Cash Store Financial releases Third Quarter and Record Nine Month Results.
Quarterly revenue up 12%, net income, before non-recurring charges up 29%
EDMONTON, April 28 /CNW/ - The Cash Store Financial Services Inc. ("Cash Store Financial") today announced results for the three and nine months ended March 31, 2010.
Highlights for the third quarter (table of results at end of release)
- Quarterly revenue of $40.8 million, up 12.4% from $36.3 million in
the same quarter last year.
- Other revenue up 35.7% to from $8.4 million from $6.2 million in the
same quarter last year.
- Branch operating income of $13.1 million, up 12.0%, compared to
$11.7 million in the same quarter last year.
- Earnings per share (diluted) before non-recurring class action
settlement costs up 27.8% to $0.23 from $0.18 in the same quarter
last year. Including non-recurring charges, earnings per share
(diluted) was $0.13.
- Net income before non-recurring class action settlement costs and
related taxes was up 29.0% to $4.0 million from $3.1 million for the
same quarter last year.
- Net income for the third quarter was $2.2 million compared to
$3.1 million for the same quarter last year.
- EBITA before non-recurring class action settlement costs was up 23.1%
to $8.0 million compared to $6.5 million for the same quarter last
year. EBITA was $5.3 million in the quarter.
- Same branch quarterly revenues for the 407 locations open since the
beginning of the third quarter of fiscal 2009 increased 10.6% to
$95,700.
- Branch count was 489 up 66 net new branches from 423 at March 31,
2009. 20 new branches opened in the quarter.
- Dividend of $0.10 payable May 26, 2010, to shareholders of record on
May 11, 2010.
- Subsequent to quarter-end, surpassed 500 branches in operation.
Highlights for the nine months ended March 31, 2010
- Record revenue of $124.7 million, up 12.5% from $110.8 million in the
same period last year.
- Record nine-month branch operating income of $44.7 million up 12.3%
from $39.8 million, in the same period last year.
- Record earnings per share (diluted) before non-recurring class action
settlement costs was up 10% to $0.88 from $0.80 for the same period
last year. Including non-recurring charges, earnings per share
(diluted) was $0.78 compared to $0.73 for the same period last year.
- Net income before non-recurring class action settlement costs and
related taxes was $15.1 million, up 2.7% from $14.7 million for the
same period last year.
- Net income was $13.3 million compared to $13.4 million for the same
period last year.
- Record EBITA adjusted for non-recurring class action settlement costs
and related taxes, up 10.9% to $29.5 million from $26.6 million for
the same period last year.
- Same branch revenues for the 372 locations open since the beginning
of the first quarter of fiscal 2009 increased 6.8% to $302,000.
Mr. Gordon Reykdal, Chairman and CEO commented: "The third quarter, which is typically our slowest, was marked by impressive year-over-year revenue growth and strong earnings. This is despite non-recurring charges and related taxes stemming from the recent settlement of class action law-suits. When non-recurring charges are removed, diluted earnings per share were up 27.8%. The Company continued to execute on its aggressive expansion with an increase of 20 new branches in the quarter, for a total increase of 66 branches relative to the close of last year's third quarter. Subsequent to quarter-end, Cash Store Financial announced an agreement to acquire for $4.4 million EZ Cash, a Saskatchewan-based regional provider of payday loan services with 14 locations throughout the province. The Company now has over 500 branches in operation. We plan to continue to expand at a rate of 18 to 20 branches per quarter through fiscal 2010 and 2011. We expect to achieve this growth with a minimal drag on earnings and continued healthy operating margins. This expansion positions the Company for sustained long-term revenue and income growth."
Mr. Reykdal further commented: "During the quarter, the President and Chief Operating Officer conducted his annual tour to meet individually with each of our managers in our branch network. This is a critical component of our long-term growth program. The President learns first-hand of the challenges and opportunities facing our front-line staff. Strategies are implemented to address the concerns that are raised. In connection with this tour, additional sales training was provided to all branch managers which we anticipate will contribute to future revenue growth."
Mr. Reykdal further commented: "In the quarter, we executed on our long-term product diversification strategy by acting on our agency agreement with DirectCash Bank and offering bank accounts across our entire branch network. DirectCash Bank is a schedule 1 bank that offers Canadian Deposit Insurance Corporation insured bank accounts that have proven popular with our customers. To secure additional ancillary revenue, we plan to further expand this offering over coming periods.
"We have also continued our international expansion efforts. We have an 18.4% ownership interest in the Cash Store Australia Holdings Inc. (TSXV: AUC), which we believe will produce positive contributions in coming periods; in its most recent quarterly financial release, the Cash Store Australia reported that it has now moved into profitability. Cash Store Australia now has 53 branches in operation and is expected to experience revenue growth as older branches move into maturity."
Mr Reykdal further commented: "Our ability to expand rapidly and our sustained revenue growth are a testament to the commitment of our associates. Through our innovative profit-sharing compensation program and our use of Cash Store TV and Cash Store College, our technology-based training platforms, we have better-trained our associates to provide quality customer service to every new customer that enters a branch. Associate retention levels continue to improve and this has been reflected in our revenue and earnings."
Mr. Reykdal added: "Many provinces have recently implemented consumer protection measures for the payday loan industry. These measures will and have included rate caps and a ban on rollovers. 88% of our branches are located in British Columbia, Alberta, Ontario and Nova Scotia. Regulation of the industry in these provinces has been fully implemented. This is a welcome development that demonstrates to capital markets that the industry is now supported by a high degree of regulatory certainty and that the industry's long-term stability has been secured. We have not experienced any material negative impacts as a result of regulations. The Company has accommodated regulation more effectively than some competitors and there has been industry consolidation as a result. Regulation has positioned the Company to lend its own capital. We continue in our efforts to source cheaper capital and expect to achieve significant savings in the near future. We believe that industry regulation will encourage previously untapped consumer segments to enter the market and offer new revenue opportunities. We continue to view regulation as a positive for the Company and expect the benefits to accrue over the long-term."
Mr. Reykdal concluded: "We have declared a quarterly dividend of $0.10 payable to on May 26, 2010 to shareholders of record on May 11, 2010. For the nine month period ending March 31, 2010, the Company made dividend payments totalling $5.7 million."
About Cash Store Financial
Cash Store Financial is the only broker of short-term advances and provider of other financial services in Canada publicly traded on the Toronto Stock Exchange (TSX: CSF). Cash Store Financial operates more than 500 branches across Canada under the banners: The Cash Store and Instaloans.
The Cash Store and Instaloans act as brokers to facilitate short-term advances and provider of other financial 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 financial services.
Cash Store Financial employs approximately 1,900 associates and is headquartered in Edmonton, Alberta.
Selected Financial Information
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Thousands of dollars,
except for per share
amounts and branch
figures Three Months Ended Nine Months Ended
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Consolidated results March 31 March 31 March 31 March 31
2010 2009 2010 2009
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No. of branches 489 423 489 423
Revenue
Brokerage $ 32,330 $ 30,094 $102,237 $ 91,686
Other income 8,428 6,212 22,445 19,089
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40,758 36,306 124,682 110,775
Branch expenses 22,315 20,110 64,605 57,582
Retention payments 5,300 4,537 15,400 13,388
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Branch operating income 13,143 11,659 44,677 39,805
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Regional expenses 2,921 2,140 8,128 5,885
Corporate expenses 3,839 4,523 11,811 11,619
Other amortization 279 311 1,637 807
Income before income
taxes and class action
settlements 6,104 4,685 23,101 21,494
Class action settlements 2,715 - 2,815 1,910
EBITA* 5,277 6,460 26,643 24,692
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Net income and
comprehensive income $ 2,199 $ 3,067 $ 13,306 $ 13,413
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Weighted average number
of shares outstanding
- basic 16,909 16,927 16,829 18,299
Basic earnings per share
Income before class
action settlement
costs $ 0.23 $ 0.18 $ 0.90 $ 0.80
Net income and
comprehensive income $ 0.13 $ 0.18 $ 0.80 $ 0.73
Diluted earnings per
share
Income before class
action settlement
costs $ 0.23 $ 0.18 $ 0.88 $ 0.80
Net income and
comprehensive income $ 0.13 $ 0.18 $ 0.78 $ 0.73
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Consolidated Balance
Sheet Information
Working capital $ 9,885 $ 10,360 $ 9,885 $ 10,360
Total assets 92,803 80,213 92,803 80,213
Total long-term
liabilities 3,663 2,267 3,663 2,267
Total liabilities 20,213 14,984 20,213 14,984
Shareholders' equity $ 72,590 $ 65,229 $ 72,590 $ 65,229
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* EBITA - earnings from operations before interest, income taxes,
stock-based compensation, amortization of capital and intangible
assets
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 26, 2009 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: 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
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