SPARTANBURG, S.C., July 28 /PRNewswire-FirstCall/ -- Advance America, Cash Advance Centers, Inc. today reported the results of its operations for the quarter and six months ended June 30, 2010.
Highlights Six Months and Quarter ended June 30, 2010: -- Diluted earnings per share for the six months and quarter were $0.30 and $0.08, respectively -- Excluding charges of $2.4 million for legal settlements, diluted earnings per share for the six months and quarter would have been $0.32 and $0.10, respectively -- Center gross profit for the quarter increased $6.5 million to $31.1 million, which represents a 26.2% increase over the same period for the prior year -- Income before income taxes for the quarter was $9.6 million, an increase of 10.0% over the same period for the prior year -- Excluding legal settlements, income before income taxes for the quarter was $11.9 million, an increase of 37.0% over the same period for the prior year
Commenting on the results of the second quarter of 2010, Advance America's President and Chief Executive Officer, Ken Compton, said, "Advance America continues to deliver solid results in the face of challenging regulatory environments and costs associated with legal settlements and costs related to center consolidations. We believe our overall strength suggests that the demand for our service will persist well into the future. Amid an active public discourse on the personal financial needs of consumers, Advance America's performance is evidence that customers are satisfied with our services and that we provide a valuable alternative to other options in the evolving financial services landscape."
Revenues
For the six months ended June 30, 2010, total revenues decreased 6.8% to $285.8 million, compared to $306.5 million for the same period in 2009. Total revenues for the quarter ended June 30, 2010 decreased 5.8% to $141.4 million, compared to $150.1 million for the same period in 2009.
These comparisons include the results of operations in Virginia, Washington, South Carolina, and Kentucky, where regulatory changes have reduced the Company's revenue and profitability. Revenues in these four states were $31.4 million and $14.1 million for the six months and quarter ended June 30, 2010, compared to $65.0 million and $28.9 million for the same periods in 2009. Based on past experience, the Company expects to experience lower revenue in these states for the next several quarters.
Excluding Virginia, Washington, South Carolina, and Kentucky, total revenues for both the six months and quarter ended June 30, 2010, increased by 5.4% and 5.0%, respectively, compared to the same periods in 2009.
For the quarter ended June 30, 2010, total revenues for the Company's centers opened prior to April 1, 2009 and still open as of June 30, 2010 decreased 0.7% compared to the same period in 2009.
Excluding Virginia, Washington, South Carolina, and Kentucky, total revenues from the Company's centers opened prior to April 1, 2009 and still open as of June 30, 2010 increased 7.9% for the quarter ended June 30, 2010, compared to the same period in 2009.
Provision for Doubtful Accounts
The provision for doubtful accounts as a percentage of total revenues for the six months ended June 30, 2010 was 13.2%, compared to 17.7% for the same period in 2009. For the quarter ended June 30, 2010, the provision for doubtful accounts as a percentage of total revenues was 17.7%, compared to 22.0% for the same period in 2009. Loss reserves were lower during the six months and quarter ended June 30, 2010 compared to the same periods in 2009 due to lower loan balances and reduced losses on the Company's open-ended line of credit product in Virginia. The Company began offering a line of credit product in Virginia in November 2008 and ceased offering new lines of credit in February 2010. The provision for doubtful accounts was reduced by approximately $0.1 million from the sale of previously written-off receivables during the quarter ended June 30, 2010, compared with $2.2 million during the same period in 2009.
Expenses and Center Gross Profit
For the quarter ended June 30, 2010, the Company's advertising expense was $6.6 million, or 4.6% of revenue, compared to $8.9 million, or 6.0% of revenues, for the same period in 2009. The Company's advertising expenses tend to vary from quarter to quarter based on the timing of various initiatives and business needs. The Company expects advertising expenses will be approximately 3.0% to 3.5% of revenue for 2010.
Center expenses for the six months and quarter ended June 30, 2010 were $211.9 million and $110.2 million, respectively, compared to $237.5 million and $125.5 million for the same periods in 2009.
Center gross profit increased 7.0% to $73.9 million for the first six months of 2010 from $69.1 million in the same period in 2009. For the quarter ended June 30, 2010, center gross profit was $31.1 million compared to $24.7 million for the quarter ended June 30, 2009, an increase of 26.2%.
For the six months ended June 30, 2010, general and administrative expenses were $33.3 million compared to $27.9 million for the same period in 2009. General and administrative expenses for the quarter ended June 30, 2010 were $16.6 million compared to $13.8 million for the same period in 2009. The increase in general and administrative expenses for the six months and quarter ended June 30, 2010 is due primarily to higher legal and consulting expenses.
Legal Settlements
The results of both the six months and quarter ended June 30, 2010 include legal settlement expenses of $2.4 million, including $2.0 million related to the previously disclosed settlement of a lawsuit in Missouri. Management believes presenting the effect of legal settlement charges on diluted earnings per share and income before income taxes provides a useful understanding of the Company's underlying operational performance and the materiality of those charges.
Center Closings
During the quarter ended June 30, 2010, the Company closed or consolidated 26 centers in 12 different states. As the Company previously announced, it has also decided to close approximately 125 centers during the third and fourth quarters of 2010. Many of these centers are in Arizona, Colorado, and Washington where legislative and regulatory events have negatively affected operations. The Company had approximately $1.4 million of center closing costs during the quarter ended June 30, 2010, compared to $1.7 million during the same period in 2009. Closing costs include severance, center tear-down costs, lease termination costs, and the write-down of fixed assets. The Company now estimates that additional costs associated with the previously announced closings to range between $2.8 and $5.0 million, all of which is expected to be incurred during the third and fourth quarters of 2010.
As of June 30, 2010, the Company had an operating network of 2,476 centers and 72 limited licensees in 32 states, the United Kingdom, and Canada.
Income before Income Taxes
Income before income taxes for the first six months of 2010 decreased 2.3% to $33.6 million compared to $34.4 million for the same period in 2009. Income before income taxes for the quarter ended June 30, 2010 was $9.6 million compared to $8.7 million for 2009, an increase of 10.0%. Excluding legal settlements of $2.4 million, income before income taxes for the quarter was $11.9 million, an increase of 37.0% over the prior year.
Income Tax Rate
The effective income tax rate as a percentage of income before income taxes was 46.4% and 23.5% for the three months ended June 30, 2010 and 2009, respectively. The effective income tax rate as a percentage of income before income taxes was 44.6% and 36.7% for the six months ended June 30, 2010 and 2009, respectively. The increase in the effective tax rate in the current year is primarily a result of a one-time reduction in state tax expense recognized in the prior year and other discrete items recognized in the current year.
Net Income and Earnings per Share
Net income for the first six months of 2010 decreased 14.6% to $18.6 million compared to $21.8 million for the same period in 2009. Net income for the quarter ended June 30, 2010 was $5.1 million compared to $6.6 million for 2009, a decrease of 22.9%.
Diluted earnings per share were $0.30 for the six months ended June 30, 2010, compared to diluted earnings per share of $0.35 for the same period in 2009. For the quarter ended June 30, 2010, diluted earnings per share were $0.08, compared to diluted earnings per share of $0.11 for the same period in 2009. Excluding the $2.4 million charge for legal settlements, diluted earnings per share for the six months and quarter ended June 30, 2010, would have been $0.32 and $0.10, respectively.
Quarterly Dividend
Today, the Company's Board of Directors declared a regular quarterly dividend of $0.0625 per share. The dividend, the Company's 23rd consecutive quarterly dividend, will be payable on September 3, 2010 to stockholders of record as of August 24, 2010.
Since our December 2004 initial public offering, the Company has returned approximately $379.4 million in cash to its stockholders through the repurchase of shares and the payment of quarterly dividends.
Conference Call
The Company will discuss the results on a conference call Thursday, July 29 at 8:00 a.m. (ET).
To listen to this call, please dial the conference telephone number (877) 303-6168. This call will also be webcast live and can be accessed at Advance America's website http://www.advanceamerica.net/. An audio replay of the call will be available online or by telephone (800) 642-1687 (replay passcode: 86621659) until August 11, 2010.
About Advance America Cash Advance
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the country's leading provider of non-bank cash advance services, with approximately 2,500 centers and 72 limited licensees in 32 states, the United Kingdom, and Canada. The Company offers convenient, less-costly credit options to consumers whose needs are not met by traditional financial institutions. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices. Please visit http://www.advanceamerica.net/ for more information.
Forward-Looking Statements and Information:
Certain statements contained in this release may constitute "forward-looking statements" within the meaning of federal securities laws. All statements in this release other than those relating to our historical information or current condition are forward-looking statements. For example, any statements regarding our future financial performance (including, but not limited to, estimated costs associated with the consolidation/closing of centers and the effect of new legislation and regulation on our operations), our business strategy, and expected developments in our industry are forward-looking statements. Although we believe that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations and the related statements are inherently subject to risks, uncertainties, and other factors, many of which are not under our control and may not even be predictable. Therefore, actual results could differ materially from our expectations as of today and any future results, performance, or achievements expressed directly or impliedly by the forward-looking statements. For a more detailed discussion of some of the factors that may cause our actual results to differ from our current expectations, please refer to the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, copies of which are available from the Securities and Exchange Commission, upon request from us, or by going to our website: http://www.advanceamerica.net/
Interim Unaudited Consolidated Statements of Income Three and Six Months Ended June 30, 2009 and 2010 (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2009 2010 2009 2010 ---- ---- ---- ---- Total Revenues $150,124 $141,357 $306,517 $285,755 Center Expenses: Salaries and related payroll costs 45,404 44,119 92,917 91,704 Provision for doubtful accounts 33,012 25,058 54,110 37,792 Occupancy costs 23,247 21,993 48,020 45,464 Center depreciation expense 3,260 2,559 6,983 5,256 Advertising expense 8,935 6,567 11,116 10,202 Other center expenses 11,606 9,937 24,312 21,448 ------ ----- ------ ------ Total center expenses 125,464 110,233 237,458 211,866 ------- ------- ------- ------- Center gross profit 24,660 31,124 69,059 73,889 Corporate and Other Expenses (Income): General and administrative expenses 13,798 16,623 27,869 33,264 Legal settlements - 2,350 - 2,388 Corporate depreciation expense 679 701 1,367 1,391 Interest expense 1,595 1,097 3,294 2,274 Interest income (17) (5) (34) (18) (Gain)/Loss on disposal of property and equipment (80) 152 (47) 320 Loss on impairment of assets - 654 2,209 654 --- --- ----- --- Income before income taxes 8,685 9,552 34,401 33,616 Income tax expense 2,043 4,430 12,616 15,007 ----- ----- ------ ------ Net income $6,642 $5,122 $21,785 $18,609 ====== ====== ======= ======= Net income per common share -basic $0.11 $0.08 $0.36 $0.30 Weighted average number of shares outstanding - basic 60,865 61,070 60,862 61,020 Net income per common share -diluted $0.11 $0.08 $0.35 $0.30 Weighted average number of shares outstanding - diluted 61,657 61,742 61,545 61,680 Consolidated Balance Sheets December 31, 2009 and June 30, 2010 (in thousands, except per share data) December 31, June 30, 2009 2010 ---- ---- (unaudited) Assets Current assets Cash and cash equivalents $38,189 $14,232 Advances and fees receivable, net 204,234 192,761 Deferred income taxes 19,145 19,145 Other current assets 17,383 20,934 ------ ------ Total current assets 278,951 247,072 Restricted cash 4,366 3,800 Property and equipment, net 31,839 26,248 Goodwill 127,031 126,812 Other assets 3,964 3,501 ----- ----- Total assets $446,151 $407,433 ======== ======== Liabilities and Stockholders' Equity Current liabilities Accounts payable $13,562 $11,634 Accrued liabilities 31,432 31,434 Income taxes payable 11,400 - Accrual for third-party lender losses 4,528 3,973 Current portion of long-term debt 851 875 --- --- Total current liabilities 61,773 47,916 Revolving credit facility 141,058 106,299 Long-term debt 4,367 3,861 Deferred income taxes 23,349 23,349 Deferred revenue 2,717 1,787 Other liabilities 274 300 --- --- Total liabilities 233,538 183,512 ------- ------- Commitments and contingencies Stockholders' equity Preferred stock, par value $.01 per share, 25,000 shares authorized; no shares issued and outstanding - - Common stock, par value $.01 per share, 250,000 shares authorized; 96,821 shares issued and 61,614 and 62,156 shares outstanding at 968 968 December 31, 2009 and June 30, 2010, respectively Paid in capital 290,146 289,879 Retained earnings 182,765 193,618 Accumulated other comprehensive loss (1,934) (2,468) Common stock in treasury (35,207 and 34,665 shares at cost at December 31, 2009 and June 30, 2010, respectively) (259,332) (258,076) -------- -------- Total stockholders' equity 212,613 223,921 ------- ------- Total liabilities and stockholders' equity $446,151 $407,433 ======== ========
Advance America, Cash Advance Centers, Inc.
CONTACT: Jamie Fulmer, +1-864-342-5633, jfulmer@advanceamerica.net
Web Site: http://www.advanceamericacash.com/
