AACE Ace Cash Express

ACE Cash Express Reports Fiscal 2004 Third Quarter Record Earnings of $0.72 Per Share DALLAS, April 15 /PRNewswire-FirstCall/ -- ACE Cash Express, Inc. announced fiscal third quarter 2004 net income of $8.2 million or $0.72 per diluted share compared to fiscal third quarter 2003 net income of $2.6 million or $0.26 per share. Fiscal third quarter 2003 results included a one-time charge of $0.29 per share related to a litigation settlement. ACE's fiscal third quarter 2004 earnings per share increased 31.0 percent over the fiscal third quarter 2003 earnings, excluding this one-time charge. During the fiscal third quarter of 2004, ACE's total revenue increased 9.7 percent to $73.7 million versus $67.2 million in the prior year period, due primarily to a 41.7 percent increase in loan fees, and a 25.8 percent increase in bill payment and debit card revenue. "We are excited to deliver another record quarter," said Jay B. Shipowitz, president. "We achieved these results through increases in comparable store loan fees and double digit bill payment services growth for the seventh consecutive quarter. Once again, we attribute our results to our continued focus on operational improvements, increased product offerings, and commitment to delivering convenient and quality services to our customers." Among the Company's accomplishments during the fiscal third quarter of 2004 were: -- The total ACE store network, including franchised stores, had a record 9.8 million customer visits and processed approximately $3.0 billion in transactions. -- Comparable store check-cashing fees, exclusive of tax checks, in company-owned stores increased 4.0 percent over the prior year period. -- Comparable store loan fees in company-owned stores increased 39.4 percent over the prior year period. The fiscal third quarter of 2003 was impacted to some extent by the Company's transition to new loan products (ACE and Republic Bank loans) effective January 1, 2003. -- ACE company-owned stores cashed 3.0 million checks, excluding tax checks, resulting in check-cashing fees of $26.1 million, up from $25.2 million in the fiscal third quarter of 2003. -- ACE company-owned stores cashed approximately 370,000 tax checks, resulting in tax check-cashing fees of $18.5 million, a 3.8 percent decrease from $19.2 million in the fiscal third quarter of 2003. -- Bill-payment revenue, including debit card revenue, increased 25.8 percent, to $4.5 million from $3.6 million in the prior year period. -- Store gross margin improved to 40.5 percent of revenue in the fiscal third quarter of 2004 compared to 39.7 percent in the previous year period. -- ACE reduced the average amount borrowed on its revolving credit agreement by $14.6 million to $102.7 million from $117.3 million in the fiscal third quarter of 2003. -- ACE repaid $6.5 million of its term notes during the fiscal third quarter of 2004. During the fiscal third quarter of 2004, the Company opened 22 newly constructed stores, including 5 ACE Cash Advance stores, closed 7 company- owned stores, and sold 1 company-owned store to a new franchisee. ACE franchisees also opened 9 stores. At the end of the quarter, ACE had a network of 1,203 stores consisting of 988 company-owned stores and 215 franchised stores. Donald H. Neustadt, chief executive officer, said, "We are pleased that our fiscal third quarter and year-to-date results reflect revenue and income growth in each of our core product offerings. Loan fees and bill-payment revenue, in particular, provide strong quarter-over-quarter comparisons, and are reflective of strong customer demand." Results for the Nine Months Ended March 31, 2004 For the first nine months of fiscal 2004, ACE's total revenue increased 4.5 percent, to $188.6 million from $180.5 million in the first nine months of fiscal 2003. Net income for the first nine months of fiscal 2004 was $14.9 million or $1.36 per diluted share compared to net income of $7.4 million or $0.73 per share for the first nine months of fiscal 2003. Excluding the one time charge of $0.29 per share related to a litigation settlement, net income increased 42.8 percent in the first nine months of fiscal 2004, resulting in earnings per share growth of 33.3 percent. Comparable store check cashing fees, excluding tax fees, increased 6.5 percent and comparable store loan fees and interest increased 17.4 percent during the nine months ended March 31, 2004. ACE also improved its store gross margin to 35.3 percent from 34.5 percent in the prior year period. During the first nine months of fiscal 2004, ACE opened 32 newly constructed company-owned stores, acquired 8 stores, and ACE franchisees opened 30 stores. ACE also closed or sold 20 company-owned locations in the normal course of business. Mr. Shipowitz added, "Year-to-date, we have opened 32 company-owned stores and executed leases for another 20 stores. Of the 20 stores leased but not yet open, 11 are currently under construction and 9 are in the permitting process. An additional 21 leases for company-owned stores are being negotiated. We remain committed to meeting our goal of adding 500 stores to the ACE network by the end of fiscal 2008." Business Outlook for the Fiscal Fourth Quarter and Full Year 2004 The statements preceded by bullet points below are the Company's outlook or forecast for the fiscal fourth quarter and the fiscal year ending June 30, 2004. These statements are made as of April 15, 2004 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," which cannot be guaranteed and may prove to be wrong. -- The Company expects total revenue for fiscal 2004 to range between $244 million and $247 million. -- The Company is increasing its full-year, fiscal 2004 diluted earnings per share guidance and now anticipates fully diluted earnings per share to range between $1.66 and $1.70 for fiscal 2004. -- Based on the Company's annual forecast, historical operating trends and historical fourth quarter performance, the Company expects diluted earnings per share to range between $0.30 and $0.34 for the fiscal fourth quarter of 2004 ending June 30, 2004. Upon completion of its proposed common stock offering, the Company expects to retire its term notes in full. In conjunction with the retirement of these notes, the Company expects to record a non-cash write-off of deferred financing fees of approximately $4.1 million and cash charges related to prepayment penalties and the termination of interest rate swaps of approximately $1.0 million. The $5.1 million charge will be expensed in the quarter in which the proposed common stock offering closes, which is expected to be the Company's fiscal fourth quarter. The Company's guidance for the fourth quarter and full year fiscal 2004 does not include these charges, nor does it include the impact of the additional shares to be sold or the proceeds from the proposed common stock offering. 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 the Company 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 the Company'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 the Company's reports filed with the Securities and Exchange Commission, such as: -- the Company's relationships with Republic Bank, with Travelers Express and its affiliates, with its bank lenders, with American Capital Strategies, Ltd. and with H&R Block; -- the Company's relationship with third-party providers of services offered by the Company 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 the Company'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 the Company's growth strategy; -- increases in interest rates, which would increase the Company'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 the Company; -- the terms and performance of third-party services offered at the Company's stores; and -- customer demand and response to services offered at the Company's stores. The Company expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in the Company's views or expectations, or otherwise. The Company makes no prediction or statement about the performance of its Common Stock. About the Company 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 March 31, 2004, the Company had a network of 1,203 stores in 36 states and the District of Columbia, consisting of 988 company-owned stores and 215 franchised stores. The Company 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. The Company's website is found at http://www.acecashexpress.com/ . ACE CASH EXPRESS, INC. AND SUBSIDIARIES INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except per share amounts) Three Months Ended Nine Months Ended March 31, March 31, 2004 2003 2004 2003 Revenues $73,674 $67,167 $188,561 $180,524 Store expenses: Salaries and benefits 16,731 15,198 45,871 44,178 Occupancy 8,174 7,431 22,762 21,852 Provision for loan losses and doubtful accounts 5,411 4,813 18,673 18,791 Depreciation 1,741 1,727 5,215 5,222 Other 11,809 11,350 29,532 28,260 Total store expenses 43,866 40,519 122,053 118,303 Store gross margin 29,808 26,648 66,508 62,221 Region expenses 4,942 4,350 14,256 12,719 Headquarters expenses 5,818 5,294 14,954 13,002 Franchise expenses 315 286 899 845 Other depreciation and amortization 1,027 1,150 3,066 4,407 Interest expense 4,362 5,885 8,830 13,595 Other expenses (income), net (279) 5,333 (327) 6,110 Income from continuing operations before taxes 13,623 4,350 24,830 11,543 Provision for income taxes 5,449 1,734 9,931 4,611 Income from continuing operations 8,174 2,616 14,899 6,932 Discontinued operations: Gain on sale of discontinued operations, net of tax --- --- --- 499 Net income $8,174 $2,616 $14,899 $7,431 Basic earnings per share: Continuing operations $0.77 $0.26 $1.42 $0.68 Discontinued operations --- --- --- 0.05 Total $0.77 $0.26 $1.42 $0.73 Diluted earnings per share: Continuing operations $0.72 $0.26 $1.36 $0.68 Discontinued operations --- --- --- 0.05 Total $0.72 $0.26 $1.36 $0.73 Weighted average number of common shares outstanding: Basic 10,650 10,181 10,462 10,181 Diluted 11,327 10,203 10,932 10,189 ACE CASH EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) March 31, June 30, 2004 2003 (unaudited) ASSETS Current Assets Cash and cash equivalents $109,380 $108,110 Accounts receivable, net 6,272 9,429 Loans receivable, net 13,353 13,000 Prepaid expenses, inventories, and other current assets 9,329 10,742 Total Current Assets 138,334 141,281 Noncurrent Assets Property and equipment, net 29,705 32,352 Covenants not to compete, net 919 1,151 Goodwill, net 75,873 75,586 Other assets 6,813 8,398 Total Assets $251,644 $258,768 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Revolving advances $68,000 $83,900 Accounts payable, accrued liabilities, and other current liabilities 39,075 40,756 Money orders payable 4,862 6,884 Term advances 3,833 3,833 Notes payable 721 778 Total Current Liabilities 116,491 136,151 Noncurrent Liabilities Term advances 26,559 34,436 Notes payable 75 110 Other liabilities 9,572 9,087 Total Liabilities 152,697 179,784 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, 10,995,309 and 10,395,113 shares issued and 10,783,909 and 10,183,713 shares outstanding, respectively 108 102 Additional paid-in capital 31,627 24,385 Retained Earnings 73,143 58,244 Accumulated comprehensive loss (1,055) (1,017) Treasury stock, at cost, 211,400 shares (2,707) (2,707) Unearned compensation - restricted stock (2,169) (23) Total Shareholders' Equity 98,947 78,984 Total Liabilities and Shareholders' Equity $251,644 $258,768 ACE CASH EXPRESS, INC. AND SUBSIDIARIES SUPPLEMENTAL STATISTICAL DATA (unaudited) Three Months Ended Nine Months Ended Year Ended March 31, March 31, June 30, 2004 2003 2004 2003 2003 2002 Company Operating and Statistical Data: Company-owned stores in operation: Beginning of period 974 977 968 1,003 1,003 988 Acquired --- --- 8 1 2 8 Opened 22 6 32 9 14 39 Sold (A) (1) --- (5) (20) (23) --- Closed (7) (9) (15) (19) (28) (32) End of period 988 974 988 974 968 1,003 Franchised stores in operation: Beginning of period 210 193 200 184 184 175 Opened 9 7 30 19 26 22 Acquired by ACE --- --- (8) (1) (2) (8) Closed/Sold (4) (4) (7) (6) (8) (5) End of period 215 196 215 196 200 184 Total store network 1,203 1,170 1,203 1,170 1,168 1,187 Percentage increase (decrease) in comparable store revenues from prior period (B) 10.0% (4.6%) 4.4% 2.7% 1.5% 15.6% Capital expenditures (in thousands) $2,061 $1,315 $4,090 $3,170 $4,771 $7,127 Cost of net assets acquired (in thousands) $--- $--- $322 $51 $673 $1,177 Check Cashing Data: Face amount of checks cashed (in millions) $1,637 $1,652 $3,980 $3,877 $5,040 $4,843 Face amount of average check $482 $478 $398 $393 $383 $378 Average fee per check $13.46 $13.18 $10.22 $10.01 $9.65 $9.36 Fees as a percentage of average check 2.79% 2.76% 2.57% 2.55% 2.52% 2.48% Number of checks cashed (in thousands) 3,395 3,456 9,991 9,864 13,148 12,821 Check Collections Data: Face amount of returned checks (in thousands) $5,253 $6,630 $15,808 $18,163 $24,087 $23,637 Collections (in thousands) 3,527 5,176 10,239 13,646 16,935 16,090 Net write-offs (in thousands) $1,726 $1,454 $5,569 $4,517 $7,152 $7,547 Collections as a percentage of returned checks 67.1% 78.1% 64.8% 75.1% 70.3% 68.1% Net write-offs as a percentage of revenue 2.3% 2.2% 3.0% 2.5% 3.1% 3.3% Net write-offs as a percentage of the face amount of checks cashed 0.11% 0.09% 0.14% 0.12% 0.14% 0.16% (A) The number of stores sold for the nine months ended March 31, 2003, includes the sale of 19 underperforming stores in Florida in November 2002. (B) Calculated based on the changes in revenues of all stores open for both of the full year and three and nine month periods compared. ACE CASH EXPRESS, INC. AND SUBSIDIARIES SUPPLEMENTAL STATISTICAL DATA, continued (unaudited) Three Months Ended Nine Months Ended Year Ended March 31, March 31, June 30, 2004 2003 2004 2003 2003 2002 Combined Small Consumer Loans Operating Data: Volume (in thousands) $122,953 $85,849 $390,560 $371,898 $484,026 $502,013 Average advance $279 $274 $278 $273 $274 $269 Average finance charge $43.77 $43.25 $43.73 $44.84 $44.55 $45.61 Number of loan transactions - new loans and refinances (in thousands) 442 316 1,414 1,388 1,798 1,866 Matured loan volume (in thousands) $127,810 $101,214 $387,014 $384,594 $488,940 $489,887 ACE Loans (A): Volume (in thousands) $87,825 $61,532 $270,845 $344,988 $420,129 $502,013 Average advance $272 $263 $269 $270 $268 $269 Average finance charge $39.85 $38.95 $39.45 $43.90 $42.71 $45.61 Number of loan transactions - new loans and refinances (in thousands) 322 235 1,007 1,299 1,587 1,866 Matured loan volume (in thousands) $90,819 $79,415 $267,612 $362,795 $432,900 $489,887 Loans Processed for Republic Bank (B): Volume - new loans and Refinances (in thousands) $35,128 $24,317 $119,715 $26,910 $63,897 $--- Average advance $294 $301 $295 $301 $302 $--- Average finance charge $51.87 $53.01 $51.95 $53.11 $53.35 $--- Number of loan transactions - new loans and refinances (in thousands) 120 81 407 89 211 --- Matured loan volume (in thousands) $36,991 $21,799 $119,402 $21,799 $56,040 $--- (A) Operating data for ACE Loans includes the Goleta National Bank loan product until it was discontinued on December 31, 2002. (B) Republic Bank loans are short-term consumer loans made by Republic Bank & Trust at our company-owned stores in Arkansas, Pennsylvania and Texas since December 2002. ACE CASH EXPRESS, INC. AND SUBSIDIARIES SUPPLEMENTAL STATISTICAL DATA, continued (unaudited) Three Months Ended Nine Months Ended Year Ended March 31, March 31, June 30, 2004 2003 2004 2003 2003 2002 ACE Loans Balance Sheet Data (in thousands) (A): Gross loans receivable $24,010 $21,207 $24,010 $21,207 $21,734 $29,569 Less: Allowance for losses on loans receivable 10,657 12,500 10,657 12,500 8,734 12,213 Loans receivable, net of allowance $13,353 $8,707 $13,353 $8,707 $13,000 $17,356 Allowance for losses on loans receivable: Beginning of period $11,108 $15,650 $8,734 $12,213 $12,213 $13,382 Provision for loan losses 3,761 3,661 12,853 17,381 19,361 21,924 Charge-offs (4,323) (7,078) (11,172) (17,728) (23,729) (24,519) Recoveries 111 267 242 634 889 1,426 End of period $10,657 $12,500 $10,657 $12,500 $8,734 $12,213 Provision for loan losses as a percent of matured loan volume 4.1% 4.6% 4.8% 4.8% 44.5% 4.5% Net loan charge-offs as a percent of volume 4.8% 11.1% (B) 4.0% 5.0% 5.4% 4.6% Allowance as a percent of gross loans receivable 44.4% 58.9% 44.4% 58.9% 40.2% 41.3% Loan Provision Data for Loans Processed for Republic Bank (C): Provision for loan losses payable to Republic Bank (in thousands) $1,619 $991 $5,897 $991 $2,932 $--- Provision for loan losses payable to Republic Bank as a percent of matured loan volume 4.4% 4.5% 4.9% 4.5% 5.2% --- (A) The balance sheet data for ACE Loans includes data for the Goleta National Bank loan product during the fiscal years ended June 30, 2003 and 2002. (B) Loan charge-offs were higher and loan volume was lower in the third quarter of fiscal 2003 as a result of the December 31, 2002 cessation of loan-related business in Georgia, North Carolina, and Alabama and the transition from offering the Goleta National Bank loan product to offering the ACE loans or Republic Loans. (C) Republic Bank loans are short-term consumer loans made by Republic Bank & Trust at our company-owned stores in Arkansas, Pennsylvania and Texas since December 2002. ACE CASH EXPRESS, INC. AND SUBSIDIARIES REVENUE ANALYSIS (unaudited) Three Months Nine Months Year Ended March 31, Ended March 31, Ended June 30, 2004 2003 2004 2003 2003 2002 Revenues (in thousands): Check cashing fees $26,111 $25,171 $81,786 $77,944 $104,175 $97,603 Loan fees and interest 18,350 12,945 57,194 54,744 70,806 74,197 Tax check fees 18,491 19,215 19,279 19,613 21,528 21,304 Bill payment services 4,521 3,595 12,488 9,839 13,507 10,156 Money transfer services 2,805 2,735 8,310 8,139 10,898 10,998 Money order fees 1,601 1,800 4,772 5,304 6,960 7,554 Franchise revenues 808 622 2,180 1,683 2,346 2,199 Other fees 987 1,084 2,552 3,258 4,069 5,255 Total revenue $73,674 $67,167 $188,561 $180,524 $234,289 $229,266 Three Months Nine Months Year Ended March 31, Ended March 31, Ended June 30, 2004 2003 2004 2003 2003 2002 Percentage of Revenues: Check cashing fees 35.4% 37.5% 43.4% 43.2% 44.5% 42.6% Loan fees and interest 24.9 19.3 30.3 30.3 30.2 32.4 Tax check fees 25.1 28.6 10.2 10.9 9.2 9.3 Bill payment services 6.2 5.3 6.6 5.5 5.8 4.4 Money transfer services 3.8 4.1 4.4 4.5 4.6 4.8 Money order fees 2.2 2.7 2.5 2.9 3.0 3.3 Franchise revenues 1.1 0.9 1.2 0.9 1.0 0.9 Other fees 1.3 1.6 1.4 1.8 1.7 2.3 Total revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% CONFERENCE CALL April 15, 2004 5 p.m. EDT An investor conference call will be held today, April 15, 2004 at 5 p.m. EDT, regarding the release of ACE Cash Express, Inc.'s fiscal 2004, third 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 6447938. Donald H. Neustadt, chief executive officer; Jay B. Shipowitz, president and chief operating officer; and William S. McCalmont, executive vice president and chief financial officer, will present the third quarter review. For your convenience, the conference call will be replayed in its entirety beginning at approximately 7 p.m. EDT on April 15th through 7 p.m. EDT on April 30th. If you wish to listen to a replay of this conference call, dial (800) 642-1687, provide your name and use confirmation number 6447938. 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, +1-972-753-2314, or , or Michael J. Briskey, Senior Vice President & Treasurer, +1-972-753-2342, or , both of ACE Cash Express, Inc. Web site: http://www.acecashexpress.com/

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