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Cash Store Financial releases Fourth Quarter and Year End Results; Record revenues, declares dividend on continued positive performance
8/27/2008 12:00:00 AM
EDMONTON, Aug. 27 /CNW/ - The Cash Store Financial Services Inc. ("The Cash Store" or the "Company") today announced fourth quarter and year endresults for the fiscal year ended June 30, 2008.
Fourth Quarter Highlights (table of results at end of release)
- Income from continuing operations up 60% to $3.2 million compared to $2.0 million in the fourth quarter last year.
- EBITA for the quarter is up 72% to $7.6 million from $4.4 million in the same quarter last year.
- Diluted earnings per share from continuing operations of $0.16, compared to $0.09 in the fourth quarter last year.
- Revenue from continuing operations up 10% to $34.5 million, compared to $31.5 million in the fourth quarter last year.
- Branch Operating Income up 29% to $11.7 million, compared to $9.1 million in the fourth quarter last year.
- Same Branch Sales up 5% to $91,700 from $87,300 in the fourth quarter last year
- Retention payments down 23% to $4.2 million (3.1% of loans brokered) in the fourth quarter compared to $5.5 million (4.3% of loans brokered) in the fourth quarter last year.
Year-end Highlights
- Income from continuing operations for fiscal 2008 was up 44% to $12.5 million, compared to $8.7 million in the prior year.
- EBITA for the year is up 38% to $26.3 million from $19.0 million last year.
- Diluted earnings per share from continuing operations were $0.62 ($0.62 basic), compared to $0.42 ($0.42 basic) in fiscal 2007.
- Revenue from continuing operations up 6% to $130.8 million, compared to $123.6 million in the prior year. '
- Branch operating income improved 14% to $39.8 million from $35 million for the previous year.
- Same Branch Sales improved 7% to $375,700 from $352,300 for the previous year.
- Retention payments dropped 14% to $20.1 million (3.9% of loans brokered) from $23.4 million (4.7 % of loans brokered) for the previous year.
- Payment of $3.6 million of dividends to shareholders compared to nil in fiscal 2007.
- Repurchase of 1,353,110 Common shares during fiscal 2008.
- 384 branches in operation, up 26 from one year ago.
Mr. Gordon Reykdal, Chairman and CEO commented, "Fiscal 2008 was a strong year for Cash Store Financial, marked by a 44% increase in earnings for continuing operations relative to the previous year, and a return to earningsl evels exceeding those experienced prior to the systems restructuring initiated in the third quarter of fiscal 2007. Revenue of $34.5 million in the fourth quarter for continuing operations represents a 10% increase relative to the same period in fiscal 2007. This continued positive trending shows clearly that the business is well positioned for solid financial performance in future periods."
Mr. Reykdal further commented, "Fiscal 2008 was also marked by the successful spin-off in the third quarter of the furniture rental division into a separate publicly-traded company listed on the TSX Venture Exchange, thus enabling senior management to further concentrate attention on the Company's core operations." Shareholders of record in Cash Store Financial at the time of the transaction received an equivalent amount of shares in the new entity.
Mr. Reykdal added, "Overall, fiscal 2008 was marked by a significant increase in revenues and substantive expense reductions. Same branch sales improved 7% to $375,700 from $352,300 for the previous year, while branchoperating income improved 14% to $39.8 million from $35 million the previous year. Retention payments dropped 14% to $20.1 million (3.9% of loans brokered)from $23.4 million (4.7% of loans brokered) for the previous year. Recent positive developments in industry regulation should enable the Company to further reduce the cost of loan related capital on a go forward basis."
Shareholder Returns
During the year the Company repurchased appropriately 1.35 million of its common shares through a normal course issuers bid for an aggregate purchase price of $6.0 million. This amounts to 7% of its outstanding shares.
As of June 30, 2008, the Company has returned $9.5 million in cash to its shareholders through the repurchase of shares and the payment of a regular quarterly dividend since the beginning of fiscal 2008. The Company is continuing the trend and has declared two dividends and will continue its share repurchase program. The first dividend is a quarterly cash dividend of $0.025 per common share and the second dividend is a special cash dividend of $0.075 per common shares. Both are payable on October 2, 2008 to shareholders of record on September 18, 2008.
The number of common shares to be purchased during the period of the normal course issuer bid (the Bid) from June 27, 2008 to June 26, 2009 will not exceed 1,208,739 common shares, or approximately 8.9% of the public float outstanding on June 18, 2008.
Discontinued Operations
On November 28, 2007, the Company's shareholders approved a plan to spin-off the Company's rental operations and certain of its assets and liabilities to InstaRent Inc., whose common shares were, upon the completion of the "spinoff" transaction, owned by the shareholders of the Company.Insta Rent Inc. is publicly traded on the TSX Venture stock exchange under the symbol "IRR".
This spin off transaction was completed pursuant to a plan of arrangement on March 31, 2008 and accordingly, the Company ceased to consolidate those assets and liabilities of the rental division transferred to InstaRent Inc.and have presented the results of its operations and its cash flows for the year ended June 30, 2008 and 2007 as discontinued operations. The net loss from discontinued operations during the year was $1.7 million, which includes $678,000 of costs related to the spinoff transaction, compared to a net loss of $2.8 million during fiscal 2007. The decrease in the net loss was due to improved branch operating income compared to the prior year.
Fourth Quarter Financial Results
Net income from continuing operations for the fourth quarter of fiscal 2008 increased to $3.2 million, compared to $2.0 million for the same quarter last year due to increased revenue, decreased expenses and lower retention payments partially offset by a higher effective tax rate. Diluted earnings per share for continuing operations for the fourth quarter were $0.16, compared to$0.09 per share for the same quarter last year.
Fiscal 2008 Financial Results
Net income from continuing operations for the year ended June 30, 2008 was $12.5 million, compared to $8.7 million in the prior year. The higher earnings resulted in diluted earnings per share from continuing operations increasing to $0.62, compared to $0.41, for the year ended June 30, 2007.
The Company's EBITA (income from continuing operations before interest, income taxes, stockbased compensation, and amortization of capital and intangible assets) for the year ended June 30, 2008 was $26.3 million, compared to $19.0 million for the year ended June 30, 2007. The Company's improved revenue and EBITA numbers are due to increased revenues partially offset by higher expenses primarily due to opening 26 new branches, and the Company has, starting January 2007, increased its infrastructure substantially, including the addition of a centralized cheque cashing department and collections department, and increased capacity in both the internal audit and training departments.
The higher fiscal 2008 earnings reflect the following:
- Increased branchlevel operating results due to improved revenues, growing same branch sales, and decreased retention payments;
- targeted expenditures on infrastructure enhancements to increase revenue generation, including: a new cheque cashing department, a new centralized collections department, increased capacity in the internal audit and training departments; and, increased capacity for regional and divisional management; and,
- decreased expenditures on stockbased compensation.
Branch revenues have improved by 6%, while same branch sales have increased 5% compared to the same period last year. Product and revenue diversification initiatives continue to generate positive results. Fees from other services (including fees from cheque cashing, money transfer, payment protection, debit cards, prepaid credit cards, collections and telephone reconnect services) increased to$21.7 million for the year ended June 30, 2008, compared to $19.8 million for the year ended June 30, 2007. A customer loyalty program is currently being tested in some markets. For future periods, the Company is planning to introduce alternative loan products.
The Company is well-positioned to fund future growth initiatives and working capital requirements with a cash position of $15.6 million and a positive working capital of $16.7 million as at June 30, 2008. For the year ended June 30, 2008, working capital has increased by $7.3 million from$9.4 million at June 30, 2007.
Summary Financial Information
This press release should be read in conjunction with the consolidated financial statements of The Cash Store Financial Services Inc. for the years ended June 30, 2008 and 2007.
About The Cash Store Financial Services Inc. (formerly Rentcash Inc.)
Cash Store Financial is the only payday advance broker in Canada publicly traded on the Toronto Stock Exchange (TSX:CSF). Cash Store Financial operates more than 390 branches across Canada under two banners: The Cash Store andInstaloans.
The Cash Store and Instaloans act as brokers to facilitate payday advance services to income-earning consumers who may not be able to obtain them from traditional banks. Cash Store Financial also provides a private-label debitcard, The Freedom Card, and other ancillary products.
Cash Store Financial employs more than 1,600 associates and is headquartered in Edmonton, Alberta.
For further information: Gordon J. Reykdal, Chairman and Chief Executive Officer, Cash Store Financial, (780) 408-5118;
or Michael J.L. Thompson,Senior Vice President and Corporate Secretary, Cash Store Financial, (780)408-5595