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Rentcash Announces Second Quarter and Six Month results; declares dividend on continued positive performance
2/6/2008 12:00:00 AM
EDMONTON, Feb. 6 /CNW/ - Rentcash Inc. ("Rentcash" or the "Company")(RCS:TSX) today announced second quarter and six month results for the period ended December 31, 2007.
Second Quarter Highlights (table of results at end of release)
- Net income was $2.5 million, compared to $1.4 million for the same quarter last year.
- Diluted earnings per share increased to $0.12 compared to $0.07 forthe same quarter last year.
- Store operating income for the brokerage division was $9.8 million,compared to $8.8 million for the same quarter last year.
- Brokerage division same store sales were $91,600 compared to $87,300for the same quarter last year.
- Same store sales in the rental division were $83,800 compared to$76,600 for the same quarter last year.
- Consolidated revenue was $37.8 million, compared to $36.9 million forthe same quarter last year.Retention payments decreased to $5.3 million, from $6.0 million forthe same quarter last year.
- Non-recurring costs of $473,000 related to the spin-off of the rentaldivision.
- Excluding these costs diluted earnings per share would havebeen $0.14.Dividend declared for the quarter of 2.5 cents per common share.
Year-To-Date Highlights (6 months)
- Net income was $5.6 million, compared to $3.8 million for the sameperiod last year.
- Diluted earnings per share increased to $0.27 compared to $0.19 forthe same period last year.
- Store operating income for the brokerage division was $19.1 million compared to $18.0 million for the same period last year.
- Consolidated revenue was $75.5 million, compared to $74.5 for thesame period last year.
- Retention payments to third party lenders decreased to $11.1 million,compared to $12.2 million for the same period last year
Mr. Gordon Reykdal, Chairman and CEO commented, "I'm pleased to report continued strong performance in the second quarter of fiscal 2008. Revenue sare growing, retention payments have been reduced and net income is up. Subsequent to a year long corporate-wide restructuring program, this quartermarks the third consecutive quarter of revenue growth in the brokerage division along with continued year-over-year improvements to the division's same store sales and store operating income. Continued positive trending instore operating performance, increased revenue from non-brokerage related services and lower retention payments indicate that ongoing management initiatives to grow revenues and control expenses are working.
"He further commented, "The rental division remains well-positioned forthe previously announced spin-off to existing shareholders, anticipated to occur in the third quarter of this fiscal year. Same store sales and store operating income have improved relative to the same period last year; net losses continue to be reduced.
"He added, "Management has in recent periods concentrated on the continuous training and development of store associates, with positive overall results. We intend to further strengthen our hands-on strategy. Beginning inthe third quarter I will conduct a country-wide tour to meet personally with all store managers to discuss the company's strategic priorities and the effective pursuit of our goals and objectives.
"Mr. Reykdal further added, "The Company maintains strong cash and working capital positions and is fully able to initiate expansion initiatives as market conditions and opportunities arise, inclusive of dividends paid. The Company's cash holdings are fully liquid, held in current accounts with major Canadian banks. We are pleased to declare a third consecutive dividend of2.5 cents per share for the second quarter of 2008."The cash dividend of $0.025 per common share will be payable on March 5,2008 to shareholders of record on February 19, 2008.
Mr. Reykdal further commented, "The Company was extremely pleased withits continued involvement in the regulatory processes ongoing in both Manitoba and Nova Scotia. Even with the anticipated increased costs associated withthese processes, the Company believes regulation will benefit the industry as a whole."
Rental Division Spin-off
Shareholder approval for divestiture of the rental division to existing shareholders was granted at the 2007 Annual General Meeting held onNovember 28, 2007. The Company continues to move forward with the spin-off,which will be subject to the receipt of applicable regulatory approvals. It is anticipated that all requisite approvals will be obtained and the spin-off completed during the third quarter of fiscal 2008. The Company has also applied to Canada Revenue Agency (CRA) for a tax ruling in respect of the transaction. Management believes that divesting of the rental division will provide better clarity for both business models and have a positive long term impact on shareholder value.
During the quarter the Company incurred non-recurring costs of $472,600 related to the spin-off of its rental division. The Company anticipates that additional costs will be incurred in the future until the spin-off's expected completion at the end of the third quarter
This press release should be read in conjunction with the unauditedinterim consolidated financial statements of Rentcash for the three month andsix month period ended December 31, 2007.
Summary Financial Information
About Rentcash
Rentcash is the only payday advance broker in Canada publicly traded on the Toronto Stock Exchange (TSX:RCS). Rentcash operates 427 stores across Canada under three banners: The Cash Store, Instaloans and Insta-rent.The Cash Store and Instaloans act as brokers to facilitate payday advance services to income-earning consumers and provide two private-label debitcards, The Cash Store Cash Card(TM) and InstaWorld Debit Card, and a prepaid credit card, the Freedom Mastercard, to those who may not be able to obtain them from traditional banks.
Insta-rent rents brand-name furniture, appliances, electronics and computers, with or without an option to purchase. Insta-rent operates primarily in The Brick and United Furniture Warehouse locations, which are part of The Brick Group, one of Canada's largest volume retailers of household furniture, mattresses, appliances and home electronics.
Rentcash employs more than 1,800 associates and is headquartered in Edmonton, Alberta.
Cautionary Statement Regarding Forward-looking Information
This press release contains "forward-looking information" within the meaning of applicable Canadian and United States securities legislation. Forward-looking information includes, but is not limited to, information withrespect to our objectives, strategies, operations and financial results, aswell as the company's plan to sell or spin-off its rental division. Generally,this forward-looking information can be identified by the use offorward-looking terminology such as "plans", "expects", or "does not expect","isexpected", "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".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 the company, 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 the spin-off of the rental division and a favorable CRA ruling including, but no tlimited to, market conditions, the availability of alternative transactions,shareholder, legal, regulatory and court approvals and third party consentsand other factors described in the company's Annual Information Form dated September 26, 2007 under the heading "Risk Factors". Although the Company has attempted to identify 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 orintended. 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. The Company does not undertake to update any forward-looking information, except in accordance withapplicable securities laws.All published financial statements can be obtained from SEDAR atwww.sedar.com and the company's web site at www.rentcash.ca.
For further information: Gordon J. Reykdal, Chairman and Chief ExecutiveOfficer, (780) 408-5118 or
Michael J.L. Thompson, Vice President Investor Relations & Government Affairs, (780) 408-5595, Cell: (613) 371-4093