QC Holdings, Inc. (Nasdaq:QCCO) reported income from continuing
operations of $1.5 million and revenues of $39.2 million for the
quarter ended December 31, 2014. For the year ended December 31,
2014, income from continuing operations totaled $5.1 million and
revenues were $153.1 million.
For the three months and year ended December 31, 2013, the
company reported a loss from continuing operations of $13.9 million
and $9.7 million, respectively, and revenues of $42.2 million and
$156.1 million, respectively. The three months and year ended
December 31, 2013 include $22.1 million of non-cash impairment
charges ($16.2 million, after consideration of income taxes)
resulting from the company's review of the recoverability of
goodwill and other intangibles for its branch lending and Canadian
online business units.
The three months and year ended December 31, 2014 and 2013
include discontinued operations relating to branches that were
closed during each period and the company's automotive business
that was sold in December 2013. Schedules reconciling adjusted
EBITDA to income from continuing operations for the three months
and year ended December 31, 2014 and 2013 are provided below.
** Fourth Quarter **
Revenues declined $3.0 million, or 7.1%, quarter-to-quarter due
to a deterioration in payday loan revenues, which reflects a
migration of customers from a single-pay loan product to an
installment product and increased competition from businesses
offering installment loans (both in branches and on the
Internet).
Branch operating costs, exclusive of loan losses, totaled $17.4
million during the three months ended December 31, 2014 compared to
$16.7 million in prior year's fourth quarter. This increase
reflects a heavier investment in marketing during fourth quarter
2014 versus prior year's fourth quarter.
Loan losses decreased $2.6 million during the three months ended
December 31, 2014, totaling $12.2 million versus $14.8 million in
prior year's quarter. The loss ratio decreased to 31.2% in fourth
quarter 2014 versus 35.0% in fourth quarter 2013. The decrease in
the loss ratio reflects improvement in each of the company's
segments, highlighted by a lower rate of returned items as a
percentage of revenues and a slightly better collection rate for
the single-pay product quarter-to-quarter.
Regional and corporate expenses totaled $6.3 million during the
three months ended December 31, 2014, essentially the same as in
fourth quarter 2013.
Other expenses decreased to $483,000 during fourth quarter 2014
from $22.3 million during fourth quarter 2013. In connection with
the review of the recoverability of goodwill and other intangibles,
during fourth quarter 2013, the company recorded: i) a goodwill
impairment charge of $15.7 million in the branch lending business
unit, and ii) goodwill and intangible impairment charges of $5.7
million and $669,000, respectively, associated with the company's
Canadian online subsidiary.
** Year Ended **
The company's revenues of $153.1 million during the year ended
December 31, 2014 were $3.0 million lower than prior year. Declines
in payday loan fees (for the reasons noted above) were partially
offset by growth in interest and fees from the company's
longer-term, higher-dollar installment products.
Branch operating costs, exclusive of loan losses, increased $1.5
million to $67.7 million during the year ended December 31, 2014
versus $66.2 million in prior year. This increase was primarily
attributable to higher marketing costs and bank-related charges,
partially offset by reduced compensation.
During 2014, the company reported loan losses of $44.9 million
compared to $46.7 million during 2013. The company's loss ratio
decreased to 29.3% versus 29.9% in 2013. This decline reflects
improvements in each of the company's business segments. The loss
rate for the company's longer-term, higher-dollar installment
loans, however, continues to be higher than expected, indicative of
the need for stronger underwriting and product refinements.
Regional and corporate expenses totaled $26.9 million during the
year ended December 31, 2014 compared to $28.6 million in 2013.
This decline reflects: i) $525,000 in severance and related costs
in connection with a company restructuring during the first half of
2013, ii) reduced public affairs expenditures during 2014, and iii)
lower overall compensation during 2014 resulting from the first
quarter 2013 restructuring.
Other expenses decreased to $2.2 million for the year ended
December 31, 2014 from $22.9 million in the prior year, for the
reasons noted in the quarterly discussion above.
** Dividend Declaration **
QC's Board of Directors declared a special cash dividend of
$0.05 per common share, payable April 6, 2015 to stockholders of
record as of March 23, 2015.
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 payday,
installment and title loans, check cashing, debit cards and money
transfer services, through 409 branches in 23 states at December
31, 2014. In Canada, a company subsidiary is engaged in short-term,
consumer Internet lending in various provinces. During fiscal 2014,
the company advanced more than $750 million to customers and
reported total revenues of approximately $153 million.
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 a number of 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 future rulemaking 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)
integration risks and costs associated with acquisitions, (11)
risks associated with the leverage of the company, (12) risks
associated with owning and managing non-U.S. businesses, and (13)
the other risks detailed under Item 1A. "Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31, 2013
filed with the Securities and Exchange Commission. 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 Statements
of Income |
(in thousands, except
per share amounts) |
(Unaudited) |
|
|
Three Months
Ended December 31, |
Year
Ended December 31, |
|
2013 |
2014 |
2013 |
2014 |
Revenues |
|
|
|
|
Payday loan fees |
$ 28,516 |
$ 25,196 |
$ 110,239 |
$ 99,379 |
Installment interest and
fees |
9,815 |
9,994 |
31,655 |
38,488 |
Other |
3,865 |
4,016 |
14,238 |
15,198 |
Total revenues |
42,196 |
39,206 |
156,132 |
153,065 |
Operating expenses |
|
|
|
|
Salaries and benefits |
8,587 |
8,519 |
34,255 |
33,199 |
Provision for losses |
14,779 |
12,232 |
46,676 |
44,887 |
Occupancy |
4,333 |
4,402 |
17,456 |
17,844 |
Depreciation and
amortization |
458 |
432 |
1,992 |
1,802 |
Other |
3,304 |
4,044 |
12,489 |
14,821 |
Total operating expenses |
31,461 |
29,629 |
112,868 |
112,553 |
Gross profit |
10,735 |
9,577 |
43,264 |
40,512 |
|
|
|
|
|
Regional expenses |
1,971 |
2,143 |
9,433 |
8,564 |
Corporate expenses |
4,245 |
4,205 |
19,178 |
18,299 |
Depreciation and amortization |
469 |
225 |
1,798 |
1,680 |
Interest expense |
448 |
263 |
1,418 |
1,369 |
Impairment of goodwill and intangible
assets |
22,055 |
|
22,055 |
|
Other expense, net |
222 |
483 |
819 |
2,170 |
Income (loss) from continuing
operations before income taxes |
(18,675) |
2,258 |
(11,437) |
8,430 |
Provision (benefit) for income taxes |
(4,748) |
801 |
(1,762) |
3,351 |
Income (loss) from
continuing operations |
(13,927) |
1,457 |
(9,675) |
5,079 |
Gain (loss) from discontinued operations, net
of income tax |
(1,390) |
23 |
(4,318) |
266 |
Net income
(loss) |
$ (15,317) |
$ 1,480 |
$ (13,993) |
$ 5,345 |
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
Basic |
|
|
|
|
Continuing
operations |
$ (0.79) |
$ 0.08 |
$ (0.55) |
$ 0.29 |
Discontinued
operations |
(0.08) |
-- |
(0.24) |
0.01 |
Net income |
$ (0.87) |
$ 0.08 |
$ (0.79) |
$ 0.30 |
|
|
|
|
|
Diluted |
|
|
|
|
Continuing
operations |
$ (0.79) |
$ 0.08 |
$ (0.55) |
$ 0.29 |
Discontinued
operations |
(0.08) |
-- |
(0.24) |
0.01 |
Net income |
$ (0.87) |
$ 0.08 |
$ (0.79) |
$ 0.30 |
Weighted average number of common
shares outstanding: |
|
|
|
|
Basic |
17,358 |
17,476 |
17,370 |
17,484 |
Diluted |
17,358 |
17,593 |
17,370 |
17,512 |
|
|
Non-GAAP
Reconciliations |
Adjusted
EBITDA |
(in
thousands) |
(Unaudited) |
|
QC reports adjusted EBITDA
(income from continuing operations before interest, taxes,
depreciation, amortization, charges related to stock options and
restricted stock awards, and non-cash gains or losses associated
with property disposition) as a financial performance measure that
is not defined by U.S. generally accepted accounting principles
("GAAP"). QC believes that adjusted EBITDA is a useful performance
metric for our investors and is a measure of operating and
financial performance that is commonly reported and widely used by
financial and industry analysts, investors and other interested
parties because it eliminates significant non-cash charges to
earnings. The year ended December 31, 2013 includes an additional
adjustment to EBITDA related to severance and related costs in
connection with a restructuring plan that the company undertook due
to a decline in loan volumes over the past few years as a result of
shifting customer demand, the sluggish economy, regulatory changes
and increasing competition in the short-term credit industry.It is
important to note that non-GAAP measures, such as adjusted EBITDA,
should not be considered as alternative indicators of financial
performance compared to net income or other financial statement
data presented in the company's consolidated financial statements
prepared pursuant to GAAP. Non-GAAP measures should be evaluated in
conjunction with, and are not a substitute for, GAAP financial
measures. The following table provides a reconciliation of income
from continuing operations to adjusted EBITDA: |
|
|
|
Three Months
Ended |
Year
Ended |
|
December
31, |
December
31, |
|
2013 |
2014 |
2013 |
2014 |
|
|
|
|
|
Income (loss) from continuing
operations |
$ (13,927) |
$ 1,457 |
$ (9,675) |
$ 5,079 |
Provision (benefit) for income
taxes |
(4,748) |
801 |
(1,762) |
3,351 |
Depreciation and
amortization |
927 |
657 |
3,790 |
3,482 |
Interest expense |
448 |
263 |
1,418 |
1,369 |
Non-cash losses on property
dispositions |
222 |
483 |
819 |
2,170 |
Non-cash impairment of goodwill
and intangible assets |
22,055 |
|
22,055 |
|
Stock option and restricted
stock expense |
236 |
120 |
1,192 |
577 |
Severance and related
costs |
|
|
557 |
|
Adjusted EBITDA |
$ 5,213 |
$ 3,781 |
$ 18,394 |
$ 16,028 |
|
|
QC Holdings,
Inc. |
Consolidated Balance
Sheets |
(in thousands)
|
|
|
|
|
|
December 31,
2013 |
December 31,
2014 |
ASSETS |
|
(Unaudited) |
Current assets |
|
|
Cash and cash equivalents |
$ 12,685 |
$ 14,220 |
Restricted cash |
1,076 |
950 |
Loans receivable, less
allowance for losses of $8,272 at December 31,
2013 and $6,794 at December 31, 2014 |
57,349 |
55,744 |
Assets held for sale |
3,702 |
2,110 |
Prepaid expenses and other
current assets |
6,723 |
4,718 |
Total current assets |
81,535 |
77,742 |
Non-current loans receivable, less allowance
for losses of $2,171 at December 31, 2013 and $2,133 at
December 31, 2014 |
6,332 |
5,603 |
Property and equipment, net |
6,628 |
5,013 |
Intangible assets, net |
1,560 |
835 |
Other assets, net |
12,049 |
12,306 |
Total assets |
$ 108,104 |
$ 101,499 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities |
|
|
Accounts payable |
$ 817 |
$ 638 |
Accrued expenses and other
liabilities |
7,770 |
6,692 |
Deferred revenue |
3,669 |
2,917 |
Current portion of long-term
debt |
4,500 |
|
Revolving credit facility |
16,300 |
12,000 |
Total current liabilities |
33,056 |
22,247 |
|
|
|
Non-current liabilities |
5,860 |
5,482 |
|
|
|
Long-term debt |
3,282 |
3,415 |
Total liabilities |
42,198 |
31,144 |
|
|
|
Commitments and contingencies |
|
|
Stockholders' equity |
65,906 |
70,355 |
Total liabilities and
stockholders' equity |
$ 108,104 |
$ 101,499 |
|
|
|
|
|
|
|
QC Holdings,
Inc. |
|
Selected Statistical
and Operating Data |
|
(in thousands, except
Average Loan, Average Term and Average Fee)
|
|
|
|
|
|
|
Three Months
Ended December 31, |
Year
Ended December 31, |
|
|
2013 |
2014 |
2013 |
2014 |
|
|
Unaudited |
Unaudited |
|
|
|
|
|
|
|
Operating Data – Short-term
Loans: |
|
|
|
|
|
Loan volume |
$ 195,201 |
$ 171,959 |
$ 743,865 |
$ 671,532 |
|
Average loan (principal
plus fee) |
389.36 |
383.37 |
385.02 |
385.42 |
|
Average fee |
59.73 |
58.77 |
59.30 |
59.07 |
|
|
|
|
|
|
|
Operating Data – Installment
Loans: |
|
|
|
|
|
Loan volume |
$ 17,147 |
$ 14,119 |
$ 54,641 |
$ 54,270 |
|
Average loan
(principal) |
803.31 |
775.68 |
725.06 |
768.29 |
|
Average term (days) |
263 |
254 |
243 |
255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Revenues: |
|
|
|
|
Credit services fees |
$ 1,581 |
$ 1,302 |
$ 6,192 |
$ 5,097 |
Check cashing fees |
661 |
584 |
2,750 |
2,560 |
Open-end credit fees |
923 |
1,424 |
2,092 |
4,733 |
Title loan fees |
119 |
67 |
789 |
310 |
Other |
581 |
639 |
2,415 |
2,498 |
Total |
$ 3,865 |
$ 4,016 |
$ 14,238 |
$ 15,198 |
|
|
|
|
|
Loss Data: |
|
|
|
|
|
|
|
|
|
Provision for losses,
continuing operations: |
|
|
|
|
Charged-off to
expense |
$ 21,081 |
$ 19,531 |
$ 75,898 |
$ 78,117 |
Recoveries |
(9,262) |
(7,685) |
(34,122) |
(31,975) |
Adjustment to provision
for losses based on evaluation of outstanding receivables |
2,960 |
386 |
4,900 |
(1,255) |
Total provision for
losses |
$ 14,779 |
$ 12,232 |
$ 46,676 |
$ 44,887 |
|
|
|
|
|
Provision for losses as
a percentage of revenues |
35.0% |
31.2% |
29.9% |
29.3% |
Provision for losses as
a percentage of loan volume (all products) |
6.6% |
6.2% |
5.5% |
5.9% |
CONTACT: Investor Relations Contact:
Douglas E. Nickerson (913-234-5154)
Chief Financial Officer
QC (PK) (USOTC:QCCO)
Historical Stock Chart
From Jul 2024 to Aug 2024
QC (PK) (USOTC:QCCO)
Historical Stock Chart
From Aug 2023 to Aug 2024