CASH AMERICA INTERNATIONAL INC Additional Information: For Immediate Release
Thomas A. Bessant, Jr. (817) 335-1100
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CASH AMERICA ANNOUNCES INCREASE IN THIRD QUARTER EARNINGS AND DECLARES DIVIDEND****************************************************************************************************** Fort Worth, Texas (October 29, 2015) - - Cash America International, Inc. (NYSE: CSH) announced today that net income from continuing operations for the third quarter of 2015 was $5,038,000 (19 cents per share) compared to a net loss from
continuing operations of $9,370,000 (loss of 32 cents per share) for the third quarter of 2014. Included in the prior year's
reported net income from continuing operations for the third quarter of 2014, was a loss on the divestiture of non-strategic operations, a loss on early extinguishment of debt, and severance and other employee-related costs for administrative and operations staff reductions, which in aggregate reduced net income by $17.3 million before taxes ($14.1 million, or 48 cents per share, after taxes). When excluding these expenses in the prior year, adjusted net income from continuing operations, a non-GAAP measure, for the third quarter of 2014 was $4.7 million (16 cents per share). Net income per share from continuing operations for the third quarter of 2015 of $0.19 is up 19% compared to the adjusted net income per share from continuing operations for the third quarter of the prior year of $0.16 and is near the top of the Company's published guidance range of between $0.17 and $0.20 as indicated in its press release dated July 30, 2015.
Consolidated net revenue was $135.0 million for the third quarter of 2015, compared to $144.1 million for the third quarter of 2014. Net revenue in the third quarter of 2014 included the results of the Company's Mexico-based pawn business, which was sold in the third quarter of 2014. The Company's net revenue from domestic operations was $135.0 million for the third quarter of 2015, compared to $142.2 million for the third quarter of 2014, with the largest component of the decrease due to the Company's decision to eliminate and de-emphasize unsecured consumer loans in many of its locations, which reduced net revenue in the third quarter of 2015 compared to the prior year. Consumer loan fees represented only about 8.5% of the Company's consolidated total revenue for the third quarter of 2015. Also impacting the net revenue comparison to the prior year domestic results was lower gross profit generated on commercial disposition activities due to the Company's shift in emphasis to predominantly in-store retail activities which are seasonally weighted to the fourth and first quarter selling periods.
While net revenue from the Company's domestic operations for the third quarter of 2015 was 5% below the prior year's third quarter results, lower operating expenses produced an increase in reported domestic operating income, which was $11.5 million for the third quarter of 2015, compared to $4.4 million for the third quarter of 2014. Excluding expenses for severance and other employee-related costs for administrative and operations staff reductions incurred during the third quarter of 2014 related exclusively to domestic operations, which were $6.1 million, the adjusted domestic operating income, a non-GAAP measure, for the third quarter of 2014 would have been $10.6 million, and the increase in domestic operating income in the third quarter of 2015 compared to the same quarter in 2014 would have been 9%.
Commenting on the third quarter results, Daniel R. Feehan, Chief Executive Officer of Cash America, said, 'The third quarter of 2015 was expected to be a challenging year over year comparison for us and we are pleased that we were able to produce a meaningful increase in earnings in 2015 compared to the prior year. More importantly, we finished the quarter well positioned for the fourth quarter selling season.'
Through the nine months ended September 30, 2015, the Company has repurchased 3,258,166 shares of its common stock, at an average price of approximately $24.75 per share, under its 4.0 million share repurchase authorization announced on January 29, 2015. These stock repurchases represent approximately 11% of the Company's fully diluted shares as of December 31, 2014. During the third quarter of 2015, the Company repurchased 925,936 shares in open market transactions.
As of September 30, 2015 there were 741,834 shares remaining on the January 2015 authorization. Additionally, on October 28, 2015, the Company's Board of Directors approved a new share repurchase program for the repurchase of an additional
million shares of the Company's common stock, which will take effect once all shares under the January 2015 4.0 million share repurchase authorization have been repurchased. The Company ended the third quarter with $19.8 million in cash and
$258.2 million in available borrowings remaining under its $280 million line of credit.
For the nine months ended September 30, 2015, the Company reported net income from continuing operations of $15.0 million (54 cents per share) compared to a net loss of $17.9 million (loss of 62 cents per share) for the same period in 2014. Included in the reported net income for the nine months ended September 30, 2015 is a gain on disposition of equity securities, a loss on early extinguishment of debt and severance and other employee-related costs for administrative and operations staff reductions, which in aggregate reduced income by $0.2 million before taxes ($0.1 million, or 1 cent per share, after taxes). When excluding these items, adjusted net income from continuing operations, a non-GAAP measure, was $15.1 million (55 cents per share) for the nine months ended September 30, 2015 and represents a 116% increase compared to adjusted net income from continuing operations, a non-GAAP measure, of $7.0 million (24 cents per share) for the nine months ended September 30, 2014, which excludes a loss on early extinguishment of debt, a loss on the divestiture of non- strategic operations, severance and other employee-related costs for administrative and operations staff reductions, and litigation settlement expenses that in aggregate reduced reported net income by $34.5 million before taxes ($24.9 million, or 86 cents per share, after taxes) for the nine months ended September 30, 2014.
Consolidated net revenue was $416.0 million for the nine months ended September 30, 2015, compared to $437.8 million for the same period in 2014. Net revenue in the nine months ended September 30, 2014 included the results of the Company's Mexico-based pawn lending business. The Company's net revenue from domestic operations was $416.0 million for the nine months ended September 30, 2015, compared to $430.0 million for the same period in 2014. Consistent with the third quarter of 2015, the domestic business produced an increase in reported operating income while overcoming lower total and net revenue. The Company's domestic operations generated an increase in domestic operating income, which reached $34.4 million for the nine months ended September 30, 2015 compared to $23.3 million for the nine months ended September 30, 2014.
Cash America will host a conference call to discuss the third quarter results on Thursday, October 29, 2015, at 7:00 AM CDT. A live web cast of the call will be available on the Investor Relations section of the Company's corporate web site http://www.cashamerica.com. To listen to the live call, please go to the web site at least fifteen minutes prior to the call to register, download, and install any necessary audio software.
Additionally, the Company announced that the Board of Directors, at its regularly scheduled quarterly meeting, declared a
$0.05 (5 cents) per share cash dividend on common shares outstanding. The dividend will be paid at the close of business on November 25, 2015 to shareholders of record on November 11, 2015.
Outlook for the Fourth Quarter of 2015 and 2016 Fiscal YearManagement believes that the opportunities for growth in revenue and earnings will be largely associated with customer demand for the credit products provided by the Company, which predominately take the form of pawn loans, and their ability to sell unredeemed collateral. Since the fourth quarter includes the seasonally important holiday selling season, results will be affected by consumer spending sentiment during the period. Management expects growth in the Company's pawn lending business, but at moderate levels for the remainder of 2015 and the first half of 2016.
Based on its views and on the preceding factors, management expects net income per share for the fourth quarter of 2015 to be between $0.45 and $0.51 per share compared to net income from continuing operations of $0.26 per share in the fourth quarter of 2014. During the fourth quarter of 2014, the Company incurred $0.9 million in after-tax expenses ($0.03 per share) related to a corporate reorganization expenses to create ongoing operating efficiencies. Excluding the $0.9 million of after-tax expense items incurred in the fourth quarter of 2014, adjusted net income from continuing operations, a non-GAAP measure, would have been $8.4 million ($0.29 per share) for the fourth quarter of 2014.
At this time, management adjusts and narrows its previously reported expectations for its fiscal year 2015 adjusted EBITDA of an anticipated range of between $113 to $120 million, which management estimates will generate between $0.99 and $1.05 in adjusted net income per share from continuing operations. This compares to a reported net loss from continuing operations of
$0.36 per share for fiscal year 2014, which included unusual items totaling $0.89. Adding back the $0.89 incurred during 2014, adjusted net income from continuing operations, a non-GAAP measure, for the year ended December 31, 2014 would have been $0.53 per share. The expense items in 2014 that generated the $0.89 per share were related to a loss on the divestiture of non-strategic operations, a loss on early extinguishment of debt, severance and other employee-related costs for administrative and operations staff reductions, and expenses related to a legal settlement.
Based on its current views of the coming year, management establishes its initial anticipated range of adjusted EBITDA, of between $124 to $132 million for fiscal 2016, which management estimates will generate between $1.25 and $1.45 in net income per share from continuing operations.
About the CompanyAs of September 30, 2015 Cash America International, Inc. (the 'Company') operated 903 total locations offering specialty financial services to consumers, which included the following:
825 lending locations in 20 states in the United States primarily under the names 'Cash America Pawn,' 'SuperPawn,' 'Cash America Payday Advance,' and 'Cashland;' and
78 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 12 states in the United States under the name 'Mr. Payroll.'
For additional information regarding the Company and the services it provides, visit the Company's website located at: http://www.cashamerica.com or its mobile app, which may be downloaded without cost from the App Store℠ and on Google Play™. App Store is a service mark of Apple Inc. and Google Play is a trademark of Google Inc.
The Non-GAAP Disclosure sections included in the attachments to this press release contain a reconciliation of non-GAAP information and a discussion of the reasons why the Company's management believes that presentation of the non-GAAP financial measures discussed above provide useful information to investors regarding the Company's financial condition and results of operations.
This release contains forward-looking statements about the business, financial condition, operations and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation: the effect of, compliance with or changes in laws, rules and regulations applicable to the Company's business or changes in the interpretation or enforcement thereof; the regulatory and examination authority of the Consumer Financial Protection Bureau, including the effect of and compliance with a consent order the Company entered into with the Consumer Financial Protection Bureau in November 2013; accounting and income tax risks related to goodwill and other intangible asset impairment, certain tax positions taken by the Company and other accounting matters that require the judgment of management; the Company's ability to attract and retain qualified executive officers; the effect of any current or future litigation proceedings, including an unfavorable outcome in an outstanding lawsuit relating to the Company's 5.75% Senior Notes due 2018 even though the Company believes the lawsuit is without merit and will vigorously defend its position, and any judicial decisions or rule-making that affects the Company, its products or the legality or enforceability of its arbitration agreements; decreased demand for the Company's products and services and changes in competition; fluctuations in the price of gold and changes in economic conditions; public perception of the Company's business and the Company's business practices; risks related to the Company's financing, such as compliance with financial covenants in the Company's debt agreements, the Company's ability to satisfy its outstanding debt obligations, to refinance existing debt obligations or to obtain new capital; risks related to interruptions to the Company's business operations, such as a prolonged interruption in the Company's operations of its facilities, systems or business functions, cyber-attacks or security breaches or the actions of third parties who provide, acquire or offer products and services to, from or for the Company; risks related to the expansion and growth of the Company's business, including the Company's ability to open new locations in accordance with plans or to successfully integrate newly acquired businesses into its operations; risks related to the 2014 spin- off of the Company's former E-Commerce Division that comprised its e-commerce segment, Enova International, Inc.; fluctuations in the price of the Company's common stock; the effect of any of the above changes on the Company's business or the markets in which the Company operates; and other risks and uncertainties indicated in the Company's filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, terms such as 'believes,' 'estimates,' 'should,' 'could,' 'would,' 'plans,' 'expects,' 'intends,' 'anticipates,' 'may,' 'forecasts,' 'projects' and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this release.
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(dollars in thousands, except per share data)
(Unaudited)
2015 | 2014 | 2015 | 2014 | |
Consolidated Operations: Total Revenue | $ 241,190 | $ 267,010 | $ 749,416 | $ 805,253 |
Net Revenue | 134,960 | 144,103 | 416,042 | 437,825 |
Total Expenses | 123,469 | 144,717 | 381,990 | 421,171 |
Income (Loss) from Operations | $ 11,491 | $ (614 ) | $ 34,052 | $ 16,654 |
Income (Loss) from Continuing Operations before Income Taxes | 8,096 | (10,930 ) | 24,113 | (20,920 ) |
Net Income (Loss) from Continuing Operations | 5,038 | (9,370 ) | 14,954 | (17,879 ) |
Net Income from Discontinued Operations, Net of Tax(a) | - | 19,286 | - | 94,503 |
Net Income Attributable to Cash America International, Inc. | $ 5,038 | $ 9,916 | $ 14,954 | $ 76,624 |
Earnings Per Share: | ||||
Basic Earnings Per Share | ||||
Net Income (Loss) from Continuing Operations | $ 0.19 | $ (0.32) | $ 0.54 | $ (0.62 ) |
Net Income from Discontinued Operations(a) | $ - | $ 0.66 | $ - | $ 3.28 |
Net Income Attributable to Cash America International, Inc.(b) Diluted Earnings Per Share | $ 0.19 | $ 0.34 | $ 0.54 | $ 2.66 |
Net Income (Loss) from Continuing Operations | $ 0.19 | $ (0.32) | $ 0.54 | $ (0.62 ) |
Net Income from Discontinued Operations(a) | $ - | $ 0.66 | $ - | $ 3.22 |
Net Income Attributable to Cash America International, Inc.(b) Weighted average common shares outstanding: | $ 0.19 | $ 0.34 | $ 0.54 | $ 2.61 |
Basic | 26,539 | 29,186 | 27,511 | 28,808 |
Diluted | 26,773 | 29,312 | 27,675 | 29,371 |
Three Months Ended Nine Months Ended September 30, September 30,
(a) Includes the operations of Enova International, Inc. ('Enova'), the wholly-owned subsidiary of Cash America International, Inc. (the 'Company') that the Company spun-off on November 13, 2014. Prior to the spin-off, Enova comprised the e-commerce segment of the Company.
(b) Earnings per share amounts included in this information may not sum due to rounding difference.
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