QC Holdings, Inc. Reports Fourth Quarter 2017 Results
April 23 2018 - 6:30PM
QC Holdings, Inc. (OTC PINK:QCCO) reported a net loss of $3.5
million and revenues of $98.2 million for the year ended December
31, 2017. Net loss totaled $16.8 million and revenues totaled
$117.2 million for the year ended December 31, 2016.
The year ended December 31, 2017 includes severance and
corporate relocation charges of approximately $569,000. The year
ended December 31, 2016 includes charges of $1.6 million related to
recording additional loan loss reserve, severance and lease
liability costs as part of the closure of the company’s branches in
Washington, South Carolina and Virginia, a $2.7 million loan loss
reserve for a business-to-business receivable and approximately
$800,000 in severance and other costs.
The decline in revenues during 2017 compared to 2016 was
primarily attributable to the third quarter 2016 store swap
transaction, whereby the company acquired 33 branches operated in
Illinois, Kansas, Missouri and Utah and sold its 98 branches
operated in Alabama, Arizona, California, Mississippi and Ohio. For
the 229 company branches not a part of the store swap, revenues
improved 2% year-to-year due to an increase in new customers.
Loan loss rates dropped to 26.1% during 2017 from 35.7% in the
prior year. This decline is attributable to $3.5 million in
2016 loan loss reserves as noted above, improvements in installment
loan underwriting and product offerings, and 2017 recoveries in the
business factoring portfolio.
During 2016, the company determined that due to the net
operating losses incurred for the years ended December 31, 2015 and
2016, the company did not meet the accounting requirements that
would indicate that available domestic loss carry-forwards and
deferred tax assets will be recognized in the future. Accordingly,
a valuation allowance of $8.5 million was established at
December 31, 2016, which resulted in a net tax charge for 2016.
During 2017, the company established a valuation allowance related
to the net operating loss carry-forwards associated with its
Canadian operations, which resulted in a net tax charge for
2017.
About QC Holdings, Inc.Headquartered in
Overland Park, Kansas, QC Holdings, Inc. is a leading provider of
consumer loans in the United States and Canada. In the United
States, QC offers various products, including single-pay,
installment and title loans, check cashing, debit cards and money
transfer services, through 258 branches in 14 states at December
31, 2017. In Canada, the company, through its subsidiary Direct
Credit Holdings Inc., is engaged in short-term, consumer internet
lending in various provinces.
Forward Looking Statement Disclaimer: This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on the company’s current
expectations and are subject to many risks and uncertainties, which
could cause actual results to differ materially from those
forward-looking statements. These risks include (1) changes in laws
or regulations or governmental interpretations of existing laws and
regulations governing consumer protection or short-term lending
practices, (2) uncertainties relating to the interpretation,
application and promulgation of regulations under the Dodd-Frank
Wall Street Reform and Consumer Protection Act, including the
impact of recently announced regulations by the Consumer Financial
Protection Bureau (CFPB), (3) ballot referendum initiatives by
industry opponents to cap the rates and fees that can be charged to
customers, (4) uncertainties related to the examination process by
the CFPB and indirect rulemaking through the examination process,
(5) litigation or regulatory action directed towards us or the
short-term consumer loan industry, (6) volatility in our earnings,
primarily as a result of fluctuations in loan loss experience and
closures of branches, (7) risks associated with our dependence on
cash management banking services and the Automated Clearing House
for loan collections, (8) negative media reports and public
perception of the short-term consumer loan industry and the impact
on federal and state legislatures and federal and state regulators,
(9) changes in our key management personnel, (10) risks associated
with owning and managing non-U.S. businesses, and (11) other
various risks. QC will not update any forward-looking statements
made in this press release to reflect future events or
developments.
(Financial and Statistical Information
Follows)
|
|
|
QC Holdings, Inc.Consolidated
Condensed Statements of Operations(in thousands,
except per share amounts)(Unaudited) |
|
|
|
|
|
|
Three Months
EndedDecember 31, |
|
|
Year
EndedDecember 31, |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
Consumer
loan interest and fees |
$ |
24,526 |
|
|
$ |
23,932 |
|
|
$ |
108,108 |
|
|
$ |
88,841 |
|
Other |
|
2,253 |
|
|
|
2,445 |
|
|
|
9,131 |
|
|
|
9,373 |
|
Total
revenues |
|
26,779 |
|
|
|
26,377 |
|
|
|
117,239 |
|
|
|
98,214 |
|
Provision for
losses |
|
10,687 |
|
|
|
8,380 |
|
|
|
41,833 |
|
|
|
25,670 |
|
Operating expenses |
|
13,471 |
|
|
|
12,222 |
|
|
|
59,617 |
|
|
|
49,053 |
|
Gross
profit |
|
2,621 |
|
|
|
5,775 |
|
|
|
15,789 |
|
|
|
23,491 |
|
|
|
|
|
|
|
|
Corporate and Regional
expenses |
|
6,139 |
|
|
|
5,597 |
|
|
|
27,446 |
|
|
|
23,592 |
|
Other expense, net |
|
981 |
|
|
|
646 |
|
|
|
627 |
|
|
|
2,465 |
|
Loss
before income taxes |
|
(4,499 |
) |
|
|
(468 |
) |
|
|
(12,284 |
) |
|
|
(2,566 |
) |
Provision for income
taxes |
|
7,201 |
|
|
|
645 |
|
|
|
4,484 |
|
|
|
973 |
|
Net loss |
$ |
(11,700 |
) |
|
$ |
(1,113 |
) |
|
$ |
(16,768 |
) |
|
$ |
(3,539 |
) |
|
|
|
|
|
|
|
Loss per
share: |
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
Net loss |
$ |
(0.68 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.97 |
) |
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
Net loss |
$ |
(0.68 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.97 |
) |
|
$ |
(0.20 |
) |
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
Basic |
|
17,333 |
|
|
|
17,333 |
|
|
|
17,333 |
|
|
|
17,333 |
|
Diluted |
|
17,333 |
|
|
|
17,333 |
|
|
|
17,333 |
|
|
|
17,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QC Holdings, Inc.Consolidated
Condensed Balance Sheets(in
thousands) |
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
December 31, 2017 |
ASSETS |
|
|
(Unaudited) |
|
Current assets |
|
|
|
|
|
Cash and
cash equivalents |
$ |
16,660 |
|
|
$ |
16,198 |
|
Restricted cash |
|
1,865 |
|
|
|
1,879 |
|
Loans
receivable, less allowance for losses of $9,836 at December
31, 2016 and $7,755 at December 31, 2017 |
|
32,586 |
|
|
|
32,921 |
|
Other
current assets |
|
6,500 |
|
|
|
3,748 |
|
Total
current assets |
|
57,611 |
|
|
|
54,746 |
|
Non-current loans
receivable, less allowance for losses of $623 at December 31,
2016 and $83 at December 31, 2017 |
|
1,664 |
|
|
|
258 |
|
Property and equipment,
net |
|
6,039 |
|
|
|
8,241 |
|
Other assets, net |
|
8,041 |
|
|
|
7,313 |
|
Total
assets |
$ |
73,355 |
|
|
$ |
70,558 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Accounts
payable and other current liabilities |
$ |
10,420 |
|
|
$ |
9,355 |
|
Revolving
credit facility |
|
2,250 |
|
|
|
2,500 |
|
Subordinated debt |
|
7,736 |
|
|
|
8,168 |
|
Total
current liabilities |
|
20,406 |
|
|
|
20,023 |
|
|
|
|
|
|
|
Non-current
liabilities |
|
3,361 |
|
|
|
4,471 |
|
Total
liabilities |
|
23,767 |
|
|
|
24,494 |
|
|
|
|
|
|
|
Stockholders’
equity |
|
49,588 |
|
|
|
46,064 |
|
Total
liabilities and stockholders’ equity |
$ |
73,355 |
|
|
$ |
70,558 |
|
|
|
|
|
|
|
|
|
|
|
QC Holdings, Inc.Consolidated
Condensed Statements of Cash Flows(in
thousands)(Unaudited) |
|
|
|
|
|
Year EndedDecember 31,
2016 |
|
Year EndedDecember 31,
2017 |
|
|
|
|
|
|
Operating
activities: |
|
|
|
Net
loss |
$ |
(16,768 |
) |
|
$ |
(3,539 |
) |
Adjustments to reconcile net loss to net cash |
|
51,049 |
|
|
|
29,394 |
|
Changes
in assets and liabilities |
|
(29,110 |
) |
|
|
(23,409 |
) |
Net operating |
|
5,171 |
|
|
|
2,446 |
|
|
|
|
|
Investing
activities: |
|
|
|
Capital
expenditures |
|
(3,781 |
) |
|
|
(3,345 |
) |
Other |
|
(867 |
) |
|
|
3 |
|
Net investing |
|
(4,648 |
) |
|
|
(3,342 |
) |
|
|
|
|
Financing
activities: |
|
|
|
Net
repayment of borrowings |
|
|
|
375 |
|
Other |
|
(83 |
) |
|
|
(50 |
) |
Net financing |
|
(83 |
) |
|
|
325 |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
105 |
|
|
|
109 |
|
|
|
|
|
Net increase (decrease)
in cash and cash equivalents |
|
545 |
|
|
|
(462 |
) |
Cash and cash
equivalents at beginning of year |
|
16,115 |
|
|
|
16,660 |
|
Cash and cash
equivalents at end of year |
$ |
16,660 |
|
|
$ |
16,198 |
|
|
|
|
|
Contact: Douglas E. Nickerson (913-234-5154)
Chief Financial Officer
QC (NASDAQ:QCCO)
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