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8-K - CASH AMERICA INTERNATIONAL, INC. 8-K - CASH AMERICA INTERNATIONAL INCa50618054.htm

Exhibit 99.1

Cash America Announces First Quarter Net Income and Declares Dividend

FORT WORTH, Texas--(BUSINESS WIRE)--April 25, 2013--Cash America International, Inc. (NYSE: CSH) announced today that net income attributable to the Company for the three-month period ended March 31, 2013 increased 6% to $43,926,000 ($1.40 per share) compared to net income of $41,467,000 ($1.30 per share) for the same period in 2012. Earnings per share was up 8% to $1.40 per share for the three-month period ended March 31, 2013, which is near the top of the Company’s published guidance of expected earnings per share of between $1.35 and $1.42 per share from its press release dated January 24, 2013 and above analysts’ published consensus estimates of $1.37 per share as reported by Thompson Reuters.

Consolidated total revenue increased to $468.1 million for the three-month period ended March 31, 2013 compared to $457.5 million in the same period in 2012. Consolidated net revenue increased 6% to $271.9 million during the first quarter of 2013, primarily due to a 23% increase in revenue from consumer loan fees, net of the provision for loan losses. The higher level of net revenue led to an 8% increase in consolidated income from operations, which rose to $77.6 million for the three-month period ended March 31, 2013 compared to $72.0 million for the same period in 2012.

The Company’s E-Commerce segment generated a 27% increase in total revenue to $182.3 million for the three-month period ended March 31, 2013, primarily due to the continued growth in both its domestic and its foreign consumer lending business. The E-Commerce segment experienced expanded marginal profitability during the first quarter of 2013 compared to the prior year, primarily due to lower levels of loan loss provision as a percent of revenue, which contributed to a 37% increase in income from operations for the E-Commerce segment in the three-month period ended March 31, 2013, to $44.2 million.

Commenting on the first quarter results, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, “During the first quarter of 2013 we executed well in the delivery of our consumer loan products generating outstanding growth in our E-Commerce business. While much of this growth was offset by the decrease in results in our retail lending services segment, which was expected based on our year-end outlook for this business, we were able to meet our expectations for consolidated financial performance for the first quarter.”

Domestic pawn loan balances ended the period up 4%, to $198 million at March 31, 2013, and domestic pawn loan fees and service charges were up 7% for the three-month period ended March 31, 2013, compared to the same period in 2012. However, the Company’s Retail Services segment, which includes both the domestic and Mexico-based pawn activities, reported an 8% decrease in net revenue to $157.4 million for the three-month period ended March 31, 2013. The decrease in net revenue was primarily due to lower net proceeds from the sale of merchandise, and, to a lesser extent, the reduction in Mexico-based pawn lending activities pursuant to the reorganization of the business, which included the closing of 148 net locations during the last half of 2012.

Cash America will host a conference call to discuss the first quarter results on Thursday, April 25 at 7:00 AM CDT. A live web cast of the call will be available on the Investor Relations section of the Company’s corporate web site http://www.cashamerica.com. To listen to the live call, please go to the web site at least fifteen minutes prior to the call to register, download, and install any necessary audio software.

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 shares outstanding. The dividend will be paid at the close of business on May 22, 2013 to shareholders of record on May 8, 2013.


Outlook for the Second Quarter of 2013 and the 2013 Fiscal Year

Management believes that the opportunities for sustained growth in revenue and earnings will be largely associated with the customer demand for the credit products provided by the Company, which take the form of pawn loans and consumer loans. During the first quarter of 2013, the typical seasonal decline in loan balances occurred later in the quarter than usual due to delays in Federal Income Tax refunds to many of our customers. Typically, customers use a portion of these refunds to pay back existing loans and for the purchase of merchandise. At the outset of the second quarter the Company expects loan balances to begin to recover due to seasonal factors. The rate of this increase and the timing has a significant influence on second quarter results and the delay in distribution of tax refunds to our customers is expected to prolong the recovery of consumer loan balances and pawn loan balances. Other elements expected to affect the growth in revenue in future periods include the potential impact of the regulatory governance of loan products, the post-reorganization continued development of the Company’s Mexico-based pawn operations, the prevailing market price of gold and the development and expansion of the Company’s consumer loan products in its e-commerce segment. Based on its views on the preceding factors, management expects that the second quarter 2013 earnings per share will be between 91 cents and 96 cents per share compared to 94 cents per share in the second quarter 2012. At this time, based primarily on the recent decrease in the spot price of gold, management is lowering its previously reported expectations for its fiscal year 2013 earnings per share to a range of between $4.70 and $5.00. This guidance range compares to actual full year 2012 earnings per share of $3.42, which includes one-time events of $25.4 million (81 cents per share) related to Mexico reorganization charges, $8.4 million (27 cents per share) related to the voluntary Ohio customer refund expense, and $2.5 million (7 cents per share) related to expenses associated with the withdrawn proposed initial public offering of the Company’s wholly-owned subsidiary Enova International, Inc.

About the Company

As of March 31, 2013, Cash America International, Inc. operated 966 total locations offering specialty financial services to consumers, which included the following:

  • 828 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” (previously operated under the name “Prenda Fácil”); and
  • 91 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 15 states in the United States under the name “Mr. Payroll.”

Additionally, as of March 31, 2013, the Company offered consumer loans over the Internet to customers:

  • in 32 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 and http://www.poundstopocket.co.uk;
  • in Australia at http://www.dollarsdirect.com.au; and
  • in Canada at http://www.dollarsdirect.ca.

For additional information regarding the Company and the services it provides, visit the Company’s websites located at:

           

http://www.cashamerica.com

http://www.poundstopocket.co.uk

http://www.enova.com

http://www.dollarsdirect.com.au

http://www.cashnetusa.com

http://www.dollarsdirect.ca

http://www.netcredit.com

http://www.goldpromise.com

http://www.cashlandloans.com

http://www.mrpayroll.com

http://www.quickquid.co.uk

http://www.primaryinnovations.net

 

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: 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 anticipated regulation of consumer financial products and services by the Consumer Financial Protection Bureau; acceptance by consumers, legislators or regulators of the negative characterization by the media and consumer activists with respect to certain of the Company’s loan products; the reorganization of the Company’s Mexico-based pawn operations; the deterioration of the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate; the actions of third parties who provide, acquire or offer products and services to, from or for the Company; changes in demand for the Company's services and the continued acceptance of the online distribution channel by the Company’s online loan customers; fluctuations in the price of gold or a deterioration in economic conditions; changes in competition; 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; 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; changes in the capital 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; a prolonged interruption in the Company’s operations of its facilities, systems and business functions, including its information technology and other business systems; security breaches, cyber attacks or fraudulent activity; the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements; 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
March 31,
2013     2012
 
Consolidated Operations:
Total revenue $ 468,128 $ 457,488
Net revenue 271,941 256,784
Total expenses       194,355       184,776
 
Income from Operations $ 77,586 $ 72,008
 
Income before income taxes       69,716       64,831
 
Net Income     $ 43,922     $ 40,523
 
Net loss attributable to the noncontrolling interest       4       944
 
Net Income Attributable to Cash America International, Inc.     $ 43,926     $ 41,467
 
Earnings per share:
Net Income attributable to Cash America International, Inc.

common shareholders:

Basic $ 1.51 $ 1.40
Diluted $ 1.40 $ 1.30
 
Weighted average common shares outstanding:
Basic 29,100 29,616
Diluted 31,371 31,912

 
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)
(Unaudited)
      March 31,   December 31,
  2013     2012 2012
 
Assets
Current assets:
Cash and cash equivalents $ 78,361 $ 63,606 $ 63,134
Pawn loans 202,982 206,343 244,640
Consumer loans, net 253,801 200,365 289,418
Merchandise held for disposition, net 146,041 139,519 167,409
Pawn loan fees and service charges receivable 40,560 38,797 48,991
Income taxes receivable 15,522 - -
Prepaid expenses and other assets 38,431 34,213 35,605
Deferred tax assets       45,771     32,312     48,992
Total current assets 821,469 715,155 898,189
Property and equipment, net 255,165 250,722 261,771
Goodwill 611,240 567,830 608,216
Intangible assets, net 35,168 33,956 36,473
Other assets       12,405     15,074     13,609
Total assets     $ 1,735,447   $ 1,582,737   $ 1,818,258
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 115,886 $ 88,472 $ 126,664
Customer deposits 12,826 11,464 11,420
Income taxes currently payable - 19,894 5,922
Current portion of long-term debt       22,606     35,939     43,617
Total current liabilities 151,318 155,769 187,623
Deferred tax liabilities 104,524 92,277 101,711
Noncurrent income tax payable 37,094 2,602 2,703
Other liabilities 1,418 1,254 888
Long-term debt       427,777     371,969     534,713
Total liabilities     $ 722,131   $ 623,871   $ 827,638
 
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 155,617 164,722 157,613
Retained earnings 922,347 816,496 879,434
Accumulated other comprehensive income 4,202 3,460 3,128

Treasury shares, at cost (1,713,387 shares, 888,336 shares and 1,351,712 shares at March 31, 2013 and 2012, and at December 31, 2012, respectively)

(70,596) (33,051) (51,304)
Total Cash America International, Inc. shareholders' equity 1,014,594 954,651 991,895
Noncontrolling interest       (1,278)     4,215     (1,275)
Total equity       1,013,316     958,866     990,620
Total liabilities and equity     $ 1,735,447   $ 1,582,737   $ 1,818,258

   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended
March 31,
2013     2012
 
Revenue
Pawn loan fees and service charges $ 75,914 $ 72,899
Proceeds from disposition of merchandise 178,717 208,383
Consumer loan fees 210,205 172,840
Other       3,292       3,366
Total Revenue       468,128       457,488
Cost of Revenue
Disposed merchandise 121,335 138,321
Consumer loan loss provision       74,852       62,383
Total Cost of Revenue       196,187       200,704
 
Net Revenue       271,941       256,784
Expenses
Operations and administration 176,824 170,155
Depreciation and amortization       17,531       14,621
Total Expenses       194,355       184,776
Income from Operations 77,586 72,008
Interest expense (7,445) (7,176)
Interest income 63 29
Foreign currency transaction (loss) gain (377) 87
Equity in loss of unconsolidated subsidiary       (111)       (117)
Income before Income Taxes 69,716 64,831
Provision for income taxes       25,794       24,308
Net Income 43,922 40,523
Net loss attributable to the noncontrolling interest       4       944
Net Income Attributable to Cash America International, Inc.     $ 43,926     $ 41,467
Earnings Per Share:
Net Income attributable to Cash America International, Inc. common shareholders:
Basic $ 1.51 $ 1.40
Diluted $ 1.40 $ 1.30
Weighted average common shares outstanding:
Basic 29,100 29,616
Diluted 31,371 31,912
Dividends declared per common share $ 0.035 $ 0.035

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

MERCHANDISE DISPOSITION, GROSS PROFIT AND OPERATING DATA

The following tables outline certain data related to the pawn loan activities of Cash America International, Inc. and its subsidiaries (the “Company”) as of and for the three months ended March 31, 2013 and 2012 (dollars in thousands).

       
 
2013 2012
Domestic     Foreign     Total Domestic     Foreign     Total

As of March 31,

Ending pawn loan balances $ 197,998 $ 4,984 $ 202,982 $ 189,721 $ 16,622 $ 206,343
Ending merchandise balance, net $ 140,667 $ 5,374 $ 146,041 $ 128,206 $ 11,313 $ 139,519
 

Three Months Ended March 31,

 
Pawn loan fees and service charges $ 74,174 $ 1,740 $ 75,914 $ 69,413 $ 3,486 $ 72,899
Average pawn loan balance outstanding $ 222,796 $ 4,512 $ 227,308 $ 214,836 $ 16,067 $ 230,903
Amount of pawn loans written and renewed $ 215,376 $ 13,093 $ 228,469 $ 205,454 $ 37,396 $ 242,850
Annualized yield on pawn loans 135.0% 156.4% 135.4% 129.9% 87.3% 127.0%
Average amount per pawn loan (in ones) $ 130 $ 86 $ 126 $ 130 $ 100 $ 125
Gross profit margin on disposition of merchandise 32.4% 20.1% 32.1% 35.1% 9.7% 33.6%
Merchandise turnover 3.1 2.7 3.1 3.5 4.0 3.6
 

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 the Company's cost basis in the loan or the amount paid for purchased merchandise. The following table summarizes the proceeds from the disposition of merchandise and the related profit for the three months ended March 31, 2013 and 2012 (dollars in thousands).

   
Three Months Ended March 31,
2013     2012
Retail     Commercial     Total Retail     Commercial     Total
Proceeds from disposition $ 112,410 $ 66,307 $ 178,717 $ 112,032 $ 96,351 $ 208,383
Gross profit on disposition $ 41,990 $ 15,392 $ 57,382 $ 41,746 $ 28,316 $ 70,062
Gross profit margin 37.4 % 23.2 % 32.1 % 37.3 % 29.4 % 33.6 %
Percentage of total gross profit 73.2 % 26.8 % 100.0 % 59.6 % 40.4 % 100.0 %
 

The following table summarizes the age of merchandise held for disposition before valuation allowance of $0.9 million and $0.7 million at March 31, 2013 and 2012, respectively (dollars in thousands).

   
As of March 31,
2013     2012
Amount     % Amount     %
Jewelry - held for one year or less $ 85,344 58.1 $ 87,597 62.5
Other merchandise - held for one year or less       52,852     36.0       46,250     33.0
Total merchandise held for one year or less       138,196     94.1       133,847     95.5
Jewelry - held for more than one year 3,199 2.2 2,708 1.9
Other merchandise - held for more than one year       5,497     3.7       3,664     2.6
Total merchandise held for more than one year       8,696     5.9       6,372     4.5
Total merchandise held for disposition     $ 146,892     100.0     $ 140,219     100.0

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA

 

The following table sets forth consumer loan fees by segment, adjusted for the deduction of the loan loss provision for the three months ended March 31, 2013 and 2012 (dollars in thousands, except where otherwise noted).

   
Three Months Ended March 31,
2013     2012

Retail

Services

    E-Commerce     Total

Retail

Services

    E-Commerce     Total
Interest and fees on short-term loans $ 25,207 $ 115,008 $ 140,215 $ 26,911 $ 109,731 $ 136,642
Interest and fees on line of credit accounts - 23,234 23,234 - 11,651 11,651
Interest and fees on installment loans       3,115         43,641         46,756         2,461         22,086         24,547  
Consumer loan fees     $ 28,322       $ 181,883       $ 210,205       $ 29,372       $ 143,468       $ 172,840
Consumer loan loss provision       6,778         68,074         74,852         4,466         57,917         62,383  
Consumer loan fees, net of loss provision     $ 21,544       $ 113,809       $ 135,353       $ 24,906       $ 85,551       $ 110,457  
 
Year-over-year change - $ $ (3,362) $ 28,258 $ 24,896 $ 2,254 $ 24,576 $ 26,830
Year-over-year change - % (13.5) % 33.0 % 22.5 % 10.0 % 40.3 % 32.1 %

Consumer loan loss provision as a % of consumer loan fees

      23.9 %       37.4 %       35.6 %       15.2 %       40.4 %       36.1 %
 

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.

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. Management believes 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.


   

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSUMER LOAN FINANCIAL AND OPERATING DATA
 

The following tables summarize selected data related to the Company’s consumer loan activities as of March 31, 2013 and 2012 and for the three months ended March 31, 2013 and 2012 (dollars in thousands, except where otherwise noted).

 
Three Months Ended
March 31,
2013     2012  

Combined consumer loan loss provision as a % of combined consumer loans written and renewed(a)

9.1 %

8.1%

 

Charge-offs (net of recoveries) as a % of combined consumer loans written and renewed(a)

 

10.2 %

8.8%

 

Combined consumer loan loss provision as a % of consumer loan fees

 

 

  35.6 %  

36.1%

 

 
(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.
 

 

  As of March 31,
2013   2012  

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 $ 38,747 $ 4,774 $ 43,521 $ 38,852 $ 6,239 $ 45,091
Installment loans     9,667       9,130       18,797       7,859       6,043       13,902  
Total Retail Services, gross     48,414       13,904       62,318       46,711       12,282       58,993  

E-Commerce

Domestic
Short-term loans 28,278 29,592 57,870 28,252 28,771 57,023
Line of credit accounts 36,955 - 36,955 20,115 - 20,115
Installment loans     40,292       -       40,292       22,283       -       22,283  
Total Domestic, gross     105,525       29,592       135,117       70,650       28,771       99,421  
 
Foreign
Short-term loans 100,703 410 101,113 96,714 3,450 100,164
Installment loans     76,826       -       76,826       45,003       -       45,003  
Total Foreign, gross     177,529       410       177,939       141,717       3,450       145,167  
Total E-Commerce, gross     283,054       30,002       313,056       212,367       32,221       244,588  
 
Total ending loan balance, gross 331,468 43,906 375,374 259,078 44,503 303,581
Less: Allowance and liabilities for losses     (77,667 )     (2,095 )     (79,762 )     (58,713 )     (1,993 )     (60,706 )
Total ending loan balance, net   $ 253,801     $ 41,811     $ 295,612     $ 200,365     $ 42,510     $ 242,875  
Allowance and liability for losses as a % of combined consumer loan balances, gross(b)     23.4 %     4.8 %     21.2 %     22.7 %     4.5 %     20.0 %
 
(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 financial statements.
(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
 

The following table summarizes the consumer loans written and renewed for the three months ended March 31, 2013 and 2012 (dollars in thousands, except where otherwise noted).

 
Three Months Ended March 31,
2013     2012

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 $ 171,920 $ 28,326 $ 200,246 $ 175,674 $ 37,367 $ 213,041
Installment loans       1,446       3,712       5,158       1,511       1,860       3,371
Total Retail Services       173,366       32,038       205,404       177,185       39,227       216,412

E-Commerce

Domestic
Short-term loans 72,628 174,266 246,894 81,681 162,282 243,963
Line of credit accounts 28,806 - 28,806 18,377 - 18,377
Installment loans       24,671       -       24,671       11,266       -       11,266
Total Domestic       126,105       174,266       300,371       111,324       162,282       273,606
Foreign
Short-term loans 266,327 13,232 279,559 240,521 17,797 258,318
Installment loans       40,585       -       40,585       24,683       -       24,683
Total Foreign       306,912       13,232       320,144       265,204       17,797       283,001
Total E-Commerce       433,017       187,498       620,515       376,528       180,079       556,607
 

Total amount of consumer loans

written and renewed

    $ 606,383     $ 219,536     $ 825,919     $ 553,713     $ 219,306     $ 773,019
 

Number of consumer loans written and renewed (in ones):

 

Retail Services

Short-term loans 355,313 53,989 409,302 369,384 66,731 436,115
Installment loans       1,396       634       2,030       1,537       277       1,814
Total Retail Services       356,709       54,623       411,332       370,921       67,008       437,929

E-Commerce

Domestic
Short-term loans 243,248 235,222 478,470 245,444 219,126 464,570
Line of credit accounts 111,651 - 111,651 70,941 - 70,941
Installment loans       23,185       -       23,185       10,015       -       10,015
Total Domestic       378,084       235,222       613,306       326,400       219,126       545,526
 
Foreign
Short-term loans 466,904 17,316 484,220 452,203 23,355 475,558
Installment loans       33,075       -       33,075       21,782       -       21,782
Total Foreign       499,979      

17,316

      517,295       473,985       23,355       497,340
Total E-Commerce       878,063       252,538       1,130,601       800,385       242,481       1,042,866
 

Total number of consumer loans written and renewed

      1,234,772       307,161       1,541,933       1,171,306       309,489       1,480,795
 

(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
 

The following tables contain operating segment data for the three months ended March 31, 2013 and 2012 by segment, for the Company’s corporate operations and on a consolidated basis (dollars in thousands).

 
Retail Services E-Commerce
Domestic   Foreign   Total Domestic   Foreign   Total Corporate Consolidated
 

Three Months Ended March 31, 2013

Revenue
Pawn loan fees and service charges $ 74,174 $ 1,740 $ 75,914 $ - $ - $ - $ - $ 75,914
Proceeds from disposition of merchandise 174,150 4,567 178,717 - - - - 178,717
Consumer loan fees 28,322 - 28,322 90,641 91,242 181,883 - 210,205
Other       2,500       93       2,593       441       7       448       251       3,292
Total revenue       279,146       6,400       285,546       91,082       91,249       182,331       251       468,128
Cost of revenue
Disposed merchandise 117,687 3,648 121,335 - - - - 121,335
Consumer loan loss provision       6,778       -       6,778       29,823       38,251       68,074       -       74,852
Total cost of revenue       124,465       3,648       128,113       29,823       38,251       68,074       -       196,187
 
Net revenue       154,681       2,752       157,433       61,259       52,998       114,257       251       271,941
Expenses
Operations and administration 90,702 3,603 94,305 30,755 34,827 65,582 16,937 176,824

Depreciation and amortization

      8,801       399       9,200       3,883       560       4,443       3,888       17,531
Total expenses       99,503       4,002       103,505       34,638       35,387       70,025       20,825       194,355
Income (loss) from operations     $ 55,178     $ (1,250)     $ 53,928     $ 26,621     $ 17,611     $ 44,232     $ (20,574)     $ 77,586

As of March 31, 2013

Total assets $ 915,772 $ 128,534 $ 1,044,306 $ 374,513 $ 185,439 $ 559,952 $ 131,189 $ 1,735,447
Goodwill $ 400,871 $ 210,369 $ 611,240
 
 
Retail Services E-Commerce
Domestic Foreign Total Domestic Foreign Total Corporate Consolidated
 

Three Months Ended March 31, 2012

Revenue
Pawn loan fees and service charges $ 69,413 $ 3,486 $ 72,899 $ - $ - $ - $ - $ 72,899
Proceeds from disposition of merchandise 195,986 12,397 208,383 - - - - 208,383
Consumer loan fees 29,372 - 29,372 69,124 74,344 143,468 - 172,840
Other         2,962       49       3,011       165       (6)       159       196       3,366
Total revenue         297,733       15,932       313,665       69,289       74,338       143,627       196       457,488
Cost of revenue
Disposed merchandise 127,128 11,193 138,321 - - - - 138,321
Consumer loan loss provision         4,466       -       4,466       21,954       35,963       57,917       -       62,383
Total cost of revenue         131,594       11,193       142,787       21,954       35,963       57,917       -       200,704
Net revenue         166,139       4,739       170,878       47,335       38,375       85,710       196       256,784
Expenses
Operations and administration 91,259 8,194 99,453 23,816 26,723 50,539 20,163 170,155
Depreciation and amortization         7,132       1,128       8,260       2,612       263       2,875       3,486       14,621
Total expenses         98,391       9,322       107,713       26,428       26,986       53,414       23,649       184,776
Income (loss) from operations       $ 67,748     $ (4,583)     $ 63,165     $ 20,907     $ 11,389     $ 32,296     $ (23,453)     $ 72,008

As of March 31, 2012

Total assets $ 844,689 $ 123,245 $ 967,934 $ 339,199 $ 143,757 $ 482,956 $ 131,847 $ 1,582,737
Goodwill $ 357,459 $ 210,371 $ 567,830

Corporate operations primarily include corporate expenses, such as legal, occupancy, and other costs related to corporate service functions, such as 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.


 

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 ancillary services as of March 31, 2013 and 2012. 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, certain recently acquired domestic retail services locations operate under various names that are expected to be changed to “Cash America Pawn” or “SuperPawn” during 2013. The Company’s foreign retail services locations operate under the name “Cash America casa de empeño.”

    As of March 31,
2013     2012
Domestic(a)     Foreign     Total Domestic(a)(b)     Foreign     Total
Retail services locations offering:
Both pawn and consumer lending 580 - 580 574 - 574
Pawn lending only 167 47 214 127 193 320
Consumer lending only 81 - 81 85 - 85
Other (c)     91     -     91     101     -     101
Total retail services     919     47     966     887     193     1,080
 

(a) Except as described in (c) below, includes locations operating in 22 and 23 states in the United States as of March 31, 2013 and 2012, respectively.

(b) Includes one unconsolidated franchised location operating under the name “Cash America Pawn” as of March 31, 2012.

(c) As of March 31, 2013 and 2012, includes 91 and 95 unconsolidated franchised check cashing locations, respectively and as of March 31, 2012 includes six consolidated Company-owned check cashing locations. As of March 31, 2013 and 2012, includes locations operating in 15 and 16 states in the United States, respectively.

E-Commerce Segment

As of March 31, 2013 and 2012, the Company’s e-commerce segment operated in 32 states in the United States and in three other 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 and http://www.poundstopocket.co.uk,
  • in Australia at http://www.dollarsdirect.com.au, and
  • in Canada at http://www.dollarsdirect.ca.

As of March 31, 2013, the Company also offered a line of credit product in Mexico under the trade name “Debit Plus.” The Company plans to cease offering this line of credit product in Mexico during the second quarter of 2013. The results of operations associated with this product are not material to the e-commerce segment or to the Company.


 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE

 

Adjusted Earnings and Adjusted Earnings Per Share

In addition to reporting financial results in accordance with GAAP, the Company has provided adjusted earnings and adjusted earnings per share, 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 adjusted earnings and adjusted earnings per share, 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.

The following table provides a reconciliation for the three months ended March 31, 2013 and 2012 between net income attributable to the Company and diluted earnings per share calculated in accordance with GAAP to adjusted earnings and adjusted earnings per share, respectively, which are shown net of tax (dollars in thousands, except per share data):

      Three Months Ended March 31,
  2013   2012
$   Per Diluted

Share(a)

$   Per Diluted

Share(a)

 

 

Net income and diluted earnings per share attributable to Cash America International, Inc.

$ 43,926 $ 1.40 $ 41,467 $ 1.30
Adjustments (net of tax):
Intangible asset amortization 832 0.03 738 0.02
Non-cash equity-based compensation 988 0.03 972 0.03

Convertible debt non-cash interest and issuance cost amortization

626 0.02 581 0.02
Foreign currency transaction loss (gain)       238     0.01     (54)     -
Adjusted earnings and adjusted earnings per share     $ 46,610   $ 1.49   $ 43,704   $ 1.37
 

(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.


 

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, equity in earnings or loss of unconsolidated subsidiary and provision for income 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 liquidity and estimated enterprise value. In addition, management believes that the adjustments shown below, especially the adjustments for charges related to events that occurred during the third and fourth quarters of 2012, such as the withdrawn proposed initial public offering of the Company’s wholly-owned subsidiary, Enova International, Inc., the reorganization of the Company’s Mexico-based pawn operations, and the voluntary reimbursements to Ohio customers are useful to investors in order to allow them to compare the Company’s financial results for the current and prior year trailing 12 months. The computation of adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies (dollars in thousands):

  Trailing 12 Months Ended
March 31,
2013 2012
Net income attributable to Cash America

International, Inc.

  $ 109,929   $ 141,052
 
Adjustments:
Charges related to withdrawn proposed Enova IPO(a) 3,424 -
Charges related to Mexico Reorganization(b) 28,873 -
Charges related to Ohio Reimbursements(c) 13,400 -
Depreciation and amortization expenses 65,774 (d) 56,328
Interest expense, net 29,222 27,005
Foreign currency transaction loss 777 1,082
Equity in loss of unconsolidated subsidiary 289 217
Provision for income taxes 78,981 (e) 84,916
Net loss attributable to the noncontrolling interest       (4,866) (f)     (1,150)
Adjusted EBITDA     $ 325,803     $ 309,450
 
Adjusted EBITDA margin calculated as follows:
Total revenue $ 1,811,070 $ 1,675,688
Adjusted EBITDA       325,803       309,450
Adjusted EBITDA as a percentage of total revenue       18.0%       18.5%
 

(a) Represents charges directly related to the proposed Enova IPO that was withdrawn in July 2012, before tax benefit of $1.3 million.

(b) 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 (d) and (e) below.

(c) Represents charges related to the Ohio Reimbursements, before tax benefit of $5.0 million.

(d) Excludes $12.6 million of depreciation and amortization expenses, which are included in “Charges related to the Mexico Reorganization” in the table above.

(e) 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. Includes an income tax benefit related to the Mexico Reorganization of $1.2 million.

(f) Includes $2.3 million of noncontrolling interests related to the Mexico Reorganization.

 

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP DISCLOSURE

 

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 GAAP 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.

CONTACT:
Cash America International, Inc.
Thomas A. Bessant, Jr., 817-335-1100