Cash America Announces Fourth Quarter and Fiscal Year-End Earnings and Declares Dividend

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Cash America Announces Fourth Quarter and Fiscal Year-End Earnings and Declares Dividend

FORT WORTH, Texas--(BUSINESS WIRE)-- Cash America International, Inc. (NYS: CSH) reported today that its fourth quarter ended December 31, 2012 net income attributable to the Company was $24,480,000 (79 cents per share), which included previously announced charges related to the closure of 115 locations during the quarter in its Mexico based pawn operations of $7.0 million (23 cents per share) and the after tax impact of the Company's voluntary refund to certain Ohio customers of $8.4 million (27 cents per share) in the period. The combined amount of the Mexico charges and the refund expense amounted to $15.4 million after taxes (50 cents per share). Adding these amounts back to reported net income would result in adjusted earnings, a non-GAAP measure, for the fourth quarter of 2012 of $39,887,000 ($1.29 per share), compared to $37,827,000 ($1.18 per share) for the fourth quarter of 2011. This amount is greater than management's publicly released earnings per share guidance of between $1.15 per share and $1.25 per share as reported in the Company's press release dated October 25, 2012 and above analysts' consensus estimates of $1.20 per share as reported by Thomson Reuters.

Consolidated total revenue of the Company increased 4% in the fourth quarter of 2012 to $491.6 million, up from $474.0 million for the same period in 2011. Revenue from the Company's loan products, driven by higher loan balances outstanding, contributed the largest portion of the increase for the period. Comparing the ending balance at December 31, 2012 to the same date in 2011, total combined consumer loan balances, a non-GAAP measure, which includes loans extended by the Company directly and loans offered by third parties that the Company guarantees, which are both GAAP measures, were up 27% to $439.8 million, which led to a 24% increase in revenue from consumer loan fees and was the primary driver of the increase in total revenue during the fourth quarter. Aggregate pawn service fees rose 5% in the fourth quarter of 2012 compared to the same period in 2011, adding to the top line revenue growth for the period. Consumer loan fees increased 24%, to $222.9 million, in the fourth quarter of 2012 compared to the same period in 2011, as the Company's E-commerce segment recorded a 30% increase in revenue, led by a 38% increase in revenue from its domestic online lending business and a 22% increase in revenue from its foreign lending business.


Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America, said, "We continued to see strong performance out of our E-commerce business in the fourth quarter of 2012 as the higher levels of assets observed in the second and third quarters contributed to earnings growth that exceeded our expectations this period."

Net income attributable to the Company for the twelve months ended December 31, 2012 was $107,470,000 (3.42 per share) compared to $135,963,000 ($4.25 per share) for the same twelve-month period of 2011. When adding back the unusual items for the full year, which includes $25.4 million (81 cents per share) related to Mexico charges, $8.4 million (27 cents per share) related to the refund expense plus $2.5 million (7 cents per share) related to expenses associated with the July 2012 withdrawal of the Enova International, Inc. proposed initial public offering, adjusted earnings, a non-GAAP measure, would have been $143.8 million and adjusted earnings per share, a non-GAAP measure, would have been $4.57 per share for the twelve-month period ended December 31, 2012, up 8% for the period. Total revenue for the fiscal year ended December 31, 2012 increased 14% to $1.80 billion, up from $1.58 billion during the same twelve-month period in 2011.

Cash America will conduct a conference call to discuss its fourth quarter earnings on Thursday, January 24, 2013, at 7:00 AM CST. A live web cast of the call will be available on the Company's corporate web site in the Investor Relations section (www.cashamerica.com). To listen to the live call, please go to the web site at least fifteen minutes early 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 $0.035 (3.5 cents) per share cash dividend on common stock outstanding. The dividend will be paid at the close of business on February 20, 2013 to shareholders of record on February 6, 2013.

Outlook for the First Quarter of 2013 and the 2013 Fiscal Year

Management believes that the opportunities for sustained growth in revenue and earnings will be largely associated with the customer demand for the credit products provided by the Company, which primarily take the form of pawn loans and consumer loans. Other elements expected to affect the growth in revenue include the potential impact of the regulatory governance of loan products, the reorganization and continued development of the Mexican pawn operations and the development and expansion of the Company's online distribution channel. First quarter 2013 results could be influenced by the timing of Federal income tax refunds to the Company's customers. Based on the preceding factors management estimates that the first quarter of fiscal 2013 will be between $1.35 and $1.42 in earnings per share compared to $1.30 in the first quarter of 2012. At this time management confirms its previously reported expectations for its fiscal year 2013 earnings per share to a range of between $4.75 to $5.15which compares to actual adjusted full year 2012 earnings per share of $4.57 that excludes the after tax impact of unusual items of $35.3 million ($1.15 per share).

About the Company

As of December 31, 2012, Cash America International, Inc. operated 969 total locations offering specialty financial services to consumers, which included the following:

  • 831 lending locations in 22 states in the United States primarily under the names "Cash America Pawn," "SuperPawn," "Cash America Payday Advance," and "Cashland;"
  • 47 pawn lending locations in central and southern Mexico under the name "Cash America casa de empeño" (previously operated under the name "Prenda Fácil"); and
  • 91 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 15 states in the United States under the name "Mr. Payroll."

Additionally, as of December 31, 2012, the Company offered consumer loans over the Internet to customers:

For additional information regarding the Company and the services it provides, visit the Company's websites located at:

Non-GAAP Measures

A reconciliation of adjusted earnings and adjusted earnings per share, which are non-GAAP measures, for the three- and twelve-month periods ended December 31, 2012 discussed above is included in the attachments to this press release. In addition, details regarding combined consumer loan balances as of December 31, 2012 and December 31, 2011 discussed above, which are non-GAAP measures that are comprised of loans extended by the Company directly and loans offered by third parties that the Company guarantees that are both GAAP measures, are included in the attachments to this press release.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

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: changes in domestic and foreign pawn, consumer credit, tax and other laws and governmental rules and regulations applicable to the Company's business or changes in the interpretation or enforcement thereof; the anticipated regulation of consumer financial products and services by the Consumer Financial Protection Bureau; acceptance by consumers, legislators or regulators of the negative characterization by the media and consumer activists with respect to certain of the Company's loan products; the reorganization of the Company's Mexico-based pawn operations; the deterioration of the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate; the actions of third parties who provide, acquire or offer products and services to, from or for the Company; changes in demand for the Company's services and the continued acceptance of the online distribution channel by the Company's online loan customers; fluctuations in the price of gold or a deterioration in economic conditions; changes in competition; the ability of the Company to open new locations in accordance with its plans or to successfully integrate newly acquired businesses into the Company's operations; interest rate and foreign currency exchange rate fluctuations; the effect of any current or future litigation proceedings or any judicial decisions or rule-making that affect the Company, its products or its arbitration agreements; changes in the capital markets; changes in the Company's ability to satisfy its debt obligations or to refinance existing debt obligations or obtain new capital to finance growth; a prolonged interruption in the Company's operations of its facilities, systems and business functions, including its information technology and other business systems; security breaches, cyber attacks or fraudulent activity; the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements; acts of God, war or terrorism, pandemics and other events; the effect of any of such changes on the Company's business or the markets in which it 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," "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.

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
 Three Months Ended Year Ended
December 31,December 31,
2012 20112012 2011
Consolidated Operations:
Total revenue$491,604$473,957$1,800,430$1,583,064
Net revenue267,088248,3291,005,957909,759
Total expenses  217,600  180,204  790,042  665,417
 
Income from Operations$49,488$68,125$215,915$244,342
 
Income before income taxes  41,160  60,688  186,320  217,526
 
Net Income $23,991 $37,605 $101,664 $135,166
 
Net loss attributable to the noncontrolling interest $489 $222 $5,806 $797
 
Net Income Attributable to Cash America International, Inc. $24,480 $37,827 $107,470 $135,963
 
Earnings per share:
Net Income attributable to Cash America International, Inc.

common shareholders:

Basic$0.84$1.28$3.64$4.59
Diluted$0.79$1.18$3.42$4.25
 
Weighted average common shares outstanding: 
Basic29,26229,52829,51429,602
Diluted30,88432,05931,45231,991

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)
(Unaudited)
 
December 31,
 2012 2011
 
Assets
Current assets:
Cash and cash equivalents$63,134$62,542
Pawn loans244,640253,519
Consumer loans, net289,418222,778
Merchandise held for disposition, net167,409161,884
Pawn loan fees and service charges receivable48,99148,003
Prepaid expenses and other assets35,60531,301
Deferred tax assets 48,992  35,065
Total current assets898,189815,092
Property and equipment, net261,771246,429
Goodwill608,216562,721
Intangible assets, net36,47334,771
Other assets 13,609  15,236
Total assets$1,818,258 $1,674,249
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses$126,664$113,113
Customer deposits11,4209,935
Income taxes currently payable5,92212,880
Current portion of long-term debt 43,617  34,273
Total current liabilities187,623170,201
Deferred tax liabilities101,71189,712
Noncurrent income tax payable2,7032,315
Other liabilities8881,413
Long-term debt 534,713  503,018
Total liabilities$827,638 $766,659
 
Equity:
Cash America International, Inc. equity:
Common stock, $0.10 par value per share, 80,000,000 shares
authorized, 30,235,164 shares issued and outstanding3,0243,024
Additional paid-in capital157,613167,683
Retained earnings879,434776,060
Accumulated other comprehensive income (loss)3,128(6,896)
Treasury shares, at cost (1,351,712 shares and 1,011,356 shares
at December 31, 2012 and 2011, respectively) (51,304)  (37,419)
Total Cash America International, Inc. shareholders' equity991,895902,452
Noncontrolling interest (1,275)  5,138
Total equity 990,620  907,590
Total liabilities and equity$1,818,258 $1,674,249

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)


(Unaudited)

 
Three Months EndedYear Ended
December 31,December 31,
2012 20112012 2011
(Unaudited)
 
Revenue
Pawn loan fees and service charges$79,479$76,063$300,929$282,197
Proceeds from disposition of merchandise185,935215,196703,767688,884
Consumer loan fees222,864180,124781,520598,646
Other 3,326  2,574  14,214  13,337
Total Revenue 491,604  473,957  1,800,430  1,583,064
Cost of Revenue
Disposed merchandise127,301145,145478,179447,617
Consumer loan loss provision 97,215  80,483  316,294  225,688
Total Cost of Revenue 224,516  225,628  794,473  673,305
 
Net Revenue 267,088  248,329  1,005,957  909,759
Expenses
Operations and administration199,054165,655714,614611,268
Depreciation and amortization 18,546  14,549  75,428