News Article

Cash Store Financial releases Third Quarter and Record Nine Month Results. Quarterly revenue up 12%, net income, before non-recurring charges up 29%

4/28/2010 12:00:00 AM

EDMONTON, April 28, 2010 /CNW/ - The Cash Store Financial Services Inc. ("Cash Store Financial") today announced results for the three and nine months ended March 31, 2010.

Highlights for the third quarter (table of results at end of release)  

• Quarterly revenue of $40.8 million, up 12.4% from $36.3 million in the same quarter last year.  
• Other revenue up 35.7% to from $8.4 million from $6.2 million in the same quarter last year.  
• Branch operating income of $13.1 million, up 12.0%, compared to $11.7 million in the same quarter last year.  
• Earnings per share (diluted) before non-recurring class action settlement costs up 27.8% to $0.23 from $0.18 in the same quarter last year.  Including non-recurring charges, earnings per share (diluted) was $0.13.  
• Net income before non-recurring class action settlement costs and related taxes was up 29.0% to $4.0 million from $3.1 million for the same quarter last year.  
• Net income for the third quarter was $2.2 million compared to $3.1 million for the same quarter last year.  
• EBITA before non-recurring class action settlement costs was up 23.1% to $8.0 million compared to $6.5 million for the same quarter last year.  EBITA was $5.3 million in the quarter.  
• Same branch quarterly revenues for the 407 locations open since the beginning of the third quarter of fiscal 2009 increased 10.6% to $95,700.  
• Branch count was 489 up 66 net new branches from 423 at March 31, 2009.  20 new branches opened in the quarter.  
• Dividend of $0.10 payable May 26, 2010, to shareholders of record on May 11, 2010.  
• Subsequent to quarter-end, surpassed 500 branches in operation.

 Highlights for the nine months ended March 31, 2010  

• Record revenue of $124.7 million, up 12.5% from $110.8 million in the same period last year.  
• Record nine-month branch operating income of $44.7 million up 12.3% from $39.8 million, in the same period last year.  
• Record earnings per share (diluted) before non-recurring class action settlement costs was up 10% to $0.88 from $0.80 for the same period last year.  Including non-recurring charges, earnings per share (diluted) was $0.78 compared to $0.73 for the same period last year.
• Net income before non-recurring class action settlement costs and related taxes was $15.1 million, up 2.7% from $14.7 million for the same period last year.
•  Net income was $13.3 million compared to $13.4 million for the same period last year. 
• Record EBITA adjusted for non-recurring class action settlement costs and related taxes, up 10.9% to $29.5 million from $26.6 million for the same period last year.
• Same branch revenues for the 372 locations open since the beginning of the first quarter of fiscal 2009 increased 6.8% to $302,000.

Mr. Gordon Reykdal, Chairman and CEO commented: "The third quarter, which is typically our slowest, was marked by impressive year-over-year revenue growth and strong earnings. This is despite non-recurring charges and related taxes stemming from the recent settlement of class action law-suits.  When non-recurring charges are removed, diluted earnings per share were up 27.8%. The Company continued to execute on its aggressive expansion with an increase of 20 new branches in the quarter, for a total increase of 66 branches relative to the close of last year’s third quarter. Subsequent to quarter-end, Cash Store Financial announced an agreement to acquire for $4.4 million EZ Cash, a Saskatchewan-based regional provider of payday loan services with 14 locations throughout the province. The Company now has over 500 branches in operation. We plan to continue to expand at a rate of 18 to 20 branches per quarter through fiscal 2010 and 2011. We expect to achieve this growth with a minimal drag on earnings and continued healthy operating margins.  This expansion positions the Company for sustained long-term revenue and income growth." 

Mr. Reykdal further commented: “During the quarter, the President and Chief Operating Officer conducted his annual tour to meet individually with each of our managers in our branch network. This is a critical component of our long-term growth program. The President learns first-hand of the challenges and opportunities facing our front-line staff.  Strategies are implemented to address the concerns that are raised. In connection with this tour, additional sales training was provided to all branch managers which we anticipate will contribute to future revenue growth.”

Mr. Reykdal further commented: “In the quarter, we executed on our long-term product diversification strategy by acting on our agency agreement with DirectCash Bank and offering bank accounts across our entire branch network. DirectCash Bank is a schedule 1 bank that offers Canadian Deposit Insurance Corporation insured bank accounts that have proven popular with our customers.  To secure additional ancillary revenue, we plan to further expand this offering over coming periods."

“We have also continued our international expansion efforts.  We have an 18.4% ownership interest in the Cash Store Australia Holdings Inc. (TSXV: AUC), which we believe will produce positive contributions in coming periods; in its most recent quarterly financial release, the Cash Store Australia reported that it has now moved into profitability.  Cash Store Australia now has 53 branches in operation and is expected to experience revenue growth as older branches move into maturity.”

Mr Reykdal further commented: “Our ability to expand rapidly and our sustained revenue growth are a testament to the commitment of our associates.  Through our innovative profit-sharing compensation program and our use of Cash Store TV and Cash Store College, our technology-based training platforms, we have better-trained our associates to provide quality customer service to every new customer that enters a branch. Associate retention levels continue to improve and this has been reflected in our revenue and earnings.”

Mr. Reykdal added: “Many provinces have recently implemented consumer protection measures for the payday loan industry.  These measures will and have included rate caps and a ban on rollovers. 88% of our branches are located in British Columbia, Alberta, Ontario and Nova Scotia.  Regulation of the industry in these provinces has been fully implemented.  This is a welcome development that demonstrates to capital markets that the industry is now supported by a high degree of regulatory certainty and that the industry’s long-term stability has been secured. We have not experienced any material negative impacts as a result of regulations. The Company has accommodated regulation more effectively than some competitors and there has been industry consolidation as a result.  Regulation has positioned the Company to lend its own capital. We continue in our efforts to source cheaper capital and expect to achieve significant savings in the near future. We believe that industry regulation will encourage previously untapped consumer segments to enter the market and offer new revenue opportunities.  We continue to view regulation as a positive for the Company and expect the benefits to accrue over the long-term.”

Mr. Reykdal concluded: “We have declared a quarterly dividend of $0.10 payable to on May 26, 2010 to shareholders of record on May 11, 2010. For the nine month period ending March 31, 2010, the Company made dividend payments totalling $5.7 million.”

About Cash Store Financial

Cash Store Financial is the only broker of short-term advances and provider of other financial services in Canada publicly traded on the Toronto Stock Exchange (TSX: CSF). Cash Store Financial operates more than 500 branches across Canada under the banners: The Cash Store and Instaloans.  

The Cash Store and Instaloans act as brokers to facilitate short-term advances and provider of 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, and other financial services.

Cash Store Financial employs approximately 1,900 associates and is headquartered in Edmonton, Alberta.

Summary Financial Information 

For further information on Cash Store Financial, please contact:

Gordon J. Reykdal, Chairman and Chief Executive Officer, (780) 408-5118 or Nancy L. Bland, Chief Financial Officer, (780) 732-5683