Exhibit 99.1
FOR IMMEDIATE RELEASE
Contacts: | | Jamie Fulmer- (864) 342-5633 |
| | Director of Investor Relations |
| | jfulmer@advanceamerica.net |
Advance America Reports Third Quarter
SPARTANBURG, S.C., October 24, 2007 – Advance America, Cash Advance Centers, Inc. (NYSE: AEA) today reported the results of its operations for the nine months and third quarter ended September 30, 2007.
For the nine months ended September 30, 2007, total revenues increased 8.1% to $525.9 million, compared to $486.6 million for the same period in 2006. Total revenues for the quarter ended September 30, 2007 increased 3.0% to $183.9 million compared to $178.6 million for the same period in 2006. For the quarter ended September 30, 2007, total revenues for the centers opened prior to July 1, 2006 and still open as of September 30, 2007 (excluding all centers in Pennsylvania and Oregon) increased 2.6% compared to the same period in 2006.
On September 20, 2007, the Company announced the closing of 31 centers in Pennsylvania, 45 centers in Oregon, and 27 underperforming centers in various other states, for a total of 103 centers. The Company incurred charges of approximately $11.0 million for these center closings during the third quarter, including writing down the
value of its receivables by $6.7 million, which includes impaired receivables for the remaining 67 centers in Pennsylvania, center closing costs of $2.9 million, and loss on disposal of fixed assets of $1.4 million. These charges are reflected in the Company’s results for the nine months and quarter ended September 30, 2007.
The provision for doubtful accounts as a percent of total revenues for the quarter ended September 30, 2007, which includes the write down of receivables of $6.7 million, was 27.6% compared to 22.7% for the same period in 2006. Excluding the previously mentioned write down of receivables, the provision for doubtful accounts, as a percent of total revenues, was 23.9%. The Company believes excluding the write down of receivables facilitates an understanding of recurring operating results and the comparison of period-over period performance. Proceeds from the sale of previously written-off customer receivables during the third quarter of 2007 totaled approximately $1.7 million compared to $1.0 million for the same period in 2006.
Center gross profit was $130.7 million in the first nine months of 2007 compared to $137.1 million in the same period of 2006. For the quarter ended September 30, 2007, center gross profit was $30.6 million compared to $48.4 million for the same period in 2006. The previously mentioned write down of receivables and center closing costs reduced center gross profit by $9.6 million for the nine months and quarter ended September 30, 2007.
Net income for the first nine months of 2007 was $42.9 million, compared to $51.3 million for the same period in 2006. Net income for the quarter ended September 30, 2007 was $5.7 million compared to $18.0 million for the same period in 2006. The
previously mentioned write down of receivables, center closing costs, and loss on disposal of fixed assets reduced net income by $6.5 million for the nine months and quarter ended September 30, 2007.
For the nine months ended September 30, 2007, diluted earnings per share were $0.54 compared to diluted earnings per share of $0.63 for the same period in 2006. Diluted earnings per share were $0.07 for the quarter ended September 30, 2007, compared to diluted earnings per share of $0.22 for the same period in 2006. The previously mentioned write down of receivables, center closing costs, and loss on disposal of fixed assets reduced diluted earnings per share by approximately $0.09 for the nine months and quarter ended September 30, 2007.
Commenting on the third quarter 2007 results, Advance America’s President and Chief Executive Officer Ken Compton said, “Our operations were negatively affected in large part by legislative events in Oregon and legal events in Pennsylvania, which resulted in reduced revenue and increased costs due to center closings. Despite these setbacks, we remain focused on executing our core business strategies, which include operational excellence, continued growth and expansion of our geographic footprint, and the further development of new product offerings that we believe will strengthen our performance. All of these are designed to continue our history of returning value to our stockholders.”
Since June 28, 2007, the Company’s subsidiary in the United Kingdom has completed the acquisition of 11 centers and has entered into contracts with an additional 85 limited
licensees. The aggregate purchase price for these acquisitions was approximately $4.8 million. On October 18, 2007 the Company opened its first center in Canada, in the province of Manitoba.
Commenting on the acquisition activity in the United Kingdom and the opening of Advance America’s first Canadian center, Compton said, “We believe the acquisitions we have made in the United Kingdom provide the Company with an excellent platform to grow our business there. In addition, we are pleased to have our first center open for business in Canada. We believe that both the United Kingdom and Canada represent tremendous growth opportunities for our Company and we look forward to expanding our footprint in both countries.”
Since becoming a public company in December of 2004, the Company has returned approximately $189 million in cash to its stockholders through the repurchase of shares and the payment of our quarterly dividends.
During the third quarter, the Company repurchased approximately 2.1 million shares of its common stock in the open market for an aggregate purchase price of $27.0 million. The remaining authorization on the Company’s previously announced share repurchase program is $53.5 million. In connection with the stock repurchase program, the Company’s Board of Directors has authorized a pre-arranged repurchase plan intended to comply with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended.
Today, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share. The dividend will be payable on December 7, 2007, to stockholders of record as of November 27, 2007.
The Company added 57 and 164 new centers during the three months and nine months ended September 30, 2007, respectively, compared to 91 and 179 during the same periods in 2006. As of September 30, 2007, the Company had an operating network of 2,921 centers and 85 limited licensees in 37 states and the United Kingdom. After giving full effect to the center closings announced on September 20, 2007, the Company’s network of centers totaled 2,849 in 36 states and the United Kingdom.
The Company will discuss the results on a conference call Thursday, October 25 at 9:00 a.m. (EDT).
To listen to this call, please dial the conference telephone number (888) 334-3020. This call will also be webcast live and can be accessed at Advance America’s website www.advanceamericacash.com. An audio replay of the call will be available online or by telephone (888) 203-1112 (replay passcode: 6143687) until the close of business on November 1, 2007.
About Advance America:
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the country’s leading provider of payday cash advance services with approximately 2,850 centers and 85 limited licensees in 36 states, the United Kingdom and Canada. The Company offers convenient, less-costly credit options to consumers whose needs are not met by traditional financial institutions. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws
that provide substantive consumer protections and to encourage responsible industry practices.
Forward-Looking Statements and Information:
Certain statements contained in this release may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this release other than those relating to our historical information or current condition are forward-looking statements. For example, any statements regarding our future financial performance, our business strategy, and expected developments in our industry are forward-looking statements. Although we believe that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations and the related statements are inherently subject to risks, uncertainties, and other factors, many of which are not under our control and may not even be predictable. Therefore, actual results could differ materially from our expectations as of today and any future results, performance, or achievements expressed directly or impliedly by the forward-looking statements. For a more detailed discussion of some of the factors that may cause our actual results to differ from our current expectations, please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and of our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2007, copies of which are available from the Securities and Exchange Commission, upon request from us, or by going to our website: www.advanceamericacash.com.
Interim Unaudited Consolidated Statements of Income
Three and Nine Months Ended September 30, 2006 and 2007
(in thousands, except per share data)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2006 | | 2007 | | 2006 | | 2007 | |
| | | | | | | | | |
Revenues: | | | | | | | | | |
Fees and interest charged to customers | | $ | 178,521 | | $ | 183,926 | | $ | 474,224 | | $ | 525,948 | |
Marketing, processing and servicing fees | | 31 | | — | | 12,418 | | — | |
Total revenues | | 178,552 | | 183,926 | | 486,642 | | 525,948 | |
| | | | | | | | | |
Provision for doubtful accounts and agency bank losses | | (40,514 | ) | (50,704 | ) | (79,825 | ) | (97,343 | ) |
Net revenues | | 138,038 | | 133,222 | | 406,817 | | 428,605 | |
| | | | | | | | | |
Center Expenses: | | | | | | | | | |
Salaries and related payroll costs | | 46,661 | | 50,235 | | 139,379 | | 149,191 | |
Occupancy costs | | 22,113 | | 24,949 | | 64,242 | | 72,168 | |
Center depreciation expense | | 4,081 | | 4,343 | | 12,034 | | 12,876 | |
Advertising expense | | 3,780 | | 6,537 | | 13,210 | | 19,438 | |
Other center expenses | | 12,955 | | 16,561 | | 40,880 | | 44,247 | |
Total center expenses | | 89,590 | | 102,625 | | 269,745 | | 297,920 | |
Center gross profit | | 48,448 | | 30,597 | | 137,072 | | 130,685 | |
| | | | | | | | | |
Corporate and Other Expenses (Income): | | | | | | | | | |
General and administrative expenses | | 12,978 | | 15,043 | | 39,755 | | 44,006 | |
Corporate depreciation expense | | 902 | | 780 | | 2,798 | | 2,410 | |
Interest expense | | 2,170 | | 3,168 | | 3,996 | | 7,771 | |
Interest income | | (120 | ) | (63 | ) | (419 | ) | (261 | ) |
Loss on disposal of property and equipment | | 334 | | 1,893 | | 825 | | 2,428 | |
Loss on impairment of assets | | — | | — | | — | | 314 | |
Income before income taxes | | 32,184 | | 9,776 | | 90,117 | | 74,017 | |
Income tax expense | | 13,322 | | 3,792 | | 36,559 | | 30,321 | |
Income before income of consolidated variable interest entity | | 18,862 | | 5,984 | | 53,558 | | 43,696 | |
Income of consolidated variable interest entity | | (894 | ) | (251 | ) | (2,267 | ) | (811 | ) |
Net income | | $ | 17,968 | | $ | 5,733 | | $ | 51,291 | | $ | 42,885 | |
| | | | | | | | | |
Net income per common share - basic | | $ | 0.22 | | $ | 0.07 | | $ | 0.63 | | $ | 0.54 | |
Weighted average number of shares outstanding - basic | | 80,821 | | 78,068 | | 81,489 | | 78,765 | |
| | | | | | | | | |
Net income per common share - diluted | | $ | 0.22 | | $ | 0.07 | | $ | 0.63 | | $ | 0.54 | |
Weighted average number of shares outstanding - diluted | | 80,939 | | 78,136 | | 81,584 | | 78,822 | |
Consolidated Balance Sheets
December 31, 2006 and September 30, 2007 (unaudited)
(in thousands, except per share data)
| | December 31, | | September 30, | |
| | 2006 | | 2007 | |
| | | | (unaudited) | |
Assets | | | | | |
Current assets | | | | | |
Cash and cash equivalents | | $ | 67,245 | | $ | 32,055 | |
Advances and fees receivable, net | | 237,725 | | 237,824 | |
Deferred income taxes | | 11,798 | | 14,394 | |
Other current assets | | 11,664 | | 15,407 | |
Total current assets | | 328,432 | | 299,680 | |
Restricted cash | | 5,446 | | 5,644 | |
Property and equipment, net | | 63,198 | | 58,482 | |
Goodwill | | 122,627 | | 127,205 | |
Other assets | | 5,389 | | 4,304 | |
Total assets | | $ | 525,092 | | $ | 495,315 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
Current liabilities | | | | | |
Accounts payable | | $ | 21,164 | | $ | 16,200 | |
Accrued liabilities | | 31,737 | | 30,549 | |
Income taxes payable | | 14,983 | | 5 | |
Current portion of long-term debt | | 537 | | 533 | |
Total current liabilities | | 68,421 | | 47,287 | |
Revolving credit facility | | 104,835 | | 106,118 | |
Long-term debt | | 5,678 | | 5,275 | |
Deferred income taxes | | 13,564 | | 16,836 | |
Other liabilities | | 157 | | 203 | |
Total liabilities | | 192,655 | | 175,719 | |
| | | | | |
Non-controlling interest in variable interest entity | | 32,540 | | 31,905 | |
| | | | | |
Commitments and contingencies | | | | | |
Stockholders’ equity | | | | | |
Preferred stock, par value $.01 per share, 25,000 shares authorized; no shares issued and outstanding | | — | | — | |
Common stock, par value $.01 per share, 250,000 shares authorized;
96,821 shares issued and 79,534 shares outstanding at December 31, 2006;
96,821 shares issued and 77,374 shares outstanding at September 30, 2007 | | 968 | | 968 | |
Paid in capital | | 285,382 | | 286,778 | |
Retained earnings | | 118,258 | | 131,667 | |
Common stock in treasury (17,287 shares at cost at December 31, 2006;
19,447 shares at cost at September 30, 2007) | | (104,711 | ) | (131,722 | ) |
Total stockholders’ equity | | 299,897 | | 287,691 | |
Total liabilities and stockholders’ equity | | $ | 525,092 | | $ | 495,315 | |
