Exhibit 99.1
Cash America Announces a 58% Increase in Year-Over-Year Second Quarter Net
Income, Raises Full Year Earnings Expectations and Declares Dividend
FORT WORTH, Texas--(BUSINESS WIRE)--July 27, 2006--Cash America
International, Inc. (NYSE:CSH) announced today that net income for the second
quarter ended June 30, 2006 increased 58% to $10,913,000 (36 cents per share)
compared to $6,900,000 (23 cents per share) for the same period in 2005.
Included in the 2006 second quarter earnings is a $2.17 million pre-tax gain
attributable to the early termination of a store lease, representing an
approximate $1.4 million after tax gain (5 cents per share). Excluding this
gain, earnings per share from continuing operations increased 35% to 31 cents
for the second quarter 2006 compared to 23 cents for the same period in 2005.
Earnings per share from continuing operations exceeded the Company's initially
published expectations in April of 2006 and were at the top of the range of an
updated release of management's anticipated financial results for the second
quarter reported on July 10, 2006.
The Company experienced a significant increase in total revenue in the
second quarter leading to the higher level of earnings than initially expected.
The increase in total revenue came from a 12% increase in the combined revenue
from fees and service charges on pawn loans plus fees from cash advances which
collectively rose to $74.0 million during the 2006 second quarter, up from $66.0
million during the same period last year. In addition, retail sales activity
during the period was robust as merchandise sold during the second quarter of
2006 reached $72.9 million, up from $65.3 million in the same period in 2005, an
increase of 12%. Total revenue for the second quarter of 2006 was $149.6 million
compared to $133.6 million in the prior year period, an increase of $16.0
million or 12% year over year.
Commenting on the results of the quarter, Daniel R. Feehan, President and
Chief Executive Officer of Cash America said, "Underlying the second quarter
2006 growth in revenue were strong increases in total cash advances written and
pawn loans written as customer demand continues to rise. Also contributing to
the successful quarter were higher gross profit margins on the disposition of
merchandise which we experienced in our retail store locations as well as
through open market liquidations of refined gold." The improvement on the gross
profit margin on merchandise sold led to a 13% increase in net revenue for the
second quarter of 2006 compared to the same period in 2005. Same store net
revenue for locations open for more than one year rose 7.4% during the period.
For the first six months of fiscal year 2006, Cash America produced an
increase in net income of 40% to $26,301,000 (86 cents per share) compared to
$18,802,000 (62 cents per share) in the same period for the prior year.
Excluding the after-tax gain of $1.4 million attributable to the early
termination of a store lease, net income for the six-month period in 2006 was up
32% to $24,892,000 (82 cents per share) compared to the first half of fiscal
2005. This increase was achieved on a 12% increase in total revenue, which
reached $312.2 million in the six months ended June 30, 2006 compared to $278.6
million for the same period in the prior year.
Cash America will host a conference call to discuss the second quarter
results on Thursday, July 27th at 3:45 p.m. CDT. A live web cast of the call
will be available on the Investor Relations section of the Company's corporate
web site (www.cashamerica.com). To listen to the live call, please go to the web
site at least fifteen minutes early to register, download, and install any
necessary audio software. A replay will be available on the Company's web site
for 90 days following the conference call.
Additionally, the Company announced that the Board of Directors, at its
regularly scheduled quarterly meeting, declared a $0.025 (2.5 cents) per share
cash dividend on common stock outstanding. The dividend will be paid to
shareholders of record on August 9, 2006 and will be paid at the close of
business on August 23, 2006.
Outlook for the Third Quarter of 2006 and Related Fiscal Year
Management believes that continued growth in earnings will be largely a
function of sustained increases in demand for its loan products, which generally
lead to higher asset balances and revenue. Other elements expected to affect the
growth in revenue include the development of the 182 additional lending
locations opened or acquired during the last 24 months and the regulatory
governance of consumer loan products. As it enters the third quarter of 2006,
management anticipates that demand for the Company's products will remain
strong. Based on the preceding factors, management expects that the third
quarter net income will be between 38 cents and 41 cents per share in 2006,
compared to 32 cents per share in 2005. This estimate excludes any potential
future benefit from the pending completion of its recently announced acquisition
transaction with CashNetUSA, which is more fully described below.
Expectations for the remainder of fiscal 2006 will be impacted by earning
asset levels in later periods based on customer demand for credit products. At
this time, management expects that full year 2006 earnings per share from net
income will range between $1.85 and $1.93 compared to $1.48 per share in fiscal
2005. The 2006 full year estimates do not include the $1.4 million after tax
gain (5 cents per share) related to the early termination of a store lease
reported in the second quarter. On July 10, 2006, the Company announced that it
executed an agreement for the future purchase of the assets of CashNetUSA
(www.cashnetusa.com), an innovative provider of online cash advance loans.
Management reported that the transaction was expected to close within 60 days
from the date of the announcement. Assuming that the acquisition is completed
during the time frame expected, management expects incremental earnings of
between 4 and 5 cents per share in fiscal 2006. These earnings are not included
in the expected earnings noted above.
Cash America International, Inc. is a provider of specialty financial
services to individuals in the United States with 896 total locations. Cash
America is the largest provider of secured non-recourse loans to individuals,
commonly referred to as pawn loans, through 467 locations in 21 states under the
brand names Cash America Pawn and SuperPawn. The Company also offers short-term
cash advances in many of its locations including 291 locations that offer this
service under the brand names Cash America Payday Advance and Cashland. In
addition, check cashing services are provided through its 138 franchised and
Company-owned "Mr. Payroll" check cashing centers. For additional information,
visit the Company's website located at www.cashamerica.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995
This release contains forward-looking statements about the business,
financial condition and prospects of Cash America International, Inc. and its
subsidiaries ("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, changes in demand
for the Company's services, the actions of third parties who offer products and
services at the Company's locations, changes in competition, the ability of the
Company to open new operating units in accordance with its plans, economic
conditions, real estate market fluctuations, interest rate fluctuations, changes
in the capital markets, changes in tax and other laws and governmental rules and
regulations applicable to the Company's business, the ability to successfully
integrate newly acquired businesses into the Company's operations and other
risks 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," "plans," "expects," "anticipates" and
similar expressions 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.
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Consolidated Operations:
Total revenue $149,607 $133,569 $312,225 $278,558
Net revenue $106,721 $94,630 $216,597 $191,664
Total expenses $89,638 $81,074 $173,215 $156,856
Income from operations $17,083 $13,556 $43,382 $34,808
Net Income $10,913 $6,900 $26,301 $18,802
Earnings per share:
Basic $0.37 $0.24 $0.89 $0.64
Diluted $0.36 $0.23 $0.86 $0.62
Weighted average shares:
Basic 29,673 29,219 29,562 29,275
Diluted 30,569 30,079 30,484 30,256
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
-------------------
2006 2005 2005
--------- --------- ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $17,733 $11,771 $18,852
Pawn loans 124,514 116,046 115,280
Cash advances, net 39,005 42,742 40,704
Merchandise held for disposition,
net 68,787 61,846 72,683
Finance and service charges
receivable 21,273 19,666 22,048
Other receivables and prepaid
expenses 14,507 12,480 13,406
Income taxes recoverable -- 1,064 --
Deferred tax assets 12,103 11,293 11,274
--------- --------- ------------
Total current assets 297,922 276,908 294,247
Property and equipment, net 103,943 91,224 94,856
Goodwill 175,574 167,190 174,987
Intangible assets, net 21,984 23,078 23,391
Other assets 12,235 10,464 11,167
--------- --------- ------------
Total assets $611,658 $568,864 $598,648
========= ========= ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
expenses $38,303 $31,004 $37,217
Customer deposits 7,080 6,388 6,239
Income taxes currently payable 1,989 -- 1,449
Current portion of long-term debt 16,786 16,786 16,786
--------- --------- ------------
Total current liabilities 64,158 54,178 61,691
Deferred tax liabilities 11,314 12,654 11,344
Other liabilities 1,585 1,437 1,689
Long-term debt 128,515 152,421 149,208
--------- --------- ------------
Total liabilities 205,572 220,690 223,932
--------- --------- ------------
Stockholders' equity:
Common stock, $.10 par value per
share, 80,000,000 shares
authorized, 30,235,164 shares
issued 3,024 3,024 3,024
Additional paid-in capital 159,260 155,357 156,557
Retained earnings 254,802 205,219 229,975
Accumulated other comprehensive
income (loss) 66 -- (5)
Notes receivable secured by common
stock (382) (2,488) (2,488)
Treasury shares, at cost (679,143
shares, 1,108,189 shares and
999,347 shares at June 30, 2006
and 2005, and December 31, 2005,
respectively) (10,684) (12,938) (12,347)
--------- --------- ------------
Total stockholders' equity 406,086 348,174 374,716
--------- --------- ------------
Total liabilities and
stockholders' equity $611,658 $568,864 $598,648
========= ========= ============
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
--------- -------- -------- --------
(Unaudited)
Revenue
Finance and service charges $34,588 $32,577 $69,643 $66,496
Proceeds from disposition of
merchandise 72,917 65,333 160,391 144,074
Cash advance fees 39,395 33,376 74,834 61,686
Check cashing royalties and fees 2,707 2,283 7,357 6,302
--------- -------- -------- --------
Total Revenue 149,607 133,569 312,225 278,558
Cost of Revenue
Disposed merchandise 42,886 38,939 95,628 86,894
--------- -------- -------- --------
Net Revenue 106,721 94,630 216,597 191,664
--------- -------- -------- --------
Expenses
Operations 59,642 54,027 118,915 107,700
Cash advance loss provision 10,798 10,769 15,235 16,403
Administration 12,695 10,604 26,209 21,513
Depreciation and amortization 6,503 5,674 12,856 11,240
--------- -------- -------- --------
Total Expenses 89,638 81,074 173,215 156,856
--------- -------- -------- --------
Income from Operations 17,083 13,556 43,382 34,808
Interest expense (2,412) (2,490) (4,848) (4,827)
Interest income 389 407 767 825
Foreign currency transaction
gain (loss) 113 (431) 178 (915)
Gain from termination of
contract 2,167 -- 2,167 --
--------- -------- -------- --------
Income from Operations before
Income Taxes 17,340 11,042 41,646 29,891
Provision for income taxes 6,427 4,142 15,345 11,089
--------- -------- -------- --------
Net Income $10,913 $6,900 $26,301 $18,802
========= ======== ======== ========
Earnings Per Share:
Basic $0.37 $0.24 $0.89 $0.64
Diluted $0.36 $0.23 $0.86 $0.62
Weighted average common shares
outstanding:
Basic 29,673 29,219 29,562 29,275
Diluted 30,569 30,079 30,484 30,256
Dividends declared per common
share $0.025 $0.025 $0.050 $0.050
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
FINANCIAL AND OPERATING DATA
($ in thousands unless noted otherwise)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
PAWN LENDING OPERATIONS:
Pawn loans
Annualized yield on pawn
loans 121.5 % 122.6 % 125.5 % 127.6 %
Total amount of pawn loans
written and renewed $123,974 $114,348 $227,901 $212,178
Average pawn loan balance
outstanding $114,186 $106,547 $111,875 $105,118
Average pawn loan balance
per average location in
operation $249 $240 $245 $238
Ending pawn loan balance per
location in operation $272 $261 $272 $261
Average pawn loan amount at
end of period (not in
thousands) $96 $88 $96 $88
Profit margin on disposition
of merchandise as a
percentage of proceeds from
disposition of merchandise 41.2 % 40.4 % 40.4 % 39.7 %
Average annualized
merchandise turnover 2.6x 2.6x 2.8x 2.8x
Average balance of
merchandise held for
disposition per average
location in operation $145 $135 $150 $141
Ending balance of
merchandise held for
disposition per location in
operation $151 $139 $151 $139
Pawnshop locations in
operation --
Beginning of period, owned 458 441 456 441
Acquired -- 2 2 2
Start-ups -- 2 1 3
Combined or closed (1) -- (2) (1)
--------- --------- ---------- --------
End of period, owned 457 445 457 445
Franchise locations at end
of period 10 11 10 11
--------- --------- ---------- --------
Total pawnshop locations
at end of period 467 456 467 456
========= ========= ========== ========
Average number of owned
pawnshop locations 458 444 457 442
========= ========= ========== ========
Cash advances
Total amount of cash
advances written (a) $65,734 $68,191 $124,746 $124,931
Number of cash advances
written (not in thousands)
(a) 168,377 209,342 319,504 379,920
Average amount per cash
advance (not in thousands)
(a) $390 $326 $390 $329
Combined cash advances
outstanding (a) $17,742 $20,279 $17,742 $20,279
Cash advances outstanding
per location at end of
period (a) $43 $47 $43 $47
Cash advances outstanding
before allowance for losses
(b) $7,585 $13,193 $7,585 $13,193
Locations offering cash
advances at end of period 415 429 415 429
========= ========= ========== ========
Average number of locations
offering cash advances 427 428 430 427
========= ========= ========== ========
CASH ADVANCE OPERATIONS (c):
Total amount of cash advances
written (a) $177,004 $156,150 $331,922 $278,235
Number of cash advances
written (not in thousands)
(a) 478,884 434,911 890,887 785,461
Average amount per cash
advance (not in thousands)
(a) $370 $359 $373 $354
Combined cash advances
outstanding (a) $45,940 $42,520 $45,940 $42,520
Cash advances outstanding per
location at end of period
(a) $158 $157 $158 $157
Cash advances outstanding
before allowance for losses
(b) $38,961 $37,269 $38,961 $37,269
Cash advance locations in
operation --
Beginning of period 286 264 286 253
Acquired -- 1 -- 1
Start-ups 5 6 8 19
Combined or closed -- -- (3) (2)
--------- --------- ---------- --------
End of period 291 271 291 271
========= ========= ========== ========
Average number of cash
advance locations 287 267 288 262
========= ========= ========== ========
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
FINANCIAL AND OPERATING DATA (Continued)
($ in thousands unless noted otherwise)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
CHECK CASHING OPERATIONS (Mr.
Payroll Corp.) (d)
Face amount of checks cashed $310,412 $277,595 $686,592 $614,623
Gross fees collected $4,280 $3,756 $9,950 $8,770
Fees as a percentage of
checks cashed 1.4% 1.4% 1.4% 1.4%
Average check cashed (not in
thousands) $397 $367 $437 $393
Centers in operation at end
of period 138 136 138 136
========= ========= ========= =========
Average number of check
cashing centers 139 135 139 135
========= ========= ========= =========
- -----------------------------
(a) Includes cash advances made by the Company and cash advances made
by third-party lenders offered at the Company's locations.
(b) Amounts recorded in the Company's consolidated financial
statements.
(c) Includes only cash advance locations.
(d) Includes franchised and company-owned locations.
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CASH ADVANCES OUTSTANDING
(in thousands)
June 30,
-----------------
2006 2005
-------- --------
Originated by the Company
Active cash advances and fees receivable $32,016 $30,220
Cash advances and fees in collection 7,615 6,840
-------- --------
Total originated by the Company 39,631 37,060
-------- --------
Originated by third-party lenders
Active cash advances and fees receivable 18,143 19,531
Cash advances and fees in collection 5,908 6,208
-------- --------
Total originated by third-party lenders 24,051 25,739
-------- --------
Combined gross portfolio 63,682 62,799
Less: Elimination of cash advances owned by third-
party lenders 17,136 11,466
Less: Discount on cash advances assigned by third-
party banks -- 871
-------- --------
Company-owned cash advances and fees receivable,
gross 46,546 50,462
Less: Allowance for losses 7,541 7,720
-------- --------
Cash advances and fees receivable, net $39,005 $42,742
======== ========
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
2006 2005 2006 2005
---------- -------- -------- --------
Allowance for company-owned cash
advances
Balance at beginning of period $3,541 $3,096 $6,309 $4,358
Cash advance loss provision 10,512 10,457 15,218 16,138
Charge-offs (8,612) (7,861) (19,657) (17,701)
Recoveries 2,100 2,028 5,671 4,925
---------- -------- -------- --------
Balance at end of period $7,541 $7,720 $7,541 $7,720
========== ======== ======== ========
Accrual for third-party lender-
owned cash advances
Balance at beginning of period $605 $295 $874 $342
Increase in loss provision 286 312 17 265
---------- -------- -------- --------
Balance at end of period $891 $607 $891 $607
========== ======== ======== ========
Combined statistics
Combined cash advance loss
provision $10,798 $10,769 $15,235 $16,403
========== ======== ======== ========
Combined cash advance loss
provision as a % of combined
cash advances written 4.5% 4.8% 3.3% 4.1%
========== ======== ======== ========
Charge-offs (net of recoveries)
as a % of combined cash
advances written 2.7% 2.6% 3.1% 3.2%
========== ======== ======== ========
Combined allowance for losses
and accrued third-party
lenders losses as a % of
combined gross portfolio 13.2% 13.3% 13.2% 13.3%
========== ======== ======== ========
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
INCOME FROM OPERATIONS BY OPERATING SEGMENT
THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(in thousands)
Pawn Cash Check
Lending Advance Cashing Consolidated
--------- --------- ------- ------------
Three Months Ended June 30,
2006:
- -----------------------------
Revenue
Finance and service charges $34,588 $-- $-- $34,588
Proceeds from disposition of
merchandise 72,917 -- -- 72,917
Cash advance fees 10,282 29,113 -- 39,395
Check cashing royalties and
fees -- 1,834 873 2,707
--------- --------- ------- ------------
Total revenue 117,787 30,947 873 149,607
Cost of revenue -- disposed
merchandise 42,886 -- -- 42,886
--------- --------- ------- ------------
Net revenue 74,901 30,947 873 106,721
--------- --------- ------- ------------
Expenses
Operations 44,799 14,523 320 59,642
Cash advance loss provision 3,724 7,074 -- 10,798
Administration 7,441 4,686 568 12,695
Depreciation and
amortization 4,478 1,936 89 6,503
--------- --------- ------- ------------
Total expenses 60,442 28,219 977 89,638
--------- --------- ------- ------------
Income (loss) from operations $14,459 $2,728 $(104) $17,083
========= ========= ======= ============
As of June 30, 2006:
- -----------------------------
Total assets $489,686 $114,546 $7,426 $611,658
========= ========= ======= ============
Three Months Ended June 30,
2005:
- -----------------------------
Revenue
Finance and service charges $32,577 $-- $-- $32,577
Proceeds from disposition of
merchandise 65,333 -- -- 65,333
Cash advance fees 10,050 23,326 -- 33,376
Check cashing royalties and
fees -- 1,440 843 2,283
--------- --------- ------- ------------
Total revenue 107,960 24,766 843 133,569
Cost of revenue - disposed
merchandise 38,939 -- -- 38,939
--------- --------- ------- ------------
Net revenue 69,021 24,766 843 94,630
--------- --------- ------- ------------
Expenses
Operations 40,998 12,703 326 54,027
Cash advance loss provision 4,075 6,694 -- 10,769
Administration 6,268 4,047 289 10,604
Depreciation and
amortization 3,817 1,777 80 5,674
------------------ ------- ------------
Total expenses 55,158 25,221 695 81,074
--------- --------- ------- ------------
Income (loss) from operations $13,863 $(455) $148 $13,556
========= ========= ======= ============
As of June 30, 2005:
- -----------------------------
Total assets $450,362 $111,683 $6,819 $568,864
========= ========= ======= ============
Note: To more accurately estimate the administrative expenses
associated with each operating segment, the Company began in the
second quarter of 2006 to allocate its aggregate administrative
expenses on a different basis. Management believes that the
current methodology creates a more balanced allocation among the
segments based on the time, resources and activities associated
with the administrative activities of each operating segment. All
prior periods have been revised to reflect this change in the
allocation of administrative burden. There is no change to the
consolidated performance of the Company for any period. There are
no other changes to the segment results other than to the
administrative expense allocation.
- ----------------------------------------------------------------------
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
INCOME FROM OPERATIONS BY OPERATING SEGMENT
SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(in thousands)
Pawn Cash Check
Lending Advance Cashing Consolidated
-------- -------- ------- ------------
Six Months Ended June 30, 2006:
- -------------------------------
Revenue
Finance and service charges $69,643 $-- $-- $69,643
Proceeds from disposition of
merchandise 160,391 -- -- 160,391
Cash advance fees 19,930 54,904 -- 74,834
Check cashing royalties and
fees -- 5,333 2,024 7,357
-------- -------- ------- ------------
Total revenue 249,964 60,237 2,024 312,225
Cost of revenue -- disposed
merchandise 95,628 -- -- 95,628
-------- -------- ------- ------------
Net revenue 154,336 60,237 2,024 216,597
-------- -------- ------- ------------
Expenses
Operations 89,016 29,245 654 118,915
Cash advance loss provision 5,607 9,628 -- 15,235
Administration 15,574 9,754 881 26,209
Depreciation and amortization 8,820 3,866 170 12,856
-------- -------- ------- ------------
Total expenses 119,017 52,493 1,705 173,215
-------- -------- ------- ------------
Income from operations $35,319 $7,744 $319 $43,382
======== ======== ======= ============
Six Months Ended June 30, 2005:
- -------------------------------
Revenue
Finance and service charges $66,496 $-- $-- $66,496
Proceeds from disposition of
merchandise 144,074 -- -- 144,074
Cash advance fees 19,030 42,656 -- 61,686
Check cashing royalties and
fees -- 4,328 1,974 6,302
-------- -------- ------- ------------
Total revenue 229,600 46,984 1,974 278,558
Cost of revenue -- disposed
merchandise 86,894 -- -- 86,894
-------- -------- ------- ------------
Net revenue 142,706 46,984 1,974 191,664
-------- -------- ------- ------------
Expenses
Operations 81,916 25,076 708 107,700
Cash advance loss provision 6,268 10,135 -- 16,403
Administration 12,916 8,024 573 21,513
Depreciation and amortization 7,609 3,468 163 11,240
-------- -------- ------- ------------
Total expenses 108,709 46,703 1,444 156,856
-------- -------- ------- ------------
Income from operations $33,997 $281 $530 $34,808
======== ======== ======= ============
See Note above regarding the revised methodology of allocating the
aggregate administrative expenses to the operating segments.
CONTACT: Cash America International, Inc.
Thomas A. Bessant, Jr., 817-335-1100