Thursday, pawnshops operator Cash America International, Inc. (CSH) reported a lower profit for the second quarter, but better than the company's and analysts' expectations. The earnings were helped by lower losses on cash advance loans and rising pawn loan demand. The company, while expecting third quarter earnings to be better than last year, trimmed its 2009 outlook.
For the quarter, net income declined to $16.82 million from $20.14 million in the year-ago quarter. Net income attributable to shareholders was $16.61 million or $0.54 per share as against $20.14 million or $0.67 per share in the second quarter of fiscal 2008.
On an average, nine analysts polled by Thomson Reuters expected the company to earn $0.52 per share. Analysts' estimates typically exclude special items.
The Fort Worth, Texas-based company stated that its management had projected that earnings in the second quarter would be lower than the previous-year quarter, mainly due to regulatory changes impacting earnings in certain cash advance markets that contributed significant earnings in the prior year.
Net revenues for the period rose slightly to $180.85 million from $181.24 million in the prior-year period, due to a 25% rise in finance and service charges on pawn loan balances year-on-year that offset lower levels of cash advance fees. Six analysts expected the company to generate revenues of $249.12 million.
For the six months ended June 30, net income was $41.05 million compared to $45.95 million last year. Net income attributable to shareholders slid to $40.52 million or $1.33 per share from $45.95 million or $1.53 per share in the comparable period prior year.
Net revenues on a year-to-date basis were $366.44 million as against $360.66 million in the same period last year.
Additionally, Cash America stated that its efforts to moderate bad debt expense through more careful underwriting instituted late in 2008 led to lower losses on loans in cash advance portfolio through the first half of fiscal 2009.
Looking forward, for the third quarter, the company expects earnings to be between 70 cents per share and 75 cents per share compared to 63 cents per share in the year-ago quarter, and foresees the demand for its lending products to be strong. Analysts expects an earnings of $0.75 per share for the third quarter.
However, for the full year 2009, Cash America lowered its earnings outlook to $3.00-$3.15 from its earlier guidance of $3.10-$3.30 per share. Analysts anticipates an earnings of $3.05 per share for the full year.
In addition, the board declared a cash dividend of $0.035 per share on common stock, payable at the close of the business on August 19, 2009 to shareholders of record on August 5.
CSH closed Wednesday's regular trading at $26.24 per share on the New York Stock Exchange.
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