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

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

2011

2012

2011

Consolidated Operations:

Total revenue

$

491,604

$

473,957

$

1,800,430

$

1,583,064

Net revenue

267,088

248,329

1,005,957

909,759

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:

Basic

29,262

29,528

29,514

29,602

Diluted

30,884

32,059

31,452

31,991

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 loans

244,640

253,519

Consumer loans, net

289,418

222,778

Merchandise held for disposition, net

167,409

161,884

Pawn loan fees and service charges receivable

48,991

48,003

Prepaid expenses and other assets

35,605

31,301

Deferred tax assets

48,992

35,065

Total current assets

898,189

815,092

Property and equipment, net

261,771

246,429

Goodwill

608,216

562,721

Intangible assets, net

36,473

34,771

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 deposits

11,420

9,935

Income taxes currently payable

5,922

12,880

Current portion of long-term debt

43,617

34,273

Total current liabilities

187,623

170,201

Deferred tax liabilities

101,711

89,712

Noncurrent income tax payable

2,703

2,315

Other liabilities

888

1,413

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 outstanding

3,024

3,024

Additional paid-in capital

157,613

167,683

Retained earnings

879,434

776,060

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' equity

991,895

902,452

Noncontrolling interest

(1,275)

5,138

Total equity

990,620

907,590

Total liabilities and equity

$

1,818,258

$

1,674,249

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)


(Unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(Unaudited)

Revenue

Pawn loan fees and service charges

$

79,479

$

76,063

$

300,929

$

282,197

Proceeds from disposition of merchandise

185,935

215,196

703,767

688,884

Consumer loan fees

222,864

180,124

781,520

598,646

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 merchandise

127,301

145,145

478,179

447,617

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 administration

199,054

165,655

714,614

611,268

Depreciation and amortization

18,546

14,549

75,428