Ace Cash Express (NASDAQ:AACE)
Historical Stock Chart
From Jun 2019 to Jun 2024
DALLAS, Jan. 26 /PRNewswire-FirstCall/ -- ACE Cash Express, Inc. (NASDAQ:AACE) announced fiscal second quarter 2006 net income of $5.0 million and diluted earnings per share of $0.36, compared to fiscal second quarter 2005 net income of $5.8 million and diluted earnings per share of $0.42. During the fiscal second quarter of 2006, ACE's total revenue increased 12 percent to $72.3 million from $64.7 million in the prior year period, due primarily to a 13 percent increase in check cashing fees, an 8 percent increase in loan fees and interest, and a 23 percent increase in bill payment and prepaid debit card services.
Comparable store revenues increased 4.2 percent compared to the prior year period. Loan fees and interest increased 2.9 percent, and in states not impacted by the revised FDIC Guidelines for PayDay Lending, increased by 8.0 percent. Check fees increased by 2.4 percent.
"We remain confident in our long-term disciplined growth strategy of de novo store development complemented by opportunistic acquisitions and the introduction of new products and services. We continue to believe that there are increased consumer and financial performance benefits related to offering our customers a full suite of financial products in an expanding network of stores," said Jay B. Shipowitz, President and Chief Executive Officer.
Among ACE's accomplishments during the fiscal second quarter 2006 were:
* The total ACE store network, including franchised stores, had a second
quarter record 10.7 million customer visits and processed approximately
$2.7 billion in transactions.
* Comparable store sales for company-owned stores increased 4.2 percent
compared to the second quarter of fiscal 2005.
* ACE company-owned stores cashed over 3.6 million checks, with a face
value of approximately $1.4 billion, resulting in check-cashing fees
for the quarter of $33.0 million, up 13 percent from $29.2 million in
the second quarter of fiscal 2005. Comparable store check cashing fees
increased 2.4 percent compared to the prior year.
* ACE company-owned stores processed over 600,000 loan transactions,
disbursed over $179 million in loan proceeds and generated interest
income and fees of $26.5 million. Comparable store loan fees in
company-owned stores increased 2.9 percent over the prior year's second
quarter, and in states not impacted by the FDIC Revised Guidelines,
increased by 8.0 percent.
* ACE company-owned stores processed over 2.0 million bill payment and
debit card transactions, producing a revenue increase of 23 percent, to
$6.1 million, from $4.9 million in the prior year period.
* ACE company-owned stores sold approximately 65,000 prepaid debit cards
in the second quarter of fiscal 2006, an increase of 48 percent over
the prior year's fiscal second quarter.
"With over 1,500 locations and a diversified product and service offering, we believe ACE has developed a unique network serving the financial services needs of our customers," commented Mr. Shipowitz. "We are continuing to leverage our network to offer new products and services such as the VISA(R) and MASTERCARD(R) prepaid cards, payroll cards, an enhanced ACE loyalty card, and the ability to access money on a stored value card."
Results for the Six Months Ended December 31, 2005
For the first six months of fiscal 2006, ACE's total revenue increased 9 percent, to $138.5 million, from $126.8 million in the first six months of fiscal 2005. Net income decreased 28 percent, to $7.9 million compared with $10.9 million in the prior year period, resulting in a decline in diluted earnings per share of 27 percent, to $0.57 per diluted share from $0.78 cents per diluted share in the prior year period. Net income for the first six months of fiscal 2006 includes an after-tax charge of $1.0 million related to losses from Hurricane Katrina. Comparable store sales increased by 3.2 percent during the first six months of fiscal 2006 compared to the first six months of fiscal 2005 as a result of continued strength in loan fees and bill payment services.
Acquisition of Popular Cash Express Stores
On November 30, 2005, ACE completed the acquisition of 107 stores owned and operated by Popular Cash Express for $33.6 million. In connection with this acquisition, ACE issued a $19.4 million convertible note to the seller with an interest rate of 3.625% convertible into shares of ACE's common stock at a conversion price of $26.77 per share. ACE plans to invest approximately $5 million of capital improvements in the acquired stores during the next 24 months.
Store Openings
ACE reached the 1,500th retail store milestone during the fiscal second quarter of 2006. For the quarter, the Company opened 25 company-owned stores, including 12 ACE Cash Express stores and 13 ACE Cash Advance stores, and acquired 116 stores, including the 107 Popular Cash Express locations. ACE franchisees also opened an additional 7 stores during the quarter. ACE ended the quarter with 1,301 company-owned stores, 219 franchised stores and a total network of 1,520 stores.
Fiscal 2006 Business Guidance
The statements in the bullet points below are the Company's outlook or forecast for the Company's business for the third quarter ending March 31, 2006 and the fiscal year ending June 30, 2006. These statements are made only as of January 26, 2006 and indicate only the expectations of the Company's management as of that date. These statements supersede any and all previous statements made by the Company regarding the matters addressed. These statements are "forward-looking statements," cannot be guaranteed and may prove to be wrong.
* The Company expects to open 20 to 30 additional ACE Cash Express stores
in the next two quarters for a total of 50 to 60 stores in fiscal 2006.
* The Company expects to open 26 to 36 additional ACE Cash Advance stores
in the next two quarters for a total of 50 to 60 stores in fiscal 2006.
* The Company expects to close 8 to 18 additional stores in the next two
quarters for a total of 20 to 30 stores in fiscal 2006.
* The Company currently estimates franchisees will open a total of
approximately 25 to 30 stores in fiscal 2006.
* The Company expects its fiscal 2006 tax rate to be 39 percent.
* The Company began expensing stock options in fiscal 2006 and expects to
record stock option expense of approximately $1 million.
* The Federal Deposit Insurance Corporation's Revised Guidelines for
Payday Lending, which took effect July 1, 2005, is expected to
adversely impact the Company's payday loan business in fiscal 2006. The
Company cannot currently quantify this impact or the benefits that
recently introduced alternative loan products may have on its revenue
and profitability in fiscal 2006. At this time ACE currently offers
its customers the following loan products:
-- Short-term consumer loans offered pursuant to state regulation
(ACE Loan) in 21 states and the District of Columbia with an
average term of approximately 14 days;
-- Short-term consumer loans in Texas, Arkansas and Pennsylvania
offered by Republic Bank of Kentucky (RBT Loan) with a
14-day term;
-- On August 1, 2005, the Company began to offer installment loans in
Texas, Arkansas and Pennsylvania made by First Bank of Delaware
(FBD Loan) with a 20-week term. An FBD Loan generates loan fees
and interest for ACE of approximately 55 percent to 80 percent of
the loan fees and interest generated by an RBT Loan depending upon
the number of days the FBD Loan is outstanding. Customers are
only offered an FBD Loan if they do not qualify for an RBT Loan.
* The Company expects its provision for loan losses to be between
35 percent and 37 percent of its loan fees and interest in its third
fiscal quarter of 2006.
* The Company expects its interest expense, inclusive of the interest
expense associated with its recently issued $19.4 million Convertible
Note, to be between $4.1 million and $4.4 million in its third fiscal
quarter of 2006.
* In the Company's third fiscal quarter of 2006, the number of diluted
shares outstanding will include approximately 725,000 shares issuable
pursuant to the recently issued $19.4 million Convertible Note.
About ACE Cash Express
ACE Cash Express, Inc. is a leading retailer of financial services, including check cashing, short-term consumer loans, bill payment and prepaid debit card services, and the largest owner, operator and franchisor of check cashing stores in the United States. As of December 31, 2005, ACE had a network of 1,520 stores in 34 states and the District of Columbia, consisting of 1,301 company-owned stores and 219 franchised stores. ACE focuses on serving consumers, many of who seek alternatives to traditional banking relationships in order to gain convenient and immediate access to financial services. ACE's website is found at http://www.acecashexpress.com/ .
Forward-Looking Statements
This release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally identified by the use of words such as "expect," "anticipate," "estimate," "believe," "intend," "plan," "target," "goal," "should," "would," and terms with similar meanings.
Although ACE believes that the current views and expectations reflected in these forward-looking statements are reasonable, these views and expectations, and the related statements, are inherently subject to risks, uncertainties, and other factors, many of which are not under ACE's control and may not even be predictable. Any inaccuracy in the assumptions, as well as those risks, uncertainties and other factors could cause the actual results to differ materially from these in the forward-looking statements. These risks, uncertainties, and factors include, but are not limited to matters described in ACE's reports filed with the Securities and Exchange Commission, such as:
* ACE's relationships with Republic Bank & Trust Company, First Bank of
Delaware, Travelers Express and its affiliates, and its bank lenders;
* ACE's relationships with providers of services or products offered by
ACE or property used in its operations;
* federal and state governmental regulation of check cashing, short-term
consumer lending and related financial services businesses;
* any impact to ACE's earnings derived from the RBT loans offered by
Republic Bank & Trust Company and the FBD loans offered by First Bank
of Delaware at ACE's stores in Texas, Pennsylvania and Arkansas from
the Federal Deposit Insurance Corporation's Revised Guidelines for
Payday Lending, which took effect on July 1, 2005 and require that such
banks develop procedures to ensure that a payday loan is not provided
to any customer with payday loans outstanding from any lender for more
than 3 months in the previous 12 months;
* any litigation;
* theft and employee errors;
* the availability of adequate financing, suitable locations, acquisition
opportunities and experienced management employees to implement ACE's
growth strategy;
* increases in interest rates, which would increase ACE's borrowing
costs;
* the fragmentation of the check cashing industry and competition from
various other sources, such as banks, savings and loans, short-term
consumer lenders, and other similar financial services entities, as
well as retail businesses that offer services offered by ACE;
* the terms and performance of third-party services offered at ACE's
stores; and
* customer demand and response to services offered at ACE's stores.
ACE expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in ACE's views or expectations, or otherwise. ACE makes no prediction or statement about the performance of its common stock.
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
INTERIM UNAUDITED
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
2005 2004 2005 2004
Revenues $72,264 $64,747 $138,457 $126,773
Store expenses:
Salaries and benefits 18,019 15,767 35,254 30,554
Occupancy 9,967 8,378 19,423 16,560
Provision for loan
losses and doubtful
accounts 9,462 6,994 17,621 14,462
Depreciation 2,159 1,771 4,225 3,458
Hurricane Katrina
related expenses --- --- 1,655 ---
Other 10,238 9,565 20,573 19,373
Total store expenses 49,845 42,475 98,751 84,407
Gross margin 22,419 22,272 39,706 42,366
Region expenses 6,107 5,806 12,025 11,025
Headquarters expenses 5,577 5,065 10,407 9,746
Franchise expenses 301 321 579 588
Other depreciation and
amortization 889 679 1,710 1,385
Interest expense, net 1,236 794 2,046 1,387
Other (income) expense, net 103 (106) 36 66
Income before income taxes 8,206 9,713 12,903 18,169
Provision for income taxes 3,202 3,885 5,034 7,268
Net income $5,004 $5,828 $7,869 $10,901
Earnings per share:
Basic $0.37 $0.43 $0.58 $0.81
Diluted $0.36 $0.42 $0.57 $0.78
Weighted average number of
common shares outstanding:
Basic 13,521 13,465 13,495 13,414
Diluted 14,096 13,973 13,964 13,910
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31, June 30,
2005 2005
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $178,599 $109,430
Accounts receivable, net 7,236 3,969
Loans receivable, net 26,473 20,787
Prepaid expenses, inventories and other
current assets 14,793 13,685
Total Current Assets 227,101 147,871
Noncurrent Assets
Property and equipment, net 41,542 37,657
Covenants not to compete, net 2,570 1,668
Goodwill, net 132,504 98,702
Other assets 8,079 6,723
Total Assets $411,796 $292,621
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Revolving advances $111,300 $43,300
Accounts payable, accrued liabilities
and other current liabilities 48,566 36,117
Money orders payable 14,364 4,867
Total Current Liabilities 174,230 84,284
Noncurrent Liabilities
Deferred income tax 3,731 4,302
Deferred revenue 3,602 3,271
Convertible notes payable 19,400 ---
Other liabilities 4,353 4,079
Total Liabilities 205,316 95,936
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $1 par value,
1,000,000 shares authorized, none
issued and outstanding --- ---
Common stock, $.01 par value,
50,000,000 shares authorized, 14,069,368
and 13,912,045 shares issued and 13,857,968
and 13,700,645 shares outstanding,
respectively 139 137
Additional paid-in capital 106,558 103,544
Retained earnings 106,705 98,836
Accumulated comprehensive income (loss) 138 (56)
Treasury stock, at cost, 211,400 shares (2,707) (2,707)
Unearned compensation - restricted stock (4,353) (3,069)
Total Shareholders' Equity 206,480 196,685
Total Liabilities and
Shareholders' Equity $411,796 $292,621
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
SUPPLEMENTAL STATISTICAL DATA
(unaudited)
Three Months Six Months Year
Ended Ended Ended
December 31, December 31, June 30,
2005 2004 2005 2004 2005 2004
Company Operating and
Statistical Data:
Company-owned stores
in operation:
Beginning of period 1,163 1,055 1,142 1,026 1,026 968
Acquired 116 17 118 40 74 34
Opened 25 23 54 38 80 53
Sold --- (3) (1) (3) (6) (5)
Closed (3) (7) (12) (16) (32) (24)
End of period 1,301 1,085 1,301 1,085 1,142 1,026
Franchised stores
in operation:
Beginning of period 226 202 229 204 204 200
Opened 7 17 13 26 48 32
Acquired by ACE (3) (3) (5) (14) (22) (13)
Closed/Sold (11) --- (18) --- (1) (15)
End of period 219 216 219 216 229 204
Total store network 1,520 1,301 1,520 1,301 1,371 1,230
Percentage increase
(decrease) in
comparable store
revenues from prior
period: (A)
Total revenue 4.2% 4.8% 3.2% 6.1% 3.1% 5.0%
Check fees including
tax check fees 2.4% (2.8%) 1.2% (2.3%) (3.8%) 4.1%
Loan fees and
interest 2.9% 14.0% 3.1% 17.2% 12.7% 7.8%
Capital Expenditures:
(in thousands)
Purchases of property
and equipment, net $4,506 $3,741 $7,539 $6,438 $18,951 $7,439
Store acquisition
costs:
Property and
equipment 1,793 275 1,825 614 958 511
Intangible assets 34,946 3,042 36,222 6,551 18,429 6,403
Check Cashing Data:
Face amount of
checks cashed
(in millions) $1,356 $1,201 $2,578 $2,348 $5,277 $5,103
Face amount of
average check $376 $358 $373 $358 $396 $388
Average fee per check $9.15 $8.72 $9.05 $8.75 $9.98 $9.91
Fees as a percentage
of average check 2.43% 2.44% 2.43% 2.44% 2.52% 2.55%
Number of checks
cashed (in thousands) 3,603 3,353 6,912 6,557 13,325 13,151
Check Collections Data:
(in thousands except
percentages)
Face amount of
returned checks $8,973 $6,897 $17,975 $12,849 $26,914 $21,705
Collections 7,667 5,291 14,768 9,332 20,951 13,947
Net write-offs $1,306 $1,606 $3,207 $3,517 $5,963 $7,758
Collections as a
percentage of
returned checks 85.4% 76.7% 82.2% 72.6% 77.8% 64.3%
Net write-offs as a
percentage of
revenues 1.8% 2.5% 2.3% 2.8% 2.2% 3.1%
Net write-offs as a
percentage of the
face amount of
checks cashed 0.10% 0.13% 0.12% 0.15% 0.11% 0.15%
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
SUPPLEMENTAL STATISTICAL DATA, continued
(unaudited)
(in thousands, except averages and percents)
Three Months Six Months Year
Ended Ended Ended
December 31, December 31, June 30,
2005 2004 2005 2004 2005 2004
Combined Short-Term
Consumer Loans
Operating Data:
Volume - new loans
and refinances $179,656 $172,309 $361,176 $331,982 $640,356 $527,723
Average advance $310 $292 $305 $288 $290 $278
Average finance
charge $46.82 $46.08 $45.49 $45.47 $45.87 $43.71
Number of loan
transactions - new
loans and refinances 533 579 1,096 1,134 2,139 1,909
Matured loan volume $179,411 $163,457 $352,338 $318,022 $613,380 $516,741
Loan fees and
interest $26,515 $24,514 $51,724 $47,737 $91,793 $77,029
Loan loss provision $9,417 $6,979 $17,531 $14,403 $26,941 $24,280
Gross margin on loans 64.5% 71.5% 66.1% 69.8% 70.7% 68.5%
Loan loss provision
as a percent of
matured loan volume 5.2% 4.3% 5.0% 4.5% 4.4% 4.7%
Loans Processed for
Republic Bank: (B)
Volume - new loans $26,275 $50,954 $55,038 $99,408 $184,646 $159,692
Average advance $314 $321 $312 $318 $319 $296
Average finance
charge $55.46 $56.71 $54.97 $56.05 $56.30 $52.11
Number of loan
transactions 84 159 177 313 578 541
Matured loan volume $25,600 $49,206 $57,163 $96,505 $181,153 $157,018
Loan fees and
interest $3,946 $7,594 $8,480 $14,858 $27,880 $24,036
Provision for loan
losses payable to
Republic Bank $1,778 $2,223 $3,336 $4,560 $8,686 $7,390
Loans Processed for
First Bank of
Delaware: (C)
Volume - new loans(D) $7,730 --- $14,999 --- --- ---
Average advance $349 --- $345 --- --- ---
Average finance
charge (E) $34.67 --- $34.23 --- --- ---
Number of loan
transactions (F) 22 --- 43 --- --- ---
Matured loan
volume (G) $25,142 --- $36,884 --- --- ---
Loan fees and
interest $3,496 --- $5,397 --- --- ---
Provision for loan
losses payable to
First Bank of
Delaware $1,305 --- $1,914 --- --- ---
ACE Loans:
Volume - new loans
and refinances $145,651 $121,355 $291,139 $232,574 $455,710 $368,031
Average advance $307 $278 $301 $274 $277 $269
Average finance
charge $45.58 $41.22 $44.19 $40.57 $41.17 $39.40
Number of loan
transactions - new
loans and refinances 427 420 876 821 1,561 1,368
Matured loan volume $128,669 $114,251 $258,291 $221,517 $432,227 $359,723
Loan fees and
interest $19,073 $16,920 $37,847 $32,879 $63,913 $52,993
Loan loss provision $6,334 $4,756 $12,281 $9,843 $18,255 $16,890
ACE Loans Balance
Sheet Data:
Gross loans
receivable $40,879 $34,485 $40,879 $34,485 $31,790 $27,663
Less: Allowance
for losses 14,406 12,961 14,406 12,961 11,003 10,616
Loans receivable,
net of allowance $26,473 $21,524 $26,473 $21,524 $20,787 $17,047
Allowance for losses
on loans receivable:
Beginning of
period $13,221 $12,021 $11,003 $10,616 $10,616 $8,734
Provision for
loan losses 6,334 4,756 12,281 9,843 18,255 16,890
Charge-offs (5,229) (4,793) (8,958) (8,626) (18,996)(15,295)
Recoveries 80 977 (H) 80 1,128 1,128 287
End of period $14,406 $12,961 $14,406 $12,961 $11,003 $10,616
Allowance as a
percent of gross
loans receivable 35.2% 37.6% 35.2% 37.6% 34.6% 38.3%
(A) Calculated based on changes in revenue for all company-owned stores
open in both periods and open for at least 13 months.
(B) Republic Bank loans are short-term consumer loans made by Republic
Bank & Trust Company at our company-owned stores in Arkansas,
Pennsylvania and Texas since January 1, 2003.
(C) First Bank of Delaware loans are 20-week installment loans made by
First Bank of Delaware at our company-owned stores in Arkansas,
Pennsylvania, and Texas since August 2005.
(D) Includes only the loan origination amount for each installment loan.
(E) The loans processed for First Bank of Delaware are 20-week loans; the
average finance charge is presented based upon the 14-day average
duration of the ACE loans and the Republic Bank loans.
(F) Includes the initial 20-week loan transaction only.
(G) Includes maturing principal amount for each 2-week payment.
(H) Includes the recovery of $0.9 million from the sale of previously
charged-off ACE loans.
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
REVENUE ANALYSIS
(unaudited)
Three Months Six Months Year
Ended Ended Ended
December 31, December 31, June 30,
2005 2004 2005 2004 2005 2004 2003
Revenues
(in thousands):
Check cashing
fees $32,957 $29,243 $62,569 $57,360 $131,619 $129,194 $125,703
Loan fees
and interest 26,515 24,514 51,724 47,737 91,793 77,029 70,806
Bill payment
services 6,067 4,925 11,363 9,634 20,266 16,960 13,507
Money transfer
services 3,307 2,883 6,275 5,708 11,868 11,136 10,898
Money order
fees 1,671 1,695 3,270 3,426 6,875 6,330 6,960
Franchise
revenues 825 855 1,594 1,602 3,180 2,774 2,346
Other fees 922 632 1,662 1,306 3,048 3,236 4,069
Total
revenue $72,264 $64,747 $138,457 $126,773 $268,649 $246,659 $234,289
Three Months Six Months Year
Ended Ended Ended
December 31, December 31, June 30,
2005 2004 2005 2004 2005 2004 2003
Percentage of
Revenues:
Check cashing
fees 45.6% 45.2% 45.2% 45.2% 49.0% 52.4% 53.7%
Loan fees and
interest 36.7 37.9 37.4 37.7 34.2 31.2 30.2
Bill payment
services 8.4 7.6 8.2 7.6 7.5 6.9 5.8
Money transfer
services 4.6 4.4 4.5 4.5 4.4 4.5 4.6
Money order
fees 2.3 2.6 2.4 2.7 2.6 2.6 3.0
Franchise
revenues 1.1 1.3 1.1 1.3 1.2 1.1 1.0
Other fees 1.3 1.0 1.2 1.0 1.1 1.3 1.7
Total
revenue 100% 100% 100% 100% 100% 100% 100%
CONFERENCE CALL
January 26, 2006
5 p.m. EST
An investor conference call will be held today, January 26, 2006 at 5 p.m. EST, regarding the release of ACE Cash Express, Inc.'s fiscal 2006, second quarter earnings. The Company invites you to participate in the conference call by dialing (800) 442-9701. The confirmation code to access the call is 4204924. Jay B. Shipowitz, President and Chief Executive Officer, and William S. McCalmont, Executive Vice President and Chief Financial Officer, will present the second quarter review.
For your convenience, the conference call will be replayed in its entirety beginning at approximately 6 p.m. EST on January 26th through 12 p.m. EST on February 2nd. If you wish to listen to a replay of this conference call, dial (800) 642-1867, provide your name and use confirmation number 4204924.
If you have questions regarding this conference call, please contact Joy Robinson at (972) 753-2305.
DATASOURCE: ACE Cash Express, Inc.
CONTACT: William S. McCalmont, Executive Vice President & CFO,
+1-972-753-2314, or , or Douglas Lindsay, Vice
President of Finance, +1-972-753-2342, or , both
of ACE Cash Express, Inc.
Web site: http://www.acecashexpress.com/