Press release from CNW Group
Cash Store Financial achieves revenue of $190 million
Wednesday, November 16, 2011
Cash Store Financial achieves revenue of $190 million20:28 EST Wednesday, November 16, 2011EDMONTON, Nov. 16, 2011 /CNW/ - The Cash Store Financial Services Inc. (Cash Store Financial) (TSX: CSF) (NYSE: CSFS) today announced results for the three and twelve months ended September 30, 2011. The following financial results are expressed in Canadian dollars.Highlights for the twelve months ended September 30, 2011 as compared to the trailing twelve months ended September 30, 2010 (table of results at end of release)Revenue of $189.9 million, up 6.1% from $179.0 million for the same period last year.Record other revenue of $53.3 million, up 26.2% from $42.2 million for the same period last year.Branch operating income was $55.0 million, down 10.7% from $61.6 million for the same period last year.Earnings per share (diluted) before class action settlement costs and related taxes were $0.64 per share, down from $1.31 for the same period last year. Including these charges, earnings per share (diluted) was $0.51 compared to $1.18 for the same period last year.Income before class action settlement costs and related taxes was $11.3 million, down from $22.9 million for the same period last year. Including these charges, net income was $9.0 million compared to $20.8 million for the same period last year.Adjusted EBITDA was $49.0 million, down from $59.2 million for the same period last year. Including these adjustments, EBITDA was $24.5 million in the period compared to $37.4 million for the same period last year.Same branch revenues for the 445 locations open since the beginning of October 2009 decreased by 5.1% to $356,250 from $375,400.Highlights for the three months ended September 30, 2011 Quarterly revenue of $47.2 million, down 4.3% from $49.3 million for the same period last year.Other revenue of $13.6 million, up 4.2% from $13.1 million for the same period last year.Branch operating income of $13.9 million, down 16.4%, from $16.6 million for the same period last year.Diluted earnings per share were $0.12 per share down, from $0.42 per share for the same period last year.Net income of $2.0 million, down from $7.7 million for the same period last year.EBITDA of $6.2 million down from $11.1 million for the same period last year. Adjusted EBITDA of $11.3 million, down from $16.5 million for the same period last year.Same branch revenues for the locations opened since the beginning of the first quarter of July 2010 decreased 9.7% to $83,800 from $92,700 for the same quarter last year.Branch count was 586, up 42 net new branches from 544 at September 30, 2010. We added 4 new branches in the UK in the quarter.Mr. Gordon Reykdal, Chairman and CEO commented: "Overall we achieved record revenue of $189.9 million for the twelve months ended September 30, 2011, up 6.1% from $179.0 million for the same twelve-month period last year. This growth was primarily attributable to strong growth in ancillary revenues of 26.2% to $53.3 million from $42.2 million for the same period last year. Ancillary revenue as a percentage of total revenue has increased from 23.6% to 28.1%. Net income for the period before class action settlement costs and related taxes was $11.3 million, down from $22.9 million for the same period last year. The decrease in net income was primarily attributable to investments in collections infrastructure, investments in United Kingdom (UK) expansion infrastructure, new product development and regulatory administrative costs."Mr. Reykdal added: "We have continued to invest in and are well-positioned for sustained long-term growth. With greater than 36% of market share in Canada by number of locations we have the leading market footprint, which we expect to maintain. Base branch operating costs are relatively fixed, we therefore anticipate increased margins going forward as newer branches mature and new products that appeal to a broader customer segment are introduced.""Mr. Reykdal added: "A key strategic focus for management has been the growth and diversification of revenue through geographic expansion and the introduction of new products. We have significantly increased corporate and regional resources to support long-term growth. These increased expenses have reduced earnings, but we believe in the long-term returns that will result from our investments. We added four new branches in the UK in the fourth quarter, and subsequently added another five, bringing the total number of branches in the UK to 17. We have made significant investments in UK infrastructure to support an accelerated expansion in that region. We have also invested significantly in new product development. For example, a new line-of-credit product is now available in multiple locations across Canada. When this product is made available in all of our branches next year it is expected to contribute meaningfully to future revenue growth."Mr. Reykdal concluded: "Overall, I am satisfied that our activities and expenditures over the quarter and twelve months ended September 30, 2011, have been in line with our long-term strategic vision. As the cost base of current branches is relatively fixed we will see improved earnings as these branches mature. We maintain a strong cash position. We are funding our growth through earnings from operations and we continue to support our investors through our dividend policy."About Cash Store Financial Cash Store Financial is the only broker and lender of short‐term advances and provider of other financial services in Canada that is listed on the Toronto Stock Exchange (TSX: CSF). Cash Store Financial also trades on the New York Stock Exchange (NYSE: CSFS). Cash Store Financial operates more than 574 branches across Canada under the banners "Cash Store Financial" and "Instaloans". Cash Store Financial also operates 17 branches in the United Kingdom.Cash Store Financial and Instaloans primarily act as brokers and lenders to facilitate short-term advances and provide other financial services to income-earning consumers who may not be able to obtain them from traditional banks. Cash Store Financial also provides a private-label debit card (the Freedom card) and a prepaid credit card (the Freedom MasterCard) as well as other financial services, including bank accounts.Cash Store Financial employs approximately 2,300 associates and is headquartered in Edmonton, Alberta.Summary Financial Information Thousands of dollars, except for per share amounts and branch figures Three Months Ended Twelve Months Ended Twelve MonthsEnded Fifteen MonthsEndedConsolidated results September 30 September 30 September 30 September 30 September 30 2011 2010 2011 2010 2010 No. of branchesCanada 574 542 574 542 542 United Kingdom 12 2 12 2 2 586 544 586 544 544Loan volumes Loan fees included $201,720 $ 216,027 $ 821,401 $ 772,617 $ 938,483 Revenue Loan fees $ 33,552 $ 36,195 $ 136,623 $ 136,782 $ 170,659 Other income 13,629 13,084 53,276 42,200 49,859 47,181 49,279 189,899 178,982 220,518 Branch expenses Salaries and benefits 14,490 13,698 57,576 51,293 62,265 Retention payments 6,245 6,934 26,786 23,067 28,167 Selling, general and administrative 4,156 4,545 17,518 17,262 21,673 Rent 4,656 4,219 18,216 14,786 17,868 Advertising and promotion 1,398 1,223 5,440 4,475 5,535 Provision for loan losses 580 454 2,559 756 788 Depreciation of property and equipment 1,743 1,566 6,803 5,751 7,006 33,268 32,639 134,898 117,390 143,302Branch operating income 13,913 16,640 55,001 61,591 77,216 Regional expenses 4,523 2,358 16,749 11,149 13,359Corporate expenses 5,177 5,026 18,266 16,972 21,127Other depreciation and amortization 570 13 2,112 1,484 2,054Income before income taxes and class action settlements 3,643 9,243 17,874 31,987 40,676Class action settlements - - 3,206 2,915 2,915EBITDA * 6,207 11,132 24,514 37,375 48,100Net income and comprehensive income $ 2,035 $ 7,682 $ 9,042 $ 20,824 $ 26,465Weighted average number of shares outstanding - basic 17,407 17,071 17,259 16,938 16,913diluted 17,643 17,533 17,663 17,547 17,522Basic earnings per share Income before class action settlement costs net of taxes $ 0.12 $ 0.44 $ 0.64 $ 1.35 $ 1.69 Net income and comprehensive income $ 0.12 $ 0.44 $ 0.52 $ 1.22 $ 1.56Diluted earnings per share Income before class action settlement costs net of taxes $ 0.12 $ 0.42 $ 0.64 $ 1.31 $ 1.63 Net income and comprehensive income $ 0.12 $ 0.42 $ 0.51 $ 1.18 $ 1.51Consolidated Balance Sheet Information Working capital $ 17,122 $ 14,980 $ 17,122 $ 14,980 $14,980Total assets 121,839 115,045 121,839 115,045 115,045Total long-term liabilities 9,082 9,882 9,082 9,882 9,882Total liabilities 34,493 31,690 34,493 31,690 31,690Shareholders' equity $ 87,346 $ 83,355 $ 87,346 $ 83,355 $83,355*EBITDA - earnings from operations before interest, income taxes, stock-based compensation, depreciation of property and equipment and amortization of intangible assets. EBITDA Reconciliation (thousands of dollars) 2011 2010 Q4 Q3 Q2 Q1 Q5 Q4 Q3 Q2 Consolidated Results Net income and comprehensive income$2,035$1,155$2,500$3,352$7,682$5,476$2,199$5,467 Interest 33 34 36 43 51 44 29 29 Income tax 1,608 1,019 1,311 1,687 1,561 2,676 1,190 2,822 Stock-based compensation 218 171 180 217 260 247 205 204 Depreciation of property and equipment and amortization of intangible assets 2,313 2,168 2,233 2,201 1,578 1,882 1,652 2,121 EBITDA $6,207$4,547$6,260$7,500$11,132$10,325$5,275$10,643 Adjustments: Class action settlements$-$3,206$-$-$-$100$2,715$100 Effective interest component of retention payments 5,112 5,107 5,561 5,505 5,344 4,895 4,400 4,226 Adjusted EBITDA $11,319$12,860$11,821$13,005$16,476$15,320$12,390$14,969 Cash Store Financial is a Canadian corporation that is not affiliated with Cottonwood Financial Ltd. or the outlets Cottonwood Financial Ltd. operates in the United States under the name "Cash Store." Cash Store Financial does not do business under the name "Cash Store" in the United States and does not own orprovide any consumer lending services in the United States.This News Release contains "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning United States federal securities legislation, which we refer to herein, collectively, as "forward-looking information. Forward-looking information includes, but is not limited to, information with respect to our objectives, strategies, operations and financial results, competition as well as initiatives to grow revenue or reduce retention payments. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". In particular this News Release contains forward-looking information in connection with the Cash Store Financial's goals and strategic priorities, introduction of products, share repurchase initiatives and branch openings. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Cash Store Financial, to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, changes in economic and political conditions, legislative or regulatory developments, technological developments, third-party arrangements, competition, litigation, risks associated with but not limited to, market conditions, and other factors described under the heading "Risk Factors" in our Annual Information Form, which is on file with Canadian provincial securities regulatory authorities, and in our Annual Report on Form 40-F filed with the U.S. Securities and Exchange Commission. All material assumptions used in making forward-looking information are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including our knowledge of the current credit, interest rate and liquidity conditions affecting us and the general economic conditions in Canada, the United Kingdom and elsewhere. Although we believe the assumptions used to make such statements are reasonable at this time and have attempted to identify in our continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material factors or assumptions are applied by us in making forward-looking information, include without limitation, factors and assumptions regarding our continued ability to fund our payday loan business, rates of customer defaults, relationships with, and payments to, third party lenders, demand for our products, as well as our operating cost structure and current consumer protection regulations. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. We do not undertake to update any forward-looking information, except in accordance with applicable securities laws. For further information: Gordon J. Reykdal, Chairman and Chief Executive Officer, (780) 408-5118; or,Nancy Bland, Chief Financial Officer, (780) 732-5683.