Wednesday, Dollar Financial Corp (DLLR), a diversified financial services company, reported a lower third-quarter profit, as job losses among its customer base due to recession and tightening of the its lending standards took a toll on revenue. The company lowered the upper end of its fiscal 2009 earnings outlook.
The Berwyn, Pennsylvania-based corporation reported a lower net income of $7.9 million or $0.33 per share for its third quarter, compared to $13.8 million or $0.56 per share a year ago.
Pro forma third-quarter net income decreased to $9.6 million or $0.40 per share from $13 million or $0.53 per share in the comparable quarter last year. On average, eight analysts polled by Thomson Reuters estimated earnings of $0.34 per share for the quarter.
Total revenue for the quarter declined to $118.2 million from $149.3 million in the prior-year quarter. On a constant currency basis, total revenue decreased 5.5% to $141.1 million.
Analysts expected revenues of $130.6 million for the quarter. Analysts' estimates typically exclude special items.
The company plans to sell or close 60 under-performing US financial services stores or about 15% of the company's US financial services store base in the fourth quarter in a drive to increase profitability and save costly support infrastructure.
Closure of under-performing stores will increase EBITDA in the range of $1.5 to $2.5 million, including reduced store support costs. One-time costs associated with the store closures are anticipated to be between $2 million and $3 million, the company indicated. Segment wise, total check cashing revenue, on a constant currency basis, was $43.4 million for the quarter, a decrease of $8.1 million, primarily due to rising unemployment related to the economic slowdown. On a constant currency basis, consolidated consumer lending revenue for the quarter was $70.3 million, a moderate decrease of $3 million or 4.1% in the prior-year quarter. Consumer lending was negatively impacted by increasing unemployment in all sectors of the economy during the third quarter.
Money transfer fees, on a constant currency basis, increased 4.4% to $7.2 million, driven by growth in foreign business units.
Looking forward, the company trimmed the upper end of its earlier fiscal 2009 earnings guidance and said it now anticipates earnings per share for the fiscal year to be at the low end of its previous guidance range. The company now expects earnings between $1.65 and $1.75 per share, excluding the impact of additional one-time store closure costs. On average, analysts currently expect earnings of $1.73 per share for the full year.
DLLR closed Wednesday's regular trading at $10.30, up $1.36 or 15.21%, on a volume of 1.23 million shares.
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