Rentcash releases Fourth Quarter and Year End Results



    Improved performance in fourth quarter

    EDMONTON, Sept. 4 /CNW/ - Rentcash Inc. ("Rentcash" or the "Company")
today announced fourth quarter and year end results for the fiscal year ended
June 30, 2007.

    
    Fourth Quarter Highlights

    -   Net income of $1.6 million, compared to $450,000 in the third quarter
        of this year and $3.6 million in the fourth quarter last year.

    -   Diluted earnings per share of $0.08, compared to $0.18 in the fourth
        quarter last year.

    -   Revenue of $37.2 million, compared to $37.6 million in the fourth
        quarter last year.

    -   Working capital improved to a positive $9.4 million.

    Year-end Highlights

    -   Net income for fiscal 2007 was $5.9 million, compared to
        $14.0 million in the prior year.

    -   Diluted earnings per share were $0.28 ($0.29 basic), compared to
        $0.67 ($0.68 basic) in fiscal 2006.

    -   Revenue totalled $147.7 million, compared to $154.2 million in the
        prior year.

    -   Cash increased to $18.7 million, compared to $12.9 million a year
        ago.

    -   358 brokerage stores in operation, up 20 from one year ago.
    

    Mr. Gordon Reykdal, Chairman and CEO commented, "I'm pleased to report
improved performance in the fourth quarter of this year. With the year-long
restructuring of the brokerage division behind us, our efforts in the second
half of this year were once again redirected towards growing customers and
revenue. The impact of these efforts was evident in brokerage revenue for the
fourth quarter increasing $1.6 million or 5% relative to the third quarter of
this year and consolidated earnings for the fourth quarter improving to
$1.6 million compared to $450,000 in the third quarter. Positive trends in
several key areas clearly signal that the brokerage division is on an upward
path and is positioned for improved financial performance in the future."
    Mr. Reykdal further commented, "Several key initiatives took place in the
last part of fiscal 2007 including a comprehensive training and development
program designed to further provide store managers and associates with the
knowledge and skills necessary to effectively perform their jobs. We believe
that these initiatives have generated positive momentum and energy at the
store level and contributed to the improved performance in the fourth quarter.
We also believe that these initiatives should continue to contribute to
improved performance in future periods."
    Mr. Reykdal added, "A further emphasis was put on increasing customers,
the volume of loans brokered, same store sales, and fees from other brokerage
services. In March of this year we launched a '50% off cheque cashing'
promotion that has resulted in volume growth and customer retention and in
July 2007 we successfully launched a prepaid credit card. We also plan to
rollout a customer loyalty program, an on-line lending platform, and
alternative lending products in fiscal 2008."
    Mr. Reykdal also commented, "The Company has not been adversely impacted
by recent credit and liquidity restrictions in the capital markets. The
third-party lenders have not restricted or imposed any new conditions for the
extension of unsecured short-term loans to the Company's customers. The
Company's funds are all held in current or term accounts with major Canadian
banks."

    Rental Division Spin-off

    During fiscal 2007, the Company announced its intention to spin-off the
rental division to its shareholders. Rentcash anticipates that the spin-off
will be completed during the second quarter of fiscal 2008. The transaction is
contingent upon the receipt of the necessary regulatory, shareholder and court
approvals. The Company has also applied to Canada Revenue Agency for a tax
ruling in respect of the transaction. 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.
    In conjunction with the planned spin-off, proforma financial information
has been included in the company's financial statements and management's
discussion and analysis for the year ended June 30, 2007. The proforma
information highlights that, after removing the rental division's operations,
Rentcash's net income for the year ended June 30, 2007 would have been
approximately $8.4 million, compared to the reported amount of $5.9 million.
Diluted earnings per share would have been approximately $0.41, compared to
the reported amount of $0.28.

    Fourth Quarter Financial Results

    Net income for the fourth quarter was $1.6 million, compared to
$3.6 million in the same quarter last year. The lower earnings reflect lower
rental revenue, increased expenses and higher retention payments. Diluted
earnings per share were $0.08 in the fourth quarter of fiscal 2007, compared
to $0.18 per share in the same quarter last year.
    In comparison to the third quarter of this year, the fourth quarter net
income of $1.6 million was up from $450,000 due to higher brokerage revenue,
reduced retention payments and a lower effective income tax rate. Brokerage
revenue increased $1.6 million (5%) compared to the third quarter of this year
due in part to the seasonality of brokerage business. Management also believes
the higher brokerage revenue relates to the recent growth and training and
development initiatives which have generated positive momentum and energy at
the store level. Retention payments improved to 17.5% of brokerage revenue in
the fourth quarter, compared to 19.1% in the third quarter of this year.

    Fiscal 2007 Financial Results

    Net income for fiscal 2007 was $5.9 million, compared to $14.0 million in
the prior year. Diluted earnings per share were $0.28, compared to $0.67 in
fiscal 2006. The earnings reflect lower brokerage revenue and increased
expenses due to the elimination of rollovers and the resulting fundamental
restructuring of processes and controls in the brokerage division. Expenses
were also higher due to a significant increase in training and development
activities and the strengthening of the management team and operational
functions in key areas such as internal audit, risk management, training and
government relations. Partially offsetting the impact of these items was lower
retention payments and improved performance in the rental division.
    While earnings were down year over year, the Company accomplished a key
objective of improving its working capital position. During the year, working
capital improved to a positive $9.3 million at year end, compared to a deficit
of $1.3 million a year ago. The Company also saw its cash balance increase to
$18.7 million from $12.9 million a year ago.
    As at June 30, 2007, the Company had a total of 423 stores in operation,
compared to 430 a year ago. The number of brokerage stores increased to 358 at
year end, compared to 338 a year ago. The Company's target for new brokerage
locations continues to be approximately two to three per month. Depending on
financial performance, that target may be increased in the second half of the
year.
    In the rental division, the store count decreased to 65 as at June 30,
2007, compared to 92 a year ago as 27 locations operating at a financial loss
were closed. The customer accounts for a majority of the stores closed were
transferred to nearby locations. Management continues to carefully assess the
potential for each rental location and if stores, still operating at a loss,
are not able to reach profitability within a reasonable period, additional
closures will occur. There are currently no new rental locations planned.

    CFO Appointment

    The Company also announced today that Ms. Nancy Bland, CA will be
appointed Chief Financial Officer of Rentcash Inc., effective October 15,
2007. Ms. Bland will succeed Mr. Darin Coutu who is leaving the Company to
pursue other interests.
    Ms. Bland has been the Company's Vice President of Finance since March of
2006. Prior to joining Rentcash, Ms. Bland's experience includes positions
with Capital Health, Luscar Ltd., The Northwest Territories Power Corporation
and Grant Thornton Chartered Accountants. Nancy has a Bachelor of Commerce
degree from the University of Alberta and holds both a Chartered Accountant
and a Certified Internal Auditor designation.
    Mr. Gordon Reykdal commented, "We wish to thank Darin for his
contributions to the development of our company. We would also like to
congratulate Nancy on her new appointment and welcome her to Rentcash's
executive team. Nancy, in her time with Rentcash, has demonstrated her ability
to provide strategic guidance and be a major contributor to the success of our
company."

    
    Summary Financial Information

    -------------------------------------------------------------------------
    (thousands of dollars,
    except for per share
    amounts and store
    figures)                      Three Months Ended         Year Ended
    -------------------------------------------------------------------------
                           30-Jun-07 31-Mar-07 30-Jun-06 30-Jun-07 30-Jun-06
    -------------------------------------------------------------------------

    Consolidated    No. of
     Results        stores     423       421       430       423       430

    Revenue
      Brokerage             $ 31,451  $ 29,895  $ 31,448  $123,498  $130,061
      Rental                   5,778     6,076     6,183    24,236    24,108
                           --------------------------------------------------
                              37,230    35,971    37,631   147,734   154,169
    Expenses                  25,629    25,280    23,819    99,068    92,241
    Retention payments         5,500     5,707     3,615    23,418    24,562
    Rental asset
     amortization              2,207     2,327     3,125     9,740    10,591
    Other amortization         1,437     1,426     1,175     5,498     4,287
    EBITA(*)                   4,137     2,948     7,369    16,696    28,220
    Income before taxes        2,455     1,231     5,896    10,010    22,487
    Net income                 1,591       450     3,607     5,882    13,960
    Basic earnings per
     share                  $   0.08  $   0.02  $   0.18  $   0.29  $   0.68

    Diluted earnings per
     share                  $   0.08  $   0.02  $   0.18  $   0.28  $   0.67
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented Results(*)

    Brokerage        No. of
     operations      stores    358       355       338       358       338

      Revenue               $ 31,451  $ 29,895  $ 31,448  $123,498  $130,061
      Expenses                18,858    18,246    16,987    71,021    65,076
      Retention payments       5,501     5,707     3,615    23,418    24,562
      Other amortization       1,029       990       862     3,935     3,087
      EBITA(*)(*)              7,094     5,944    10,855    29,067    40,449
      Income before taxes      6,063     4,952     9,984    25,124    37,337
      Net income            $  4,025  $  3,356  $  6,498  $ 16,559  $ 24,206
      Diluted earnings per
       share                $   0.20  $   0.15  $   0.32  $   0.80  $   1.16
                           --------------------------------------------------
    Rental           No. of
     operations      stores     65        66        92        65        92

      Revenue               $  5,778  $  6,076  $  6,183  $ 24,236  $ 24,108
      Expenses                 3,773     4,047     4,428    16,461    16,835
      Rental asset
       amortization            2,207     2,327     3,125     9,740    10,591
      Other amortization         273       322       203     1,095       797
      EBITA (*)(*)              (202)     (298)   (1,369)   (1,965)   (3,310)
      Income before taxes       (475)     (620)   (1,573)   (3,059)   (4,115)
      Net income (loss)     $   (223) $   (792) $ (1,025) $ (2,294) $ (2,672)
      Diluted earnings per
       share                $  (0.01) $  (0.03) $  (0.05) $  (0.11) $  (0.13)
                           --------------------------------------------------
    Corporate
      Expense               $  2,999  $  2,988  $  2,404  $ 11,586  $ 10,330
      Other amortization         134       114       110       469       404
      EBITA (*)(*)            (2,755)   (2,699)   (2,117)  (10,407)   (8,919)
      Income before taxes     (3,133)   (3,102)   (2,514)  (12,055)  (10,734)
      Net income (loss)     $ (2,210) $ (2,115) $ (1,866) $ (8,383) $ (7,574)
      Diluted earnings per
       share                $  (0.11) $  (0.10) $  (0.09) $  (0.40) $  (0.36)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*)    Certain comparative tax figures have been reclassified to conform
           to the presentation adopted for the current period. In addition,
           expense and tax amounts have been reclassified to reflect that the
           Company no longer allocates corporate expenses to the operating
           segments.
    (xx)   EBITA - earnings before interest, income taxes, stock-based
           compensation, amortization of capital and intangible assets
    

    About Rentcash

    Rentcash is the only payday advance broker in Canada publicly traded on
the Toronto Stock Exchange (TSX:RCS). Rentcash operates more than 423 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, 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.

    Non-GAAP Measures

    This release refers to certain financial measures that are not determined
in accordance with generally accepted accounting principles (GAAP) in Canada.
These measures do not have standardized meanings and may not be comparable to
similar measures presented by other companies. Although a measure such as
'Earnings Before Interest, Income Taxes, Stock-based Compensation,
Amortization of Capital and Intangible Assets' (EBITA) and 'Adjusted Loss' do
not have standardized meanings prescribed by GAAP, these measures are used
herein or can be determined by reference to the Company's financial
statements. "Same store sales" is a non-GAAP measure tracked and reported by
the Company and is generally used to compare the average revenue for a
particular group of stores in a current period to that same particular group
of stores in a prior period. This non-GAAP measure is a way to gauge the
performance of a particular group of stores and is directly related to and
helps explain changes in total revenue. Average revenue is defined as revenue
for the period divided by the number stores. These measures are discussed
because management believes that they facilitate the understanding of the
Company's results of operation and financial position.

    Cautionary Statement Regarding Forward-looking Statements

    This press release contains "forward-looking information" within the
meaning of applicable Canadian securities legislation. Forward-Looking
Information includes, but is not limited to, statements with respect to our
objectives, strategies, operations and financial results, competition, as well
as the Company's plan to separate the rental division or initiatives to grow
revenue or reduce retention payments. Generally, these forward-looking
statements 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 statements are
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 statements, 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 plans to separate the certain operations, 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 28, 2006 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
statements, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. The Company does not undertake to update any forward-looking
statements, 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

Organization Profile

The Cash Store Financial Services Inc.

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