Cash America announces a 58 percent increase in year-over-year second quarter net income, raises full year earnings expectations and declares dividend
July 27, 2006 - Fort Worth, Texas
Cash America International, Inc. (NYSE:CSH) announced today that net income for the second quarter ended June 30, 2006 increased 58% to $10,913,000 (36 cents per share) compared to $6,900,000 (23 cents per share) for the same period in 2005. Included in the 2006 second quarter earnings is a $2.17 million pre-tax gain attributable to the early termination of a store lease, representing an approximate $1.4 million after tax gain (5 cents per share). Excluding this gain, earnings per share from continuing operations increased 35% to 31 cents for the second quarter 2006 compared to 23 cents for the same period in 2005. Earnings per share from continuing operations exceeded the Company's initially published expectations in April of 2006 and were at the top of the range of an updated release of management's anticipated financial results for the second quarter reported on July 10, 2006.
The Company experienced a significant increase in total revenue in the second quarter leading to the higher level of earnings than initially expected. The increase in total revenue came from a 12% increase in the combined revenue from fees and service charges on pawn loans plus fees from cash advances which collectively rose to $74.0 million during the 2006 second quarter, up from $66.0 million during the same period last year. In addition, retail sales activity during the period was robust as merchandise sold during the second quarter of 2006 reached $72.9 million, up from $65.3 million in the same period in 2005, an increase of 12%. Total revenue for the second quarter of 2006 was $149.6 million compared to $133.6 million in the prior year period, an increase of $16.0 million or 12% year over year.
Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, "Underlying the second quarter 2006 growth in revenue were strong increases in total cash advances written and pawn loans written as customer demand continues to rise. Also contributing to the successful quarter were higher gross profit margins on the disposition of merchandise which we experienced in our retail store locations as well as through open market liquidations of refined gold." The improvement on the gross profit margin on merchandise sold led to a 13% increase in net revenue for the second quarter of 2006 compared to the same period in 2005. Same store net revenue for locations open for more than one year rose 7.4% during the period.
For the first six months of fiscal year 2006, Cash America produced an increase in net income of 40% to $26,301,000 (86 cents per share) compared to $18,802,000 (62 cents per share) in the same period for the prior year. Excluding the after-tax gain of $1.4 million attributable to the early termination of a store lease, net income for the six-month period in 2006 was up 32% to $24,892,000 (82 cents per share) compared to the first half of fiscal 2005. This increase was achieved on a 12% increase in total revenue, which reached $312.2 million in the six months ended June 30, 2006 compared to $278.6 million for the same period in the prior year.
Cash America will host a conference call to discuss the second quarter results on Thursday, July 27th at 3:45 p.m. CDT. A live web cast of the call will be available on the Investor Relations section of the Company's corporate web site (www.cashamerica.com). To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. A replay will be available on the Company's web site for 90 days following the conference call.
Additionally, the Company announced that the Board of Directors, at its regularly scheduled quarterly meeting, declared a $0.025 (2.5 cents) per share cash dividend on common stock outstanding. The dividend will be paid to shareholders of record on August 9, 2006 and will be paid at the close of business on August 23, 2006.
Outlook for the Third Quarter of 2006 and Related Fiscal Year
Management believes that continued growth in earnings will be largely a function of sustained increases in demand for its loan products, which generally lead to higher asset balances and revenue. Other elements expected to affect the growth in revenue include the development of the 182 additional lending locations opened or acquired during the last 24 months and the regulatory governance of consumer loan products. As it enters the third quarter of 2006, management anticipates that demand for the Company's products will remain strong. Based on the preceding factors, management expects that the third quarter net income will be between 38 cents and 41 cents per share in 2006, compared to 32 cents per share in 2005. This estimate excludes any potential future benefit from the pending completion of its recently announced acquisition transaction with CashNetUSA, which is more fully described below.
Expectations for the remainder of fiscal 2006 will be impacted by earning asset levels in later periods based on customer demand for credit products. At this time, management expects that full year 2006 earnings per share from net income will range between $1.85 and $1.93 compared to $1.48 per share in fiscal 2005. The 2006 full year estimates do not include the $1.4 million after tax gain (5 cents per share) related to the early termination of a store lease reported in the second quarter. On July 10, 2006, the Company announced that it executed an agreement for the future purchase of the assets of CashNetUSA (www.cashnetusa.com), an innovative provider of online cash advance loans. Management reported that the transaction was expected to close within 60 days from the date of the announcement. Assuming that the acquisition is completed during the time frame expected, management expects incremental earnings of between 4 and 5 cents per share in fiscal 2006. These earnings are not included in the expected earnings noted above.
Cash America International, Inc. is a provider of specialty financial services to individuals in the United States with 896 total locations. Cash America is the largest provider of secured non-recourse loans to individuals, commonly referred to as pawn loans, through 467 locations in 21 states under the brand names Cash America Pawn and SuperPawn. The Company also offers short-term cash advances in many of its locations including 291 locations that offer this service under the brand names Cash America Payday Advance and Cashland. In addition, check cashing services are provided through its 138 franchised and Company-owned "Mr. Payroll" check cashing centers. For additional information, visit the Company's website located at www.cashamerica.com.
BusinessWire, Cash America Press Release
Cash America International Inc. (NYSE: CHS)
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