EDMONTON, Nov. 7 /CNW/ - Rentcash Inc. ("Rentcash") today announced first
quarter results for the period ended September 30, 2007.
First Quarter Highlights (table of results at end of release)
- Net income of $3.0 million, compared to $2.5 million for the same
quarter last year.
- Diluted earnings per share of $0.15, compared to $0.12 for the same
quarter last year.
- Store operating income of $9.4 million, compared to $8.8 million for
the same quarter last year.
- Same store sales in the brokerage division of $91,500 compared to
$90,000 for the same quarter last year. Same store sales in the
rental division of $87,000 compared to $78,000 for the same quarter
- Retention payments of $5.8 million, compared to $6.2 million for the
same quarter last year.
- Working capital of $9.4 million, compared to ($7.1 million) for the
same quarter last year - an increase of $16.5 million.
- Fully liquid cash and cash equivalents of $15 million.
- Dividend declared for the quarter of 2.5 cents a share.
Mr. Gordon Reykdal, Chairman and CEO commented, "I'm pleased to report
strong performance in the first quarter of fiscal 2008. Subsequent to a year
long corporate-wide restructuring program, this quarter marks the second
consecutive quarter of revenue growth in the brokerage division along with
year over year improvements to the division's same store sales and store
operating income. New management initiatives have resulted in positive
trending in store operating performance, increased revenue from non-brokerage
related services and lower retention payments."
He further commented, "Positive strides have also been made in the rental
division, positioning the division well for a successful spin-off later in the
fiscal year. Same store sales and store operating income have improved
relative to the same period last year. Management continues to focus on
efficiency gains and has achieved improved financial performance through the
closure of underperforming stores, increases in higher margin rental revenue
and improved margins on product sales."
He added, "The concentration of management's efforts in recent periods on
the training and development of store associates has had positive results on
company performance. Early in the next calendar year, I look forward to
repeating my country-wide meetings with store managers to discuss the
company's strategic priorities and the effective pursuit of our goals and
Mr. Reykdal further added, "The Company has no debt, strong working
capital, and a fully liquid cash position held in current accounts with major
Canadian banks. This allowed us in the fourth quarter of 2007 to declare our
first quarterly dividend of 2.5 cents per share and a special dividend of
7.5 cents per share. We are pleased to declare another dividend of 2.5 cents
per share for the first quarter of 2008." The cash dividend of 2.5 cents per
common share will be payable on December 5, 2007 to shareholders of record on
November 20, 2007. Post dividend the Company has maintained ample cash
resources to fund growth opportunities as they arise.
Rental Division Spin-off
The Company continues to move forward with the spin-off of the rental
division to shareholders. The spin-off will be subject to the receipt of
applicable regulatory and shareholder approvals. The Company has also applied
to Canada Revenue Agency (CRA) for a tax ruling in respect of the transaction.
Shareholder approval for the divestiture will be sought at the Annual General
Meeting scheduled for November 28, 2007. It is anticipated that all requisite
approvals will be obtained and the spin-off completed during the third quarter
of fiscal 2008. Management believes that divesting of the rental division will
provide better clarity for both business models and have a positive long term
impact on shareholder value.
Consolidated Financial Results
Net income for the first quarter was $3.0 million, compared to
$2.5 million for the same quarter last year. The higher earnings resulted in
diluted earnings per share increasing to $0.15 in the quarter, compared to
$0.12, respectively, for the same period in the prior year.
Revenue for the first quarter totalled $37.6 million compared to
$37.7 million in the same quarter last year. Brokerage revenue increased 3% to
$32.2 million from $31.4 million in the same quarter last year. Rental revenue
decreased 15% to $5.4 million from $6.3 million in the first quarter last year
due to the closure of rental locations.
In the brokerage division, same store sales for the 331 locations open
since the beginning of the first quarter of fiscal 2007 averaged $91,500 in
the first quarter, a 2% increase compared to $90,000 in the same quarter last
year. Management believes the increase in same store sales reflect the impact
of training and development activities and the renewed emphasis on growth.
In the rental division, same store sales for the 60 locations open since
the beginning of the first quarter last year averaged $87,000 in the first
quarter this year, an improvement of 12% compared to $78,000 in the same
quarter last year. Management believes that the improvement is due to
initiatives over the past year including the closure of poor performing stores
and the consolidation of accounts with nearby stores.
Fees from other brokerage services (including fees from cheque cashing,
money transfer, payment protection, debit cards, collections and telephone
re-connect services) increased to $5.0 million in the first quarter, compared
to $4.3 million in the same period last year.
At the end of the quarter the Company had cash of $15.0 million and
positive working capital of $9.4 million. Just over a year and a half ago,
management set out to improve the Company's working capital position which was
in a deficit position of $7.1 million at March 31, 2006. The change over this
period represents an improvement of $16.5 million.
Expenses at $23.6 million for the first quarter were consistent with
expenses of $23.7 million for the same quarter last year.
Third-party lender retention payments for the first quarter totalled
$5.8 million (4.4% of loans brokered), compared to $6.2 million (4.8% of loans
brokered) in the same quarter last year.
Amortization of rental assets for the quarter totalled $2.2 million (40%
of rental revenue), a decrease from $2.6 million (42% of rental revenue) in
the first quarter last year. The improved percentage reflects initiatives
designed to increase higher margin rental revenue and improve the margin on
For the first quarter amortization of capital and intangible assets
totaled $1.4 million, which was consistent with $1.3 million in the first
quarter last year.
Divisional Financial Results
The Company's EBITA (earnings before interest, income taxes, stock-based
compensation and amortization of capital and intangible assets) for the first
quarter was $6.2 million, compared to $5.5 million in the same quarter last
year. The brokerage division's EBITA decreased to $8.6 million from
$8.8 million in the same quarter last year, due to the strengthening of
operational and management capacity, the addition of a collection department
and cheque cashing call centre and a significant increase in training
activities. The rental division's EBITA improved to negative $294,000 from
negative $671,000 in the first quarter last year. The improvement demonstrates
the significant positive strides made by the rental division over the past
year. The overall EBITA also reflects a decrease in corporate costs of
$689,000 compared to the first quarter last year which was caused by lower
advertising and stock-based compensation expenditures.
Summary Financial Information
(thousands of dollars, except for
per share amounts and store figures) Three Months Ended
Brokerage Operations No. of stores 361 344
Broker fees 27,238 27,068
Other fees 4,943 4,310
Expenses 17,747 16,334
Retention payments 5,792 6,210
Other amortization 1,055 862
Income before taxes 7,587 7,972
EBITA(xx) 8,643 8,833
Net income 4,891 4,975
Diluted earnings per share 0.24 0.24
Rental Operations No. of stores 60 88
Revenue 5,392 6,305
Expenses 3,531 4,343
Rental asset amortization 2,154 2,633
Other amortization 144 165
Income before taxes (437) (836)
EBITA(xx) (293) (671)
Net income (282) (522)
Diluted earnings per share (0.01) (0.02)
Revenue 57 12
Expenses 2,298 2,987
Other amortization 212 233
Income before taxes (2,453) (3,208)
EBITA(xx) (2,145) (2,646)
Net income (1,581) (2,002)
Diluted earnings per share (0.08) (0.10)
(*) Certain comparative tax figures have been reclassified to conform to
the presentation adopted for the current period.
(xx)EBITA - earnings before interest, income taxes, stock-based
compensation, amortization of capital and intangible assets.
Rentcash is the only payday advance broker in Canada publicly traded on
the Toronto Stock Exchange (TSX: RCS). Rentcash operates 421 stores across
Canada under three banners: The Cash Store, Instaloans and Insta-rent.
The Cash Store and Instaloans act as brokers to facilitate payday advance
services to income-earning consumers and provide two private-label debit
cards, The Cash Store Cash Card(TM) and InstaWorld Debit Card, and a prepaid
credit card, the Freedom Mastercard, to those who may not be able to obtain
them from traditional banks.
Insta-rent rents brand-name furniture, appliances, electronics and
computers, with or without an option to purchase. Insta-rent operates
primarily in The Brick and United Furniture Warehouse locations, which are
part of The Brick Group, one of Canada's largest volume retailers of household
furniture, mattresses, appliances and home electronics.
Rentcash employs more than 1,800 associates and is headquartered in
Edmonton, Alberta. In 2007, Rentcash was named "Canada's Fastest-Growing
Company" by PROFIT Magazine and ranked number three in the top 25 performers
with revenue greater than $25 million, in Alberta Venture's "The Fast 50."
Cautionary Statement Regarding Forward-looking Information
This press release contains "forward-looking information" within the
meaning of applicable Canadian securities legislation. Forward-looking
information includes, but is not limited to, information with respect to our
objectives, strategies, operations and financial results, as well as the
company's plan to sell or spin-off its rental division. Generally, this
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". 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 the company, 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 the spin-off of the rental
division and a favorable CRA ruling including, but not limited to, market
conditions, the availability of alternative transactions, shareholder, legal,
regulatory and court approvals and third party consents and other factors
described in the company's Annual Information Form dated September 26, 2007
under the heading "Risk Factors". Although the company has attempted to
identify important factors that could cause actual results to differ
materially from those contained in forward-looking information, there may be
other factors that cause results not to be as anticipated, estimated or
intended. 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. The company does not undertake
to update any forward-looking information, except in accordance with
applicable securities laws.
All published financial statements can be obtained from SEDAR at
www.sedar.com and the company's web site at www.rentcash.ca.
For further information:
For further information: Gordon J. Reykdal, Chairman and Chief Executive
Officer, (780) 408-5118 or Michael J.L. Thompson, Vice President Investor
Relations & Government Affairs, (780) 408-5595, Cell: (613) 371-4093