AACE Ace Cash Express

ACE Cash Express Reports Record Fiscal 2005 First Quarter Net Income and EPS; Comparable Store Sales Increase 7.9% DALLAS, Oct. 21 /PRNewswire-FirstCall/ -- ACE Cash Express, Inc. (NASDAQ:AACE) announced diluted earnings per share of $0.37 for its fiscal 2005 first quarter ended September 30, 2004, a 32 percent increase over its diluted earnings per share of $0.28 in the prior year period. Net income of $5.1 million in the first quarter of fiscal 2005 increased 69 percent from the $3.0 million of net income in the first quarter of fiscal 2004. During the first quarter of fiscal 2005, ACE's total revenue increased by 11 percent to $62.0 million from $55.7 million in the first quarter of fiscal 2004. This increase is primarily due to a 26 percent increase in loan fees and interest and a 23 percent increase in bill payment services. "We are pleased with our strong start to fiscal 2005," stated Jay B. Shipowitz, President and CEO of ACE, "Our excellent first quarter results demonstrate the diversification of our retail financial services which were led by continued strong demand for our loan and bill payment services. We believe our results are indicative of ACE's ability to continue to meet the needs of our customers and the large under-banked consumer marketplace." Highlights from the first quarter of fiscal 2005 include: -- Comparable store revenue increased 7.9 percent over the prior year's first quarter. -- ACE company-owned stores cashed 3.2 million checks, excluding tax checks, resulting in check-cashing fees of $27.9 million, a 3.4 percent increase from check-cashing fees of $27.0 million in the first quarter of fiscal 2004. -- Loan fees and interest rose 26 percent to $23.2 million from $18.5 million, fueled by comparable store fees growth of 20.7 percent. ACE processed over 550,000 loan transactions, a 19.4 percent increase from the same period last year. -- Bill-payment revenue increased 23 percent, to $4.7 million from $3.8 million in the first quarter of fiscal 2004. -- Gross margin improved to 32.4 percent from 31.1 percent in the same period last year. -- The total ACE store network, including franchised stores, had a record 9.8 million customer visits and processed approximately $2.4 billion in transactions. -- ACE further increased its capital availability by amending and extending its bank credit facility in July 2004. During the first quarter of fiscal 2005, the Company opened 15 newly constructed stores and closed nine company-owned stores. Additionally, ACE acquired 23 stores during the quarter including 10 stores in northwest Arkansas, eight stores from a franchisee in Houston, three stores from a franchisee in Louisville and two stores in Seattle. The Company also opened nine franchised stores in the first quarter of fiscal 2005. During the quarter, ACE secured commitments to open 21 more franchised stores. In total, ACE franchisees have committed to open more than 125 franchised stores over the next five years. "Our comprehensive growth plans include our previously announced store expansion strategy, opportunistic acquisitions, additional new product initiatives including the ACE Cash Express MasterCard, and further technological enhancements that will all contribute to our long-term growth plans," concluded Mr. Shipowitz. 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 second quarter ending December 31, 2004 and the fiscal year ending June 30, 2005. These statements are made only as of October 21, 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," cannot be guaranteed and may prove to be wrong. -- The Company expects total revenue for fiscal 2005 to range between $265 million and $275 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 $0.39 to $0.42 for its second fiscal quarter ending December 31, 2004. 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 in fiscal 2005, the closure of 15 to 25 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, and the opening of 25 ACE Cash Advance stores; (2) no material change in the products or services offered at the Company's locations as of September 30, 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 September 30, 2004, ACE had a network of 1,257 stores in 37 states and the District of Columbia, consisting of 1,055 company-owned stores and 202 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 September 30, 2004 2003 Revenues $62,026 $55,701 Store expenses: Salaries and benefits 14,787 14,255 Occupancy 8,182 7,249 Provision for loan losses and doubtful accounts 7,468 6,351 Depreciation 1,687 1,737 Other 9,808 8,777 Total store expenses 41,932 38,369 Gross margin 20,094 17,332 Region expenses 5,219 4,477 Headquarters expenses 4,681 4,313 Franchise expenses 267 263 Other depreciation and amortization 706 1,017 Interest expense, net 593 2,235 Other expenses, net 172 16 Income before income taxes 8,456 5,011 Provision for income taxes 3,383 2,004 Net income $ 5,073 $ 3,007 Earnings per share: Basic $ 0.38 $ 0.29 Diluted $ 0.37 $ 0.28 Weighted average number of common shares outstanding: Basic 13,366 10,296 Diluted 13,848 10,589 ACE CASH EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) September 30, June 30, 2004 2004 ASSETS Current Assets Cash and cash equivalents $104,052 $123,041 Accounts receivable, net 5,214 5,555 Loans receivable, net 18,798 17,047 Prepaid expenses, inventories, and other current assets 11,343 10,658 Total Current Assets 139,407 156,301 Noncurrent Assets Property and equipment, net 30,966 30,721 Covenants not to compete, net 1,193 1,067 Goodwill, net 84,999 81,719 Other assets 5,765 3,839 Total Assets $262,330 $273,647 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Revolving advances $ 42,400 $ 60,000 Accounts payable, accrued liabilities, and other current liabilities 32,308 32,711 Money orders payable 5,107 4,495 Total Current Liabilities 79,815 97,206 Noncurrent Liabilities Deferred income tax 5,684 5,684 Deferred revenue 3,946 3,969 Other liabilities 302 358 Total Liabilities 89,747 107,217 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, 13,639,982 and 13,518,737 shares issued and 13,428,582 and 13,307,337 shares outstanding, respectively 134 133 Additional paid-in capital 98,184 95,941 Retained earnings 80,369 75,296 Accumulated comprehensive loss (292) (170) Treasury stock, at cost, 211,400 shares (2,707) (2,707) Unearned compensation - restricted stock (3,105) (2,063) Total Shareholders' Equity 172,583 166,430 Total Liabilities and Shareholders' Equity $262,330 $273,647 ACE CASH EXPRESS, INC. AND SUBSIDIARIES SUPPLEMENTAL STATISTICAL DATA (unaudited) Three Months Ended September 30, Year Ended June 30, 2004 2003 2004 2003 2002 Company Operating and Statistical Data: Company-owned stores in operation: Beginning of period 1,026 968 968 1,003 988 Acquired 23 1 34 2 8 Opened 15 4 53 14 39 Sold --- --- (5) (23) --- Closed (9) (5) (24) (28) (32) End of period 1,055 968 1,026 968 1,003 Franchised stores in operation: Beginning of period 204 200 200 184 175 Opened 9 7 32 26 22 Acquired by ACE (11) (1) (13) (2) (8) Closed/Sold --- --- (15) (8) (5) End of period 202 206 204 200 184 Total store network 1,257 1,174 1,230 1,168 1,187 Percentage increase (decrease) in comparable store revenues from prior period: (A) Total revenue 7.9% (0.2%) 5.0% 1.9% 17.2% Check fees excluding tax check fees 0.0% 6.9% 5.2% 8.0% 6.0% Loan fees and interest 20.7% (10.6%) 7.8% (4.4%) 36.1% Purchases of property and equipment, net (in thousands) $3,036 $794 $7,950 $4,771 $7,127 Intangible assets acquired (in thousands) $3,510 $60 $6,403 $673 $1,177 Check Cashing Data: Face amount of checks cashed (in millions) $1,147 $1,156 $5,103 $5,040 $4,843 Face amount of average check $358 $354 $388 $383 $378 Average fee per check $8.78 $8.47 $9.91 $9.65 $9.36 Fees as a percentage of average check 2.45% 2.39% 2.55% 2.52% 2.48% Number of checks cashed (in thousands) 3,204 3,266 13,151 13,148 12,821 Check Collections Data: Face amount of returned checks (in thousands) $5,952 $5,353 $21,705 $24,087 $23,637 Collections (in thousands) 4,041 3,356 13,947 16,935 16,090 Net write-offs (in thousands) $1,911 $1,997 $7,758 $7,152 $7,547 Collections as a percentage of returned checks 67.9% 62.7% 64.3% 70.3% 68.1% Net write-offs as a percentage of revenues 3.1% 3.7% 3.1% 3.1% 3.3% Net write-offs as a percentage of the face amount of checks cashed 0.17% 0.17% 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 September 30, Year Ended June 30, 2004 2003 2004 2003 2002 Combined Short-Term Consumer Loans Operating Data: Volume - new loans and refinances $159,673 $126,911 $527,723 $484,026 $502,013 Average advance $283 $276 $278 $274 $269 Average finance charge $44.83 $43.54 $43.71 $44.55 $45.61 Number of loan transactions - new loans and refinances 554 464 1,909 1,798 1,866 Matured loan volume $154,565 $124,204 $516,741 $488,940 $489,887 Loan fees and interest $23,223 $18,455 $77,029 $70,806 $74,197 Loan loss provision $7,424 $6,486 $24,280 $22,293 $21,924 Gross margin on loans 68.0% 64.9% 68.5% 68.5% 70.5% Loan loss provision as a percent of matured loan volume 4.8% 5.2% 4.7% 4.6% 4.5% ACE Loans: (B) Volume - new loans and refinances $111,219 $86,412 $368,031 $420,129 $502,013 Average advance $269 $265 $269 $268 $269 Average finance charge $39.89 $38.99 $39.40 $42.71 $45.61 Number of loan transactions - new loans and refinances 400 327 1,368 1,587 1,866 Matured loan volume $107,266 $84,244 $359,723 $432,900 $489,887 Loan fees and interest $15,960 $12,296 $52,993 $61,769 $74,197 Loan loss provision $5,087 $4,540 $16,890 $19,361 $21,924 Loans Processed for Republic Bank: (C) Volume - new loans and refinances $48,454 $40,499 $159,692 $63,897 $--- Average advance $314 $295 $296 $302 $--- Average finance charge $55.37 $51.96 $52.11 $53.35 $--- Number of loan transactions - new loans and refinances 154 137 541 211 --- Matured loan volume $47,299 $39,960 $157,018 $56,040 $--- Loan fees and interest $7,263 $6,159 $24,036 $9,037 $--- Provision for loan losses payable to Republic Bank $2,337 $1,946 $7,390 $2,932 $--- Balance Sheet Data (in thousands): Gross loans receivable $30,819 $24,090 $27,663 $21,734 $29,569 Less: Allowance for losses on loans receivable 12,021 9,887 10,616 8,734 12,213 Loans receivable, net of allowance $18,798 $14,203 $17,047 $13,000 $17,356 Allowance for losses on loans receivable: Beginning of period $10,616 $8,734 $8,734 $12,213 $13,382 Provision for loan losses 5,087 4,540 16,890 19,361 21,924 Charge-offs (3,833) (3,459) (15,295) (23,729) (24,519) Recoveries 151 72 287 889 1,426 End of period $12,021 $9,887 $10,616 $8,734 $12,213 Allowance as a percent of gross loans receivable 39.0% 41.0% 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) 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. (C) 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. ACE CASH EXPRESS, INC. AND SUBSIDIARIES REVENUE ANALYSIS (unaudited) Three Months Ended Year Ended September 30, June 30, 2004 2003 2004 2003 2002 Revenues (in thousands): Check cashing fees $28,117 $27,661 $129,194 $125,703 $118,907 Loan fees and interest 23,223 18,455 77,029 70,806 74,197 Bill payment services 4,709 3,839 16,960 13,507 10,156 Money transfer services 2,825 2,756 11,136 10,898 10,998 Money order fees 1,731 1,593 6,330 6,960 7,554 Franchise revenues 747 597 2,774 2,346 2,199 Other fees 674 800 3,236 4,069 5,255 Total revenue $62,026 $55,701 $246,659 $234,289 $229,266 Three Months Ended Year Ended September 30, June 30, 2004 2003 2004 2003 2002 Percentage of Revenues: Check cashing fees 45.3% 49.7% 52.4% 53.7% 51.9% Loan fees and interest 37.4 33.1 31.2 30.2 32.4 Bill payment services 7.6 6.9 6.9 5.8 4.4 Money transfer services 4.6 4.9 4.5 4.6 4.8 Money order fees 2.8 2.9 2.6 3.0 3.3 Franchise revenues 1.2 1.1 1.1 1.0 0.9 Other fees 1.1 1.4 1.3 1.7 2.3 Total revenue 100.0% 100.0% 100.0% 100.0% 100.0% CONFERENCE CALL OCTOBER 21, 2004 5 p.m. EDT An investor conference call will be held today, October 21, 2004 at 5 p.m. EDT, regarding the release of ACE Cash Express, Inc.'s fiscal 2005 first 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 1216667. Jay B. Shipowitz, President and Chief Executive Officer and William S. McCalmont, Executive Vice President and Chief Financial Officer will present the first quarter review. For your convenience, the conference call will be replayed in its entirety beginning at approximately 7 p.m. EDT on October 23rd through 7 p.m. EDT on October 30th. If you wish to listen to a replay of this conference call, dial (800) 642-1687, provide your name and use confirmation number 1216667. 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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