Cash America International, Inc. (NYSE: CSH) reported today that its net income for the second quarter ended June 30, 2014 was $20,971,000 (72 cents per share), which compares to the second quarter 2013 net income of $25,132,000 (81 cents per share). Included in the results for the second quarter ended June 30, 2014 is $15.0 million in charges related to the early extinguishment of debt related to the prepayment of long-term notes during the period. Excluding the after-tax impact of the early extinguishment of debt costs of $9.5 million (32 cents per share), net income attributable to the Company adjusted for this expense, a non-GAAP measure, would have increased 21% to $30.4 million for the three months ended June 30, 2014, and net income per share adjusted for this expense, a non-GAAP measure, would have been $1.04 per share, representing a 28% increase in earnings per share from the same period in 2013. Net income per share adjusted for this expense for the second quarter of 2014 exceeded the Company’s published guidance range of 85 cents per share to 95 cents per share announced on April 24, 2014.
Total revenue for the second quarter ended June 30, 2014 was $455.1 million compared to $410.4 million in the second quarter of 2013. Net revenue, which is total revenue less cost of merchandise sold and loan loss provision expense, was up 13% to $275.9 million for the three-month period ended June 30, 2014 compared to the prior year, primarily due to growth in the Company’s E-Commerce Segment. The E-Commerce Segment posted higher total revenue levels and lower loan losses as a percentage of revenue leading to a 27% increase in net revenue, which reached $134.6 million for the second quarter ended June 30, 2014 compared to $106.0 million during the same period in 2013. The E-Commerce Segment generated income from operations of $58.1 million in the second quarter of 2014, representing an increase of 60% compared to the same period in 2013.
The Company’s Retail Services Segment posted its first year-over-year increase in net revenue in two years as net revenue increased 3% to $141.1 million for the three months ended June 30, 2014. The increase in net revenue was supported by an 11% increase in revenue from pawn loans, which ended the month of June 2014 with a balance outstanding of $263.7 million, up 14.9% from the end of June 2013. Same store pawn loan balances in the Company’s U.S. lending locations were up 4.5% on June 30, 2014 compared to the same period in 2013.
Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, “The second quarter’s results exceeded our expectations due to much lower loan loss rates in our unsecured consumer loan products during the period, which led to strong gains in operating income from our E-Commerce Segment. In addition, our pawn lending activities experienced renewed demand leading to a healthy increase in overall pawn loans and the first domestic same store pawn loan balance increase since early 2012.”
For the first six months of fiscal year 2014, total revenue increased 8% to $948.2 million compared to $878.5 million for the same period in 2013, and net revenue for the same comparison period was up 11%, reaching $570.9 million in 2014 versus $516.1 million in 2013. The Company reported net income of $66,708,000 ($2.27 per share) for the first six months of fiscal year 2014, which includes the $10.4 million of after-tax expenses related to the early extinguishment of debt (36 cents per share) discussed above. Net income attributable to the Company as adjusted for these expenses, a non-GAAP measure, would have increased to $77.1 million for the six-month period ended June 30, 2014 and net income per share as adjusted for these expenses, a non-GAAP measure, would have been $2.63 per share, up 18% compared to $69,058,000 ($2.23 per share) from the same six month period in 2013.
Cash America will host a conference call to discuss the second quarter results on Thursday, July 24, 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 August 20, 2014 to shareholders of record on August 6, 2014.
Outlook for the Third Quarter of 2014 and Related 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, 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. Management expects that changes to its U.K. business practices that it has adopted in response to new regulatory requirements in the United Kingdom will significantly reduce loan volumes, balances and revenue levels in that market for the remainder of the year and potentially into 2015, although the decrease could be offset by higher balances from domestic consumer loan products, among other things. Other elements that could affect the growth in revenue include the regulatory governance of the consumer loan products and the continued development and growth of new lending products offered by the Company’s E-Commerce Segment. In addition, the Company’s wholly-owned subsidiary, Enova International, Inc., completed a $500 million long-term note offering during the second quarter of 2014 that has significantly increased the Company’s interest expense as the proceeds were used to pay-off long-term notes at lower interest rates. Management estimates that the after tax additional interest expense burden will amount to 13 cents per share per quarter.
Based on its views and on the preceding factors, management expects the third quarter 2014 net income per share to be between 70 cents and 80 cents per share compared to $1.52 per share in the third quarter of 2013, which included a tax benefit of $33.2 million ($1.09 per share) related to the reorganization of its Mexico-based pawn operations and an $18 million pre-tax expense (37 cents per share after taxes) associated with a negotiated settlement of a class-action lawsuit. These two items combined to create a net after-tax benefit to income of $21.9 million (72 cents per share) for the three months ended September 30, 2013. Adjusted earnings per share for the third quarter of 2013, excluding the net effect of these two items, was 80 cents per share.
Based on the Company’s results through the first half of 2014, which produced adjusted earnings per share of $2.64, a non-GAAP measure, and excludes the first quarter after-tax impact of $1.1 million in expenses primarily related to the early extinguishment of debt (4 cents per share) and the second quarter $9.5 million (32 cents per share) discussed above, management expects its fiscal year 2014 earnings per share to be in a range of between $4.20 and $4.40 per share. This guidance range compares to actual full year 2013 earnings per share of $4.66, which includes 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). Adjusting for the full year effects of the net benefit in 2013 would result in adjusted net income attributable to the Company, a non-GAAP measure, of $123.7 million ($4.04 per share).
Non-GAAP Measures
The “Adjusted Earnings and Adjusted Earnings Per Share” section included in the attachments to this press release contains a discussion of the reasons why the Company’s management believes that presentation of the non-GAAP financial measures discussed above provide useful information to investors regarding the Company’s financial condition and results of operations.
About the Company
As of June 30, 2014, Cash America International, Inc. (the “Company”) operated 1,004 total locations offering specialty financial services to consumers, which included the following:
- 869 lending locations in 22 states in the United States primarily under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” and “Cashland;”
- 47 pawn lending locations in central and southern Mexico under the name “Cash America casa de empeño;” and
- 88 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 June 30, 2014, the Company offered consumer loans over the Internet to customers:
- in 33 states in the United States at http://www.cashnetusa.com and http://www.netcredit.com;
- in the United Kingdom at http://www.quickquid.co.uk, http://www.quickquidflexcredit.co.uk, http://www.poundstopocket.co.uk, and http://onstride.co.uk;
- in Australia at http://www.dollarsdirect.com.au;
- in Canada at http://www.dollarsdirect.ca; and
- in Brazil at http://www.simplic.com.br.
For additional information regarding the Company and the services it provides, visit the Company’s websites located at:
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 UK Financial Conduct Authority, 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 division, 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.
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES HIGHLIGHTS OF CONSOLIDATED RESULTS OF OPERATIONS (dollars in thousands, except per share data) (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Consolidated Operations: | ||||||||||||||||
| Total revenue | $ | 455,090 | $ | 410,380 | $ | 948,190 | $ | 878,508 | ||||||||
| Net revenue | 275,891 | 244,190 | 570,927 | 516,131 | ||||||||||||
| Total expenses | 214,472 | 194,942 | 425,319 | 389,297 | ||||||||||||
| Income from Operations | $ | 61,419 | $ | 49,248 | $ | 145,608 | $ | 126,834 | ||||||||
| Income before income taxes | 33,404 | 40,390 | 105,888 | 110,106 | ||||||||||||
| Net Income | $ | 20,971 | $ | 25,444 | $ | 66,708 | $ | 69,366 | ||||||||
| Net income attributable to the noncontrolling interest | $ | — | $ | (312 | ) | $ | — | $ | (308 | ) | ||||||
| Net Income Attributable to Cash America International, Inc. | $ | 20,971 | $ | 25,132 | $ | 66,708 | $ | 69,058 | ||||||||
| Earnings per share: | ||||||||||||||||
| Net Income attributable to Cash America International, Inc. common shareholders: | ||||||||||||||||
| Basic | $ | 0.73 | $ | 0.88 | $ | 2.33 | $ | 2.39 | ||||||||
| Diluted | $ | 0.72 | $ | 0.81 | $ | 2.27 | $ | 2.23 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 28,823 | 28,721 | 28,616 | 28,910 | ||||||||||||
| Diluted | 29,256 | 30,845 | 29,365 | 31,023 | ||||||||||||
| CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (dollars in thousands, except per share information) | ||||||||||||
| (Unaudited) | ||||||||||||
| June 30, | December 31, | |||||||||||
| 2014 | 2013 | 2013 | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 192,915 | $ | 124,459 | $ | 67,228 | ||||||
| Restricted cash | 60 | — | 8,000 | |||||||||
| Pawn loans | 263,668 | 229,574 | 261,148 | |||||||||
| Consumer loans, net | 337,961 | 287,127 | 358,841 | |||||||||
| Merchandise held for disposition, net | 198,919 | 155,112 | 208,899 | |||||||||
| Pawn loan fees and service charges receivable | 51,986 | 45,566 | 53,438 | |||||||||
| Income taxes receivable | 17 | 25,495 | 9,535 | |||||||||
| Prepaid expenses and other assets | 42,545 | 30,985 | 33,655 | |||||||||
| Deferred tax assets | 34,779 | 43,628 | 38,800 | |||||||||
| Total current assets | 1,122,850 | 941,946 | 1,039,544 | |||||||||
| Property and equipment, net | 255,407 | 250,842 | 261,223 | |||||||||
| Goodwill | 706,037 | 608,242 | 705,579 | |||||||||
| Intangible assets, net | 49,135 | 34,067 | 52,256 | |||||||||
| Other assets | 35,457 | 21,571 | 21,129 | |||||||||
| Total assets | $ | 2,168,886 | $ | 1,856,668 | $ | 2,079,731 | ||||||
| Liabilities and Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and accrued expenses | $ | 120,417 | $ | 115,591 | $ | 140,068 | ||||||
| Customer deposits | 18,295 | 12,962 | 14,803 | |||||||||
| Income taxes currently payable | — | — | — | |||||||||
| Current portion of long-term debt | — | 22,606 | 22,606 | |||||||||
| Total current liabilities | 138,712 | 151,159 | 177,477 | |||||||||
| Deferred tax liabilities | 113,157 | 103,759 | 101,417 | |||||||||
| Noncurrent income tax payable | — | 36,834 | — | |||||||||
| Other liabilities | 1,268 | 1,609 | 1,031 | |||||||||
| Long-term debt | 793,863 | 547,218 | 717,383 | |||||||||
| Total liabilities | $ | 1,047,000 | $ | 840,579 | $ | 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 | 86,184 | 156,349 | 150,833 | |||||||||
| Retained earnings | 1,082,725 | 946,483 | 1,017,981 | |||||||||
| Accumulated other comprehensive income (loss) | 7,998 | (362 | ) | 4,649 | ||||||||
| Treasury shares, at cost (1,382,602 shares, 2,107,082 shares and 2,224,902 shares as of June 30, 2014 and 2013, and as of December 31, 2013, respectively) | (58,045 | ) | (89,405 | ) | (94,064 | ) | ||||||
| Total equity | 1,121,886 | 1,016,089 | 1,082,423 | |||||||||
| Total liabilities and equity | $ | 2,168,886 | $ | 1,856,668 | $ | 2,079,731 | ||||||
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue | ||||||||||||||||
| Pawn loan fees and service charges | $ | 80,990 | $ | 72,728 | $ | 161,177 | $ | 148,642 | ||||||||
| Proceeds from disposition of merchandise | 146,772 | 131,532 | 323,227 | 310,249 | ||||||||||||
| Consumer loan fees | 225,339 | 202,431 | 459,521 | 412,636 | ||||||||||||
| Other | 1,989 | 3,689 | 4,265 | 6,981 | ||||||||||||
| Total Revenue | 455,090 | 410,380 | 948,190 | 878,508 | ||||||||||||
| Cost of Revenue | ||||||||||||||||
| Disposed merchandise | 104,510 | 88,961 | 229,074 | 210,296 | ||||||||||||
| Consumer loan loss provision | 74,689 | 77,229 | 148,189 | 152,081 | ||||||||||||
| Total Cost of Revenue | 179,199 | 166,190 | 377,263 | 362,377 | ||||||||||||
| Net Revenue | 275,891 | 244,190 | 570,927 | 516,131 | ||||||||||||
| Expenses | ||||||||||||||||
| Operations and administration | 194,975 | 176,942 | 386,561 | 353,766 | ||||||||||||
| Depreciation and amortization | 19,497 | 18,000 | 38,758 | 35,531 | ||||||||||||
| Total Expenses | 214,472 | 194,942 | 425,319 | 389,297 | ||||||||||||
| Income from Operations | 61,419 | 49,248 | 145,608 | 126,834 | ||||||||||||
| Interest expense | (12,828 | ) | (8,903 | ) | (22,896 | ) | (16,348 | ) | ||||||||
| Interest income | 8 | 5 | 18 | 68 | ||||||||||||
| Foreign currency transaction (loss) gain | (179 | ) | 65 | (280 | ) | (312 | ) | |||||||||
| Loss on extinguishment of debt | (15,016 | ) | — | (16,562 | ) | — | ||||||||||
| Equity in loss of unconsolidated subsidiary | — | (25 | ) | — | (136 | ) | ||||||||||
| Income before Income Taxes | 33,404 | 40,390 | 105,888 | 110,106 | ||||||||||||
| Provision for income taxes | 12,433 | 14,946 | 39,180 | 40,740 | ||||||||||||
| Net Income | 20,971 | 25,444 | 66,708 | 69,366 | ||||||||||||
| Net income attributable to the noncontrolling interest | — | (312 | ) | — | (308 | ) | ||||||||||
| Net Income Attributable to Cash America International, Inc. | $ | 20,971 | $ | 25,132 | $ | 66,708 | $ | 69,058 | ||||||||
| Earnings Per Share: | ||||||||||||||||
| Net Income attributable to Cash America International, Inc. common shareholders: | ||||||||||||||||
| Basic | $ | 0.73 | $ | 0.88 | $ | 2.33 | $ | 2.39 | ||||||||
| Diluted | $ | 0.72 | $ | 0.81 | $ | 2.27 | $ | 2.23 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 28,823 | 28,721 | 28,616 | 28,910 | ||||||||||||
| Diluted | 29,256 | 30,845 | 29,365 | 31,023 | ||||||||||||
| Dividends declared per common share | $ | 0.035 | $ | 0.035 | $ | 0.070 | $ | 0.070 | ||||||||
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 six months ended June 30, 2014 and 2013 (dollars in thousands): | ||||||||||||||
| As of June 30, | ||||||||||||||
| 2014 | 2013 | Change | % Change | |||||||||||
| Ending pawn loan balances | ||||||||||||||
| Domestic retail services | $ | 257,647 | $ | 224,622 | $ | 33,025 | 14.7 | % | ||||||
| Foreign retail services | 6,021 | 4,952 | 1,069 | 21.6 | % | |||||||||
| Consolidated pawn loan balances | $ | 263,668 | $ | 229,574 | $ | 34,094 | 14.9 | % | ||||||
| Ending merchandise balance, net | ||||||||||||||
| Domestic retail services | $ | 192,745 | $ | 149,244 | $ | 43,501 | 29.1 | % | ||||||
| Foreign retail services | 6,174 | 5,868 | 306 | 5.2 | % | |||||||||
| Consolidated merchandise balance, net | $ | 198,919 | $ | 155,112 | $ | 43,807 | 28.2 | % | ||||||
| Three Months Ended June 30, | ||||||||||||||
| 2014 | 2013 | Change | % Change | |||||||||||
| Pawn loan fees and service charges | ||||||||||||||
| Domestic retail services | $ | 78,911 | $ | 70,802 | $ | 8,109 | 11.5 | % | ||||||
| Foreign retail services | 2,079 | 1,926 | 153 | 7.9 | % | |||||||||
| Consolidated pawn loan fees and service charges | $ | 80,990 | $ | 72,728 | $ | 8,262 | 11.4 | % | ||||||
| Average pawn loan balance outstanding | ||||||||||||||
| Domestic retail services | $ | 235,187 | $ | 211,195 | $ | 23,992 | 11.4 | % | ||||||
| Foreign retail services | 5,683 | 5,237 | 446 | 8.5 | % | |||||||||
| Consolidated average pawn loans outstanding | $ | 240,870 | $ | 216,432 | $ | 24,438 | 11.3 | % | ||||||
| Amount of pawn loans written and renewed | ||||||||||||||
| Domestic retail services | $ | 271,226 | $ | 234,327 | $ | 36,899 | 15.7 | % | ||||||
| Foreign retail services | 15,909 | 15,166 | 743 | 4.9 | % | |||||||||
| Consolidated amount of pawn loans written and renewed | $ | 287,135 | $ | 249,493 | $ | 37,642 | 15.1 | % | ||||||
| Average amount per pawn loan (in ones) | ||||||||||||||
| Domestic retail services | $ | 123 | $ | 126 | $ | (3 | ) | (2.4 | )% | |||||
| Foreign retail services | $ | 88 | $ | 89 | $ | (1 | ) | (1.1 | )% | |||||
| Consolidated average amount per pawn loan (in ones) | $ | 120 | $ | 123 | $ | (3 | ) | (2.4 | )% | |||||
| Annualized yield on pawn loans | ||||||||||||||
| Domestic retail services | 134.6 | % | 134.5 | % | ||||||||||
| Foreign retail services | 146.7 | % | 147.5 | % | ||||||||||
| Consolidated annualized yield on pawn loans | 134.9 | % | 134.8 | % | ||||||||||
| Gross profit margin on disposition of merchandise | ||||||||||||||
| Domestic retail services | 29.0 | % | 32.9 | % | ||||||||||
| Foreign retail services | 23.0 | % | 16.4 | % | ||||||||||
| Gross profit margin on disposition of merchandise | 28.8 | % | 32.4 | % | ||||||||||
| Merchandise turnover | ||||||||||||||
| Domestic retail services | 2.2 | 2.4 | ||||||||||||
| Foreign retail services | 2.4 | 2.6 | ||||||||||||
| Consolidated merchandise turnover | 2.2 | 2.4 | ||||||||||||
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES PAWN LENDING ACTIVITIES – FINANCIAL AND OPERATING DATA (dollars in thousands, except where otherwise noted) | |||||||||||||||
| Six Months Ended June 30, | |||||||||||||||
| 2014 | 2013 | Change | % Change | ||||||||||||
| Pawn loan fees and service charges | |||||||||||||||
| Domestic retail services | $ | 157,378 | $ | 144,976 | $ | 12,402 | 8.6 | % | |||||||
| Foreign retail services | 3,799 | 3,666 | 133 | 3.6 | % | ||||||||||
| Consolidated pawn loan fees and service charges | $ | 161,177 | $ | 148,642 | $ | 12,535 | 8.4 | % | |||||||
| Average pawn loan balance outstanding | |||||||||||||||
| Domestic retail services | $ | 239,089 | $ | 219,709 | $ | 19,380 | 8.8 | % | |||||||
| Foreign retail services | 5,175 | 4,858 | 317 | 6.5 | % | ||||||||||
| Consolidated average pawn loans outstanding | $ | 244,264 | $ | 224,567 | $ | 19,697 | 8.8 | % | |||||||
| Amount of pawn loans written and renewed | |||||||||||||||
| Domestic retail services | $ | 503,786 | $ | 449,703 | $ | 54,083 | 12.0 | % | |||||||
| Foreign retail services | 28,895 | 28,259 | 636 | 2.3 | % | ||||||||||
| Consolidated amount of pawn loans written and renewed | $ | 532,681 | $ | 477,962 | $ | 54,719 | 11.4 | % | |||||||
| Average amount per pawn loan (in ones) | |||||||||||||||
| Domestic retail services | $ | 124 | $ | 128 | $ | (4 | ) | (3.1 | )% | ||||||
| Foreign retail services | $ | 88 | $ | 87 | $ | 1 | 1.1 | % | |||||||
| Consolidated average amount per pawn loan (in ones) | $ | 121 | $ | 124 | $ | (3 | ) | (2.4 | )% | ||||||
| Annualized yield on pawn loans | |||||||||||||||
| Domestic retail services | 132.7 | % | 133.1 | % | |||||||||||
| Foreign retail services | 148.0 | % | 152.2 | % | |||||||||||
| Consolidated annualized yield on pawn loans | 133.1 | % | 133.5 | % | |||||||||||
| Gross profit margin on disposition of merchandise | |||||||||||||||
| Domestic retail services | 29.3 | % | 32.6 | % | |||||||||||
| Foreign retail services | 22.9 | % | 18.3 | % | |||||||||||
| Gross profit margin on disposition of merchandise | 29.1 | % | 32.2 | % | |||||||||||
| Merchandise turnover | |||||||||||||||
| Domestic retail services | 2.3 | 2.7 | |||||||||||||
| Foreign retail services | 2.5 | 2.6 | |||||||||||||
| Consolidated merchandise turnover | 2.3 | 2.7 | |||||||||||||
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 six months ended June 30, 2014 and 2013 (dollars in thousands): | |||||||||||||||||||||||
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||||||
| Retail | Commercial | Total | Retail | Commercial | Total | ||||||||||||||||||
| Proceeds from disposition | $ | 117,951 | $ | 28,821 | $ | 146,772 | $ | 89,836 | $ | 41,696 | $ | 131,532 | |||||||||||
| Gross profit on disposition | $ | 38,681 | $ | 3,581 | $ | 42,262 | $ | 33,385 | $ | 9,186 | $ | 42,571 | |||||||||||
| Gross profit margin | 32.8 | % | 12.4 | % | 28.8 | % | 37.2 | % | 22.0 | % | 32.4 | % | |||||||||||
| Percentage of total gross profit | 91.5 | % | 8.5 | % | 100.0 | % | 78.4 | % | 21.6 | % | 100.0 | % | |||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||||||
| Retail | Commercial | Total | Retail | Commercial | Total | ||||||||||||||||||
| Proceeds from disposition | $ | 260,244 | $ | 62,983 | $ | 323,227 | $ | 202,246 | $ | 108,003 | $ | 310,249 | |||||||||||
| Gross profit on disposition | $ | 88,033 | $ | 6,120 | $ | 94,153 | $ | 75,375 | $ | 24,578 | $ | 99,953 | |||||||||||
| Gross profit margin | 33.8 | % | 9.7 | % | 29.1 | % | 37.3 | % | 22.8 | % | 32.2 | % | |||||||||||
| Percentage of total gross profit | 93.5 | % | 6.5 | % | 100.0 | % | 75.4 | % | 24.6 | % | 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 $2.1 million and $0.9 million as of June 30, 2014 and 2013, respectively (dollars in thousands): | |||||||||||||
| As of June 30, | |||||||||||||
| 2014 | 2013 | ||||||||||||
| Amount | % | Amount | % | ||||||||||
| Jewelry - held for one year or less | $ | 107,905 | 53.7 | % | $ | 90,105 | 57.8 | % | |||||
| Other merchandise - held for one year or less | 80,050 | 39.8 | % | 56,398 | 36.1 | % | |||||||
| Total merchandise held for one year or less | 187,955 | 93.5 | % | 146,503 | 93.9 | % | |||||||
| Jewelry - held for more than one year | 5,480 | 2.7 | % | 3,856 | 2.4 | % | |||||||
| Other merchandise - held for more than one year | 7,593 | 3.8 | % | 5,702 | 3.7 | % | |||||||
| Total merchandise held for more than one year | 13,073 | 6.5 | % | 9,558 | 6.1 | % | |||||||
| Merchandise held for disposition, gross | $ | 201,028 | 100.0 | % | $ | 156,061 | 100.0 | % | |||||
| Merchandise held for disposition, net of allowance | $ | 198,919 | $ | 155,112 | |||||||||
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 six months ended June 30, 2014 and 2013 (dollars in thousands): | |||||||||||||||||||||||||||||||
| Three Months Ended June 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 | $ | 20,440 | $ | — | $ | 3,460 | $ | 23,900 | $ | 23,529 | $ | — | $ | 3,118 | $ | 26,647 | |||||||||||||||
| E-commerce | |||||||||||||||||||||||||||||||
| Domestic | 41,392 | 36,066 | 31,293 | 108,751 | 42,398 | 26,465 | 18,639 | 87,502 | |||||||||||||||||||||||
| Foreign | 24,316 | 38,828 | 29,544 | 92,688 | 60,633 | 1,818 | 25,831 | 88,282 | |||||||||||||||||||||||
| Total E-commerce | 65,708 | 74,894 | 60,837 | 201,439 | 103,031 | 28,283 | 44,470 | 175,784 | |||||||||||||||||||||||
| Consumer loan fees | $ | 86,148 | $ | 74,894 | $ | 64,297 | $ | 225,339 | $ | 126,560 | $ | 28,283 | $ | 47,588 | $ | 202,431 | |||||||||||||||
| Less: consumer loan loss provision | 25,621 | 21,786 | 27,282 | 74,689 | 42,931 | 9,919 | 24,379 | 77,229 | |||||||||||||||||||||||
| Consumer loan fees, net loss provision | $ | 60,527 | $ | 53,108 | $ | 37,015 | $ | 150,650 | $ | 83,629 | $ | 18,364 | $ | 23,209 | $ | 125,202 | |||||||||||||||
| Year-over-year change - $ | $ | (23,102 | ) | $ | 34,744 | $ | 13,806 | $ | 25,448 | $ | (3,750 | ) | $ | 9,279 | $ | 11,348 | $ | 16,877 | |||||||||||||
| Year-over-year change - % | (27.6 | )% | 189.2 | % | 59.5 | % | 20.3 | % | (4.3 | )% | 102.1 | % | 95.7 | % | 15.6 | % | |||||||||||||||
Consumer loan loss provision as a % of consumer loan fees | 29.7 | % | 29.1 | % | 42.4 | % | 33.1 | % | 33.9 | % | 35.1 | % | 51.2 | % | 38.2 | % | |||||||||||||||
| Six Months Ended June 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 | $ | 42,437 | $ | — | $ | 7,222 | $ | 49,659 | $ | 48,736 | $ | — | $ | 6,233 | $ | 54,969 | |||||||||||||||
| E-commerce | |||||||||||||||||||||||||||||||
| Domestic | 85,786 | 71,082 | 60,931 | 217,799 | 89,994 | 49,699 | 38,450 | 178,143 | |||||||||||||||||||||||
| Foreign | 52,899 | 76,848 | 62,316 | 192,063 | 128,045 | 1,818 | 49,661 | 179,524 | |||||||||||||||||||||||
| Total E-commerce | 138,685 | 147,930 | 123,247 | 409,862 | 218,039 | 51,517 | 88,111 | 357,667 | |||||||||||||||||||||||
| Consumer loan fees | $ | 181,122 | $ | 147,930 | $ | 130,469 | $ | 459,521 | $ | 266,775 | $ | 51,517 | $ | 94,344 | $ | 412,636 | |||||||||||||||
| Less: consumer loan loss provision | 47,382 | 45,161 | 55,646 | 148,189 | 88,097 | 16,472 | 47,512 | 152,081 | |||||||||||||||||||||||
| Consumer loan fees, net loss provision | $ | 133,740 | $ | 102,769 | $ | 74,823 | $ | 311,332 | $ | 178,678 | $ | 35,045 | $ | 46,832 | $ | 260,555 | |||||||||||||||
| Year-over-year change - $ | $ | (44,938 | ) | $ | 67,724 | $ | 27,991 | $ | 50,777 | $ | (797 | ) | $ | 17,730 | $ | 24,840 | $ | 41,773 | |||||||||||||
| Year-over-year change - % | (25.2 | )% | 193.2 | % | 59.8 | % | 19.5 | % | (0.4 | )% | 102.4 | % | 113.0 | % | 19.1 | % | |||||||||||||||
| Consumer loan loss provision as a % of consumer loan fees | 26.2 | % | 30.5 | % | 42.7 | % | 32.2 | % | 33.0 | % | 32.0 | % | 50.4 | % | 36.9 | % | |||||||||||||||
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. | |||||||||||||||||||||||||||||||
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSUMER LOAN FINANCIAL AND OPERATING DATA (dollars in thousands, except where otherwise noted) | |||||||
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. | |||||||
The following tables summarize selected data related to the Company’s consumer loan activities as of and for the three months ended June 30, 2014 and 2013. | |||||||
The following table shows short-term loans and related loan loss activity, which is based on the volume of loans written and renewed, for the three months ended June 30, 2014 and 2013. | |||||||
| Three Months Ended | |||||||
| June 30, | |||||||
| 2014 | 2013 | ||||||
Short-term consumer loans: | |||||||
| Consumer loan loss provision | $ | 25,621 | $ | 42,931 | |||
| Charge-offs (net of recoveries) | 24,507 | 42,541 | |||||
| Allowance and liability for losses | 23,700 | 44,507 | |||||
| Combined consumer loans and fees receivable, gross(a) | 141,775 | 208,912 | |||||
Short-term loans: | |||||||
| Consumer loan loss provision as a % of combined consumer loans written and renewed(b) | 5.1 | % | 6.3 | % | |||
| Charge-offs (net of recoveries) as a % of combined consumer loans written and renewed(b) | 4.9 | % | 6.3 | % | |||
| Consumer loan loss provision as a % of consumer loan fees | 29.7 | % | 33.9 | % | |||
| Allowance and liability for losses as a % of combined consumer loans and fees receivable, gross(a) | 16.7 | % | 21.3 | % | |||
(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. | |||||||
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSUMER LOAN FINANCIAL AND OPERATING DATA (dollars in thousands, except where otherwise noted) | |||||||
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 June 30, 2014 and 2013. | |||||||
| Three Months Ended | |||||||
| June 30, | |||||||
| 2014 | 2013 | ||||||
Line of credit accounts: | |||||||
| Consumer loan loss provision | $ | 21,786 | $ | 9,919 | |||
| Charge-offs (net of recoveries) | 26,877 | 7,334 | |||||
| Allowance and liability for losses | 21,578 | 10,649 | |||||
| Average consumer loan balance(a) | 120,707 | 47,513 | |||||
Line of credit accounts: | |||||||
| Consumer loan loss provision as a % of average consumer loan balance(a) | 18.0 | % | 20.9 | % | |||
| Charge-offs (net of recoveries) as a % of average consumer loan balance(a) | 22.3 | % | 15.4 | % | |||
| Consumer loan loss provision as a % of consumer loan fees | 29.1 | % | 35.1 | % | |||
| Allowance for losses as a % of average consumer loan balance(a) | 17.9 | % | 22.4 | % | |||
(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. | |||||||
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 June 30, 2014 and 2013. | ||||||||
| Three Months Ended | ||||||||
| June 30, | ||||||||
| 2014 | 2013 | |||||||
Installment loans: | ||||||||
| Consumer loan loss provision | $ | 27,282 | $ | 24,379 | ||||
| Charge-offs (net of recoveries) | 28,107 | 24,206 | ||||||
| Allowance and liability for losses | 30,085 | 27,754 | ||||||
| Installment loan average loan balance:(a) | ||||||||
| Company owned | $ | 181,358 | $ | 133,773 | ||||
| Guaranteed by the Company(b) | 8,840 | 9,631 | ||||||
| Combined average consumer loan balance(c) | $ | 190,198 | $ | 143,404 | ||||
Installment loans: | ||||||||
| Consumer loan loss provision as a % of combined average consumer loan balance(a)(c) | 14.3 | % | 17.0 | % | ||||
| Charge-offs (net of recoveries) as a % of combined average consumer loan balance(a)(c) | 14.8 | % | 16.9 | % | ||||
| Consumer loan loss provision as a % of consumer loan fees | 42.4 | % | 51.2 | % | ||||
| Allowance and liability for losses as a % of combined average consumer loan balance(a)(c) | 15.8 | % | 19.4 | % | ||||
(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 June 30, 2014 and 2013 (dollars in thousands): | |||||||||||||||||||||||
| As of June 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 | $ | 42,744 | $ | 3,976 | $ | 46,720 | $ | 45,324 | $ | 5,338 | $ | 50,662 | |||||||||||
| Installment loans | 7,643 | 8,565 | 16,208 | 9,819 | 10,131 | 19,950 | |||||||||||||||||
| Total Retail Services, gross | 50,387 | 12,541 | 62,928 | 55,143 | 15,469 | 70,612 | |||||||||||||||||
E-Commerce | |||||||||||||||||||||||
| Domestic | |||||||||||||||||||||||
| Short-term loans | 30,545 | 34,914 | 65,459 | 31,594 | 35,115 | 66,709 | |||||||||||||||||
| Line of credit accounts | 64,490 | — | 64,490 | 47,368 | — | 47,368 | |||||||||||||||||
| Installment loans | 100,009 | — | 100,009 | 44,509 | — | 44,509 | |||||||||||||||||
| Total Domestic, gross | 195,044 | 34,914 | 229,958 | 123,471 | 35,115 | 158,586 | |||||||||||||||||
| Foreign | |||||||||||||||||||||||
| Short-term loans | 29,596 | — | 29,596 | 91,240 | 301 | 91,541 | |||||||||||||||||
| Line of credit accounts | 57,919 | — | 57,919 | 10,703 | — | 10,703 | |||||||||||||||||
| Installment loans | 77,202 | — | 77,202 | 86,433 | — | 86,433 | |||||||||||||||||
| Total Foreign, gross | 164,717 | — | 164,717 | 188,376 | 301 | 188,677 | |||||||||||||||||
| Total E-Commerce, gross | 359,761 | 34,914 | 394,675 | 311,847 | 35,416 | 347,263 | |||||||||||||||||
| Total ending loan balance, gross | 410,148 | 47,455 | 457,603 | 366,990 | 50,885 | 417,875 | |||||||||||||||||
| Less: Allowance and liabilities for losses | (72,187 | ) | (3,176 | ) | (75,363 | ) | (79,863 | ) | (3,047 | ) | (82,910 | ) | |||||||||||
| Total ending loan balance, net | $ | 337,961 | $ | 44,279 | $ | 382,240 | $ | 287,127 | $ | 47,838 | $ | 334,965 | |||||||||||
| Allowance and liability for losses as a % of consumer loan balances, gross | 17.6 | % | 6.7 | % | 16.5 | % | 21.8 | % | 6.0 | % | 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 CONSUMER LOAN FINANCIAL AND OPERATING DATA (dollars in thousands, except where otherwise noted) | ||||||||||||||||||||||
The following tables summarize the consumer loans written and renewed for the three and six months ended June 30, 2014 and 2013 (dollars in thousands, except where otherwise noted): | ||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||
| Company Owned(a) | Guaranteed by the Company(a)(b) | Combined(a) |
Company Owned(a) |
Guaranteed by the Company(a)(b) | Combined(a) | |||||||||||||||||
| Amount of consumer loans written and renewed (dollars in thousands): | ||||||||||||||||||||||
Retail Services | ||||||||||||||||||||||
| Short-term loans | $ | 157,268 | $ | 16,878 | $ | 174,146 | $ | 167,896 | $ | 26,446 | $ | 194,342 | ||||||||||
| Installment loans | 2,526 | 6,763 | 9,289 | 2,051 | 5,274 | 7,325 | ||||||||||||||||
| Total Retail Services | 159,794 | 23,641 | 183,435 | 169,947 | 31,720 | 201,667 | ||||||||||||||||
E-Commerce | ||||||||||||||||||||||
| Domestic | ||||||||||||||||||||||
| Short-term loans | 73,493 | 157,905 | 231,398 | 71,507 | 163,236 | 234,743 | ||||||||||||||||
| Line of credit accounts | 49,708 | — | 49,708 | 37,649 | — | 37,649 | ||||||||||||||||
| Installment loans | 58,058 | — | 58,058 | 31,385 | — | 31,385 | ||||||||||||||||
| Total Domestic | 181,259 | 157,905 | 339,164 | 140,541 | 163,236 | 303,777 | ||||||||||||||||
| Foreign | ||||||||||||||||||||||
| Short-term loans | 95,250 | — | 95,250 | 249,953 | 739 | 250,692 | ||||||||||||||||
| Line of credit accounts | 76,241 | — | 76,241 | 13,484 | — | 13,484 | ||||||||||||||||
| Installment loans | 56,047 | — | 56,047 | 64,665 | — | 64,665 | ||||||||||||||||
| Total Foreign | 227,538 | — | 227,538 | 328,102 | 739 | 328,841 | ||||||||||||||||
| Total E-Commerce | 408,797 | 157,905 | 566,702 | 468,643 | 163,975 | 632,618 | ||||||||||||||||
| Total amount of consumer loans written and renewed | $ | 568,591 | $ | 181,546 | $ | 750,137 | $ | 638,590 | $ | 195,695 | $ | 834,285 | ||||||||||
| Number of consumer loans written and renewed (in ones): | ||||||||||||||||||||||
Retail Services | ||||||||||||||||||||||
| Short-term loans | 331,032 | 31,482 | 362,514 | 354,546 | 51,763 | 406,309 | ||||||||||||||||
| Installment loans | 1,833 | 5,180 | 7,013 | 1,798 | 928 | 2,726 | ||||||||||||||||
| Total Retail Services | 332,865 | 36,662 | 369,527 | 356,344 | 52,691 | 409,035 | ||||||||||||||||
E-Commerce | ||||||||||||||||||||||
| Domestic | ||||||||||||||||||||||
| Short-term loans | 219,274 | 229,007 | 448,281 | 242,617 | 227,956 | 470,573 | ||||||||||||||||
| Line of credit accounts | 198,956 | — | 198,956 | 139,550 | — | 139,550 | ||||||||||||||||
| Installment loans | 37,751 | — | 37,751 | 30,229 | — | 30,229 | ||||||||||||||||
| Total Domestic | 455,981 | 229,007 | 684,988 | 412,396 | 227,956 | 640,352 | ||||||||||||||||
| Foreign | ||||||||||||||||||||||
| Short-term loans | 187,561 | — | 187,561 | 454,293 | 919 | 455,212 | ||||||||||||||||
| Line of credit accounts | 255,171 | — | 255,171 | 30,748 | — | 30,748 | ||||||||||||||||
| Installment loans | 44,200 | — | 44,200 | 56,679 | — | 56,679 | ||||||||||||||||
| Total Foreign | 486,932 | — | 486,932 | 541,720 | 919 | 542,639 | ||||||||||||||||
| Total E-Commerce | 942,913 | 229,007 | 1,171,920 | 954,116 | 228,875 | 1,182,991 | ||||||||||||||||
| Total number of consumer loans written and renewed | 1,275,778 | 265,669 | 1,541,447 | 1,310,460 | 281,566 | 1,592,026 | ||||||||||||||||
(a) The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company’s financial statements. | ||||||||||||||||||||||
(b) Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs. | ||||||||||||||||||||||
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES CONSUMER LOAN FINANCIAL AND OPERATING DATA (dollars in thousands, except where otherwise noted) | ||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||
| Company Owned(a) | Guaranteed by the Company(a)(b) | Combined(a) |
Company Owned(a) |
Guaranteed by the Company(a)(b) | Combined(a) | |||||||||||||||||
| Amount of consumer loans written and renewed (dollars in thousands): | ||||||||||||||||||||||
Retail Services | ||||||||||||||||||||||
| Short-term loans | $ | 316,728 | $ | 35,242 | $ | 351,970 | $ | 339,816 | $ | 54,772 | $ | 394,588 | ||||||||||
| Installment loans | 4,351 | 11,201 | 15,552 | 3,497 | 8,986 | 12,483 | ||||||||||||||||
| Total Retail Services | 321,079 | 46,443 | 367,522 | 343,313 | 63,758 | 407,071 | ||||||||||||||||
E-Commerce | ||||||||||||||||||||||
| Domestic | ||||||||||||||||||||||
| Short-term loans | 144,949 | 320,633 | 465,582 | 144,135 | 337,502 | 481,637 | ||||||||||||||||
| Line of credit accounts | 90,321 | — | 90,321 | 66,455 | — | 66,455 | ||||||||||||||||
| Installment loans | 98,369 | — | 98,369 | 56,056 | — | 56,056 | ||||||||||||||||
| Total Domestic | 333,639 | 320,633 | 654,272 | 266,646 | 337,502 | 604,148 | ||||||||||||||||
| Foreign | ||||||||||||||||||||||
| Short-term loans | 210,432 | — | 210,432 | 516,280 | 13,971 | 530,251 | ||||||||||||||||
| Line of credit accounts | 151,237 | — | 151,237 | 13,484 | — | 13,484 | ||||||||||||||||
| Installment loans | 128,459 | — | 128,459 | 105,250 | — | 105,250 | ||||||||||||||||
| Total Foreign | 490,128 | — | 490,128 | 635,014 | 13,971 | 648,985 | ||||||||||||||||
| Total E-Commerce | 823,767 | 320,633 | 1,144,400 | 901,660 | 351,473 | 1,253,133 | ||||||||||||||||
| Total amount of consumer loans written and renewed | $ | 1,144,846 | $ | 367,076 | $ | 1,511,922 | $ | 1,244,973 | $ | 415,231 | $ | 1,660,204 | ||||||||||
| Number of consumer loans written and renewed (in ones): | ||||||||||||||||||||||
Retail Services | ||||||||||||||||||||||
| Short-term loans | 659,497 | 64,970 | 724,467 | 709,859 | 105,752 | 815,611 | ||||||||||||||||
| Installment loans | 3,327 | 8,221 | 11,548 | 3,194 | 1,562 | 4,756 | ||||||||||||||||
| Total Retail Services | 662,824 | 73,191 | 736,015 | 713,053 | 107,314 | 820,367 | ||||||||||||||||
E-Commerce | ||||||||||||||||||||||
| Domestic | ||||||||||||||||||||||
| Short-term loans | 433,505 | 461,249 | 894,754 | 485,865 | 463,178 | 949,043 | ||||||||||||||||
| Line of credit accounts | 370,061 | — | 370,061 | 251,201 | — | 251,201 | ||||||||||||||||
| Installment loans | 67,779 | — | 67,779 | 53,414 | — | 53,414 | ||||||||||||||||
| Total Domestic | 871,345 | 461,249 | 1,332,594 | 790,480 | 463,178 | 1,253,658 | ||||||||||||||||
| Foreign | ||||||||||||||||||||||
| Short-term loans | 402,432 | — | 402,432 | 921,197 | 18,235 | 939,432 | ||||||||||||||||
| Line of credit accounts | 499,408 | — | 499,408 | 30,748 | — | 30,748 | ||||||||||||||||
| Installment loans | 104,301 | — | 104,301 | 89,754 | — | 89,754 | ||||||||||||||||
| Total Foreign | 1,006,141 | — | 1,006,141 | 1,041,699 | 18,235 | 1,059,934 | ||||||||||||||||
| Total E-Commerce | 1,877,486 | 461,249 | 2,338,735 | 1,832,179 | 481,413 | 2,313,592 | ||||||||||||||||
| Total number of consumer loans written and renewed | 2,540,310 | 534,440 | 3,074,750 | 2,545,232 | 588,727 | 3,133,959 | ||||||||||||||||
(a) The disclosure regarding the amount and number of consumer loans written and renewed is statistical data that is not included in the Company’s financial statements. | ||||||||||||||||||||||
(b) Loans guaranteed by the Company represent loans originated by third-party lenders through the CSO programs. | ||||||||||||||||||||||
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 six months ended June 30, 2014 and 2013 (dollars in thousands). | |||||||||||||||||||||||||||||||||||
| Retail Services | E-Commerce | ||||||||||||||||||||||||||||||||||
| Domestic | Foreign | Total | Domestic | Foreign | Admin | Total | Corporate | Consolidated | |||||||||||||||||||||||||||
Three Months Ended June 30, 2014 | |||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||
| Pawn loan fees and service charges | $ | 78,911 | $ | 2,079 | $ | 80,990 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 80,990 | |||||||||||||||||
| Proceeds from disposition of merchandise | 142,447 | 4,325 | 146,772 | — | — | — | — | — | 146,772 | ||||||||||||||||||||||||||
| Consumer loan fees | 23,900 | — | 23,900 | 108,751 | 92,688 | — | 201,439 | — | 225,339 | ||||||||||||||||||||||||||
| Other | 1,718 | 45 | 1,763 | 35 | 8 | — | 43 | 183 | 1,989 | ||||||||||||||||||||||||||
| Total revenue | 246,976 | 6,449 | 253,425 | 108,786 | 92,696 | — | 201,482 | 183 | 455,090 | ||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||||||||
| Disposed merchandise | 101,177 | 3,333 | 104,510 | — | — | — | — | — | 104,510 | ||||||||||||||||||||||||||
| Consumer loan loss provision | 7,849 | — | 7,849 | 38,729 | 28,111 | — | 66,840 | — | 74,689 | ||||||||||||||||||||||||||
| Total cost of revenue | 109,026 | 3,333 | 112,359 | 38,729 | 28,111 | — | 66,840 | — | 179,199 | ||||||||||||||||||||||||||
| Net revenue | 137,950 | 3,116 | 141,066 | 70,057 | 64,585 | — | 134,642 | 183 | 275,891 | ||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Operations and administration | 100,189 | 3,386 | 103,575 | 25,816 | 24,061 | 22,387 | 72,264 | 19,136 | 194,975 | ||||||||||||||||||||||||||
| Depreciation and amortization | 10,122 | 421 | 10,543 | 2,054 | 559 | 1,703 | 4,316 | 4,638 | 19,497 | ||||||||||||||||||||||||||
| Total expenses | 110,311 | 3,807 | 114,118 | 27,870 | 24,620 | 24,090 | 76,580 | 23,774 | 214,472 | ||||||||||||||||||||||||||
| Income (loss) from operations | $ | 27,639 | $ | (691 | ) | $ | 26,948 | $ | 42,187 | $ | 39,965 | $ | (24,090 | ) | $ | 58,062 | $ | (23,591 | ) | $ | 61,419 | ||||||||||||||
As of June 30, 2014 | |||||||||||||||||||||||||||||||||||
| Total assets | $ | 952,990 | $ | 121,193 | $ | 1,074,183 | $ | 462,039 | $ | 205,249 | $ | 14,779 | $ | 682,067 | $ | 412,636 | $ | 2,168,886 | |||||||||||||||||
| Goodwill | $ | 495,672 | $ | 210,365 | $ | 706,037 | |||||||||||||||||||||||||||||
| Retail Services | E-Commerce | |||||||||||||||||||||||||||||||||
| Domestic | Foreign | Total | Domestic | Foreign | Admin | Total | Corporate | Consolidated | ||||||||||||||||||||||||||
Three Months Ended June 30, 2013 | ||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||
| Pawn loan fees and service charges | $ | 70,802 | $ | 1,926 | $ | 72,728 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 72,728 | ||||||||||||||||
| Proceeds from disposition of merchandise | 127,214 | 4,318 | 131,532 | — | — | — | — | — | 131,532 | |||||||||||||||||||||||||
| Consumer loan fees | 26,647 | — | 26,647 | 87,502 | 88,282 | — | 175,784 | — | 202,431 | |||||||||||||||||||||||||
| Other | 1,918 | 258 | 2,176 | 361 | 16 | — | 377 | 1,136 | 3,689 | |||||||||||||||||||||||||
| Total revenue | 226,581 | 6,502 | 233,083 | 87,863 | 88,298 | — | 176,161 | 1,136 | 410,380 | |||||||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||||||||||||
| Disposed merchandise | 85,352 | 3,609 | 88,961 | — | — | — | — | — | 88,961 | |||||||||||||||||||||||||
| Consumer loan loss provision | 7,112 | — | 7,112 | 33,343 | 36,774 | — | 70,117 | — | 77,229 | |||||||||||||||||||||||||
| Total cost of revenue | 92,464 | 3,609 | 96,073 | 33,343 | 36,774 | — | 70,117 | — | 166,190 | |||||||||||||||||||||||||
| Net revenue | 134,117 | 2,893 | 137,010 | 54,520 | 51,524 | — | 106,044 | 1,136 | 244,190 | |||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||
| Operations and administration | 89,487 | 2,998 | 92,485 | 21,838 | 26,284 | 16,985 | 65,107 | 19,350 | 176,942 | |||||||||||||||||||||||||
| Depreciation and amortization | 8,900 | 430 | 9,330 | 2,532 | 835 | 1,218 | 4,585 | 4,085 | 18,000 | |||||||||||||||||||||||||
| Total expenses | 98,387 | 3,428 | 101,815 | 24,370 | 27,119 | 18,203 | 69,692 | 23,435 | 194,942 | |||||||||||||||||||||||||
| Income (loss) from operations | $ | 35,730 | $ | (535 | ) | $ | 35,195 | $ | 30,150 | $ | 24,405 | $ | (18,203 | ) | $ | 36,352 | $ | (22,299 | ) | $ | 49,248 | |||||||||||||
As of June 30, 2013 | ||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,023,015 | $ | 123,601 | $ | 1,146,616 | $ | 374,720 | $ | 190,612 | $ | 11,909 | $ | 577,241 | $ | 132,811 | $ | 1,856,668 | ||||||||||||||||
| Goodwill | $ | 397,876 | $ | 210,366 | $ | 608,242 | ||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
Six Months Ended June 30, 2014 | |||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||
| Pawn loan fees and service charges | $ | 157,378 | $ | 3,799 | $ | 161,177 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 161,177 | |||||||||||||||||
| Proceeds from disposition of merchandise | 314,617 | 8,610 | 323,227 | — | — | — | — | — | 323,227 | ||||||||||||||||||||||||||
| Consumer loan fees | 49,659 | — | 49,659 | 217,799 | 192,063 | — | 409,862 | — | 459,521 | ||||||||||||||||||||||||||
| Other | 3,720 | 130 | 3,850 | 74 | 11 | — | 85 | 330 | 4,265 | ||||||||||||||||||||||||||
| Total revenue | 525,374 | 12,539 | 537,913 | 217,873 | 192,074 | — | 409,947 | 330 | 948,190 | ||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||||||||
| Disposed merchandise | 222,435 | 6,639 | 229,074 | — | — | — | — | — | 229,074 | ||||||||||||||||||||||||||
| Consumer loan loss provision | 15,447 | — | 15,447 | 67,364 | 65,378 | — | 132,742 | — | 148,189 | ||||||||||||||||||||||||||
| Total cost of revenue | 237,882 | 6,639 | 244,521 | 67,364 | 65,378 | — | 132,742 | — | 377,263 | ||||||||||||||||||||||||||
| Net revenue | 287,492 | 5,900 | 293,392 | 150,509 | 126,696 | — | 277,205 | 330 | 570,927 | ||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Operations and administration | 201,342 | 6,635 | 207,977 | 49,224 | 49,181 | 42,026 | 140,431 | 38,153 | 386,561 | ||||||||||||||||||||||||||
| Depreciation and amortization | 20,426 | 824 | 21,250 | 3,959 | 1,082 | 3,393 | 8,434 | 9,074 | 38,758 | ||||||||||||||||||||||||||
| Total expenses | 221,768 | 7,459 | 229,227 | 53,183 | 50,263 | 45,419 | 148,865 | 47,227 | 425,319 | ||||||||||||||||||||||||||
| Income (loss) from operations | $ | 65,724 | $ | (1,559 | ) | $ | 64,165 | $ | 97,326 | $ | 76,433 | $ | (45,419 | ) | $ | 128,340 | $ | (46,897 | ) | $ | 145,608 | ||||||||||||||
| Retail Services | E-Commerce | |||||||||||||||||||||||||||||||||
| Domestic | Foreign | Total | Domestic | Foreign | Admin | Total | Corporate | Consolidated | ||||||||||||||||||||||||||
Six Months Ended June 30, 2013 | ||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||
| Pawn loan fees and service charges | $ | 144,976 | $ | 3,666 | $ | 148,642 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 148,642 | ||||||||||||||||
| Proceeds from disposition of merchandise | 301,364 | 8,885 | 310,249 | — | — | — | — | — | 310,249 | |||||||||||||||||||||||||
| Consumer loan fees | 54,969 | — | 54,969 | 178,143 | 179,524 | — | 357,667 | — | 412,636 | |||||||||||||||||||||||||
| Other | 4,418 | 351 | 4,769 | 802 | 23 | — | 825 | 1,387 | 6,981 | |||||||||||||||||||||||||
| Total revenue | 505,727 | 12,902 | 518,629 | 178,945 | 179,547 | — | 358,492 | 1,387 | 878,508 | |||||||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||||||||||||
| Disposed merchandise | 203,039 | 7,257 | 210,296 | — | — | — | — | — | 210,296 | |||||||||||||||||||||||||
| Consumer loan loss provision | 13,890 | — | 13,890 | 63,166 | 75,025 | — | 138,191 | — | 152,081 | |||||||||||||||||||||||||
| Total cost of revenue | 216,929 | 7,257 | 224,186 | 63,166 | 75,025 | — | 138,191 | — | 362,377 | |||||||||||||||||||||||||
| Net revenue | 288,798 | 5,645 | 294,443 | 115,779 | 104,522 | — | 220,301 | 1,387 | 516,131 | |||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||
| Operations and administration | 180,189 | 6,601 | 186,790 | 43,243 | 50,931 | 36,515 | 130,689 | 36,287 | 353,766 | |||||||||||||||||||||||||
| Depreciation and amortization | 17,701 | 829 | 18,530 | 4,960 | 1,395 | 2,673 | 9,028 | 7,973 | 35,531 | |||||||||||||||||||||||||
| Total expenses | 197,890 | 7,430 | 205,320 | 48,203 | 52,326 | 39,188 | 139,717 | 44,260 | 389,297 | |||||||||||||||||||||||||
| Income (loss) from operations | $ | 90,908 | $ | (1,785 | ) | $ | 89,123 | $ | 67,576 | $ | 52,196 | $ | (39,188 | ) | $ | 80,584 | $ | (42,873 | ) | $ | 126,834 | |||||||||||||
Corporate operations primarily include corporate expenses for both of the Company’s segments, 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. 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 offering pawn lending, consumer lending, and other services as of June 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.” The Company’s foreign retail services locations operate under the name “Cash America casa de empeño.” | ||||||||||||||||
| As of June 30, | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||
| Domestic(a) | Foreign | Total | Domestic(a) | Foreign | Total | |||||||||||
| Retail services locations offering: | ||||||||||||||||
| Both pawn and consumer lending | 576 | — | 576 | 581 | — | 581 | ||||||||||
| Pawn lending only | 256 | 47 | 303 | 169 | 47 | 216 | ||||||||||
| Consumer lending only | 37 | — | 37 | 77 | — | 77 | ||||||||||
| Other(b) | 88 | — | 88 | 90 | — | 90 | ||||||||||
| Total retail services | 957 | 47 | 1,004 | 917 | 47 | 964 | ||||||||||
(a) Except as described in (b) below, includes locations that operated in 22 states in the United States as of June 30, 2014 and 2013, respectively. | ||||||||||||||||
(b) As of June 30, 2014 and 2013, includes 88 and 90 unconsolidated franchised check cashing locations, respectively, that operated in 12 and 14 states in the United States, respectively. | ||||||||||||||||
E-Commerce Segment
As of June 30, 2014 and 2013, the Company’s e-commerce segment provided services in 33 and 32 states, respectively, in the United States and in four foreign countries:
- in the United States at http://www.cashnetusa.com and http://www.netcredit.com,
- in the United Kingdom at http://www.quickquid.co.uk, http://www.quickquidflexcredit.co.uk, http://www.poundstopocket.co.uk, and www.onstride.co.uk,
- in Australia at http://www.dollarsdirect.com.au,
- in Canada at http://www.dollarsdirect.ca, and
- in Brazil at http://www.simplic.com.br.
On June 30, 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 provides certain guarantees for payment of defaulted loans in the pilot program.
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 shown below, especially the loss on the early extinguishment of a portion of the Company’s debt (the “Debt Extinguishment”) and the charges related to the Company's settlement of a litigation matter in 2013 (the “2013 Litigation Settlement”) are useful to investors in order to allow them to compare the Company’s financial results for the current quarter and current six-month period with the prior year quarter and prior year six-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 six months ended June 30, 2014 and 2013, respectively, between net income attributable to the Company and diluted earnings per share 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 June 30, | Six Months Ended June 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 Cash America International, Inc. | $ | 20,971 | $ | 0.72 | $ | 25,132 | $ | 0.81 | $ | 66,708 | $ | 2.27 | $ | 69,058 | $ | 2.23 | |||||||||||||||
| Adjustments (net of tax): | |||||||||||||||||||||||||||||||
| Loss on Debt Extinguishment(b) | 9,460 | 0.32 | — | — | 10,434 | 0.36 | — | — | |||||||||||||||||||||||
| 2013 Litigation Settlement(c) | 236 | 0.01 | — | — | 400 | 0.01 | — | — | |||||||||||||||||||||||
| Adjusted net income and adjusted diluted net income per share attributable to the Company | 30,667 | 1.05 | 25,132 | 0.81 | 77,542 | 2.64 | 69,058 | 2.23 | |||||||||||||||||||||||
| Other adjustments (net of tax): | |||||||||||||||||||||||||||||||
| Intangible asset amortization | 1,045 | 0.04 | 828 | 0.03 | 2,092 | 0.07 | 1,661 | 0.05 | |||||||||||||||||||||||
| Non-cash equity-based compensation | 1,040 | 0.04 | 770 | 0.03 | 1,982 | 0.06 | 1,758 | 0.05 | |||||||||||||||||||||||
| Non-cash interest and debt issuance cost amortization | 789 | 0.03 | 1,094 | 0.04 | 1,554 | 0.05 | 1,925 | 0.06 | |||||||||||||||||||||||
| Foreign currency transaction loss (gain) | 113 | — | (41 | ) | — | 176 | 0.01 | 197 | 0.01 | ||||||||||||||||||||||
| Adjusted earnings and adjusted earnings per share | $ | 33,654 | $ | 1.16 | $ | 27,783 | $ | 0.91 | $ | 83,346 | $ | 2.83 | $ | 74,599 | $ | 2.40 | |||||||||||||||
(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 months ended June 30, 2014, represents charges related to the Debt Extinguishment of $15.0 million, net of tax benefit of $5.5 million. For the six months ended June 30, 2014, represents $16.6 million of charges, net of tax benefit of $6.1 million. | |||||||||||||||||||||||||||||||
(c) For the three months ended June 30, 2014, represents charges related to the 2013 Litigation Settlement of $0.4 million, net of tax benefit of $0.2 million. For the six months ended June 30, 2014, represents $0.6 million of charges, net of tax benefit of $0.2 million. | |||||||||||||||||||||||||||||||
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 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, especially the adjustments for the closure of 36 consumer lending-only retail services locations in Texas during the second half of 2013 (the “Texas Consumer Loan Store Closures”), the penalty paid to the Consumer Financial Protection Bureau (“CFPB”) in connection with the issuance of a consent order by the CFPB (the “Regulatory Penalty”), charges related to the 2013 Litigation Settlement, the withdrawal in July 2012 of the proposed initial public offering by the Company’s wholly-owned subsidiary, Enova International, Inc. (“Enova IPO”), an income tax benefit related to the change of tax basis in the stock of one of the Company's subsidiaries in connection with the Mexico Reorganization (as defined below) (the “Creazione Deduction”), the reorganization of the Company's Mexico-based pawn operations during 2012 (the “Mexico Reorganization”) and a voluntary program to reimburse Ohio customers in connection with legal collections proceedings initiated by the Company in Ohio (the “Ohio Reimbursement Program”), including a decrease in the Company's remaining liability related to the Ohio Reimbursement Program during 2013 after the assessment of the claims made to date and related matters (the “Ohio Adjustment”), 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 | |||||||
| June 30, | |||||||
| 2014 | 2013 | ||||||
| Net income attributable to Cash America International, Inc. | $ | 140,178 | $ | 105,241 | |||
| Adjustments: | |||||||
| Texas Consumer Loan Store Closures(a) | 1,373 | — | |||||
| Regulatory Penalty(b) | 5,000 | — | |||||
| 2013 Litigation settlement(c) | 18,635 | — | |||||
| Charges related to withdrawn proposed Enova IPO(d) | 3,112 | ||||||
| Charges related to Mexico Reorganization(e) | 28,873 | ||||||
| Charges related to Ohio Adjustment and Ohio Reimbursement Program(f) | (5,000 | ) | 13,400 | ||||
| Depreciation and amortization expenses(g) | 76,319 | 68,587 | |||||
| Interest expense, net | 42,843 | 31,455 | |||||
| Foreign currency transaction loss | 1,173 | 460 | |||||
| Loss on Debt Extinguishment(h) | 17,169 | — | |||||
| Equity in loss of unconsolidated subsidiary | — | 283 | |||||
| Provision for income taxes(i) | 29,194 | 75,864 | |||||
| Net loss attributable to the noncontrolling interest(j) | — | (3,954 | ) | ||||
| Adjusted EBITDA | $ | 326,884 | $ | 323,321 | |||
| Adjusted EBITDA margin calculated as follows: | |||||||
| Total revenue | $ | 1,866,337 | $ | 1,809,806 | |||
| Adjusted EBITDA | $ | 326,884 | $ | 323,321 | |||
| Adjusted EBITDA as a percentage of total revenue | 17.5 | % | 17.9 | % | |||
(a) Represents charges related to the Texas Consumer Loan Store Closures of $1.4 million, before tax benefit of $0.5 million. | |||||||
(b) Represents charges for the Regulatory Penalty, which is nondeductible for tax purposes. | |||||||
(c) Represents charges related to the 2013 Litigation Settlement of $18.6 million, before tax benefit of $6.9 million. | |||||||
(d) Represents charges directly related to the withdrawn Enova IPO, before tax benefit of $1.1 million. | |||||||
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES |
NON-GAAP DISCLOSURE |
ADJUSTED EBITDA |
| (e) Represents charges related to the Mexico Reorganization, before tax benefit of $1.2 million and noncontrolling interest of $2.3 million. Includes $12.6 million and $7.2 million of depreciation and amortization expenses and charges for the recognition of a deferred tax asset valuation allowance, respectively, as noted in (g) and (i) below. |
| (f) For the trailing 12 months ended June 30, 2014, represents the Ohio Adjustment of $5.0 million, before tax provision of $1.8 million. For the trailing 12 months ended June 30, 2013, represents charges related to the Ohio Reimbursement Program, before tax benefit of $5.0 million. |
| (g) For the trailing 12 months ended June 30, 2014, excludes $0.2 million of depreciation and amortization expenses, which are included in the Texas Consumer Loan Store Closures. For the trailing 12 months ended June 30, 2013, excludes $12.6 million of depreciation and amortization expenses which are included in “Charges related to the Mexico Reorganization”. |
| (h) For the trailing 12 months ended June 30, 2014, represents charges of $17.2 million, before tax benefit of $6.4 million, related to the Debt Extinguishment. |
| (i) For the trailing 12 months ended June 30, 2014, includes income benefit of $33.2 million related to the Creazione Deduction. For the trailing 12 months ended June 30, 2013, excludes a $7.2 million charge for the recognition of a deferred tax asset valuation allowance, which is included in “Charges related to the Mexico Reorganization” in the table above and includes an income tax benefit related to the Mexico Reorganization of $1.2 million. |
| (j) For the trailing twelve months ended June 30, 2013, includes $2.3 million of noncontrolling interests related to the Mexico Reorganization. |
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 June 30, | ||||||||||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||||||||||
| Retail Services | E-Commerce | Corporate | Consolidated | Retail Services | E-Commerce | Corporate | Consolidated | |||||||||||||||||||||||
| Income (loss) from operations | $ | 119,296 | $ | 198,371 | $ | (87,110 | ) | $ | 230,557 | $ | 152,227 | $ | 144,506 | $ | (80,223 | ) | $ | 216,510 | ||||||||||||
| Depreciation and amortization expenses(a) | 42,181 | 16,549 | 17,589 | 76,319 | 36,683 | 16,398 | 15,506 | 68,587 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||
| Texas Consumer Loan Store Closures | 1,373 | — | — | 1,373 | — | — | — | — | ||||||||||||||||||||||
| Regulatory Penalty | 2,500 | 2,500 | 5,000 | — | — | — | — | |||||||||||||||||||||||
| 2013 Litigation Settlement | 18,635 | — | — | 18,635 | — | — | — | — | ||||||||||||||||||||||
| Charges related to withdrawn Enova IPO | — | — | — | — | — | 3,112 | — | 3,112 | ||||||||||||||||||||||
| Charges related to the Mexico Reorganization(b) | — | — | — | — | 21,712 | — | — | 21,712 | ||||||||||||||||||||||
| Charges related to Ohio Adjustment and Ohio Reimbursement(c) | (5,000 | ) | — | — | (5,000 | ) | 13,400 | — | — | 13,400 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 178,985 | $ | 217,420 | $ | (69,521 | ) | $ | 326,884 | $ | 224,022 | $ | 164,016 | $ | (64,717 | ) | $ | 323,321 | ||||||||||||
(a) For the trailing 12 months ended June 30, 2014, excludes $0.2 million of depreciation and amortization expenses, which are included in the Texas Consumer Loan Store Closures. For the trailing 12 months ended June 30, 2013, excludes $12.6 million of depreciation and amortization expenses which are included in “Charges related to the Mexico Reorganization.” | ||||||||||||||||||||||||||||||
(b) Includes $12.6 million of depreciation and amortization expenses as noted in (a) above. | ||||||||||||||||||||||||||||||
(c) For the trailing 12 months ended June 30, 2014, represents the Ohio Adjustment. For the trailing 12 months ended June 30, 2013, represents charges related to the Ohio Reimbursement Program. | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||||||||||
| Retail Services | E-Commerce | Corporate | Consolidated | Retail Services | E-Commerce | Corporate | Consolidated | |||||||||||||||||||||||
| Income (loss) from operations | $ | 64,165 | $ | 128,340 | $ | (46,897 | ) | $ | 145,608 | $ | 89,123 | $ | 80,584 | $ | (42,873 | ) | $ | 126,834 | ||||||||||||
| Depreciation and amortization expenses | 21,250 | 8,434 | 9,074 | 38,758 | 18,530 | 9,028 | 7,973 | 35,531 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||
| 2013 Litigation Settlement(a) | 635 | — | — | 635 | — | — | — | — | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 86,050 | $ | 136,774 | $ | (37,823 | ) | $ | 185,001 | $ | 107,653 | $ | 89,612 | $ | (34,900 | ) | $ | 162,365 | ||||||||||||
(a) Represents charges related to the 2013 Litigation Settlement during the six months ended June 30, 2014. | ||||||||||||||||||||||||||||||
Contacts:
Thomas A. Bessant, Jr.,
817-335-1100
