Cash America International Inc. reported Oct. 23 net income for the third quarter ended Sept. 30, 2014, was $9,916,000, or 34 cents per share. During the third quarter, the Fort Worth-based pawn lender implemented plans that generated $14.1 million in after tax expenses (48 cents per share) related to the sale of non-strategic operations, the early extinguishment of long-term debt and to complete a corporate reorganization to create efficiencies in its retail services segment.
Excluding the unusual expense items, adjusted net income, a non-GAAP measure, would have been $24 million, or 82 cents per share, for the third quarter. Net income for the third quarter of 2013 was $46,186,000 ($1.52 per share), which included an after tax net benefit of $21.9 million (72 cents per share) that was created by a tax credit partially offset by a significant litigation settlement during the period. The adjusted net income, a non-GAAP measure, for the third quarter of 2013, excluding the net benefit, was $24.3 million, or 80 cents per share.
Consolidated total revenue during the third quarter of 2014 increased by 8 percent to $472.2 million compared with $437.8 million during the same period in 2013. Consolidated net revenue for the three months ended Sept. 30 increased 12 percent to $276.4 million from $247 million in the same period of 2013 as loss rates on the consumer loan portfolio were lower overall and pawn-related net revenue was up for the second consecutive quarter in 2014. Total pawn loan balances in the United States were up 6.5 percent year-over-year and same store pawn loan balances were up 2.1 percent as of the end of the third quarter of 2014 compared to the same period in 2013. During the third quarter of 2014, the company sold non-strategic lending operations, including 47 locations in Mexico and five locations in Colorado, which generated $21.5 million in net cash proceeds but contributed to an aggregate loss of $6.4 million after taxes (22 cents per share). Additionally, the company purchased $103.5 million of its outstanding long-term fixed-rate senior notes in the open market during the third quarter, which generated $6 million in pretax charges ($3.8 million after taxes, or 13 cents per share) related to the early extinguishment of debt. Management also completed a corporate reorganization effort in anticipation of the impending separation of its retail services segment and its e-commerce segment On Oct. 22, Cash America announced its board of directors has approved the spin-off of its online financial services division, Enova International Inc., into a separate publicly traded company. Cash America and Enova will be separated through the distribution of 80 percent of the outstanding shares of Enova to holders of Cash America.
The distribution is expected to occur on Nov. 13. Commenting on the results for the third quarter, Daniel R. Feehan, president and chief executive officer, said, “We have completed a variety of strategic initiatives during the third quarter, including the refocusing of our domestic pawn operations and the positioning of our e-commerce segment to be an independent public company. We have taken the steps we feel have the greatest potential for delivering long-term value to our shareholders for many periods in the future. Operationally, we also successfully moved through the initial transition of our U.K. e-commerce business to meet the new regulatory requirements in the United Kingdom, and we maintained our positive metrics of pawn lending that started in the second quarter.” As the company enters the fourth quarter of 2014, management anticipates that demand for the company’s consumer loan products will continue on a similar pace to the one it has experienced during the first nine months of 2014. Demand for the company’s pawn lending products during the second and third quarters of 2014 have improved, and management expects a continued growth in the company’s pawn lending business, but at moderate levels for the balance of 2014 and the first half of 2015. The company expects the fourth quarter 2014 consolidated net income per share to be between $1 and $1.10 per share as if the separation of the e-commerce segment does not occur before year end 2014. This range compares to $1.01 per share of consolidated net income in the fourth quarter of 2013, which included $2.8 million of after-tax.
Based on results through the first nine months of 2014, management expects its consolidated fiscal year 2014 earnings per share to be in a range of between $4.40 and $4.50 per share as if the separation of the e-commerce business does not occur before year end 2014. As of Sept. 30, 2014, Cash America International Inc. operated 948 total locations offering specialty financial services to consumers, which included 863 lending locations in 21 states in the United States and 85 check cashing centers operating in 12 states in the U.S. Additionally, as of Sept. 30, the company offered consumer loans over the Internet to customers in 34 states in the U.S., the United Kingdom, Australia, Canada and China.
Betty Dillard email@example.com