropped 22% from the prior quarter to $38.2 million, though it remained 44% above the year-earlier period.
Pawn lending strengthened beneath the slower headline growth. Pawn loans outstanding reached a record $387.2 million, up 11% sequentially and 33% from a year earlier. Same-store loan growth accelerated to 18% from 16% in the prior quarter as average loan sizes increased and pawn demand remained strong.
Latin America led the operating gains, with segment contribution rising 56% to $24.8 million as revenue increased 37%. U.S. Pawn segment contribution grew 24% to $61.6 million, supported by a 15% increase in pawn loans outstanding and a merchandise margin that expanded to 40%.
Merchandise gross margin improved sequentially to 38% from 36%, and aged general merchandise declined to 1.3% of inventory. Jewelry-scrap sales rose 110% from a year earlier, but that growth slowed from 288% in the prior quarter and scrap margin contracted sequentially to 26% from 38%.
EZCORP added 43 net stores during the quarter, bringing its footprint to 1,549 locations, and increased its ownership of SMG to 97.4% before acquiring the remainder in July. SMG contributed $43.1 million of revenue during the period. Cash and equivalents fell to $311.0 million from $472.1 million a year earlier after the company retired $134.2 million of SMG debt and funded acquisitions.