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EZCORP's Management Discusses F3Q2012 Results - Earnings Call Transcript

I'll begin with our consolidated results. The third quarters record net income of $28.5 million was up 8% and diluted earnings-per-share of $0.56 were up 6%. For the nine months, net income and earnings-per-share increased 23% and 20%, respectively, on a GAAP basis and 13% and 11% on a non-GAAP basis.

Compared to the prior year, our third quarter results were positively impacted by our international businesses, specifically, continued growth of Empeno Facil and the consolidation for the first time of Crediamigo and Cash Genie. At a consolidated level the big movers, in revenue terms, were jewelry scrapping sales and consumer loan fees. I'll talk about scrap and gold in particular, inside the U.S. and Canada segment discussion.

The 38% in consumer loan fees to $53.5 million in the quarter was driven almost entirely by Crediamigo and Cash Genie. The two acquisitions diversify our unsecured lending business, both geographically and in terms of product mix. The two businesses are also expected to provide accelerated growth in our unsecured lending business.

Lastly at the consolidation level, $4.9 million of the $8.3 million increase in administrative expenses resulted from the two acquisitions. Neither Crediamigo nor Cash Genie, are store-based businesses, and therefore, the majority of their cost-base is included in administrative expenses.

The remainder of the increase includes the company's continued investment in broadening the management team and infrastructure to support the company's globalization strategy and other domestic and profitability initiatives. I'll now move on to the segments.

As you might remember from last quarter, the company's now reporting segment results based on geographic lines. I'll start with our largest segment, U.S. and Canada which includes our 914 stores in the U.S. offering pawn buy/sell, and/or financial services and our 68 Cash Advance and buy/sell stores in Canada.

The U.S. and Canada deliver segment contribution of $44.4 million, a $1.9 million decrease compared with the prior quarter driven by the challenges related to jewelry merchandise sales and scrap sales, specifically gold, inside the U.S. pawn business. We estimate that on a same-store basis, the changing gold metrics, both price and volume, from the year-over-year quarter caused a decrease around $6 million in net revenue for the U.S. and Canada segment. And that's assuming we've been flat for last year.

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