AACE Ace Cash Express

ACE Cash Express Reports Record Fiscal 2005 Second Quarter Net Income and EPS; Total Store Network Grows 10% in Last 12 Months DALLAS, Jan. 20 /PRNewswire-FirstCall/ -- ACE Cash Express, Inc. (NASDAQ:AACE) announced diluted earnings per share of $0.42 for its fiscal 2005 second quarter ended December 31, 2004, a 24 percent increase over its diluted earnings per share of $0.34 in the second quarter of fiscal 2004. Net income of $5.8 million in the second quarter of fiscal 2005 increased 57 percent from $3.7 million in the second quarter of fiscal 2004. During the second quarter of fiscal 2005, ACE's total revenue increased 9 percent to $64.7 million versus $59.2 million in the prior year period. This increase is primarily due to a 20 percent increase in loan fees and interest and a 19 percent increase in bill payment services. "ACE's second quarter financial performance was excellent and is representative of our ability to continue to meet the needs of our customers and the large under-banked consumer marketplace," said Jay B. Shipowitz, President and CEO. "Over 10 million customers visited our stores seeking our diversified financial service offerings. We continue to generate strong comparable sales growth driven by loan fees, which increased 14 percent and bill payment services, which rose 16 percent, during the second quarter." Among the Company's accomplishments during the second quarter of fiscal 2005 were: * The total ACE store network, including franchised stores, had a record 10 million customer visits and processed approximately $2.4 billion in transactions. * Comparable store sales increased 4.8 percent compared to the second quarter of fiscal 2004. * Gross margin improved to 34.4 percent, a record for any second quarter, from 32.7 percent for the second quarter of fiscal 2004. * ACE company-owned stores cashed 3.4 million checks, resulting in check-cashing fees of $29.2 million, a 2 percent increase from $28.8 million in the second quarter of fiscal 2004. * Loan fees and interest in company-owned stores increased 20 percent, to $24.5 million from $20.4 million in the prior year period and ACE processed over 578,000 loan transactions. * Bill-payment revenue increased 19 percent, to $4.9 million, from $4.1 million in the prior year period. * From October 1, 2004 through January 3, 2005, the Company opened 23 newly constructed company-owned stores, closed or sold 10 company- owned stores, and acquired 43 stores, for a total of 1,111 company- owned stores as of January 3, 2005. * During the second quarter, ACE opened 17 franchised stores and secured commitments to open another 8 franchised stores, bringing its total commitments to 122 stores. * ACE was ranked #1 in the industry and #74 overall in the January 2005 issue of Entrepreneur Magazine's Franchise 500 (R). Results for the Six Months Ended December 31, 2004 For the first six months of fiscal 2005, ACE's total revenue increased 10 percent, to $126.8 million, from $114.9 million in the first six months of fiscal 2004. Net income increased 62 percent, to $10.9 million compared with $6.7 million in the prior year period, resulting in diluted earnings per share growth of 24 percent, to $0.78 per diluted share from $0.63 cents per diluted share. Comparable store sales increased by 6.1 percent during the first six months of fiscal 2005 compared to the first six months of fiscal 2004 as a result of continued strength in loan fees and bill payment services. ACE also improved its gross margin to 33.4 percent from 31.9 percent in the prior year period. From July 1, 2004 through January 3, 2005, ACE opened 38 newly constructed company-owned stores, acquired 66 stores and opened 26 franchised locations. ACE also closed or sold 19 company-owned locations in the normal course of business. "We are continuing to execute our growth plans as demonstrated by our store expansion strategy and new product and technology initiatives," concluded Mr. Shipowitz. "We will continue to look for and introduce new products and services that our customers desire." Business Outlook for the Remainder of Fiscal 2005 The statements preceded by bullet points below are the Company's outlook or forecast for the Company's business for the third quarter ending March 31, 2005 and the fiscal year ending June 30, 2005. These statements are made only as of January 20, 2005 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 total revenue for fiscal 2005 to range between $265 million and $270 million. * The Company expects its fiscal 2005 fully diluted earnings per share to range between $1.94 and $2.00. * Based on the Company's annual forecast, historical operating trends and historical second quarter performance, the Company expects diluted earnings per share to range between $0.68 to $0.74 for its third fiscal quarter ending March 31, 2005. This outlook is based upon various assumptions, which include, but are not limited to, the following: (1) the opening of 60 newly-constructed ACE Cash Express company-owned stores and the opening of 20 to 25 newly-constructed ACE Cash Advance stores in fiscal 2005, the closure of approximately 20 to 30 stores during the normal course of business in fiscal 2005, but no other increase or decrease in the number of the Company's owned stores (whether by acquisition or otherwise) and the opening of 50 franchised stores; (2) no material change in the products or services offered at the Company's locations as of December 31, 2004 or in the terms or procedures for offering such products and services; and (3) no material adverse results from any litigation or regulatory proceedings against the Company, either currently existing or that may arise in the future. About ACE ACE Cash Express, Inc. is a leading retailer of financial services, including check cashing, short-term consumer loans and bill payment services, and the largest owner, operator and franchisor of check cashing stores in the United States. As of January 4, 2005, ACE had a network of 1,327 stores in 37 states and the District of Columbia, consisting of 1,111 company-owned stores and 216 franchised stores. ACE focuses on serving unbanked and underbanked consumers, many of whom seek alternatives to traditional banking relationships in order to gain convenient and immediate access to check cashing services and short-term consumer loans. 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, with Travelers Express and its affiliates and with 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 litigation regarding ACE's short-term consumer lending activities; 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, 2004 2003 2004 2003 Revenues $64,747 $59,186 $126,773 $114,887 Store expenses: Salaries and benefits 15,767 14,885 30,554 29,140 Occupancy 8,378 7,339 16,560 14,588 Provision for loan losses and doubtful accounts 6,994 6,911 14,462 13,262 Depreciation 1,771 1,737 3,458 3,474 Other 9,565 8,946 19,373 17,723 Total store expenses 42,475 39,818 84,407 78,187 Gross margin 22,272 19,368 42,366 36,700 Region expenses 5,806 4,837 11,025 9,314 Headquarters expenses 5,065 4,823 9,746 9,136 Franchise expenses 321 321 588 584 Other depreciation and amortization 679 1,022 1,385 2,039 Interest expense, net 794 2,233 1,387 4,468 Other (income) expense, net (106) (64) 66 (48) Income before income taxes 9,713 6,196 18,169 11,207 Provision for income taxes 3,885 2,478 7,268 4,482 Net income $ 5,828 $ 3,718 $ 10,901 $ 6,725 Earnings per share: Basic $ 0.43 $ 0.36 $ 0.81 $ 0.65 Diluted $ 0.42 $ 0.34 $ 0.78 $ 0.63 Weighted average number of common shares outstanding: Basic 13,465 10,428 13,414 10,364 Diluted 13,973 10,880 13,910 10,735 ACE CASH EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, June 30, 2004 2004 (unaudited) ASSETS Current Assets Cash and cash equivalents $135,027 $123,041 Accounts receivable, net 5,075 5,555 Loans receivable, net 21,524 17,047 Prepaid expenses, inventories and other current assets 11,760 10,658 Total Current Assets 173,386 156,301 Noncurrent Assets Property and equipment, net 32,631 30,721 Covenants not to compete, net 1,254 1,067 Goodwill, net 87,870 81,719 Other assets 6,033 3,839 Total Assets $301,174 $273,647 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Revolving advances $ 70,307 $ 60,000 Accounts payable, accrued liabilities and other current liabilities 34,543 32,711 Money orders payable 7,133 4,495 Total Current Liabilities 111,983 97,206 Noncurrent Liabilities Deferred income tax 4,982 5,684 Deferred revenue 3,675 3,969 Other liabilities 180 358 Total Liabilities 120,820 107,217 Commitments and Contingencies --- --- Shareholders' Equity Preferred stock, $1 par value, 1,000,000 shares authorized, none issued and outstanding --- --- Common stock, $.01 par value, 20,000,000 shares authorized, 13,733,427 and 13,518,737 shares issued and 13,522,027 and 13,307,337 shares outstanding, respectively 135 133 Additional paid-in capital 100,401 95,941 Retained earnings 86,197 75,296 Accumulated comprehensive loss (140) (170) Treasury stock, at cost, 211,400 shares (2,707) (2,707) Unearned compensation - restricted stock (3,532) (2,063) Total Shareholders' Equity 180,354 166,430 Total Liabilities and Shareholders' Equity $301,174 $273,647 ACE CASH EXPRESS, INC. AND SUBSIDIARIES SUPPLEMENTAL STATISTICAL DATA (unaudited) Three Months Six Months Ended Ended Year Ended December 31, December 31, June 30, 2004 2003 2004 2003 2004 2003 2002 Company Operating and Statistical Data: Company-owned stores in operation: Beginning of period 1,055 968 1,026 968 968 1,003 988 Acquired 17 8 40 8 34 2 8 Opened 23 10 38 10 53 14 39 Sold (3) (4) (3) (4) (5) (23) --- Closed (7) (8) (16) (8) (24) (28) (32) End of period 1,085 974 1,085 974 1,026 968 1,003 Franchised stores in operation: Beginning of period 202 200 204 200 200 184 175 Opened 17 21 26 21 32 26 22 Acquired by ACE (3) (8) (14) (8) (13) (2) (8) Closed/Sold --- (3) --- (3) (15) (8) (5) End of period 216 210 216 210 204 200 184 Total store network 1,301 1,184 1,301 1,184 1,230 1,168 1,187 Percentage increase (decrease) in comparable store revenues from prior period: (A) Total revenue 4.8% 2.5% 6.1% 1.1% 5.0% 1.9% 17.2% Check fees excluding tax check fees (2.7%) 8.3% (1.4%) 7.6% 5.2% 8.0% 6.0% Loan fees and interest 14.0% (4.6%) 17.2% (7.6%) 7.8% (4.4%) 36.1% Purchases of property and equipment, net (in thousands) $4,016 $1,235 $7,052 $2,029 $7,950 $4,771 $7,127 Intangible assets related to acquired stores (in thousands) $3,042 $262 $6,552 $322 $6,403 $673 $1,177 Check Cashing Data: Face amount of checks cashed (in millions) $1,201 $1,188 $2,348 $2,343 $5,103 $5,040 $4,843 Face amount of average check $358 $357 $358 $355 $388 $383 $378 Average fee per check $8.72 $8.65 $8.75 $8.56 $9.91 $9.65 $9.36 Fees as a percentage of average check 2.44% 2.43% 2.44% 2.41% 2.55% 2.52% 2.48% Number of checks cashed (in thousands) 3,353 3,329 6,557 6,595 13,151 13,148 12,821 Check Collections Data: Face amount of returned checks (in thousands) $6,897 $5,202 $12,849 $10,555 $21,705 $24,087 $23,637 Collections (in thousands) 5,291 3,356 9,332 6,712 13,947 16,935 16,090 Net write-offs (in thousands) $1,606 $1,846 $3,517 $3,843 $7,758 $7,152 $7,547 Collections as a percentage of returned checks 76.7% 64.5% 72.6% 63.6% 64.3% 70.3% 68.1% Net write-offs as a percentage of revenues 2.5% 3.1% 2.8% 3.3% 3.1% 3.1% 3.3% Net write-offs as a percentage of the face amount of checks cashed 0.13% 0.16% 0.15% 0.16% 0.15% 0.14% 0.16% ACE CASH EXPRESS, INC. AND SUBSIDIARIES SUPPLEMENTAL STATISTICAL DATA, continued (unaudited) (in thousands, except averages and percents) Three Months Ended Six Months Ended December 31, December 31, 2004 2003 2004 2003 Combined Short-Term Consumer Loans Operating Data: Volume - new loans and refinances $172,309 $140,696 $331,982 $267,607 Average advance $292 $279 $288 $277 Average finance charge $46.08 $43.87 $45.47 $43.71 Number of loan transactions - new loans and refinances 579 508 1,133 972 Matured loan volume $163,457 $135,000 $318,022 $259,203 Loan fees and interest $24,513 $20,389 $47,736 $38,844 Loan loss provision $6,979 $6,880 $14,403 $13,366 Gross margin on loans 71.5% 66.3% 69.8% 65.6% Loan loss provision as a percent of matured loan volume 4.3% 5.1% 4.5% 5.2% Loans Processed for Republic Bank: (B) Volume - new loans and refinances $50,954 $44,088 $99,408 $84,587 Average advance $321 $295 $318 $295 Average finance charge $56.71 $52.00 $56.05 $51.98 Number of loan transactions - new loans and refinances 159 150 313 287 Matured loan volume $49,206 $42,451 $96,505 $82,411 Loan fees and interest $7,594 $6,638 $14,857 $12,797 Provision for loan losses payable to Republic Bank $2,223 $2,329 $4,560 $4,274 ACE Loans Operating Data: (C) Volume - new loans and refinances $121,355 $96,608 $232,574 $183,020 Average advance $278 $270 $274 $268 Average finance charge $41.22 $39.51 $40.57 $39.26 Number of loan transactions - new loans and refinances 420 358 821 685 Matured loan volume $114,251 $92,549 $221,517 $176,792 Loan fees and interest $16,919 $13,751 $32,879 $26,047 Loan loss provision $4,756 $4,551 $9,843 $9,092 ACE Loans Balance Sheet Data: Gross loans receivable $34,485 $27,828 $34,485 $27,828 Less: Allowance for losses 12,961 11,107 12,961 11,107 Loans receivable, net of allowance $21,524 $16,721 $21,524 $16,721 Allowance for losses on loans receivable: Beginning of period $12,021 $9,887 $10,616 $8,734 Provision for loan losses 4,756 4,551 9,843 9,092 Charge-offs (4,793) (3,389) (8,626) (6,849) Recoveries 977 58 1,128 130 End of period $12,961 $11,107 $12,961 $11,107 Allowance as a percent of gross loans receivable 37.6% 39.9% 37.6% 39.9% Year Ended June 30, 2004 2003 2002 Combined Short-Term Consumer Loans Operating Data: Volume - new loans and refinances $527,723 $484,026 $502,013 Average advance $278 $274 $269 Average finance charge $43.71 $44.55 $45.61 Number of loan transactions - new loans and refinances 1,909 1,798 1,866 Matured loan volume $516,741 $488,940 $489,887 Loan fees and interest $77,029 $70,806 $74,197 Loan loss provision $24,280 $22,293 $21,924 Gross margin on loans 68.5% 68.5% 70.5% Loan loss provision as a percent of matured loan volume 4.7% 4.6% 4.5% Loans Processed for Republic Bank: (B) Volume - new loans and refinances $159,692 $63,897 $--- Average advance $296 $302 $--- Average finance charge $52.11 $53.35 $--- Number of loan transactions - new loans and refinances 541 211 --- Matured loan volume $157,018 $56,040 $--- Loan fees and interest $24,036 $9,037 $--- Provision for loan losses payable to Republic Bank $7,390 $2,932 $--- ACE Loans Operating Data: (C) Volume - new loans and refinances $368,031 $420,129 $502,013 Average advance $269 $268 $269 Average finance charge $39.40 $42.71 $45.61 Number of loan transactions - new loans and refinances 1,368 1,587 1,866 Matured loan volume $359,723 $432,900 $489,887 Loan fees and interest $52,993 $61,769 $74,197 Loan loss provision $16,890 $19,361 $21,924 ACE Loans Balance Sheet Data: Gross loans receivable $27,663 $21,734 $29,569 Less: Allowance for losses 10,616 8,734 12,213 Loans receivable, net of allowance $17,047 $13,000 $17,356 Allowance for losses on loans receivable: Beginning of period $8,734 $12,213 $13,382 Provision for loan losses 16,890 19,361 21,924 Charge-offs (15,295) (23,729) (24,519) Recoveries 287 889 1,426 End of period $10,616 $8,734 $12,213 Allowance as a percent of gross loans receivable 38.3% 40.2% 41.3% (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) Operating data for ACE loans include short-term consumer loans made by Goleta National Bank at our company-owned stores until we discontinued offering Goleta loans on December 31, 2002. ACE CASH EXPRESS, INC. AND SUBSIDIARIES REVENUE ANALYSIS (unaudited) Three Months Ended Six Months Ended December 31, December 31, 2004 2003 2004 2003 Revenues (in thousands): Check cashing fees $29,243 $28,802 $57,360 $56,463 Loan fees and interest 24,514 20,389 47,737 38,844 Bill payment services 4,925 4,126 9,634 7,965 Money transfer services 2,883 2,749 5,708 5,505 Money order fees 1,695 1,578 3,426 3,171 Franchise revenues 855 774 1,602 1,371 Other fees 632 768 1,306 1,568 Total revenue $64,747 $59,186 $126,773 $114,887 Year Ended June 30, 2004 2003 2002 Revenues (in thousands): Check cashing fees $129,194 $125,703 $118,907 Loan fees and interest 77,029 70,806 74,197 Bill payment services 16,960 13,507 10,156 Money transfer services 11,136 10,898 10,998 Money order fees 6,330 6,960 7,554 Franchise revenues 2,774 2,346 2,199 Other fees 3,236 4,069 5,255 Total revenue $246,659 $234,289 $229,266 Three Months Six Months Ended Ended December 31, December 31, Year Ended June 30, 2004 2003 2004 2003 2004 2003 2002 Percentage of Revenues: Check cashing fees 45.2% 48.7% 45.2% 49.1% 52.4% 53.7% 51.9% Loan fees and interest 37.9 34.4 37.7 33.8 31.2 30.2 32.4 Bill payment services 7.6 7.0 7.6 6.9 6.9 5.8 4.4 Money transfer services 4.4 4.6 4.5 4.8 4.5 4.6 4.8 Money order fees 2.6 2.7 2.7 2.8 2.6 3.0 3.3 Franchise revenues 1.3 1.3 1.3 1.2 1.1 1.0 0.9 Other fees 1.0 1.3 1.0 1.4 1.3 1.7 2.3 Total revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% CONFERENCE CALL JANUARY 20, 2005 5 p.m. EST An investor conference call will be held today, January 20, 2005 at 5 p.m. EST, regarding the release of ACE Cash Express, Inc.'s fiscal 2005 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 3222856. 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 7 p.m. EST on January 20, 2005. If you wish to listen to a replay of this conference call, dial (800) 642-1687, provide your name and use confirmation number 3222856. If you have questions regarding this conference call, please contact Darla Ashby at (972) 550-5037. DATASOURCE: ACE Cash Express, Inc. CONTACT: William S. McCalmont, Executive Vice President & CFO of ACE Cash Express, Inc., +1-972-753-2314, or Web site: http://www.acecashexpress.com/

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