Cash Store Financial releases Second Quarter and Six Month Results; strong earnings growth continues



    EDMONTON, Jan. 28 /CNW/ -  The Cash Store Financial Services Inc. ("Cash
Store Financial") today announced second Quarter results for the period ended
December 31, 2008.

    
    Second Quarter Highlights (table of results at end of release)

    -  Net income of $4.3 million, compared to $2.5 million for the same
       quarter last year.

    -  Diluted earnings per share of $0.23, compared to $0.12 for the same
       quarter last year.

    -  Diluted earnings per share before class action lawsuit settlement
       costs were $0.30, compared to $0.12 for the same quarter last year.

    -  Over the quarter the diluted earnings per share were increased by
       $0.02 per share as a result of the normal course issuer bid
       repurchases in the prior quarter.

    -  Branch operating income of $13.5 million, compared to $9.9 million for
       the same quarter last year.

    -  Same branch revenues increased 11% to $97,100 from $87,400 for the
       same quarter last year.

    -  25 new branches added during the quarter, with 48 new branches added
       since December 31, 2007.

    -  Retention payments of $4.6 million (3.1% of loans brokered), compared
       to $5.3 million (4.1% of loans brokered) for the same quarter last
       year.

    -  Class action lawsuit settlement approved by court and $1.9 million in
       costs accrued.


    Year to date highlights (six months)

    -  Net income of $10.3 million, compared to $5.6 million for the same
       period last year.

    -  Diluted earnings per share of $0.54, compared to $0.27 for the same
       quarter last year.

    -  Diluted earnings per share before class action lawsuit settlement
       costs were $0.61, compared to $0.27 for the same quarter last year.

    -  Branch operating income of $28.1 million, compared to $19.3 million
       for the same quarter last year.

    -  Same branch revenues increased 10% to $197,500 from $179,400 for the
       same period last year.

    -  Retention payments of $8.9 million (3.0% of loans brokered), compared
       to $11.1 million (4.2% of loan volume) for the same quarter last year.
    

    Mr. Gordon Reykdal, Chairman and CEO commented, "The second quarter of
2008 was very strong with earnings growth up 72% relative to the same period
last year. Charges of $1.9 million related to the settlement of a class action
lawsuit negatively effected the performance of an otherwise stellar quarter.
To date, the Company has not experienced any significant negative impact from
the economic downturn. Our ability to access capital and service our
customers' needs remains well intact. We will continue to closely monitor our
Company's performance in relation to both industry trends and economic
conditions. The ongoing direct involvement of senior management in the
development of our branch associates combined with recently strengthened
incentive packages for all branch-level associates is expected to continue
fostering revenue growth."
    He further commented, "In the second quarter we executed a substantial
issuer bid, successfully purchasing for cancellation 1.5 million shares at a
total cost of $9 million. This share repurchase followed a normal course
issuer bid, completed in the second quarter through which a further 1.218
million shares were purchased for cancellation at a cost of $7.1 million.
While these initiatives to enhance shareholder value have reduced available
cash, our cash position remains consistent and we are well-poised to exploit
growth opportunities as they arise. We will continue our quarterly dividend of
6.5 cents per share which will be paid on February 18, 2009 to shareholders on
record as of February 3, 2009."
    He added: "Key positive developments over the quarter on a year-over-year
comparative basis included a marked increase in same branch revenues, improved
contributions to earnings from our ancillary products, a significant reduction
in retention payments, and improved overall earnings by branches. Over the
past several quarters, we have concentrated significantly on the training and
development of our associates. This effort has been rewarded through our
improved performance and management will continue to focus on these
operational areas in future periods."
    Mr. Reykdal also added, "Current liquidity restrictions in Canada's
capital markets have had no impact on the accessibility of funds for our
customers."

    About Cash Store Financial

    Cash Store Financial is the only payday advance broker in Canada publicly
traded on the Toronto Stock Exchange (TSX:CSF). Cash Store Financial operates
more than 415 branches across Canada under the banners: The Cash Store and
Instaloans.
    The Cash Store and Instaloans act as brokers to facilitate payday advance
services to income-earning consumers who may not be able to obtain them from
traditional banks. Cash Store Financial also provides a private-label debit
card - the Freedom card and a prepaid credit card - the Freedom MasterCard,
and other ancillary products.
    Cash Store Financial employs more than 1,600 associates and is
headquartered in Edmonton, Alberta.

    
    Summary Financial Information

    -------------------------------------------------------------------------
    Thousands of dollars,
     except for per share
     amounts and branch
     figures                 Three Months Ended         Six Months Ended
    -------------------------------------------------------------------------
    Consolidated
    results               December 31  December 31  December 31  December 31
                              2008         2007         2008         2007
    -------------------------------------------------------------------------
          No. of branches      415          367          415          367

    Revenue
      Brokerage               $36,966      $32,591      $74,259      $64,772
      Corporate                    83           83          209          140
    -------------------------------------------------------------------------
                               37,049       32,674       74,468       64,912
    Branch expenses            18,935       17,460       37,470       34,493
    Retention payments          4,600        5,290        8,851       11,082
    -------------------------------------------------------------------------
    Branch operating income    13,514        9,924       28,147       19,337
    -------------------------------------------------------------------------

    Regional expenses           2,024        1,991        3,745        3,725
    Corporate expenses          3,691        2,589        7,097        4,832
    Other amortization            281          180          495          343
    Income from continuing
     operations before
     income taxes, class
     action settlement and
     discontinued operations    7,518        5,164       16,810       10,437
    Class action settlement    (1,910)           -       (1,910)           -
    Income from continuing
     operations                 4,292        3,207       10,348        6,625
    Loss from discontinued
     operations                     -         (676)           -       (1,066)
    EBITA                       7,294        6,639       18,222       13,224
    -------------------------------------------------------------------------
    Net income and
     comprehensive income      $4,292       $2,531      $10,348       $5,559
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number
     of shares outstanding
     - basic                   18,507       20,267       18,971       20,483
    Basic earnings per share
      Income from continuing
       operations               $0.23        $0.15        $0.55        $0.32
      Loss from discontinued
       operations                   -        (0.03)           -        (0.05)
      Net income and
       comprehensive income      0.23         0.12         0.55         0.27
    Diluted earnings per
     share
      Income from continuing
       operations                0.23         0.15         0.54         0.32
      Loss from discontinued
       operations                   -        (0.03)           -        (0.05)
      Net income and
       comprehensive income      0.23        $0.12         0.54        $0.27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consolidated Balance
     Sheet Information
    Working capital            $8,272       $8,700       $8,272       $8,700
    Total assets               78,827       87,788       78,827       87,788
    Total long-term
     liabilities                2,231        2,005        2,231        2,005
    Total liabilities          15,804       10,536       15,804       10,536
    Shareholders' equity      $63,023      $77,252      $63,023      $77,252
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    This News Release contains "forward-looking information" within the
meaning of applicable Canadian and United States securities legislation.
Forward-looking information includes, but is not limited to, information with
respect to our objectives, strategies, operations and financial results,
competition as well initiatives to grow revenue or reduce retention payments.
Generally, forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects", or "does not expect",
"is expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "does not anticipate", or "believes" or variations of such
words and phrases or state that certain actions, events or results "may",
"could", "would", "might", or "will be taken", "occur", or "be achieved". In
particular this News Release contains forward-looking statements in connection
with the Cash Store Financials goals and strategic priorities, introduction of
products, share repurchase initiatives and branch openings. Forward-looking
information is subject to known and unknown risks, uncertainties and other
factors that may cause the actual results, level of activity, performance or
achievements of Cash Store Financial, to be materially different from those
expressed or implied by such forward-looking information, including, but not
limited to, changes in economic and political conditions, legislative or
regulatory developments, technological developments, third-party arrangements,
competition, litigation, risks associated with but not limited to, market
conditions, and other factors described in our Annual Information Form ("AIF")
dated August 28, 2008 under the heading "Risk Factors". All material
assumptions used in making forward-looking statements are based on
management's knowledge of current business conditions and expectations of
future business conditions and trends, including our knowledge of the current
credit, interest rate and liquidity conditions affecting us and the Canadian
economy. Although we believe the assumptions used to make such statements are
reasonable at this time and have attempted to identify in our continuous
disclosure documents important factors that could cause actual results to
differ materially from those contained in forward-looking statements, there
may be other factors that cause results not to be as anticipated, estimated or
intended. Certain material factors or assumptions are applied by us in making
forward-looking statements, include without limitation, factors and
assumptions regarding our continued ability to fund our payday loan business,
rates of customer defaults, relationships with, and payments to, third party
lenders, demand for our products, as well as our operating cost structure and
current consumer protection regulations. There can be no assurance that such
information will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such information.
Accordingly, readers should not place undue reliance on forward-looking
information. We do not undertake to update any forward-looking information,
except in accordance with applicable securities laws.





For further information:

For further information: on Cash Store Financial, please contact: Gordon
J. Reykdal, Chairman and Chief Executive Officer, (780) 408-5118; or Nancy L.
Bland, Chief Financial Officer, (780) 732-5683; or Michael J.L. Thompson,
Senior Vice President & Corporate Secretary, (780) 408-5595, Cell: (780)
934-4729

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The Cash Store Financial Services Inc.

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