Exhibit 99.1
Cash America Announces Third Quarter Results and Dividend Declared
FORT WORTH, Texas--(BUSINESS WIRE)--October 23, 2014--Cash America International, Inc. (NYSE:CSH) announced today that reported net income attributable to the Company for the third quarter ended September 30, 2014, was $9,916,000 (34 cents per share). During the third quarter of 2014, management implemented plans that generated $14.1 million in after tax expenses (48 cents per share) related to the sale of non-strategic operations, the early extinguishment of long-term debt and to complete a corporate reorganization to create efficiencies in its Retail Services segment. Excluding the $14.1 million of unusual expense items incurred in the third quarter of 2014, adjusted net income, a non-GAAP measure, would have been $24.0 million (82 cents per share) for the third quarter ended September 30, 2014. Net income for the comparable third quarter of 2013 was $46,186,000 ($1.52 per share), which included an after tax net benefit of $21.9 million (72 cents per share) that was created by a tax credit that was partially offset by a significant litigation settlement during the period. The adjusted net income, a non-GAAP measure, for the third quarter of 2013, excluding the net benefit, was $24.3 million (80 cents per share).
Consolidated total revenue during the third quarter of 2014 increased by 8% to $472.2 million compared to $437.8 million during the same period in 2013. Consolidated net revenue for the three months ended September 30, 2014, increased 12% to $276.4 million from $247.0 million in the same period of 2013 as loss rates on the consumer loan portfolio were lower overall and pawn-related net revenue was up for the second consecutive quarter in 2014. The aggregate balance of consumer loans outstanding rose slightly as U.S. consumer loan growth outstripped the anticipated decline in foreign consumer loans related to changes in the regulatory environment in the United Kingdom. Total pawn loan balances in the United States were up 6.5% year-over-year and same store pawn loan balances were up 2.1% as of the end of the third quarter of 2014 compared to the same period in 2013.
During the third quarter of 2014, the Company sold non-strategic lending operations, including the disposition of 47 locations in Mexico and the disposition of 5 locations in Colorado, which generated approximately $21.5 million in net cash proceeds but contributed to an aggregate loss of $6.4 million after taxes (22 cents per share). In addition, the Company purchased $103.5 million of its outstanding long-term fixed-rate senior notes in the open market during the third quarter, which generated $6.0 million in pretax charges ($3.8 million after taxes, or 13 cents per share) related to the early extinguishment of debt. Management also completed a corporate reorganization effort in anticipation of the impending separation of its Retail Services segment and its E-Commerce segment and incurred severance and benefits costs of $6.1 million before taxes ($3.9 million after taxes, or 13 cents per share). In the third quarter of 2013, the Company recognized a tax benefit of $33.2 million ($1.09 per share) related to the reorganization of its Mexico-based pawn operations, and incurred an $18.0 million pre-tax expense ($11.3 million after taxes or 37 cents per share) associated with a negotiated settlement of a class-action lawsuit. These two items combined to create a net benefit to after tax income of $21.9 million (72 cents per share) for the period ended September 30, 2013.
Commenting on the results for the third quarter, Daniel R. Feehan, President and Chief Executive Officer, said, “We have completed a variety of strategic initiatives during the third quarter, including the refocusing of our domestic pawn operations and the positioning of our E-Commerce segment to be an independent public company. We have taken the steps we feel have the greatest potential for delivering long-term value to our shareholders for many periods in the future. Operationally, we also successfully moved through the initial transition of our U.K. e-commerce business to meet the new regulatory requirements in the United Kingdom, and we maintained our positive metrics of pawn lending that started in the second quarter.”
For the nine-month period ended September 30, 2014, the Company reported net income of $76,624,000 ($2.61 per share) compared to $115,244,000 ($3.73 per share) for the same period in 2013. Excluding the unusual items discussed above in the third quarter of 2014 totaling $14.1 million after tax (48 cents per share) plus an additional $16.5 million pre-tax ($10.4 million after tax, or 36 cents per share) attributable to the early extinguishment of debt in the first two quarters of 2014, adjusted net earnings, a non-GAAP measure, would have been $101.5 million ($3.45 per share) for the nine-month period ended September 30, 2014. This compares to adjusted net earnings, a non-GAAP measure, of $93.4 million ($3.02 per share) for the nine-month period ended September 30, 2013, when adding back the unusual items discussed above for the 2013 period, which totaled $21.9 million (71 cents per share).
Total revenue was $1.4 billion for the nine-month period ended September 30, 2014, compared to $1.3 billion for the same nine-month period in 2013.
Cash America will host a conference call to discuss the third quarter results and the previously announced spin-off of the Company’s e-commerce segment on Thursday, October 23, at 7:00 AM CDT. A live webcast of the call will be available on the Investor Relations section of the Company’s corporate website (http://www.cashamerica.com). To listen to the live call, please go to the website at least fifteen minutes early to register, download, and install any necessary audio software. A replay will be available on the Company’s website following the call.
Additionally, the Company announced that the Board of Directors, at its regularly scheduled quarterly meeting, declared a $0.035 (3.5 cents) per share cash dividend on common stock outstanding. The dividend will be paid at the close of business on November 19, 2014, to shareholders of record on November 5, 2014.
Outlook for the Fourth Quarter of 2014 and 2015 Fiscal Year
Management believes that the opportunities for growth in revenue and earnings will be largely associated with customer demand for the credit products provided by the Company, which take the form of pawn loans and consumer loans and the disposition of unredeemed collateral by way of consumer spending on retail sales and the commercial sale of refined gold and diamonds. The fourth quarter, during the seasonally important holiday selling season, represents an important period of retail sales for the Company, and results will be affected by consumer sentiments during the period. There are various other elements that could affect the growth in revenue, such as the regulation of consumer loan products and the development and growth of additional markets for the Company’s e-commerce segment for consumer lending products. As the Company enters the fourth quarter of 2014, management anticipates that demand for the Company’s consumer loan products will continue on a similar pace to the one it has experienced during the first nine months of 2014, with a continued heavier weighting to the consumer loan portfolio and longer-term installment and line of credit products. Demand for the Company’s pawn lending products during the second and third quarters of 2014 have improved, and management expects a continued growth in the Company’s pawn lending business, but at moderate levels for the balance of 2014 and the first half of 2015.
Due to the recent announcement of Board approval to spin-off the Company’s e-commerce segment, management is initiating its expectations for fiscal year 2015, breaking expectations out by each of the two segments into their relative expected range for adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, a non-GAAP measure. Based on its current views of the coming year, management establishes its initial anticipated range of adjusted EBITDA, of between $110 million to $135 million for fiscal 2015 for the retail services segment, including corporate services for that segment, and an anticipated range of adjusted EBITDA of between $180 million to $240 million for fiscal 2015 for the e-commerce segment, which is also known as Enova International, Inc.
Management is providing its expectations for the fourth quarter of 2014 as if the separation of the e-commerce segment, or Enova, does not occur before year-end 2014 in order to remain consistent with past practice related to reporting management’s expectations for future periods. Based on management’s views and on the preceding factors, management expects the fourth quarter 2014 consolidated net income per share to be between $1.00 and $1.10 per share as if the separation of the e-commerce segment does not occur before year end 2014. This range compares to $1.01 per share of consolidated net income in the fourth quarter of 2013, which included $2.8 million of after-tax expenses related to the closure of 28 locations in Texas that offered unsecured consumer loans as the primary source of revenue, a regulatory penalty incurred during the period, an adjustment to the remaining expected liability for the voluntary refund to customers in Ohio and expenses related to the early extinguishment of debt.
Based on the Company’s results through the first nine months of 2014, management expects its consolidated fiscal year 2014 earnings per share to be in a range of between $4.40 and $4.50 per share as if the separation of the e-commerce business does not occur before year end 2014, on a non-GAAP adjusted basis, adjusted for the third quarter unusual items discussed above of 48 cents per share, plus 35 cents per share related to the early extinguishment of debt in the first half of 2014, or 83 cents in total. This compares to the fiscal year 2013 consolidated net earnings per share of $4.04 per share, on a non-GAAP adjusted basis, which excludes a net benefit from unusual items during the year of $18.8 million (a benefit of 62 cents per share). During 2013, the Company recorded a tax benefit related to the disposition of assets and reorganization of its Mexico-based pawn lending business of $33.2 million ($1.09 per share), which was partially offset by unusual expense items of $14.4 million (47 cents per share) related to a litigation settlement during the third quarter of 2013, the closure of consumer lending locations, a regulatory penalty, an adjustment to the remaining expected liability for the voluntary refund to customers in Ohio and expenses for the early extinguishment of debt. Combining these amounts generates the net benefit of unusual items in 2013 of $18.8 million (62 cents per share).
Non-GAAP Measures
The “Adjusted Earnings and Adjusted Earnings Per Share” and the “Adjusted EBITDA” sections included in the attachments to this press release contains a reconciliation of non-GAAP information and a discussion of the reasons why the Company’s management believes that presentation of non-GAAP financial measures provide useful information to investors regarding the Company’s financial condition and results of operations.
About the Company
As of September 30, 2014, Cash America International, Inc. (the “Company”) operated 948 total locations offering specialty financial services to consumers, which included the following:
- 863 lending locations in 21 states in the United States primarily under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” and “Cashland;” and
- 85 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 12 states in the United States under the name “Mr. Payroll.”
Additionally, as of September 30, 2014, the Company offered consumer loans over the Internet to customers:
- in 34 states in the United States at http://www.cashnetusa.com; http://www.netcredit.com; and http://www.headwaycapital.com;
- in the United Kingdom at http://www.quickquid.co.uk, http://www.quickquidflexcredit.co.uk, http://www.poundstopocket.co.uk, and http://www.onstride.co.uk;
- in Australia at http://www.dollarsdirect.com.au;
- in Canada at http://www.dollarsdirect.ca;
- in Brazil at http://www.simplic.com.br; and
- in China at http://www.youxinyi.cn.
For additional information regarding the Company and the services it provides, visit the Company’s websites located at:
http://www.cashamerica.com | | | http://www.dollarsdirect.com.au |
http://www.enova.com | | | http://www.dollarsdirect.ca |
http://www.cashnetusa.com | | | http://www.quickquidflexcredit.co.uk |
http://www.netcredit.com | | | http://www.onstride.co.uk |
http://www.cashlandloans.com | | | http://www.simplic.com.br |
http://www.quickquid.co.uk | | | http://www.mrpayroll.com |
http://www.poundstopocket.co.uk | | | http://www.youxinyi.cn |
http://www.headwaycapital.com | | | |
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This release contains forward-looking statements about the business, financial condition, operations and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation: the effect of, compliance with or changes in domestic and foreign pawn, consumer credit, tax and other laws and governmental rules and regulations applicable to the Company's business or changes in the interpretation or enforcement thereof; the regulatory and examination authority of the Consumer Financial Protection Bureau in the U.S. and the Financial Conduct
Authority in the United Kingdom, including the effect of and compliance with a consent order the Company entered into with the Consumer Financial Protection Bureau in November 2013 and changes to the Company’s UK business practices as a result of adapting the Company’s business in response to the requirements of the Financial Conduct Authority; changes in the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate; risks related to the potential separation of the Company’s online lending business that comprises its e-commerce segment, Enova International, Inc.; the Company’s ability to process or collect consumer loans through the Automated Clearing House system; the actions of third parties who provide, acquire or offer products and services to, from or for the Company; public and regulatory perception of the Company’s business, including its consumer loan business and its business practices; the effect of any current or future litigation proceedings or any judicial decisions or rule-making that affect the Company, its products or its arbitration agreements; fluctuations, including a sustained decrease, in the price of gold or deterioration in economic conditions; a prolonged interruption in the Company’s operations of its facilities, systems and business functions, including its information technology and other business systems; changes in demand for the Company’s services and changes in competition; the Company’s ability to maintain an allowance or liability for estimated losses on consumer loans that are adequate to absorb credit losses; the Company’s ability to attract and retain qualified executive officers; the ability of the Company to open new locations in accordance with its plans or to successfully integrate newly acquired businesses into the Company’s operations; interest rate and foreign currency exchange rate fluctuations; changes in the capital markets, including the debt and equity markets; changes in the Company’s ability to satisfy its debt obligations or to refinance existing debt obligations or obtain new capital to finance growth; security breaches, cyber-attacks or fraudulent activity; acts of God, war or terrorism, pandemics and other events; the effect of any of such changes on the Company’s business or the markets in which it operates; and other risks and uncertainties indicated in the Company’s filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this release.
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| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS |
(dollars in thousands, except per share data) |
(Unaudited) |
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| Consolidated Operations: | | | | | | | | | | | | | | | | |
| Total revenue | | $ | 472,178 | | | $ | 437,801 | | | $ | 1,420,368 | | | $ | 1,316,309 | |
| Net revenue | | | 276,352 | | | | 247,007 | | | | 847,279 | | | | 763,138 | |
| Total expenses | | | 231,351 | | | | 218,488 | | | | 656,670 | | | | 607,785 | |
| | | | | | | | | | | | | | | | |
| Income from Operations | | $ | 45,001 | | | $ | 28,519 | | | $ | 190,609 | | | $ | 155,353 | |
| Income before income taxes | | | 21,394 | | | | 18,173 | | | | 127,282 | | | | 128,279 | |
| | | | | | | | | | | | | | | | |
| Net Income | | $ | 9,916 | | | $ | 46,186 | | | $ | 76,624 | | | $ | 115,552 | |
| | | | | | | | | | | | | | | | |
| Net income attributable to the noncontrolling interest | | $ | — | | | $ | — | | | $ | — | | | $ | (308 | ) |
| | | | | | | | | | | | | | | | |
| Net Income Attributable to Cash America International, Inc. | | $ | 9,916 | | | $ | 46,186 | | | $ | 76,624 | | | $ | 115,244 | |
| | | | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | | | | |
| Net Income attributable to Cash America International, Inc. common shareholders: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.34 | | | $ | 1.62 | | | $ | 2.66 | | | $ | 4.01 | |
| Diluted | | $ | 0.34 | | | $ | 1.52 | | | $ | 2.61 | | | $ | 3.73 | |
| | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 29,186 | | | | 28,426 | | | | 28,808 | | | | 28,747 | |
| Diluted | | | 29,312 | | | | 30,379 | | | | 29,371 | | | | 30,857 | |
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| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| (dollars in thousands, except per share information) |
| (Unaudited) |
| | | | | | | | | | | | |
| | September 30, | | December 31, |
| | 2014 | | 2013 | | 2013 |
| Assets | | | | | | | | | | | | |
| Current assets: | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 123,532 | | | $ | 80,359 | | | $ | 67,228 | |
| Restricted cash | | | 60 | | | | — | | | | 8,000 | |
| Pawn loans | | | 264,612 | | | | 253,678 | | | | 261,148 | |
| Consumer loans, net | | | 348,225 | | | | 328,281 | | | | 358,841 | |
| Merchandise held for disposition, net | | | 215,263 | | | | 193,115 | | | | 208,899 | |
| Pawn loan fees and service charges receivable | | | 54,501 | | | | 50,090 | | | | 53,438 | |
| Income taxes receivable | | | — | | | | 10,931 | | | | 9,535 | |
| Prepaid expenses and other assets | | | 33,871 | | | | 28,840 | | | | 33,655 | |
| Deferred tax assets | | | 36,076 | | | | 46,429 | | | | 38,800 | |
| Total current assets | | | 1,076,140 | | | | 991,723 | | | | 1,039,544 | |
| Property and equipment, net | | | 245,382 | | | | 257,787 | | | | 261,223 | |
| Goodwill | | | 699,061 | | | | 670,037 | | | | 705,579 | |
| Intangible assets, net | | | 47,490 | | | | 46,860 | | | | 52,256 | |
| Other assets | | | 32,272 | | | | 21,185 | | | | 21,129 | |
| Total assets | | $ | 2,100,345 | | | $ | 1,987,592 | | | $ | 2,079,731 | |
| Liabilities and Equity | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 141,351 | | | $ | 133,736 | | | $ | 140,068 | |
| Customer deposits | | | 19,271 | | | | 15,123 | | | | 14,803 | |
| Income taxes currently payable | | | 1,399 | | | | — | | | | — | |
| Current portion of long-term debt | | | — | | | | 22,606 | | | | 22,606 | |
| Total current liabilities | | | 162,021 | | | | 171,465 | | | | 177,477 | |
| Deferred tax liabilities | | | 110,624 | | | | 96,286 | | | | 101,417 | |
| Other liabilities | | | 1,124 | | | | 1,287 | | | | 1,031 | |
| Long-term debt | | | 700,043 | | | | 660,243 | | | | 717,383 | |
| Total liabilities | | $ | 973,812 | | | $ | 929,281 | | | $ | 997,308 | |
| Equity: | | | | | | | | | | | | |
| Cash America International, Inc. equity: | | | | | | | | | | | | |
| Common stock, $0.10 par value per share, 80,000,000 shares authorized, 30,235,164 shares issued and outstanding | | | 3,024 | | | | 3,024 | | | | 3,024 | |
| Additional paid-in capital | | | 87,718 | | | | 152,872 | | | | 150,833 | |
| Retained earnings | | | 1,091,629 | | | | 991,682 | | | | 1,017,981 | |
| Accumulated other comprehensive income (loss) | | | 2,073 | | | | 2,614 | | | | 4,649 | |
| Treasury shares, at cost (1,379,345 shares, 2,164,873 shares and 2,224,902 shares as of September 30, 2014 and 2013, and as of December 31, 2013, respectively) | | | (57,911 | ) | | | (91,881 | ) | | | (94,064 | ) |
| Total equity | | | 1,126,533 | | | | 1,058,311 | | | | 1,082,423 | |
| Total liabilities and equity | | $ | 2,100,345 | | | $ | 1,987,592 | | | $ | 2,079,731 | |
| | | | | | | | | | | | |
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| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF INCOME |
(dollars in thousands, except per share data) |
(Unaudited) |
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| Revenue | | | | | | | | | | | | | | | | |
| Pawn loan fees and service charges | | $ | 85,313 | | | $ | 79,298 | | | $ | 246,490 | | | $ | 227,940 | |
| Proceeds from disposition of merchandise | | | 155,087 | | | | 128,660 | | | | 478,314 | | | | 438,909 | |
| Consumer loan fees | | | 229,435 | | | | 227,563 | | | | 688,956 | | | | 640,199 | |
| Other | | | 2,343 | | | | 2,280 | | | | 6,608 | | | | 9,261 | |
| Total Revenue | | | 472,178 | | | | 437,801 | | | | 1,420,368 | | | | 1,316,309 | |
| Cost of Revenue | | | | | | | | | | | | | | | | |
| Disposed merchandise | | | 114,293 | | | | 91,101 | | | | 343,367 | | | | 301,397 | |
| Consumer loan loss provision | | | 81,533 | | | | 99,693 | | | | 229,722 | | | | 251,774 | |
| Total Cost of Revenue | | | 195,826 | | | | 190,794 | | | | 573,089 | | | | 553,171 | |
| Net Revenue | | | 276,352 | | | | 247,007 | | | | 847,279 | | | | 763,138 | |
| Expenses | | | | | | | | | | | | | | | | |
| Operations and administration | | | 205,731 | | | | 199,705 | | | | 592,292 | | | | 553,471 | |
| Loss on divestitures | | | 5,176 | | | | — | | | | 5,176 | | | | — | |
| Depreciation and amortization | | | 20,444 | | | | 18,783 | | | | 59,202 | | | | 54,314 | |
| Total Expenses | | | 231,351 | | | | 218,488 | | | | 656,670 | | | | 607,785 | |
| Income from Operations | | | 45,001 | | | | 28,519 | | | | 190,609 | | | | 155,353 | |
| Interest expense | | | (17,467 | ) | | | (9,260 | ) | | | (40,363 | ) | | | (25,608 | ) |
| Interest income | | | 10 | | | | 1 | | | | 28 | | | | 69 | |
| Foreign currency transaction loss | | | (159 | ) | | | (741 | ) | | | (439 | ) | | | (1,053 | ) |
| Loss on early extinguishment of debt | | | (5,991 | ) | | | (346 | ) | | | (22,553 | ) | | | (346 | ) |
| Equity in loss of unconsolidated subsidiary | | | — | | | | — | | | | — | | | | (136 | ) |
| Income before Income Taxes | | | 21,394 | | | | 18,173 | | | | 127,282 | | | | 128,279 | |
| Provision (benefit) for income taxes | | | 11,478 | | | | (28,013 | ) | | | 50,658 | | | | 12,727 | |
| Net Income | | | 9,916 | | | | 46,186 | | | | 76,624 | | | | 115,552 | |
| Net income attributable to the noncontrolling interest | | | — | | | | — | | | | — | | | | (308 | ) |
| Net Income Attributable to Cash America International, Inc. | | $ | 9,916 | | | $ | 46,186 | | | $ | 76,624 | | | $ | 115,244 | |
| Earnings Per Share: | | | | | | | | | | | | | | | | |
| Net Income attributable to Cash America International, Inc. common shareholders: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.34 | | | $ | 1.62 | | | $ | 2.66 | | | $ | 4.01 | |
| Diluted | | $ | 0.34 | | | $ | 1.52 | | | $ | 2.61 | | | $ | 3.73 | |
| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 29,186 | | | | 28,426 | | | | 28,808 | | | | 28,747 | |
| Diluted | | | 29,312 | | | | 30,379 | | | | 29,371 | | | | 30,857 | |
| Dividends declared per common share | | $ | 0.035 | | | $ | 0.035 | | | $ | 0.105 | | | $ | 0.105 | |
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| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA |
(dollars in thousands, except where otherwise noted) |
| |
The following tables outline certain data related to pawn loan activities of Cash America International, Inc. and its subsidiaries (the “Company”) as of and for the three and nine months ended September 30, 2014 and 2013 (dollars in thousands except where otherwise noted): |
| | |
| | As of September 30, |
| | 2014 | | | 2013 | | | Change | | % Change |
| Ending pawn loan balances | | | | | | | | | | | | | |
| Domestic retail services | | $ | 264,612 | | | $ | 248,427 | | | $ | 16,185 | | | 6.5 | % |
| Foreign retail services | | | — | | | | 5,251 | | | | (5,251 | ) | | (100.0 | )% |
| Consolidated pawn loan balances | | $ | 264,612 | | | $ | 253,678 | | | $ | 10,934 | | | 4.3 | % |
| Ending merchandise balance, net | | | | | | | | | | | | | |
| Domestic retail services | | $ | 215,263 | | | $ | 186,878 | | | $ | 28,385 | | | 15.2 | % |
| Foreign retail services | | | — | | | | 6,237 | | | | (6,237 | ) | | (100.0 | )% |
| Consolidated merchandise balance, net | | $ | 215,263 | | | $ | 193,115 | | | $ | 22,148 | | | 11.5 | % |
| | |
| | Three Months Ended September 30, |
| | 2014 | | | 2013 | | | Change | | % Change |
| Pawn loan fees and service charges | | | | | | | | | | | | | |
| Domestic retail services | | $ | 84,081 | | | $ | 77,532 | | | $ | 6,549 | | | 8.4 | % |
| Foreign retail services | | | 1,232 | | | | 1,766 | | | | (534 | ) | | (30.2 | )% |
| Consolidated pawn loan fees and service charges | | $ | 85,313 | | | $ | 79,298 | | | $ | 6,015 | | | 7.6 | % |
| Average pawn loan balance outstanding | | | | | | | | | | | | | |
| Domestic retail services | | $ | 263,509 | | | $ | 241,785 | | | $ | 21,724 | | | 9.0 | % |
| Foreign retail services | | | 5,971 | | | | 5,012 | | | | 959 | | | 19.1 | % |
| Consolidated average pawn loans outstanding | | $ | 269,480 | | | $ | 246,797 | | | $ | 22,683 | | | 9.2 | % |
| Amount of pawn loans written and renewed | | | | | | | | | | | | | |
| Domestic retail services | | $ | 277,651 | | | $ | 258,055 | | | $ | 19,596 | | | 7.6 | % |
| Foreign retail services | | | 9,942 | | | | 14,043 | | | | (4,101 | ) | | (29.2 | )% |
| Consolidated amount of pawn loans written and renewed | | $ | 287,593 | | | $ | 272,098 | | | $ | 15,495 | | | 5.7 | % |
| Average amount per pawn loan (in ones) | | | | | | | | | | | | | |
| Domestic retail services | | $ | 125 | | | $ | 125 | | | $ | — | | | — | % |
| Foreign retail services | | $ | 86 | | | $ | 86 | | | $ | — | | | — | % |
| Consolidated average amount per pawn loan (in ones) | | $ | 123 | | | $ | 122 | | | $ | 1 | | | 0.8 | % |
| Annualized yield on pawn loans | | | | | | | | | | | | | |
| Domestic retail services | | | 126.6 | % | | | 127.2 | % | | | | | | | |
| Foreign retail services | | | 134.5 | % | | | 139.8 | % | | | | | | | |
| Consolidated annualized yield on pawn loans | | | 127.0 | % | | | 127.5 | % | | | | | | | |
| Gross profit margin on disposition of merchandise | | | | | | | | | | | | | |
| Domestic retail services | | | 26.5 | % | | | 29.6 | % | | | | | | | |
| Foreign retail services | | | 16.6 | % | | | 17.1 | % | | | | | | | |
| Gross profit margin on disposition of merchandise | | | 26.3 | % | | | 29.2 | % | | | | | | | |
| Merchandise turnover | | | | | | | | | | | | | |
| Domestic retail services | | | 2.1 | | | | 2.1 | | | | | | | | |
| Foreign retail services | | | 3.3 | | | | 2.3 | | | | | | | | |
| Consolidated merchandise turnover | | | 2.2 | | | | 2.1 | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA |
(dollars in thousands, except where otherwise noted) |
| | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2014 | | 2013 | | Change | | % Change |
| Pawn loan fees and service charges | | | | | | | | | | | | | | | |
| Domestic retail services | | $ | 241,459 | | | $ | 222,508 | | | $ | 18,951 | | | 8.5 | % |
| Foreign retail services | | | 5,031 | | | | 5,432 | | | | (401 | ) | | (7.4 | )% |
| Consolidated pawn loan fees and service charges | | $ | 246,490 | | | $ | 227,940 | | | $ | 18,550 | | | 8.1 | % |
| Average pawn loan balance outstanding | | | | | | | | | | | | | | | |
| Domestic retail services | | $ | 247,002 | | | $ | 228,048 | | | $ | 18,954 | | | 8.3 | % |
| Foreign retail services | | | 5,347 | | | | 4,910 | | | | 437 | | | 8.9 | % |
| Consolidated average pawn loans outstanding | | $ | 252,349 | | | $ | 232,958 | | | $ | 19,391 | | | 8.3 | % |
| Amount of pawn loans written and renewed | | | | | | | | | | | | | | | |
| Domestic retail services | | $ | 781,437 | | | $ | 707,758 | | | $ | 73,679 | | | 10.4 | % |
| Foreign retail services | | | 38,837 | | | | 42,303 | | | | (3,466 | ) | | (8.2 | )% |
| Consolidated amount of pawn loans written and renewed | | $ | 820,274 | | | $ | 750,061 | | | $ | 70,213 | | | 9.4 | % |
| Average amount per pawn loan (in ones) | | | | | | | | | | | | | | | |
| Domestic retail services | | $ | 124 | | | $ | 127 | | | $ | (3 | ) | | (2.4 | )% |
| Foreign retail services | | $ | 87 | | | $ | 87 | | | $ | — | | | — | % |
| Consolidated average amount per pawn loan (in ones) | | $ | 122 | | | $ | 124 | | | $ | (2 | ) | | (1.6 | )% |
| Annualized yield on pawn loans | | | | | | | | | | | | | | | |
| Domestic retail services | | | 130.7 | % | | | 130.5 | % | | | | | | | |
| Foreign retail services | | | 144.9 | % | | | 147.9 | % | | | | | | | |
| Consolidated annualized yield on pawn loans | | | 131.2 | % | | | 130.8 | % | | | | | | | |
| Gross profit margin on disposition of merchandise | | | | | | | | | | | | | | | |
| Domestic retail services | | | 28.4 | % | | | 31.7 | % | | | | | | | |
| Foreign retail services | | | 21.0 | % | | | 17.9 | % | | | | | | | |
| Gross profit margin on disposition of merchandise | | | 28.2 | % | | | 31.3 | % | | | | | | | |
| Merchandise turnover | | | | | | | | | | | | | | | |
| Domestic retail services | | | 2.2 | | | | 2.5 | | | | | | | | |
| Foreign retail services | | | 2.7 | | | | 2.5 | | | | | | | | |
| Consolidated merchandise turnover | | | 2.3 | | | | 2.5 | | | | | | | | |
| | | | | | | | | | | | | | | |
| |
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
MERCHANDISE DISPOSITION, GROSS PROFIT AND INVENTORY OPERATING DATA |
(dollars in thousands) |
Profit from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of disposed merchandise, which is generally the principal amount loaned on an item or the amount paid for purchased merchandise. The following tables summarize the proceeds from the disposition of merchandise and the related profit for the three and nine months ended September 30, 2014 and 2013 (dollars in thousands):
| | Three Months Ended September 30, |
| | 2014 | | 2013 |
| | Retail | | Commercial | | Total | | Retail | | Commercial | | Total |
| Proceeds from disposition | | $117,721 | | $37,366 | | $155,087 | | $94,169 | | $34,491 | | $128,660 |
| Gross profit on disposition | | $36,994 | | $3,800 | | $40,794 | | $33,452 | | $4,107 | | $37,559 |
| Gross profit margin | | 31.4% | | 10.2% | | 26.3% | | 35.5% | | 11.9% | | 29.2% |
| Percentage of total gross profit | | 90.7% | | 9.3% | | 100.0% | | 89.1% | | 10.9% | | 100.0% |
| | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2014 | | 2013 |
| | Retail | | Commercial | | Total | | Retail | | Commercial | | Total |
| Proceeds from disposition | | $ | 377,965 | | | $ | 100,349 | | | $ | 478,314 | | | $ | 296,415 | | | $ | 142,494 | | | $ | 438,909 | |
| Gross profit on disposition | | $ | 125,027 | | | $ | 9,920 | | | $ | 134,947 | | | $ | 108,827 | | | $ | 28,685 | | | $ | 137,512 | |
| Gross profit margin | | | 33.1 | % | | | 9.9 | % | | | 28.2 | % | | | 36.7 | % | | | 20.1 | % | | | 31.3 | % |
| Percentage of total gross profit | | | 92.6 | % | | | 7.4 | % | | | 100.0 | % | | | 79.1 | % | | | 20.9 | % | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
The table below summarizes the age of merchandise held for disposition related to the Company’s pawn lending operations before valuation allowance of $2.4 million and $0.9 million as of September 30, 2014 and 2013, respectively (dollars in thousands):
| | As of September 30, |
| | 2014 | | 2013 |
| | Amount | | % | | Amount | | % |
| Jewelry - held for one year or less | | $ | 114,998 | | | 53.0 | % | | $ | 105,583 | | | 54.4 | % |
| Other merchandise - held for one year or less | | | 91,058 | | | 41.9 | % | | | 76,235 | | | 39.3 | % |
| Total merchandise held for one year or less | | | 206,056 | | | 94.9 | % | | | 181,818 | | | 93.7 | % |
| Jewelry - held for more than one year | | | 2,532 | | | 1.2 | % | | | 5,701 | | | 2.9 | % |
| Other merchandise - held for more than one year | | | 8,448 | | | 3.9 | % | | | 6,544 | | | 3.4 | % |
| Total merchandise held for more than one year | | | 10,980 | | | 5.1 | % | | | 12,245 | | | 6.3 | % |
| Merchandise held for disposition, gross | | $ | 217,036 | | | 100.0 | % | | $ | 194,063 | | | 100.0 | % |
| Merchandise held for disposition, net of allowance | | $ | 214,636 | | | | | | $ | 193,115 | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| CONSUMER LOAN FINANCIAL AND OPERATING DATA |
(dollars in thousands, except where otherwise noted) |
| |
The following tables set forth interest and fees on consumer loans by product type and segment, and the related loan loss provision for the three and nine months ended September 30, 2014 and 2013 (dollars in thousands): |
| | |
| | Three Months Ended September 30, |
| | 2014 | | 2013 |
| | | Short-term loans | | Line of credit accounts | | Installment loans | | Total | | Short-term loans | | Line of credit accounts | | Installment loans | | Total |
| Retail services | | $ | 21,476 | | | $ | — | | | $ | 3,355 | | | $ | 24,831 | | | $ | 26,265 | | | $ | — | | | $ | 3,239 | | | $ | 29,504 | |
| E-commerce | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Domestic | | | 46,125 | | | | 41,723 | | | | 38,275 | | | | 126,123 | | | | 48,552 | | | | 32,373 | | | | 24,029 | | | | 104,954 | |
| Foreign | | | 15,760 | | | | 39,186 | | | | 23,535 | | | | 78,481 | | | | 43,958 | | | | 18,131 | | | | 31,016 | | | | 93,105 | |
| Total E-commerce | | | 61,885 | | | | 80,909 | | | | 61,810 | | | | 204,604 | | | | 92,510 | | | | 50,504 | | | | 55,045 | | | | 198,059 | |
| Consumer loan fees | | $ | 83,361 | | | $ | 80,909 | | | $ | 65,165 | | | $ | 229,435 | | | $ | 118,775 | | | $ | 50,504 | | | $ | 58,284 | | | $ | 227,563 | |
| Less: consumer loan loss provision | | | 25,581 | | | | 25,913 | | | | 30,039 | | | | 81,533 | | | | 41,806 | | | | 25,140 | | | | 32,747 | | | | 99,693 | |
| Consumer loan fees, net loss provision | | $ | 57,780 | | | $ | 54,996 | | | $ | 35,126 | | | $ | 147,902 | | | $ | 76,969 | | | $ | 25,364 | | | $ | 25,537 | | | $ | 127,870 | |
| Year-over-year change - $ | | $ | (19,189 | ) | | $ | 29,632 | | | $ | 9,589 | | | $ | 20,032 | | | $ | (17,424 | ) | | $ | 14,943 | | | $ | 9,556 | | | $ | 7,075 | |
| Year-over-year change - % | | | (24.9 | )% | | | 116.8 | % | | | 37.5 | % | | | 15.7 | % | | | (18.5 | )% | | | 143.4 | % | | | 59.8 | % | | | 5.9 | % |
Consumer loan loss provision
as a % of consumer loan fees | | | 30.7 | % | | | 32.0 | % | | | 46.1 | % | | | 35.5 | % | | | 35.2 | % | | | 49.8 | % | | | 56.2 | % | | | 43.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2014 | | 2013 |
| | | Short-term loans | | Line of credit accounts | | Installment loans | | Total | | Short-term loans | | Line of credit accounts | | Installment loans | | Total |
| Retail services | | $ | 63,913 | | | $ | — | | | $ | 10,577 | | | $ | 74,490 | | | $ | 74,999 | | | $ | — | | | $ | 9,474 | | | $ | 84,473 | |
| E-commerce | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Domestic | | | 131,910 | | | | 112,804 | | | | 99,208 | | | | 343,922 | | | | 138,546 | | | | 82,072 | | | | 62,479 | | | | 283,097 | |
| Foreign | | | 68,660 | | | | 116,036 | | | | 85,848 | | | | 270,544 | | | | 172,003 | | | | 19,949 | | | | 80,677 | | | | 272,629 | |
| Total E-commerce | | | 200,570 | | | | 228,840 | | | | 185,056 | | | | 614,466 | | | | 310,549 | | | | 102,021 | | | | 143,156 | | | | 555,726 | |
| Consumer loan fees | | $ | 264,483 | | | $ | 228,840 | | | $ | 195,633 | | | $ | 688,956 | | | $ | 385,548 | | | $ | 102,021 | | | $ | 152,630 | | | $ | 640,199 | |
| Less: consumer loan loss provision | | | 72,963 | | | | 71,074 | | | | 85,685 | | | | 229,722 | | | | 129,903 | | | | 41,612 | | | | 80,259 | | | | 251,774 | |
| Consumer loan fees, net loss provision | | $ | 191,520 | | | $ | 157,766 | | | $ | 109,948 | | | $ | 459,234 | | | $ | 255,645 | | | $ | 60,409 | | | $ | 72,371 | | | $ | 388,425 | |
| Year-over-year change - $ | | $ | (64,125 | ) | | $ | 97,357 | | | $ | 37,577 | | | $ | 70,809 | | | $ | (18,220 | ) | | $ | 32,670 | | | $ | 34,398 | | | $ | 48,848 | |
| Year-over-year change - % | | | (25.1 | )% | | | 161.2 | % | | | 51.9 | % | | | 18.2 | % | | | (6.7 | )% | | | 117.8 | % | | | 90.6 | % | | | 14.4 | % |
| Consumer loan loss provision as a % of consumer loan fees | | | 27.6 | % | | | 31.1 | % | | | 43.8 | % | | | 33.3 | % | | | 33.7 | % | | | 40.8 | % | | | 52.6 | % | | | 39.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In addition to reporting consumer loans owned by the Company and consumer loans guaranteed by the Company, which are either generally accepted accounting principles (“GAAP”) items or disclosures required by GAAP, the Company has provided combined consumer loans, which is a non-GAAP measure. In addition, the Company has reported consumer loans written and renewed, which is statistical data that is not included in the Company’s financial statements. The Company also reports allowances and liabilities for estimated losses on consumer loans individually and on a combined basis, which are GAAP measures that are included in the Company’s financial statements.
Management believes these measures provide investors with important information needed to evaluate the magnitude of potential loan losses and the opportunity for revenue performance of the consumer loan portfolio on an aggregate basis. The comparison of the aggregate amounts from period to period is more meaningful than comparing only the residual amount on the Company’s balance sheet since both revenue and the loss provision for loans are impacted by the aggregate amount of loans owned by the Company and those guaranteed by the Company as reflected in its financial statements.
| | | | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| CONSUMER LOAN FINANCIAL AND OPERATING DATA |
(dollars in thousands, except where otherwise noted) |
| |
The following tables summarize selected data related to the Company’s consumer loan activities as of and for the three months ended September 30, 2014 and 2013. |
| |
The following table shows short-term consumer loans and related loan loss activity, which is based on the volume of loans written and renewed, for the three months ended September 30, 2014 and 2013. |
| | | | | | | | |
| | Three Months Ended |
| | September 30, |
| | 2014 | | 2013 |
Short-term consumer loans: | | | | | | | | |
| Consumer loan loss provision | | $ | 25,581 | | | $ | 41,806 | |
| Charge-offs (net of recoveries) | | | 26,323 | | | | 49,271 | |
| Allowance and liability for losses | | | 22,958 | | | | 37,042 | |
| Combined consumer loans and fees receivable, gross(a) | | | 132,917 | | | | 184,836 | |
Short-term loans: | | | | | | | | |
| Consumer loan loss provision as a % of combined consumer loans written and renewed(b) | | | 5.2 | % | | | 6.5 | % |
| Charge-offs (net of recoveries) as a % of combined consumer loans written and renewed(b) | | | 5.3 | % | | | 7.6 | % |
| Consumer loan loss provision as a % of consumer loan fees | | | 30.7 | % | | | 35.2 | % |
| Allowance and liability for losses as a % of combined consumer loan balances, gross(a) | | | 17.3 | % | | | 20.0 | % |
| | | | | | | | |
(a) Non-GAAP measure. |
(b) The disclosure regarding the amount of short-term consumer loans written and renewed is statistical data that is not included in the Company’s financial statements. |
| | | | | | | | |
| | | | | | | | |
The following table shows line of credit accounts and related loan loss activity, which is based on average amount of consumer loan balance, for the three months ended September 30, 2014 and 2013. |
| | | | | | | | |
| | Three Months Ended |
| | September 30, |
| | 2014 | | 2013 |
Line of credit accounts: | | | | | | | | |
| Consumer loan loss provision | | $ | 25,913 | | | $ | 25,140 | |
| Charge-offs (net of recoveries) | | | 24,818 | | | | 13,855 | |
| Allowance and liability for losses | | | 22,673 | | | | 21,934 | |
| Average consumer loan balance(a) | | | 125,342 | | | | 78,839 | |
Line of credit accounts: | | | | | | | | |
| Consumer loan loss provision as a % of average consumer loan balance(a) | | | 20.7 | % | | | 31.9 | % |
| Charge-offs (net of recoveries) as a % of average consumer loan balance(a) | | | 19.8 | % | | | 17.6 | % |
| Consumer loan loss provision as a % of consumer loan fees | | | 32.0 | % | | | 49.8 | % |
| Allowance for losses as a % of consumer loan balances, gross(b) | | | 17.7 | % | | | 22.0 | % |
| | | | | | | | |
| (a) The average consumer loan balance for line of credit accounts is the simple average of the beginning and ending consumer loan balance for the quarter for line of credit accounts. |
| (b) Non-GAAP measure. |
| | | | | | | | |
| | | | | | | | |
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
CONSUMER LOAN FINANCIAL AND OPERATING DATA |
(dollars in thousands, except where otherwise noted) |
| | | | | | | | |
The following table shows installment loans and related loan loss activity, which is based on average amount of combined consumer loan balance, for the three months ended September 30, 2014 and 2013. |
| | | | | | | | |
| | Three Months Ended |
| | September 30, |
| | 2014 | | 2013 |
Installment loans: | | | | | | | | |
| Consumer loan loss provision | | $ | 30,039 | | | $ | 32,747 | |
| Charge-offs (net of recoveries) | | | 27,954 | | | | 26,691 | |
| Allowance and liability for losses | | | 32,170 | | | | 33,810 | |
| Installment loan average loan balance:(a) | | | | | | | | |
| Company owned | | $ | 193,137 | | | $ | 157,183 | |
| Guaranteed by the Company(b) | | | 8,357 | | | | 10,203 | |
| Combined average consumer loan balance(c) | | $ | 201,494 | | | $ | 167,386 | |
Installment loans: | | | | | | | | |
| Consumer loan loss provision as a % of combined average consumer loan balance(a)(c) | | | 14.9 | % | | | 19.6 | % |
| Charge-offs (net of recoveries) as a % of combined average consumer loan balance(a)(c) | | | 13.9 | % | | | 15.9 | % |
| Consumer loan loss provision as a % of consumer loan fees | | | 46.1 | % | | | 56.2 | % |
| Allowance and liability for losses as a % of combined consumer loan balances, gross(c) | | | 15.4 | % | | | 18.4 | % |
| | | | | | | | |
| (a) The combined average consumer loan balance for installment loans is the simple average of the beginning and ending combined consumer loan balance for the quarter for installment loans. |
| (b) Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company’s financial statements. |
| (c) Non-GAAP measure. |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| CONSUMER LOAN FINANCIAL AND OPERATING DATA |
(dollars in thousands, except where otherwise noted) |
| |
The following table summarizes consumer loan balances outstanding as of September 30, 2014 and 2013 (dollars in thousands): |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, |
| | 2014 | | 2013 |
| | Company Owned(a) | | Guaranteed by the Company(a) | | Combined(b) | | Company Owned(a) | | Guaranteed by the Company(a) | | Combined(b) |
| Ending consumer loan balances: | | | | | | | | | | | | | | | | | | | | | | | | |
Retail Services | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term loans | | $ | 42,978 | | | $ | 3,728 | | | $ | 46,706 | | | $ | 47,824 | | | $ | 4,681 | | | $ | 52,505 | |
| Installment loans | | | 6,823 | | | | 8,108 | | | | 14,931 | | | | 9,945 | | | | 10,275 | | | | 20,220 | |
| Total Retail Services, gross | | | 49,801 | | | | 11,836 | | | | 61,637 | | | | 57,769 | | | | 14,956 | | | | 72,725 | |
E-Commerce | | | | | | | | | | | | | | | | | | | | | | | | |
| Domestic | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term loans | | | 34,113 | | | | 35,389 | | | | 69,502 | | | | 33,926 | | | | 35,107 | | | | 69,033 | |
| Line of credit accounts | | | 72,648 | | | | — | | | | 72,648 | | | | 59,341 | | | | — | | | | 59,341 | |
| Installment loans | | | 135,664 | | | | 40 | | | | 135,704 | | | | 62,460 | | | | — | | | | 62,460 | |
| Total Domestic, gross | | | 242,425 | | | | 35,429 | | | | 277,854 | | | | 155,727 | | | | 35,107 | | | | 190,834 | |
| Foreign | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term loans | | | 16,709 | | | | — | | | | 16,709 | | | | 63,276 | | | | 22 | | | | 63,298 | |
| Line of credit accounts | | | 55,627 | | | | — | | | | 55,627 | | | | 40,265 | | | | — | | | | 40,265 | |
| Installment loans | | | 58,932 | | | | — | | | | 58,932 | | | | 101,200 | | | | — | | | | 101,200 | |
| Total Foreign, gross | | | 131,268 | | | | — | | | | 131,268 | | | | 204,741 | | | | 22 | | | | 204,763 | |
| Total E-Commerce, gross | | | 373,693 | | | | 35,429 | | | | 409,122 | | | | 360,468 | | | | 35,129 | | | | 395,597 | |
| Total ending loan balance, gross | | | 423,494 | | | | 47,265 | | | | 470,759 | | | | 418,237 | | | | 50,085 | | | | 468,322 | |
| Less: Allowance and liabilities for losses | | | (75,269 | ) | | | (2,532 | ) | | | (77,801 | ) | | | (89,956 | ) | | | (2,830 | ) | | | (92,786 | ) |
| Total ending loan balance, net | | $ | 348,225 | | | $ | 44,733 | | | $ | 392,958 | | | $ | 328,281 | | | $ | 47,255 | | | $ | 375,536 | |
| Allowance and liability for losses as a % of consumer loan balances, gross | | | 17.8 | % | | | 5.4 | % | | | 16.5 | % | | | 21.5 | % | | | 5.7 | % | | | 19.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) GAAP measure. The consumer loan balances guaranteed by the Company represent loans originated by third-party lenders through the Company’s credit services organization programs (the “CSO programs”), so these balances are not recorded in the Company’s financial statements. However, the Company has established a liability for estimated losses in support of its guarantee of these loans, which is reflected in the table above and included in its consolidated balance sheets. |
| (b) Except for allowance and liability for estimated losses, amounts represent non-GAAP measures. |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| INCOME FROM OPERATIONS BY OPERATING SEGMENT |
(dollars in thousands) |
| |
The following tables contain operating segment data for the three and nine months ended September 30, 2014 and 2013 (dollars in thousands). |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Retail Services | | E-Commerce | | | | | | | |
| | Domestic | | Foreign | | Total | | Domestic | | Foreign | | Admin | | Total | | | Corporate | | Consolidated |
Three Months Ended September 30, 2014 |
| Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pawn loan fees and service charges | | $ | 84,081 | | $ | 1,232 | | | $ | 85,313 | | $ | — | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 85,313 |
| Proceeds from disposition of merchandise | | | 151,399 | | | 3,688 | | | | 155,087 | | | — | | | — | | | — | | | | — | | | — | | | | 155,087 |
| Consumer loan fees | | | 24,831 | | | — | | | | 24,831 | | | 126,123 | | | 78,481 | | | — | | | | 204,604 | | | — | | | | 229,435 |
| Other | | | 1,564 | | | 38 | | | | 1,602 | | | 7 | | | 557 | | | — | | | | 564 | | | 177 | | | | 2,343 |
| Total revenue | | | 261,875 | | | 4,958 | | | | 266,833 | | | 126,130 | | | 79,038 | | | — | | | | 205,168 | | | 177 | | | | 472,178 |
| Cost of revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Disposed merchandise | | | 111,216 | | | 3,077 | | | | 114,293 | | | — | | | — | | | — | | | | — | | | — | | | | 114,293 |
| Consumer loan loss provision | | | 8,614 | | | — | | | | 8,614 | | | 55,058 | | | 17,861 | | | — | | | | 72,919 | | | — | | | | 81,533 |
| Total cost of revenue | | | 119,830 | | | 3,077 | | | | 122,907 | | | 55,058 | | | 17,861 | | | — | | | | 72,919 | | | — | | | | 195,826 |
| Net revenue | | | 142,045 | | | 1,881 | | | | 143,926 | | | 71,072 | | | 61,177 | | | — | | | | 132,249 | | | 177 | | | | 276,352 |
| Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operations and administration | | | 100,128 | | | 1,740 | | | | 101,868 | | | 32,201 | | | 23,238 | | | 25,857 | | | | 81,296 | | | 22,567 | | | | 205,731 |
| Loss on divestitures | | | 273 | | | 4,903 | | | | 5,176 | | | — | | | — | | | — | | | | — | | | — | | | | 5,176 |
| Depreciation and amortization | | | 9,931 | | | 280 | | | | 10,211 | | | 2,618 | | | 601 | | | 2,119 | | | | 5,338 | | | 4,895 | | | | 20,444 |
| Total expenses | | | 110,332 | | | 6,923 | | | | 117,255 | | | 34,819 | | | 23,839 | | | 27,976 | | | | 86,634 | | | 27,462 | | | | 231,351 |
| Income (loss) from operations | | $ | 31,713 | | $ | (5,042 | ) | | $ | 26,671 | | $ | 36,253 | | $ | 37,338 | | $ | (27,976 | ) | | $ | 45,615 | | $ | (27,285 | ) | | $ | 45,001 |
As of September 30, 2014 |
| Total assets | | | | | | | | | $ | 1,385,469 | | | | | | | | | | | | $ | 714,876 | | | | | | $ | 2,100,345 |
| Goodwill | | | | | | | | | $ | 488,700 | | | | | | | | | | | | $ | 210,361 | | | | | | $ | 699,061 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Retail Services | | E-Commerce | | | | | | | |
| | Domestic | | Foreign | | Total | | Domestic | | Foreign | | Admin | | Total | | Corporate | | Consolidated |
Three Months Ended September 30, 2013 |
| Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pawn loan fees and service charges | | $ | 77,532 | | $ | 1,766 | | | $ | 79,298 | | $ | — | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 79,298 |
| Proceeds from disposition of merchandise | | | 124,352 | | | 4,308 | | | | 128,660 | | | — | | | — | | | — | | | | — | | | — | | | | 128,660 |
| Consumer loan fees | | | 29,504 | | | — | | | | 29,504 | | | 104,954 | | | 93,105 | | | — | | | | 198,059 | | | — | | | | 227,563 |
| Other | | | 1,731 | | | 66 | | | | 1,797 | | | 249 | | | 69 | | | — | | | | 318 | | | 165 | | | | 2,280 |
| Total revenue | | | 233,119 | | | 6,140 | | | | 239,259 | | | 105,203 | | | 93,174 | | | — | | | | 198,377 | | | 165 | | | | 437,801 |
| Cost of revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Disposed merchandise | | | 87,530 | | | 3,571 | | | | 91,101 | | | — | | | — | | | — | | | | — | | | — | | | | 91,101 |
| Consumer loan loss provision | | | 10,037 | | | — | | | | 10,037 | | | 49,225 | | | 40,431 | | | — | | | | 89,656 | | | — | | | | 99,693 |
| Total cost of revenue | | | 97,567 | | | 3,571 | | | | 101,138 | | | 49,225 | | | 40,431 | | | — | | | | 89,656 | | | — | | | | 190,794 |
| Net revenue | | | 135,552 | | | 2,569 | | | | 138,121 | | | 55,978 | | | 52,743 | | | — | | | | 108,721 | | | 165 | | | | 247,007 |
| Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operations and administration | | | 111,220 | | | 2,831 | | | | 114,051 | | | 30,445 | | | 25,245 | | | 15,556 | | | | 71,246 | | | 14,408 | | | | 199,705 |
| Depreciation and amortization | | | 9,878 | | | 764 | | | | 10,642 | | | 1,906 | | | 706 | | | 1,346 | | | | 3,958 | | | 4,183 | | | | 18,783 |
| Total expenses | | | 121,098 | | | 3,595 | | | | 124,693 | | | 32,351 | | | 25,951 | | | 16,902 | | | | 75,204 | | | 18,591 | | | | 218,488 |
| Income (loss) from operations | | $ | 14,454 | | $ | (1,026 | ) | | $ | 13,428 | | $ | 23,627 | | $ | 26,792 | | $ | (16,902 | ) | | $ | 33,517 | | $ | (18,426 | ) | | $ | 28,519 |
As of September 30, 2013 |
| Total assets | | | | | | | | | $ | 1,354,074 | | | | | | | | | | | | $ | 633,518 | | | | | | $ | 1,987,592 |
| Goodwill | | | | | | | | | $ | 459,669 | | | | | | | | | | | | $ | 210,368 | | | | | | $ | 670,037 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| INCOME FROM OPERATIONS BY OPERATING SEGMENT |
(dollars in thousands) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Retail Services | | E-Commerce | | | | | | | |
| | Domestic | | Foreign | | Total | | Domestic | | Foreign | | Admin | | Total | | Corporate | | Consolidated |
Nine Months Ended September 30, 2014 |
| Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pawn loan fees and service charges | | $ | 241,459 | | $ | 5,031 | | | $ | 246,490 | | $ | — | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 246,490 |
| Proceeds from disposition of merchandise | | | 466,016 | | | 12,298 | | | | 478,314 | | | — | | | — | | | — | | | | — | | | — | | | | 478,314 |
| Consumer loan fees | | | 74,490 | | | — | | | | 74,490 | | | 343,922 | | | 270,544 | | | — | | | | 614,466 | | | — | | | | 688,956 |
| Other | | | 5,284 | | | 168 | | | | 5,452 | | | 81 | | | 568 | | | — | | | | 649 | | | 507 | | | | 6,608 |
| Total revenue | | | 787,249 | | | 17,497 | | | | 804,746 | | | 344,003 | | | 271,112 | | | — | | | | 615,115 | | | 507 | | | | 1,420,368 |
| Cost of revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Disposed merchandise | | | 333,651 | | | 9,716 | | | | 343,367 | | | — | | | — | | | — | | | | — | | | — | | | | 343,367 |
| Consumer loan loss provision | | | 24,061 | | | — | | | | 24,061 | | | 122,422 | | | 83,239 | | | — | | | | 205,661 | | | — | | | | 229,722 |
| Total cost of revenue | | | 357,712 | | | 9,716 | | | | 367,428 | | | 122,422 | | | 83,239 | | | — | | | | 205,661 | | | — | | | | 573,089 |
| Net revenue | | | 429,537 | | | 7,781 | | | | 437,318 | | | 221,581 | | | 187,873 | | | — | | | | 409,454 | | | 507 | | | | 847,279 |
| Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operations and administration | | | 301,470 | | | 8,375 | | | | 309,845 | | | 81,425 | | | 72,419 | | | 67,883 | | | | 221,727 | | | 60,720 | | | | 592,292 |
| Loss on divestitures | | | 273 | | | 4,903 | | | | 5,176 | | | — | | | — | | | — | | | | — | | | — | | | | 5,176 |
| Depreciation and amortization | | | 30,357 | | | 1,104 | | | | 31,461 | | | 6,577 | | | 1,683 | | | 5,512 | | | | 13,772 | | | 13,969 | | | | 59,202 |
| Total expenses | | | 332,100 | | | 14,382 | | | | 346,482 | | | 88,002 | | | 74,102 | | | 73,395 | | | | 235,499 | | | 74,689 | | | | 656,670 |
| Income (loss) from operations | | $ | 97,437 | | $ | (6,601 | ) | | $ | 90,836 | | $ | 133,579 | | $ | 113,771 | | $ | (73,395 | ) | | $ | 173,955 | | $ | (74,182 | ) | | $ | 190,609 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Retail Services | | E-Commerce | | | | | | | |
| | Domestic | | Foreign | | Total | | Domestic | | Foreign | | Admin | | Total | | Corporate | | Consolidated |
Nine Months Ended September 30, 2013 |
| Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pawn loan fees and service charges | | $ | 222,508 | | $ | 5,432 | | | $ | 227,940 | | $ | — | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 227,940 |
| Proceeds from disposition of merchandise | | | 425,716 | | | 13,193 | | | | 438,909 | | | — | | | — | | | — | | | | — | | | — | | | | 438,909 |
| Consumer loan fees | | | 84,473 | | | — | | | | 84,473 | | | 283,097 | | | 272,629 | | | — | | | | 555,726 | | | — | | | | 640,199 |
| Other | | | 6,149 | | | 417 | | | | 6,566 | | | 1,051 | | | 92 | | | — | | | | 1,143 | | | 1,552 | | | | 9,261 |
| Total revenue | | | 738,846 | | | 19,042 | | | | 757,888 | | | 284,148 | | | 272,721 | | | — | | | | 556,869 | | | 1,552 | | | | 1,316,309 |
| Cost of revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Disposed merchandise | | | 290,569 | | | 10,828 | | | | 301,397 | | | — | | | — | | | — | | | | — | | | — | | | | 301,397 |
| Consumer loan loss provision | | | 23,927 | | | — | | | | 23,927 | | | 112,391 | | | 115,456 | | | — | | | | 227,847 | | | — | | | | 251,774 |
| Total cost of revenue | | | 314,496 | | | 10,828 | | | | 325,324 | | | 112,391 | | | 115,456 | | | — | | | | 227,847 | | | — | | | | 553,171 |
| Net revenue | | | 424,350 | | | 8,214 | | | | 432,564 | | | 171,757 | | | 157,265 | | | — | | | | 329,022 | | | 1,552 | | | | 763,138 |
| Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operations and administration | | | 291,409 | | | 9,432 | | | | 300,841 | | | 73,688 | | | 76,176 | | | 52,071 | | | | 201,935 | | | 50,695 | | | | 553,471 |
| Depreciation and amortization | | | 27,579 | | | 1,593 | | | | 29,172 | | | 6,866 | | | 2,101 | | | 4,019 | | | | 12,986 | | | 12,156 | | | | 54,314 |
| Total expenses | | | 318,988 | | | 11,025 | | | | 330,013 | | | 80,554 | | | 78,277 | | | 56,090 | | | | 214,921 | | | 62,851 | | | | 607,785 |
| Income (loss) from operations | | $ | 105,362 | | $ | (2,811 | ) | | $ | 102,551 | | $ | 91,203 | | $ | 78,988 | | $ | (56,090 | ) | | $ | 114,101 | | $ | (61,299 | ) | | $ | 155,353 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Corporate operations primarily include corporate expenses such as legal, occupancy, executive oversight, insurance and risk management, public and government relations, internal audit, treasury, payroll, compliance and licensing, finance, accounting, tax and information systems (except for online lending systems, which are included in the e-commerce segment). Corporate income includes miscellaneous income not directly attributable to the Company’s segments. Corporate assets primarily include corporate property and equipment, nonqualified savings plan assets, marketable securities, foreign exchange forward contracts and prepaid insurance.
During the first quarter of 2014, the Company changed the presentation of financial information within its e-commerce segment to report certain administrative and depreciation and amortization expenses within that segment separately from its domestic and foreign operating components. Administrative expenses in the e-commerce segment, which were previously allocated between the domestic and foreign components based on the amount of loans written and renewed, are included under the “Admin” heading within the e-commerce segment information in the tables above.
| |
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
INCOME FROM OPERATIONS BY OPERATING SEGMENT |
(dollars in thousands) |
Depreciation and amortization related to the e-commerce administrative function is also included in this category. For comparison purposes, amounts for prior years have been conformed to the current presentation.
| |
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
LOCATION INFORMATION |
Retail Services Segment
The following table sets forth the number of domestic and foreign Company-owned and franchised locations in the Company’s retail services segment providing pawn lending, consumer lending, and other services as of September 30, 2014 and 2013. The Company’s domestic retail services locations operate under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” “Cashland” and “Mr. Payroll.” In addition, some recently acquired domestic retail services locations operate under various names that are expected to be changed to “Cash America Pawn.” Prior to the Company’s sale of its Mexico-based pawn operations in August 2014, the foreign retail services locations operated under the name “Cash America casa de empeño.”
| | As of September 30, |
| | 2014 | | 2013 |
| | Domestic(a) | | Foreign | | Total | | Domestic(a) | | Foreign | | Total |
| Retail services locations offering: | | | | | | | | | | | | |
| Both pawn and consumer lending | | 420 | | — | | 420 | | 581 | | — | | 581 |
| Pawn lending only | | 406 | | — | | 406 | | 211 | | 47 | | 258 |
| Consumer lending only | | 37 | | — | | 37 | | 68 | | — | | 68 |
| Other(b) | | 85 | | — | | 85 | | 88 | | — | | 88 |
| Total retail services | | 948 | | — | | 948 | | 948 | | 47 | | 995 |
| | | | | | | | | | | | | |
(a) Except as described in (b) below, includes locations that operated in 21 and 22 states in the United States as of September 30, 2014 and 2013, respectively. |
| (b) As of September 30, 2014 and 2013, includes 85 and 88 unconsolidated franchised check cashing locations, respectively, that operated in 12 and 13 states in the United States, respectively. |
| | | | | | | | | | | | |
E-Commerce Segment
As of September 30, 2014 and 2013, the Company’s e-commerce segment provided services in 34 and 32 states, respectively, in the United States and in five foreign countries:
- in the United States at http://www.cashnetusa.com, http://www.netcredit.com and http://www.headwaycapital.com,
- in the United Kingdom at http://www.quickquid.co.uk, http://www.quickquidflexcredit.co.uk, http://www.poundstopocket.co.uk, and http://www.onstride.co.uk,
- in Australia at http://www.dollarsdirect.com.au,
- in Canada at http://www.dollarsdirect.ca,
- in Brazil at http://www.simplic.com.br, and
- in China at http://www.youxinyi.cn.
In June 2014, the Company launched a pilot program in Brazil where it arranges loans that are made by a third-party lender in accordance with applicable laws and guarantees the payment of these loans by agreeing to purchase the loans from the third-party under certain circumstances. In July 2014, the Company launched a pilot program in China where it has entered into a joint venture with a third-party lender where the third-party lender makes loans in accordance with applicable laws. In addition, in July 2014, the Company launched Headway Capital, a pilot program for a new line of credit product in the United States that serves the needs of small businesses.
| |
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
NON-GAAP DISCLOSURE |
ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE |
Non-GAAP Disclosure
In addition to the financial information prepared in conformity with GAAP, the Company provides historical non-GAAP financial information. Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of the Company’s operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.
Management provides non-GAAP financial information for informational purposes and to enhance understanding of the Company’s consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, its financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.
Adjusted Earnings and Adjusted Earnings Per Share
In addition to reporting financial results in accordance with GAAP, the Company has provided adjusted net income, adjusted diluted net income per share attributable to the Company, adjusted earnings and adjusted earnings per share (collectively, the “Adjusted Earnings Measures”), which are non-GAAP measures. Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of the Company’s financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, management believes that the adjustments included in the table below, especially those included in “Adjusted net income and adjusted diluted net income per share attributable to the Company,” are useful to investors in order to allow them to compare the Company’s financial results for the current quarter and current nine-month period with the prior year quarter and prior year nine-month period, respectively. The computation of Adjusted Earnings Measures as presented below may differ from the computation of similarly-titled measures provided by other companies.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| NON-GAAP DISCLOSURE |
| ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides a reconciliation for the three and nine months ended September 30, 2014 and 2013, respectively, between net income attributable to the Company and diluted net income per share attributable to the Company calculated in accordance with GAAP to the Adjusted Earnings Measures, which are shown net of tax (dollars in thousands, except per share data): |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| | $ | | Per Diluted Share(a) | | $ | | Per Diluted Share(a) | | $ | | Per Diluted Share(a) | | $ | | Per Diluted Share(a) |
| Net income and diluted net income per share attributable to the Company | | $ | 9,916 | | $ | 0.34 | | $ | 46,186 | | | $ | 1.52 | | | $ | 76,624 | | $ | 2.61 | | $ | 115,244 | | | $ | 3.73 | |
| Adjustments (net of tax): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss on divestitures (b) | | | 6,444 | | | 0.22 | | | — | | | | — | | | | 6,444 | | | 0.22 | | | — | | | | — | |
| Corporate Reorganization (c) | | | 3,870 | | | 0.13 | | | — | | | | — | | | | 3,870 | | | 0.13 | | | — | | | | — | |
| Loss on early extinguishment of debt (d) | | | 3,774 | | | 0.13 | | | — | | | | — | | | | 14,208 | | | 0.48 | | | — | | | | — | |
| 2013 Litigation Settlement (e) | | | — | | | — | | | 11,340 | | | | 0.37 | | | | 400 | | | 0.01 | | | 11,340 | | | | 0.37 | |
| Tax benefit related to Creazione Deduction (f) | | | — | | | — | | | (33,201 | ) | | | (1.09 | ) | | | — | | | — | | | (33,201 | ) | | | (1.08 | ) |
| Adjusted net income and adjusted diluted net income per share attributable to the Company | | | 24,004 | | | 0.82 | | | 24,325 | | | | 0.80 | | | | 101,546 | | | 3.45 | | | 93,383 | | | | 3.02 | |
| Other adjustments (net of tax): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Intangible asset amortization | | | 1,043 | | | 0.04 | | | 1,014 | | | | 0.03 | | | | 3,134 | | | 0.11 | | | 2,675 | | | | 0.09 | |
| Non-cash equity-based compensation | | | 1,058 | | | 0.04 | | | 698 | | | | 0.03 | | | | 3,040 | | | 0.11 | | | 2,456 | | | | 0.08 | |
| Non-cash interest and debt issuance cost amortization | | | 869 | | | 0.02 | | | 1,014 | | | | 0.03 | | | | 2,423 | | | 0.08 | | | 2,939 | | | | 0.10 | |
| Foreign currency transaction loss (gain) | | | 100 | | | — | | | 467 | | | | 0.02 | | | | 277 | | | 0.01 | | | 663 | | | | 0.02 | |
| Adjusted earnings and adjusted earnings per share | | $ | 27,074 | | $ | 0.92 | | $ | 27,518 | | | $ | 0.91 | | | $ | 110,420 | | $ | 3.76 | | $ | 102,116 | | | $ | 3.31 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) Diluted shares are calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period. |
| (b) For the three and nine months ended September 30, 2014, represents a loss on the sale of the Mexico-based pawn operations of $2.8 million and tax provision of $1.7 million, a $2.1 million expense, net of tax benefit of $0.3 million recognized related to an uncollectible receivable as a result of the Company’s discontinuation of its Mexico-based pawn operations, and a loss on the sale of Colorado pawn lending locations of $0.3 million, net of tax benefit of $0.1 million. |
| (c) For the three and nine months ended September 30, 2014, represents charges of $6.1 million, net of tax benefit of $2.3 million related to a reorganization of the Company’s corporate functions (the “Corporate Reorganization”). |
| (d) For the three months ended September 30, 2014, represents charges of $6.0 million, net of tax benefit of $2.2 million. For the nine months ended September 30, 2014, represents $22.6 million of charges, net of tax benefit of $8.3 million. |
| (e) Represents charges related to settlement of a litigation matter in 2013 (the “2013 Litigation Settlement”). For the nine months ended September 30, 2014, represents charges of $0.6 million of charges, net of tax benefit of $0.2 million. For the three and nine months ended September 30, 2013, represents $18.0 million of charges, net of a tax benefit of $6.7 million. |
| (f) In connection with the liquidation of Creazione, represents a recognized income tax benefit related to a tax deduction included on the Company’s 2013 federal income tax return for its tax basis in the stock of Creazione (the “Creazione Deduction”). |
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| |
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
NON-GAAP DISCLOSURE |
ADJUSTED EBITDA |
Adjusted EBITDA
The table below shows adjusted EBITDA, a non-GAAP measure that the Company defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, loss on early extinguishment of debt, equity in earnings or loss of unconsolidated subsidiary, taxes and including the net income or loss attributable to noncontrolling interests. Management believes adjusted EBITDA is used by investors to analyze operating performance and evaluate the Company’s ability to incur and service debt and its capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess the Company’s estimated enterprise value. In addition, management believes that the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results during the periods shown without the effect of each of these income and expense items. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies. The following table provides a reconciliation between Net Income attributable to Cash America International, Inc., which is the nearest GAAP measure presented in the Company’s financial statements, to Adjusted EBITDA (dollars in thousands):
| | Trailing 12 Months Ended |
| | September 30, |
| | 2014 | | 2013 |
| Net income attributable to Cash America International, Inc. | | $ | 103,908 | | | $ | 139,724 | |
| Net loss attributable to the noncontrolling interest | | | — | | | | (181 | ) |
| Provision for income taxes (a) | | | 68,685 | | | | 29,896 | |
| Equity in loss of unconsolidated subsidiary | | | — | | | | 222 | |
| Loss on early extinguishment of debt (b) | | | 22,814 | | | | 346 | |
| Foreign currency transaction loss | | | 591 | | | | 1,294 | |
| Interest expense, net | | | 51,041 | | | | 33,540 | |
| Depreciation and amortization expenses (c) | | | 77,980 | | | | 71,377 | |
| Adjustments: | | | | | | | | |
| Corporate Reorganization (d) | | | 6,143 | | | | — | |
| Loss on divestitures (e) | | | 5,176 | | | | — | |
| Texas Consumer Loan Store Closures (f) | | | 1,373 | | | | — | |
| Regulatory Penalty (g) | | | 5,000 | | | | — | |
| 2013 Litigation settlement (h) | | | 635 | | | | 18,000 | |
| Charges related to Mexico Reorganization (i) | | | — | | | | 6,965 | |
| Charges related to Ohio Adjustment and Ohio Reimbursement Program (j) | | | (5,000 | ) | | | 13,400 | |
| Adjusted EBITDA | | $ | 338,346 | | | $ | 314,583 | |
| Adjusted EBITDA margin calculated as follows: | | | | | | | | |
| Total revenue | | $ | 1,900,714 | | | $ | 1,807,913 | |
| Adjusted EBITDA | | $ | 338,346 | | | $ | 314,583 | |
| Adjusted EBITDA as a percentage of total revenue | | | 17.8 | % | | | 17.4 | % |
| | | | | | | | |
| (a) For the trailing 12 months ended September 30, 2013, includes income benefit of $33.2 million related to the Creazione Deduction. |
| (b) For the trailing 12 months ended September 30, 2014, represents charges of $22.8 million, before tax benefit of $8.4 million. For the trailing 12 months ended September 30, 2013, represents charges of $0.3 million, before tax benefit of $0.1 million. |
| (c) For the trailing 12 months ended September 30, 2014, excludes $0.2 million of depreciation and amortization expenses, which are included in Texas Consumer Loan Store Closures related to the closure of 36 consumer lending-only retail services locations in Texas in 2013 (“Texas Consumer Loan Store Closures”). For the trailing 12 months ended September 30, 2013, excludes $1.5 million of depreciation and amortization expenses which are included in “Charges related to the Mexico Reorganization.” |
| (d) Represents charges of $6.1 million, before tax benefit of $2.3 million. |
| (e) Represents a loss on the sale of the Mexico-based pawn operations of $2.8 million and tax provision of $1.7 million, a $2.1 million expense, before tax benefit of $0.3 million recognized related to an uncollectible receivable as a result of the Company’s discontinuation of its Mexico-based pawn operations, and a loss on the sale of Colorado pawn lending locations of $0.3 million, before tax benefit of $0.1 million. |
| (f) Represents charges of $1.4 million, before tax benefit of $0.5 million, related to the Texas Consumer Loan Store Closures. |
| (g) Represents charges that are nondeductible for tax purposes related to a penalty paid to the Consumer Financial Protection Bureau “CFPB” in connection with the issuance of a consent order by the CFPB. |
| (h) For the trailing 12 months ended September 30, 2014, represents charges of $0.6 million, before tax benefit of $0.2 million. For the trailing 12 months ended September 30, 2013, represents charges of $18.0 million, before tax benefit of $6.7 million. |
| (i) Includes $1.5 million of depreciation and amortization expenses, as noted in (c) above. |
| (j) For the trailing 12 months ended September 30, 2014, represents the decrease in the Company's remaining liability related to the Ohio Reimbursement Program (defined below) during 2013 after the assessment of the claims made to date and related matters (the “Ohio Adjustment”) of $5.0 million, before tax provision of $1.8 million. For the trailing 12 months ended September 30, 2013, represents charges related a voluntary program to reimburse Ohio customers in connection with legal collections proceedings initiated by the Company in Ohio (the “Ohio Reimbursement Program”), before tax benefit of $5.0 million. |
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| |
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
NON-GAAP DISCLOSURE |
ADJUSTED EBITDA |
In addition, management believes that the adjusted EBITDA shown by segment and for the Company’s corporate operations are useful to investors in order to allow them to compare the Company’s financial results during the periods shown without the effect of each of the applicable income and expense items discussed above. The following table provides a reconciliation between Income (loss) from operations, which is the nearest GAAP measure presented for the Company’s segments in the notes to the Company’s financial statements, to Adjusted EBITDA (dollars in thousands):
| | Trailing 12 Months Ended September 30, |
| | 2014 | | 2013 |
| | Retail Services | | E-Commerce | | Corporate | | Consolidated | | Retail Services | | E-Commerce | | Corporate | | Consolidated |
| Income (loss) from operations | | $ | 132,539 | | | $ | 210,469 | | $ | (95,969 | ) | | $ | 247,039 | | | $ | 136,157 | | $ | 148,051 | | $ | (79,367 | ) | | $ | 204,841 |
| Depreciation and amortization expenses(a) | | | 41,750 | | | | 17,929 | | | 18,301 | | | | 77,980 | | | | 38,334 | | | 16,977 | | | 16,066 | | | | 71,377 |
| Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corporate Reorganization | | | 1,708 | | | | — | | | 4,435 | | | | 6,143 | | | | — | | | — | | | — | | | | — |
| Loss on divestitures | | | 5,176 | | | | — | | | — | | | | 5,176 | | | | — | | | — | | | — | | | | — |
| Texas Consumer Loan Store Closures(b) | | | 1,373 | | | | — | | | — | | | | 1,373 | | | | — | | | — | | | — | | | | — |
| Regulatory Penalty | | | 2,500 | | | | 2,500 | | | | | | | 5,000 | | | | — | | | — | | | — | | | | — |
| 2013 Litigation Settlement | | | 635 | | | | — | | | — | | | | 635 | | | | 18,000 | | | — | | | — | | | | 18,000 |
| Charges related to the Mexico Reorganization(c) | | | — | | | | — | | | — | | | | — | | | | 6,965 | | | — | | | — | | | | 6,965 |
| Charges related to Ohio Adjustment and Ohio Reimbursement(d) | | $ | (5,000 | ) | | $ | — | | $ | — | | | $ | (5,000 | ) | | $ | 13,400 | | $ | — | | $ | — | | | $ | 13,400 |
| Adjusted EBITDA | | | 180,681 | | | | 230,898 | | | (73,233 | ) | | | 338,346 | | | | 212,856 | | | 165,028 | | | (63,301 | ) | | | 314,583 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) For the trailing 12 months ended September 30, 2014, excludes $0.2 million of depreciation and amortization expenses, which are included in Texas Consumer Loan Store Closures. For the trailing 12 months ended September 30, 2013, excludes $1.5 million of depreciation and amortization expenses which are included in “Charges related to the Mexico Reorganization.” |
| (b) Includes $0.2 million of depreciation and amortization expenses as noted in (a) above. |
| (c) Includes $1.5 million of depreciation and amortization expenses as noted in (a) above. |
| (d) For the trailing 12 months ended September 30, 2014, represents the Ohio Adjustment. For the trailing 12 months ended September 30, 2013, represents charges related to the Ohio Reimbursement Program. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2014 | | 2013 |
| | Retail Services | | E-Commerce | | Corporate | | Consolidated | | Retail Services | | E-Commerce | | Corporate | | Consolidated |
| Income (loss) from operations | | $ | 90,836 | | $ | 173,955 | | $ | (74,182 | ) | | $ | 190,609 | | $ | 102,551 | | $ | 114,101 | | $ | (61,299 | ) | | $ | 155,353 |
| Depreciation and amortization expenses | | | 31,461 | | | 13,772 | | | 13,969 | | | | 59,202 | | | 29,172 | | | 12,986 | | | 12,156 | | | | 54,314 |
| Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corporate Reorganization | | | 1,708 | | | — | | | 4,435 | | | | 6,143 | | | — | | | — | | | — | | | | — |
| Loss on divestitures | | | 5,176 | | | — | | | — | | | | 5,176 | | | — | | | — | | | — | | | | — |
| 2013 Litigation Settlement | | | 635 | | | — | | | — | | | | 635 | | | 18,000 | | | — | | | — | | | | 18,000 |
| Adjusted EBITDA | | $ | 129,816 | | $ | 187,727 | | $ | (55,778 | ) | | $ | 261,765 | | $ | 149,723 | | $ | 127,087 | | $ | (49,143 | ) | | $ | 227,667 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
| NON-GAAP DISCLOSURE |
| ESTIMATED ADJUSTED EBITDA FOR 2015 |
| | | | | | |
The following table reconciles estimated Income from operations to Adjusted EBITDA, a non-GAAP measure, for each of the Company's retail services and e-commerce segments (dollars in thousands): |
| | | | | | |
Retail services segment (including corporate services): | | | | | | |
| | Estimated Results |
| | Year ended December 31, 2015 |
| | Low | | High |
| | Unaudited |
| | | | | | |
| Income from operations | | $ | 50,000 | | $ | 72,000 |
| Depreciation and amortization | | | 60,000 | | | 63,000 |
| Adjusted EBITDA | | $ | 110,000 | | $ | 135,000 |
| | | | | | |
| | | | | | |
E-commerce segment: | | | | | | |
| | Estimated Results |
| | Year ended December 31, 2015 |
| | Low | | High |
| | Unaudited |
| | | | | | |
| Income from operations | | $ | 160,000 | | $ | 217,000 |
| Depreciation and amortization | | | 20,000 | | | 23,000 |
| Adjusted EBITDA | | $ | 180,000 | | $ | 240,000 |
CONTACT:
Cash America International, Inc.
Thomas A. Bessant, Jr., 817-335-1100
