QC Holdings, Inc. Reports Second Quarter 2018 Results

QC Holdings, Inc. (OTC PINK: QCCO) reported a net loss of $3.0 million and revenues of $47.4 million for the six months ended June 30, 2018. Net loss totaled $1.6 million and revenues totaled $46.2 million for the six months ended June 30, 2017.

The 3% improvement in revenues during the first six months of 2018 compared to 2017 was primarily attributable to an acceleration of installment loan revenues as customers migrate from single-pay products.

Loan loss rates increased during the six months ended June 30, 2018 compared to 2017, largely due to approximately $1.0 million in first quarter 2017 cash recoveries from the business-to-business portfolio and from branches that were closed at the end of 2016.

About QC Holdings, Inc.Headquartered in Lenexa, 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 257 branches in 14 states at June 30, 2018. 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 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)

	Quarter EndedJune 30,						Year EndedJune 30,
		2017			2018				2017			2018
Revenues
Consumer loan interest and fees	$	20,555		$	21,226			$	41,712		$	43,034
Other		2,261			2,112				4,522			4,405
Total revenues		22,816			23,338				46,234			47,439

Provision for losses		6,198			7,150				9,468			12,373
Operating expenses		11,889			12,170				24,443			24,516
Gross profit		4,729			4,018				12,323			10,550

Corporate and Regional expenses		6,025			6,097				12,294			11,902
Other expense, net		563			781				1,382			1,570
Loss before income taxes		(1,859	)		(2,860	)			(1,353	)		(2,922	)

Provision (benefit) for income taxes		81			(10	)			222			42
Net loss	$	(1,940	)	$	(2,850	)		$	(1,575	)	$	(2,964	)

Loss per share:
Basic
Net loss	$	(0.11	)	$	(0.16	)		$	(0.09	)	$	(0.17	)

Diluted
Net loss	$	(0.11	)	$	(0.16	)		$	(0.09	)	$	(0.17	)
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, 2017		June 30, 2018
ASSETS				(Unaudited)
Current assets
Cash and cash equivalents	$	16,198		$	16,525
Restricted cash		1,879			2,069
Loans receivable, less allowance for losses of $7,755 at December 31, 2017 and $7,742 at June 30, 2018		32,921			30,079
Other current assets		3,748			3,469
Total current assets		54,746			52,142
Non-current loans receivable, less allowance for losses of $83 at December 31, 2017 and $64 at June 30, 2018		258			192
Property and equipment, net		8,241			8,703
Other assets, net		7,313			7,112
Total assets	$	70,558		$	68,149

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and other current liabilities	$	9,355		$	8,103
Revolving credit facility		2,500			4,678
Subordinated debt		8,168			7,822
Total current liabilities		20,023			20,603

Non-current liabilities		4,471			4,482
Total liabilities		24,494			25,085

Stockholders’ equity		46,064			43,064
Total liabilities and stockholders’ equity	$	70,558		$	68,149

QC Holdings, Inc.Consolidated Condensed Statements of Cash Flows(in thousands)(Unaudited)

	Six Months EndedJune 30, 2017			Six Months Ended June 30, 2018
Operating activities:

Net loss	$	(1,575	)		$	(2,964	)
Adjustments to reconcile net loss to net cash		11,148				14,202
Changes in assets and liabilities		(4,968	)			(10,463	)
Net operating		4,605				775

Investing activities:
Capital expenditures		(1,407	)			(1,875	)
Other		1				-
Net investing		(1,406	)			(1,875	)

Financing activities:
Net repayment of borrowings		(2,625	)			1,700
Other		-				(38	)
Net financing		(2,625	)			1,662

Effect of exchange rate changes on cash, cash equivalents and restricted cash		67				(45	)

Net increase in cash, cash equivalents and restricted cash		641				517
Cash, cash equivalents and restricted cash at beginning of year		18,525				18,077
Cash, cash equivalents and restricted cash at end of period	$	19,166			$	18,594