EZCORP, Inc. (NASDAQ:EZPW) Q1 2015 Earnings Conference Call - Final Transcript

Jan 27, 2015 • 05:00 pm ET


EZCORP, Inc. (NASDAQ:EZPW) Q1 2015 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the EZCORP First Quarter of Fiscal Year 2015 Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Mr. Mark Trinske, EZCORP's Vice President of Investor Relations and Communications. Sir, please go ahead.

Mark Trinske

Thank you, operator. I'm Mark Trinske, Vice President of Investor Relations at EZCORP, and I'd like to welcome everyone to our conference call to discuss our results for our first fiscal quarter of 2015.

Presenting on the call today is Mark Kuchenrither, our President and Chief Executive Officer.

(Forward-Looking Cautionary Statements)

On today's call Mr. Kuchenrither will present his comments about the quarter, and then we'll open the call to your questions.

Now, I would like to turn the call over to Mark Kuchenrither. Mark?

Mark Kuchenrither

Thank you, Mark, and good afternoon everyone. I will provide an overview of our first quarter results and trends in each of our businesses within our operating segments.

But first I want to recognize that our team delivered a creditable performance in a challenging trading conditions, with our Latin America operating segment delivering a strong performance.

Total revenues were $252.6 million, compared to $263 million for the same period last year. Net income from continuing operations attributable to EZCORP was $14.2 million or $0.26 per share, compared to $26.1 million or $0.48 per share in the same period a year earlier.

Please turn to the consolidated statements of operations that compare the three months ending December 31, 2014 to December 31, 2013.

You can see that year-over-year net revenues were down $13.5 million. This was driven primarily from lower merchandise sales gross margin due to inventory velocity disposition initiatives that I will talk about within each pawn business unit and that had approximate impact of $4.3 million;

Unidentified Speaker

gross profit reduction of $3.8 million driven primarily from lower volumes and year-over-year price compression; lower CSO net revenue driven by the impact of Houston and El Paso ordinances; and the higher bad debt experienced primarily in Texas, impacting by $2.6 million. And Grupo Finmart loan fees lower due to lower loan balance entering into the year. This was partially offset by a favorable year-over-year structured loan sale, and that impact was $2 million. This was planned for and expected as the business is transitioning to a mix of portfolio of structured asset sales.

Moving to the administrative expenses, you can see the favorable impact of the steps we have taken to improve the efficiency of our operations, $5.6 million favorable. And in addition to that, there is $1.1 million of legal expenses during the quarter that were associated with the lawsuits. We expect this run rate to continue going forward.

Please note, on the loss/gain on the sale of disposable assets line, the favorable $6.3 million in the prior-year quarter, this was the result of selling pawn stores, primarily in Louisiana. And the interest expense is approximately $9 million. The convertible bond portion of the