Pawn store operator Dollar Financial Corp. (DLLR), on Thursday, reported a 20% growth in fourth-quarter earnings as revenues increased 23% on strong international operations. The company also provided its earnings guidance for fiscal 2009, indicated to be below the market expectation. Dollar Financial said it plans to close about 70 stores in North America over the next several months and expects to record the related charges in the 2009 first quarter.
Net income for the fourth quarter advanced 20% to $12.33 million from $10.28 million, with earnings per share rising to $0.50 from $0.42 in the fourth quarter of 2007.
Results for the quarter included $2.1 million in severance and store closing costs related to the company's plan to rationalize its North American platform and to close 70 underperforming stores across the U.S. and Canada. Pro forma net income for the quarter, excluding these special items, increased to $14.38 million or $0.59 per share from $11.06 million or $0.45 per share in the same period last year.
On average, nine analysts polled by First Call/Thomson Financial expected earnings of $0.58 per share for the fourth quarter.
Total revenues for the quarter increased 23% to $150.29 million from $122.21 million in the prior-year quarter. Seven analysts had a consensus revenue estimate of $136.27 million for the quarter.
Total check-cashing revenue for the quarter increased 14.5% to $50.6 million helped mainly by acquisition and the de novo store build activity and consumer lending revenue increased 25.1% to $77.1 million. Money transfer fees for the quarter increased 33.7% and other revenue rose 40.0% from last year. Nearly 75% of the company's total consolidated revenue was generated outside the U.S, in Canada, the United Kingdom and the Republic of Ireland.
Berwyn, Pennsylvania-based Dollar Financial reduced its loan loss provision for the fourth quarter, as a percentage of gross consumer lending revenue, to 17.6% from 21.3% in the 2007 fourth quarter. Store and regional margin for the recent quarter advanced 23.8% to $52.02 million from $42.02 million in the corresponding quarter a year earlier.
Amongst peers, check-cashing services provider Cash America International Inc. (CSH) reported a 52% increase in earnings for its second quarter ended June 30, as revenues increased 16% from last year on higher pawn loan and merchandise sales.
For fiscal 2008, Dollar Financial reported net income of $51.17 million or $2.08 per share, compared to a loss of $32.20 million or $1.37 per share in the previous year. Pro forma net income for the year increased 34% to $2.17 per share from $1.62 per share last year. Annual revenues increased 25.6% to $572.18 million in 2007. Analysts expected earnings of $2.15 per share on revenues of $513.51 million for 2008.
During the year, the company increased its global store network by 235 locations through expansion of the de novo stores and new acquisitions. Going forward, the company plans to close 53 stores in the U.S. and 17 stores in Canada in order to enhance efficiencies as well as to eliminate non-essential costs and overlapping territories resulting from acquisitions and new store build-outs.
Looking ahead, the company expects to record a charge of $4.0 million - $5.0 million in the first quarter of fiscal 2009 in connection with the proposed rationalization of the North American operations.
For fiscal 2009, Dollar Financial expects to report earnings per share in the range of $2.10 to $2.35. Full year revenues are estimated to be in the range of $595.0 million to $625.0 million. The Street expects the company to report earnings of $2.48 per share on revenues of $586.28 million for fiscal 2009.
Shares of Dollar Financial gained 5.51% to close Thursday's regular trading at $16.66, but dropped 0.12% in the extended session, trading at $16.64. DLLR has been moving in a range of $15.02 to $33.04 for the past one year, with a three-month average volume of about 362 thousand shares.
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