Cash America International, Inc. (NYSE: CSH) announced today
that net income from continuing operations for the second quarter
of 2015 was $2,071,000 (8 cents per share) compared to a net loss
from continuing operations of $11,746,000 (loss of 41 cents per
share) for the second quarter of 2014. After adjusting for
non-operating items in both the current and the prior year second
quarter, adjusted net income from continuing operations, a non-GAAP
measure, was $1,761,000 (6 cents per share) for the second quarter
of 2015 compared to a net loss of $2,050,000 (loss of 8 cents per
share) for the second quarter of 2014.
Included in the reported net income from continuing operations
for the second quarter of 2015 is a gain on the disposition of
equity securities of $1.1 million before taxes (3 cents per share
after taxes) and a loss on the early extinguishment of debt of $0.6
million before taxes (1 cent per share after taxes), which in
aggregate increased income by $0.5 million before taxes (2 cents
per share after taxes). When excluding this additional income,
adjusted net income from continuing operations, a non-GAAP measure,
was $1.8 million (6 cents per share) for the second quarter of
2015, which exceeded the high end of the Company’s published
guidance of expected net income per share from continuing
operations of between 1 cent and 5 cents per share provided in its
press release dated April 30, 2015. Included in the results for the
second quarter of 2014 was a loss on the early extinguishment of
debt and a loss related to a litigation settlement, which in
aggregate reduced net income by $15.4 million before taxes (33
cents per share after taxes). Excluding these expenses, adjusted
net loss from continuing operations, a non-GAAP measure, would have
been $2.1 million, representing a loss of 8 cents per share, in the
second quarter of 2014.
Consolidated total revenue was $236.5 million for the second
quarter of 2015 compared to $253.6 million for the second quarter
of 2014. Consolidated net revenue was $134.0 million for the second
quarter of 2015, compared to $141.2 million for the second quarter
of 2014. Included in the second quarter of 2014 were 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 $134.0 million for the second quarter of 2015
compared to $138.1 million for the second quarter of 2014, with the
$4.1 million decrease primarily due to lower pawn loan fees and
service charges as a result of lower average pawn loan balances, as
well as decreased consumer loan net revenue as a result of the
Company's strategic decision to de-emphasize and eliminate its
unsecured short-term consumer loan activities in many of its
locations. Consumer loan fees represented only 8% of the Company’s
consolidated total revenue for the second quarter of 2015.
While net revenue from the Company’s domestic operations was 3%
below the prior year’s second quarter results, the domestic
business produced a 58% increase in income from operations, which
reached $6.4 million for the three months ended June 30, 2015
compared to $4.0 million for the three months ended June 30, 2014.
Commenting on the second quarter results, Daniel R. Feehan, Chief
Executive Officer of Cash America, said, “The first half of 2015
has shaped up much as we expected as our efforts to emphasize
improved marginal profitability through expense management allowed
us to report a significant increase in earnings compared to the
prior year. As we enter the second half of 2015, we are well
positioned to leverage our focus on business fundamentals and
execution to expand net revenue and continue to report
year-over-year increases in earnings and marginal
profitability.”
The Company announced a four million share repurchase
authorization on January 29, 2015. As a part of that authorization,
the Company repurchased 1,184,230 shares during the second quarter
of 2015. In aggregate, these shares were purchased at an
approximate average price of $26.77 per share and represented
approximately 4% of the fully diluted shares as of the end of the
first quarter of 2015. Through the six-month period ended June 30,
2015, the Company has purchased 2,332,230 shares under this
repurchase authorization at an average price of approximately
$24.44 per share, representing approximately 8% of the fully
diluted shares as of the end of December 31, 2014. The Company
ended the second quarter with $44 million in cash and no borrowings
outstanding under its $280 million line of credit.
For the six months ended June 30, 2015, the Company reported net
income from continuing operations of $9.9 million (35 cents per
share) compared to a net loss of $8.5 million (a loss of 30 cents
per share) for the same period in 2014. Included in the reported
net income for the six months ended June 30, 2015 is a gain on the
disposition of equity securities, a loss on early extinguishment of
debt and severance expenses related to administrative and
operations staff reductions, which in aggregate reduced net income
from continuing operations by $0.2 million before taxes (1 cent per
share after taxes). When excluding these items, adjusted net income
from continuing operations, a non-GAAP measure, was $10.1 million
(36 cents per share) for the six months ended June 30, 2015. This
compares to adjusted net income from continuing operations, a
non-GAAP measure, of $2.3 million (7 cents per share) for the
six-months ended June 30, 2014, which adds back to the
reported results the expense for the early extinguishment of debt
of $10.4 million after taxes and litigation settlement expenses of
$0.4 million after taxes, for a total of $10.8 million (37 cents
per share) for the six months ended June 30, 2014.
Consolidated total revenue was $508.2 million for the six months
ended June 30, 2015 compared to $538.2 million for the same
period in 2014, which included the Company’s Mexico-based pawn
lending business in 2014. The Company’s domestic business posted
total revenue of $508.2 million compared to $525.7 million for the
six months ended June 30, 2015 and 2014, respectively. Consistent
with the second quarter of 2015, the domestic business produced an
increase in operating income while overcoming lower total and net
revenue. The Company’s domestic operations generated a 21% increase
in income from operations, which reached $22.9 million for the six
months ended June 30, 2015 compared to $18.8 million for the six
months ended June 30, 2014.
Cash America will host a conference call to discuss the second
quarter results on Thursday, July 30, 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 stock outstanding. The
dividend will be paid at the close of business on August 26, 2015
to shareholders of record on August 12, 2015.
Outlook for the Third Quarter of 2015
and the 2015 Fiscal Year
Management 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 predominantly
take the form of pawn loans, the disposition of unredeemed
collateral by way of consumer spending on retail sales, the
commercial sale of refined gold and diamonds and, to a lesser
extent, consumer loans. During the second quarter, pawn loan
balances increased sequentially from the first quarter in-line with
traditional seasonal growth. Management expects traditional
sequential pawn loan balance growth in the third quarter and
believes that the rate and timing of this growth will have a
significant influence on the third and fourth quarter results.
Based on its views on the preceding factors, management expects
net income per share for the third quarter of 2015 to be between 17
cents and 20 cents per share compared to a net loss from continuing
operations of 32 cents per share in the third quarter of 2014.
During the third quarter of 2014, management implemented actions
that generated $14.1 million in after-tax expenses (48 cents per
share) related to the sale of non-strategic operations in Mexico
and Colorado, the early extinguishment of long-term debt and a
corporate reorganization to create expense efficiencies. Excluding
the $14.1 million in expenses related to these items incurred in
the third quarter of 2014, adjusted net income from continuing
operations, a non-GAAP measure, would have been $4.7 million (16
cents per share) for the third quarter of 2014.
At this time, management modifies and increases its previously
reported expectations for its fiscal year 2015 adjusted EBITDA to
an anticipated range of between $117 million to $125 million, which
management estimates will generate between $0.95 and $1.10 in
adjusted net income per share from continuing operations, a
non-GAAP measure, which excludes the disposition of equity
securities, a loss on early extinguishment of debt and severance
expenses related to administrative and operations staff reductions,
which in aggregate reduced income for the six months ended June 30,
2015 by 1 cent per share. This compares to a reported net loss from
continuing operations of 36 cents per share for fiscal year 2014,
which included expense items totaling 87 cents per share related to
the early extinguishment of debt, a loss on divestitures and the
severance expenses related to administrative and operations staff
reductions. Adding back the expense per share of 87 cents incurred
during 2014, adjusted net income from continuing operations, a
non-GAAP measure, for the year ended December 31, 2014 would have
been 51 cents per share.
About the Company
As of June 30, 2015 Cash America International, Inc. (the
“Company”) operated 904 total locations offering specialty
financial services to consumers, which included the following:
- 826 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 StoreSM and on Google Play™.
*App Store is a service mark of Apple Inc. and Google Play is a
trademark of Google Inc.
Non-GAAP Measures
The Non-GAAP Disclosure section 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.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
This press 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, including a new
Chief Executive Officer upon the retirement of the Company’s
current Chief Executive Officer; 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 press 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 press
release.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIES
HIGHLIGHTS OF CONSOLIDATED RESULTS OF
OPERATIONS
(dollars in thousands, except per share
data)
(Unaudited)
Three Months Ended
Six Months Ended June 30, June 30, 2015 2014 2015
2014
Consolidated Operations: Total Revenue $
236,464 $ 253,608 $ 508,226 $ 538,243 Net Revenue 133,991 141,249
281,082 293,722 Total Expenses 127,664
137,892 258,521
276,454
Income from Operations $ 6,327
$ 3,357 $ 22,561 $ 17,268
Income (Loss) from Continuing
Operations before Income Taxes
3,260 (17,049 ) 16,017 (9,990 )
Net Income (Loss) from
Continuing Operations 2,071 (11,746 ) 9,916 (8,509 )
Net Income from Discontinued Operations, Net of
Tax(a) —
32,717 — 75,217
Net Income Attributable to Cash America International,
Inc. $ 2,071 $ 20,971
$ 9,916 $ 66,708
Earnings Per Share: Basic Earnings Per Share
Net Income (Loss) from Continuing Operations $ 0.08 $ (0.41 ) $
0.35 $ (0.30 ) Net Income from Discontinued Operations(a) $ — $
1.14 $ — $ 2.63 Net Income Attributable to Cash America
International, Inc.(b) $ 0.08 $ 0.73 $ 0.35 $ 2.33
Diluted
Earnings Per Share Net Income (Loss) from Continuing Operations
$ 0.08 $ (0.41 ) $ 0.35 $ (0.30 ) Net Income from Discontinued
Operations(a) $ — $ 1.12 $ — $ 2.56 Net Income Attributable to Cash
America International, Inc.(b) $ 0.08 $ 0.72 $ 0.35 $ 2.27
Weighted average common shares outstanding: Basic 27,326 28,823
28,005 28,616 Diluted 27,508 29,256 28,124 29,365
(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.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share
information)
(Unaudited) June 30, December
31, 2015 2014 2014
Assets Current assets: Cash
and cash equivalents $ 43,986 $ 113,130 $ 53,042 Restricted cash 27
60 60 Pawn loans 247,381 263,668 252,168 Merchandise held for
disposition, net 203,006 198,919 212,849 Pawn loan fees and service
charges receivable 50,317 51,986 53,648 Consumer loans, net 30,393
45,994 44,853 Income taxes receivable 4,084 9 8,881 Prepaid
expenses and other assets 25,287 40,207 21,317 Deferred tax assets
— 8,981 — Investment in equity securities 109,140 — 131,584 Current
assets of discontinued operations —
411,347 — Total current
assets 713,621 1,134,301 778,402 Property and equipment, net
182,051 217,407 201,054 Goodwill 487,569 495,672 487,569 Intangible
assets, net 42,562 49,121 45,828 Other assets 9,044 13,116 9,594
Noncurrent assets of discontinued operations —
270,720 — Total
assets $ 1,434,847 $
2,180,337 $ 1,522,447
Liabilities
and Equity Current liabilities: Accounts payable and accrued
expenses $ 71,586 $ 69,055 $ 74,331 Customer deposits 20,350 18,295
17,314 Current deferred tax liabilities 20,366 — 27,820 Current
liabilities of discontinued operations —
62,813 — Total
current liabilities 112,302 150,163 119,465 Deferred tax
liabilities 70,323 64,398 72,432 Other liabilities 838 1,161 878
Noncurrent liabilities of discontinued operations — 542,729 —
Long-term debt 184,450
300,000 196,470 Total liabilities
$ 367,913 $ 1,058,451
$ 389,245 Cash America International,
Inc. equity: Common stock, $0.10 par value per share, 80,000,000
shares authorized, 30,235,164 shares issued 3,024 3,024 3,024
Additional paid-in capital 80,702 86,184 86,388 Retained earnings
1,037,505 1,082,725 1,030,387 Accumulated other comprehensive
income 57,649 7,998 71,959 Treasury shares, at cost (3,678,936
shares, 1,382,602 shares and 1,428,495 shares as of June 30, 2015
and 2014, and as of December 31, 2014, respectively)
(111,946 ) (58,045 ) (58,556 )
Total equity 1,066,934
1,121,886 1,133,202 Total liabilities
and equity $ 1,434,847 $
2,180,337 $ 1,522,447
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(dollars in thousands, except per share
data)
(Unaudited)
Three Months Ended Six
Months Ended June 30, June 30, 2015 2014 2015
2014
Revenue Pawn loan fees and service charges $
76,899 $ 80,990 $ 154,212 $ 161,177 Proceeds from disposition of
merchandise 138,703 146,772 310,916 323,227 Consumer loan fees
19,311 23,900 39,630 49,659 Other 1,551
1,946 3,468
4,180
Total Revenue 236,464
253,608 508,226
538,243
Cost of Revenue Disposed
merchandise 98,060 104,510 217,944 229,074 Consumer loan loss
provision 4,413 7,849
9,200 15,447
Total Cost of Revenue 102,473
112,359 227,144
244,521
Net Revenue
133,991 141,249 281,082
293,722
Expenses Operations and
administration 113,306 122,711 229,644 246,130 Depreciation and
amortization 14,559 15,181 29,078 30,324 Gain on divestitures
(201 ) —
(201 ) —
Total Expenses
127,664 137,892
258,521 276,454
Income from
Operations 6,327 3,357 22,561 17,268 Interest expense (3,557 )
(8,389 ) (7,201 ) (18,457 ) Interest income 5 2,880 7 7,644 Foreign
currency transaction (loss) gain (7 ) 119 32 117 Loss on early
extinguishment of debt (607 ) (15,016 ) (607 ) (16,562 ) Gain on
disposition of equity securities 1,099
— 1,225 —
Income (Loss) from Continuing Operations before Income
Taxes 3,260 (17,049 ) 16,017 (9,990 ) Provision (benefit) for
income taxes 1,189 (5,303
) 6,101 (1,481 )
Net Income
(Loss) from Continuing Operations 2,071 (11,746 ) 9,916 (8,509
)
Net Income from Discontinued Operations, Net of Tax
— 32,717 —
75,217
Net Income Attributable to
Cash America International, Inc. $ 2,071
$ 20,971 $ 9,916
$ 66,708
Earnings Per Share: Basic
Earnings Per Share Net Income (Loss) from Continuing Operations
$ 0.08 $ (0.41 ) $ 0.35 $ (0.30 ) Net Income from Discontinued
Operations $ — $ 1.14 $ — $ 2.63 Net Income Attributable to Cash
America International, Inc. $ 0.08 $ 0.73 $ 0.35 $ 2.33
Diluted
Earnings Per Share Net Income (Loss) from Continuing Operations
$ 0.08 $ (0.41 ) $ 0.35 $ (0.30 ) Net Income from Discontinued
Operations $ — $ 1.12 $ — $ 2.56 Net Income Attributable to Cash
America International, Inc. $ 0.08 $ 0.72 $ 0.35 $ 2.27 Weighted
average common shares outstanding: Basic 27,326 28,823 28,005
28,616 Diluted 27,508 29,256 28,124 29,365 Dividends declared per
common share $ 0.050 $ 0.035 $ 0.100 $ 0.070
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESPAWN LOAN METRICS
The following tables outline certain data related to domestic
pawn loan activities for the continuing operations of the Company
as of and for the three and six months ended June 30, 2015 and
2014 (dollars in thousands except where otherwise noted):
Domestic Pawn
Loan Metrics:
As of June 30, 2015
2014(a)
$ Change
% Change Ending pawn loan balances
$
247,381 $ 257,647 $ (10,266 )
(4.0
)%
Ending merchandise balance, net
$ 203,006 $ 192,745 $
10,261 5.3 %
Three Months Ended June 30, Domestic pawn
operations 2015
2014(a)
$ Change
% Change Pawn loan fees and service charges
$ 76,899
$ 78,911 $ (2,012 ) (2.5 )% Average pawn loan balance outstanding
$ 228,140 $ 235,187 $ (7,047 ) (3.0 )% Amount of pawn
loans written and renewed
$ 257,430 $ 271,226 $
(13,796 ) (5.1 )% Average amount per pawn loan (in ones)
$
124 $ 123 $ 1 0.8 % Annualized yield on pawn loans
135.2 % 134.6 %
(a) Excludes amounts related to the Company’s Mexico-based pawn
operations, which were sold in August 2014. For the three months
ended June 30, 2014, Mexico-based pawn operations had an ending
pawn loan balance of $6,021, an ending merchandise balance, net, of
$6,174, pawn loan fees and services charges of $2,079, an average
pawn loan balance outstanding of $5,683, pawn loans written and
renewed of $15,909, an average amount per pawn loan of $88 and an
annualized yield on pawn loans of 146.7%.
Six Months Ended June 30,
Domestic pawn operations 2015
2014(a)
$ Change % Change Pawn loan fees and
service charges
$ 154,212 $ 157,378 $ (3,166 ) (2.0
)% Average pawn loan balance outstanding
$ 231,748 $
239,089 $ (7,341 ) (3.1 )% Amount of pawn loans written and renewed
$ 479,606 $ 503,786 $ (24,180 ) (4.8 )% Average
amount per pawn loan (in ones)
$ 126 $ 124 $ 2 1.6 %
Annualized yield on pawn loans
134.2 % 132.7 %
(a) Excludes amounts related to the Company’s Mexico-based pawn
operations, which were sold in August 2014. For the six months
ended June 30, 2014, Mexico-based pawn operations had pawn
loan fees and service charges of $3,799, an average pawn loan
balance outstanding of $5,175, pawn loans written and renewed of
$28,895, an average amount per pawn loan of $88, and an annualized
yield on pawn loans of 148.0%.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESMERCHANDISE DISPOSITION, GROSS PROFIT AND
INVENTORY OPERATING DATA
Profit from the disposition of merchandise represents the
proceeds received from the disposition of merchandise in excess of
the cost of disposed merchandise, which is generally the principal
amount loaned on an item or the amount paid for purchased
merchandise. The following table summarizes the proceeds from the
disposition of merchandise and the related profit for domestic
operations for the three and six months ended June 30, 2015
and 2014 (dollars in thousands):
Three Months Ended June 30, 2015
2014(a)
Domestic pawn operations Retail
Commercial Total Retail
Commercial Total Proceeds from disposition
$
119,323 $ 19,380 $ 138,703 $
113,626 $ 28,821 $ 142,447 Gross profit on disposition
$
38,798 $ 1,845 $ 40,643 $ 37,689
$ 3,581 $ 41,270 Gross profit margin
32.5 %
9.5 % 29.3 % 33.2 % 12.4 % 29.0 %
Percentage of total gross profit
95.5
% 4.5 % 100.0 % 91.3 % 8.7 %
100.0 %
(a) Excludes amounts related to the Company’s Mexico-based pawn
operations, which were sold in August 2014. For the three months
ended June 30, 2014, Mexico-based pawn operations had proceeds from
disposition of $4,325, gross profit on disposition of $992, and
gross profit margin of 22.9%.
Six Months Ended June 30, 2015
2014(a)
Domestic pawn operations Retail
Commercial Total Retail
Commercial Total Proceeds from disposition
$
267,472 $ 43,444 $
310,916 $ 251,952 $ 62,665 $ 314,617 Gross profit on
disposition
$ 85,754 $ 7,218 $
92,972 $ 86,131 $ 6,051 $ 92,182 Gross profit margin
32.1 % 16.6 % 29.9 % 34.2
% 9.7 % 29.3 % Percentage of total gross profit
92.2 % 7.8 % 100.0
% 93.4 % 6.6 % 100.0 %
(a) Excludes amounts related to the Company’s Mexico-based pawn
operations, which were sold in August 2014. For the six months
ended June 30, 2014, Mexico-based pawn operations had proceeds
from disposition of $8,610, gross profit on disposition of $1,971,
and gross profit margin of 22.9%.
The table below summarizes the age of merchandise held for
disposition related to the Company’s domestic pawn lending
operations before valuation allowance of $2.6 million,
$2.0 million and $2.4 million as of June 30, 2015 and
2014, and December 31, 2014, respectively (dollars in
thousands):
As of June 30,
As of December 31, 2015
2014(a)
2014
Domestic pawn operations Amount
% Amount % Amount % Jewelry -
held for one year or less
$ 130,265 63.4
% $ 106,722 54.8 % $ 111,963 52.0 % Other merchandise - held
for one year or less
64,648 31.4
% 75,394 38.7 %
90,642 42.1 % Total merchandise
held for one year or less
194,913
94.8 % 182,116
93.5 % 202,605 94.1 %
Jewelry - held for more than one year
5,233 2.5
% 5,361 2.8 % 3,494 1.6 % Other merchandise - held for more
than one year
5,460 2.7 %
7,268 3.7 %
9,150 4.3 % Total merchandise held for more
than one year
10,693 5.2
% 12,629 6.5 %
12,644 5.9 % Merchandise held
for disposition, gross
$ 205,606
100.0 % $ 194,745
100.0 % $ 215,249 100.0 %
Merchandise held for disposition, net of allowance
$
203,006 $ 192,745
$ 212,849
(a) Excludes amounts related to the Company’s Mexico-based pawn
operations, which were sold in August 2014. As of June 30,
2014, Mexico-based pawn operations had gross merchandise held for
disposition of $6,282 and merchandise held for disposition, net of
allowance, of $6,174.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESCONSUMER LOAN METRICS AND BALANCES
The following tables set forth interest and fees on consumer
loans, loan loss provision and consumer loan fees, net of the loss
provision, related to domestic consumer loan activities for the
continuing operations of the Company for the three and six months
ended June 30, 2015 and 2014 (dollars in thousands except
where otherwise noted):
Three Months Ended June 30, 2015
2014
Short-termloans
Installmentloans
Total
Short-termloans
Installmentloans
Total Consumer loan fees
$ 13,362
$ 5,949 $ 19,311 $ 20,440 $ 3,460 $
23,900 Less: consumer loan loss provision
1,711 2,702
4,413 5,952 1,897
7,849 Consumer loan fees, net loss
provision
$ 11,651
$ 3,247 $
14,898 $ 14,488 $
1,563 $ 16,051 Year-over-year change -
$
$ (2,837 ) $ 1,684 $
(1,153 ) $ (3,163 ) $ (321 ) $ (3,484 )
Year-over-year change - %
(19.6 )% 107.7
% (7.2 )% (17.9 )% (17.0 )% (17.8 )%
Consumer loan loss provision as a % of
consumer loan fees
12.8 % 45.4
% 22.9 % 29.1 %
54.8 % 32.8 %
Six Months
Ended June 30, 2015 2014
Short-termloans
Installmentloans
Total
Short-termloans
Installmentloans
Total Consumer loan fees
$ 30,425 $
9,205 $ 39,630 $ 42,437 $ 7,222 $ 49,659 Less:
consumer loan loss provision
4,830
4,370 9,200
11,397 4,050
15,447 Consumer loan fees, net loss provision
$ 25,595
$ 4,835 $ 30,430
$ 31,040 $ 3,172
$ 34,212 Year-over-year change - $
$
(5,445 ) $ 1,663 $ (3,782
) $ (6,274 ) $ (593 ) $ (6,867 ) Year-over-year change - %
(17.5 )% 52.4 % (11.1 )%
(16.8 )% (15.8 )% (16.7 )%
Consumer loan loss provision as a % of
consumer loan fees
15.9 % 47.5
% 23.2 % 26.9 %
56.1 % 31.1 %
In addition to reporting consumer loans owned by the Company and
consumer loans guaranteed by the Company, which are either GAAP
items or disclosures required by GAAP, the Company has provided
combined consumer loans, which is a non-GAAP measure.
Management believes these measures provide investors with
important information needed to evaluate the magnitude of potential
loan losses and the opportunity for revenue performance of the
consumer loan portfolio on an aggregate basis. The comparison of
the aggregate amounts from period to period is more meaningful than
comparing only the residual amount on the Company’s balance sheet
since both revenue and the loss provision for loans are impacted by
the aggregate amount of loans owned by the Company and those
guaranteed by the Company as reflected in its financial
statements.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESCONSUMER LOAN METRICS AND BALANCES
Management evaluates consumer loan loss rates for all of its
consumer loan products to determine credit quality and evaluate
trends. The following tables provide additional information related
to each of the Company’s consumer loan products as of and for the
three and six months ended June 30, 2015 and 2014 (dollars in
thousands).
Three Months Ended June 30, 2015
2014
Short-termloans
Installmentloans
Total
Short-termloans
Installmentloans
Total
Consumer loans written and
renewed(a) Company owned
$ 107,026
$ 1,501 $ 108,527 $ 157,268 $ 2,526 $
159,794 Guaranteed by the Company(b)
6,811 23,783
30,594 16,878
6,763 23,641 Combined consumer
loans written and renewed
$
113,837 $ 25,284
$ 139,121 $
174,146 $ 9,289 $ 183,435
Ending consumer loan balances, gross Company owned
$ 29,092 $ 4,834 $ 33,926
$ 42,744 $ 7,643 $ 50,387 Guaranteed by the Company(b)
1,659 11,223
12,882 3,976
8,565 12,541
Combined ending consumer loan balances,
gross(c)
$ 30,751
$ 16,057 $ 46,808
$ 46,720 $ 16,208
$ 62,928
Allowance and liability for
losses Company owned
$ 2,106 $
1,427 $ 3,533 $ 3,431 $ 962 $ 4,393 Guaranteed
by the Company(b)
159
1,763 1,922
440 1,155 1,595
Combined allowance and liability for losses
$ 2,265 $
3,190 $ 5,455
$ 3,871 $ 2,117
$ 5,988
Ending consumer loan balances, net
Company owned
$ 26,986 $ 3,407 $
30,393 $ 39,313 $ 6,681 $ 45,994 Guaranteed by the
Company(b)
1,500
9,460 10,960
3,536 7,410 10,946
Combined ending consumer loan balances,
net(c)
$ 28,486
$ 12,867 $ 41,353
$ 42,849 $ 14,091
$ 56,940
Consumer loan
ratios:
Allowance and liability for losses as a %
of combined ending consumer loan balance, gross(c)
7.4 % 19.9
% 11.7 % 8.3 %
13.1 % 9.5 %
Six Months Ended
June 30, 2015 2014
Short-termloans
Installmentloans
Total
Short-termloans
Installmentloans
Total
Consumer loans written and renewed (a) Company
owned
$ 241,503 $ 2,949 $
244,452 $ 316,728 $ 4,351 $ 321,079 Guaranteed by the
Company (b)
14,868
37,786 52,654
35,242 11,201
46,443 Combined consumer loans written and renewed
$ 256,371 $
40,735 $ 297,106
$ 351,970 $ 15,552
$ 367,522
(a) The disclosure regarding the amount of consumer loans
written and renewed is statistical data that is not included in the
Company’s financial statements.
(b) The consumer loan balances guaranteed by the Company
represent loans originated by third-party lenders through the CSO
programs, so these balances are not recorded in the Company’s
financial statements. However, the Company has established a
liability for estimated losses in support of its guarantee of these
loans, which is reflected in the table above and included in the
Company’s consolidated balance sheets.
(c) Non-GAAP measure.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESLOCATION INFORMATION
Locations
The following table sets forth the number of locations through
which the Company offered pawn lending, consumer lending, and other
services and franchised locations offering check cashing services
as of June 30, 2015 and 2014. The Company provides these
services in the United States primarily under the names “Cash
America Pawn,” “SuperPawn,” “Cash America Payday Advance,”
“Cashland” and “Mr. Payroll.” The Company’s domestic pawn and
consumer lending locations operated in 20 and 22 states in the
United States as of June 30, 2015 and 2014, respectively. As
of both June 30, 2015 and 2014, the franchised check cashing
centers operated in 12 states.
As of June 30, 2015
2014 Company-operated locations offering: Pawn
lending only
549 303 Both pawn and consumer lending
255 576 Consumer lending only
22
37 Total Company-operated locations
826 916
Franchised check cashing
78
88 Total
904 1,004
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSURE
Non-GAAP Disclosure
In addition to the financial information prepared in conformity
with GAAP, the Company has provided certain historical non-GAAP
measures in the tables below, including (i) adjusted net income
from continuing operations, adjusted diluted net income per share
from continuing operations, adjusted earnings from continuing
operations and adjusted earnings per share from continuing
operations (collectively, the “Adjusted Earnings Measures”), and
(ii) adjusted EBITDA, which the Company defines as earnings
excluding depreciation, amortization, interest, foreign currency
transaction gains or losses, loss on early extinguishment of debt,
gain on disposition of equity securities and provision or benefit
for income taxes. Management also provides estimated adjusted
EBITDA, estimated adjusted earnings per share from continuing
operations, and estimated free cash flow per share, which are
non-GAAP measures. Management defines estimated free cash flow per
share as estimated adjusted earnings per share from continuing
operations excluding estimated depreciation and amortization, less
estimated cash paid for capital expenditures.
Management believes that the presentation of these measures
provides users of the financial statements with greater
transparency and facilitates a more meaningful comparison of
operating results across a broad spectrum of companies with varying
capital structures, compensation strategies, derivative instruments
and amortization methods. In addition, management believes this
information provides a more in-depth and complete view of the
Company’s financial performance, competitive position and prospects
for the future and may highlight trends in the Company’s business
that may not otherwise be apparent when relying on financial
measures calculated in accordance with GAAP. Management also
believes that non-GAAP measures are frequently used by investors to
analyze operating performance, evaluate the Company’s ability to
incur and service debt and its capacity for making capital
investments, and to help assess the Company’s estimated enterprise
value.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSURE
For adjusted earnings from continuing operations and adjusted
earnings per share from continuing operations, management excludes
intangible asset amortization, non-cash equity-based compensation,
convertible debt non-cash interest and issuance cost amortization,
and foreign currency transaction gains or losses. In addition,
management has determined that the adjustments to the Adjusted
Earnings Measures and adjusted EBITDA, as applicable, included in
the tables below are useful to investors in order to allow them to
compare the Company’s financial results for the current quarter
with the prior year quarter without the effect of the below items,
which management believes are less frequent in nature:
- the expenses related to the Company’s
reorganization to better align the corporate and operating cost
structure with its remaining storefront operations after the Enova
Spin-off (the “Reorganization”);
- the gain on disposition of equity
securities;
- the gain or loss on significant
divestitures;
- the loss on early extinguishment of
debt;
- the charges related to the closure of
36 locations in Texas in 2013 that offered consumer loans as their
primary source of revenue (the “Texas Consumer Loan Store
Closures”);
- the adjustments for a penalty paid to
the Consumer Financial Protection Bureau (the “CFPB”) in connection
with the issuance of a consent order by the CFPB in November 2013
(the “Regulatory Penalty”);
- charges related to a significant
litigation settlement in 2013 (the “2013 Litigation
Settlement”);
- an adjustment made in 2013 (the “Ohio
Adjustment for the Ohio Reimbursement Program”) to decrease the
Company’s remaining liability following an assessment of the claims
made under a voluntary program initiated in 2012 to reimburse Ohio
customers in connection with certain legal collections proceedings
initiated by the Company in Ohio; and
- a recognized income tax benefit related
to a tax deduction included on the Company’s 2013 federal income
tax return for its tax basis in the stock of its subsidiary that
previously owned its Mexico-based pawn operations, Creazione
Estilo, S.A. de C.V., a Mexican sociedad anónima de capital
variable (the “Creazione Deduction”).
Adjusted EBITDA is presented for the trailing twelve months
ended June 30, 2015 and 2014. Therefore, certain adjusting items
that occurred in the third and fourth quarters of 2014 and 2013 are
presented in the adjusted EBITDA table.
Management believes the non-GAAP measures, including these
adjustments, provide more meaningful information regarding the
ongoing operating performance, provide more useful period-to-period
comparisons of operating results, both internally and in relation
to operating results of competitors, enhance investors'
understanding of the core operating results of the business and
provide a more accurate indication of the Company’s ability to
generate cash flows from operations.
Management provides non-GAAP financial information for
informational purposes and to enhance understanding of the
Company’s GAAP consolidated financial statements. Readers should
consider the information in addition to, but not instead of or
superior to, its financial statements prepared in accordance with
GAAP. This non-GAAP financial information may be determined or
calculated differently by other companies, limiting the usefulness
of those measures for comparative purposes.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSUREADJUSTED EARNINGS AND
ADJUSTED EARNINGS PER SHARE
Adjusted Earnings and Adjusted Earnings Per Share
The following table provides a reconciliation for the three and
six months ended June 30, 2015 and 2014, between net income
(loss) from continuing operations and diluted net income (loss) per
share from continuing operations calculated in accordance with GAAP
to the Adjusted Earnings Measures, which are shown net of tax
(dollars in thousands, except per share data). Amounts for the
three and six months ended June 30, 2014 include the Company’s
Mexico-based pawn operations, which were sold in August 2014.
Three Months Ended June
30, Six Months Ended June 30, 2015
2014
2015 2014
$
Per Diluted
Share(a)
$
PerDilutedShare(a)
$
Per Diluted
Share(a)
$
PerDilutedShare(a)
Net income (loss) and diluted net income
(loss) per share from continuing operations
$ 2,071 $ 0.08 $ (11,746 ) $ (0.41 )
$ 9,916 $ 0.35 $ (8,509 ) $ (0.30 )
Adjustments (net of tax): Loss on early extinguishment of debt
382 0.01 9,460 0.32
382 0.01 10,434
0.36 Gain on disposition of equity securities
(692 )
(0.03 ) — —
(771 ) (0.02
) — — Reorganization
— — — —
537
0.02 — — 2013 Litigation Settlement
— — 236
0.01
—
— 400
0.01
Adjusted net income (loss) and adjusted
diluted net income (loss) per share from continuing operations
1,761 0.06
(2,050 ) (0.08 )
10,064 0.36
2,325 0.07 Other adjustments (net of
tax): Intangible asset amortization
1,028 0.04 1,038
0.04
2,057 0.07 2,071 0.07 Non-cash equity-based
compensation
1,039 0.04 1,040 0.04
2,046
0.07 1,982 0.07
Convertible debt non-cash interest and
issuance cost amortization
— — 144 —
— — 518 0.02 Foreign currency
transaction loss (gain)
4
— (75 ) —
(20 ) —
(74 ) —
Adjusted earnings and adjusted earnings
per share from continuing operations
$ 3,832
$ 0.14 $ 97
$ —
$ 14,147
$ 0.50 $ 6,822
$ 0.23
(a) Diluted shares are calculated by giving effect to the
potential dilution that could occur if securities or other
contracts to issue common shares were exercised and converted into
common shares during the period. Per-share values may not calculate
correctly using the weighted average common shares outstanding
value as the denominator due to rounding differences.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSUREADJUSTED EARNINGS AND
ADJUSTED EARNINGS PER SHARE
The tables below reconcile the gross amounts, the impact of
income taxes and the net amounts for each of the adjustments
included in the table above.
Three Months Ended June 30, 2015
2014
Pre-tax Tax
After-tax Pre-tax Tax
After-tax Loss on early extinguishment of debt
$ 607
$ 225 $ 382
$ 15,016 $ 5,556 $ 9,460 Gain on
disposition of equity securities
(1,099 ) (407
) (692 ) — — — 2013 Litigation Settlement
— —
— 375
139 236 Total Adjustments
$ (492 ) $
(182 ) $ (310 )
$ 15,391 $ 5,695
$ 9,696
Six Months Ended June 30, 2015
2014
Pre-tax Tax After-tax Pre-tax Tax
After-tax Loss on early extinguishment of debt
$ 607
$ 225 $ 382 $ 16,562 $ 6,128 $ 10,434
Gain on disposition of equity securities
(1,225 )
(454 ) (771 ) — — — Reorganization
853 316 537 — — — 2013 Litigation Settlement
— —
— 635
235 400 Total Adjustments
$ 235 $ 87
$ 148 $
17,197 $ 6,363 $ 10,834
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSUREADJUSTED
EBITDA
Adjusted EBITDA
The following table provides a reconciliation between net income
from continuing operations, which is the nearest GAAP measure
presented in the Company’s financial statements, to adjusted EBITDA
from continuing operations (dollars in thousands):
Trailing 12 Months Ended June
30, 2015 2014 Net income from continuing
operations
$ 8,038 $ 26,367 Provision (benefit) for
income taxes (a)
9,623 (32,096 ) Gain on disposition of
equity securities
(1,225 ) — Loss on early
extinguishment of debt
6,598 17,169 Foreign currency
transaction gain
(28 ) (73 ) Interest expense, net
15,254 20,819 Depreciation and amortization expenses (b)
59,696 59,770 Adjustments: Reorganization
8,391 —
Loss on divestitures
5,176 — Texas Consumer Loan Store
Closures
— 1,373 Regulatory Penalty
— 2,500 2013
Litigation settlement
— 18,635 Ohio Adjustment for the Ohio
Reimbursement Program
—
(5,000 ) Adjusted EBITDA from continuing operations
$ 111,523 $
109,464 Adjusted EBITDA margin from continuing operations
calculated as follows: Total revenue
$ 1,064,679 $
1,048,713 Adjusted EBITDA
$
111,523 $ 109,464 Adjusted
EBITDA as a percentage of total revenue
10.5 % 10.4 %
(a) For the trailing 12 months ended June 30, 2014,
includes income tax benefit of $33.2 million related to the
Creazione Deduction.
(b) For the trailing 12 months ended June 30, 2014,
excludes $0.2 million of depreciation and amortization expenses,
which are included in the “Texas Consumer Loan Store Closures.”
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSUREADJUSTED
EBITDA
The table below reconciles the gross amounts, the impact of
income taxes and the net amounts for each of the adjustments
included in the table above.
Trailing 12 Months Ended June 30,
2015 2014
Pre-tax
Tax
AfterTax
Pre-tax Tax After Tax Reorganization
$ 8,391 $ 3,105 $ 5,286 $
— $ — $ — Loss on divestitures
5,176 (1,268 )
6,444 — — — Gain on disposition of equity securities
(1,225 ) (454 ) (771 ) —
— — Loss on early extinguishment of debt
6,598 2,442
4,156 17,169 6,353 10,816 Texas Consumer Loan Store Closures
— — — 1,373 508 865 Regulatory Penalty
— — — 2,500 — 2,500 2013 Litigation Settlement
— — — 18,635 6,895 11,740 Ohio Adjustment for
the Ohio Reimbursement Program
— — — (5,000 )
(1,791 ) (3,209 ) Tax benefit related to Creazione Deduction (a)
— —
— —
33,201 (33,201 ) Total Adjustments
$ 18,940 $
3,825 $ 15,115
$ 34,677 $ 45,166
$ (10,489 )
(a) For the trailing 12 months ended June 30, 2014, the tax
benefit related to the Creazione Deduction of $33.2 million is
included in the provision (benefit) for income taxes.
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSUREESTIMATED ADJUSTED
EBITDA
The following table reconciles estimated income from operations
to estimated Adjusted EBITDA, a non-GAAP measure (dollars in
thousands):
Estimated Results For Year Ended
December 31, 2015 Low High
(Unaudited)
Estimated income from operations $ 57,000 $ 65,000 Depreciation and
amortization 60,000
60,000 Estimated Adjusted EBITDA $ 117,000
$ 125,000
CASH AMERICA INTERNATIONAL, INC. AND
SUBSIDIARIESNON-GAAP DISCLOSUREESTIMATED ADJUSTED
EARNINGS PER SHARE AND FREE CASH FLOW PER SHARE
The table below shows an estimated range of adjusted earnings
per share from continuing operations, in addition to an estimated
range of free cash flow per share. The financial measure of free
cash flow per share has limitations as it does not represent the
residual cash flow available for discretionary expenditures as
certain components of the Company’s consolidated statement of cash
flows are omitted. Therefore, estimated free cash flow per share
should be evaluated in conjunction with the Company’s consolidated
statement of cash flows.
A reconciliation is shown for the year ended December 31, 2015,
between estimated net income from continuing operations, which is
the nearest GAAP measure presented in the Company’s financial
statements, to estimated adjusted earnings per share and estimated
free cash flow per share (all amounts shown are per-share based on
diluted weighted average common shares outstanding for the quarter
ended June 30, 2015):
Estimated Results For the year ended
December 31, 2015 Low High
(Unaudited) Estimated net income from continuing operations $ 0.94
$ 1.09 Adjustments (net of tax): Loss on early
extinguishment of debt 0.01 0.01 Gain on disposition of equity
securities (0.02 ) (0.02 ) Reorganization 0.02
0.02 Estimated adjusted earnings per
share from continuing operations $ 0.95 $ 1.10 Depreciation and
amortization expenses (a) 2.18 2.18 Capital expenditures (b)
(0.85 ) (0.85 ) Estimated free cash
flow per share $ 2.28 $
2.43
(a) Assumes approximately $60.0 million of depreciation and
amortization for the year ended December 31, 2015.
(b) Assumes approximately $23.4 million of capital expenditures
for the year ended December 31, 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150730005458/en/
Cash America International, Inc.Thomas A. Bessant, Jr.,
817-335-1100
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