OVERLAND PARK, Kan., April 23, 2018 (GLOBE NEWSWIRE) -- QC Holdings, Inc. (OTC PINK:QCCO) reported a net loss of $3.5 million and revenues of $98.2 million for the year ended December 31, 2017. Net loss totaled $16.8 million and revenues totaled $117.2 million for the year ended December 31, 2016.

The year ended December 31, 2017 includes severance and corporate relocation charges of approximately $569,000. The year ended December 31, 2016 includes charges of $1.6 million related to recording additional loan loss reserve, severance and lease liability costs as part of the closure of the company’s branches in Washington, South Carolina and Virginia, a $2.7 million loan loss reserve for a business-to-business receivable and approximately $800,000 in severance and other costs.

The decline in revenues during 2017 compared to 2016 was primarily attributable to the third quarter 2016 store swap transaction, whereby the company acquired 33 branches operated in Illinois, Kansas, Missouri and Utah and sold its 98 branches operated in Alabama, Arizona, California, Mississippi and Ohio. For the 229 company branches not a part of the store swap, revenues improved 2% year-to-year due to an increase in new customers.

Loan loss rates dropped to 26.1% during 2017 from 35.7% in the prior year.  This decline is attributable to $3.5 million in 2016 loan loss reserves as noted above, improvements in installment loan underwriting and product offerings, and 2017 recoveries in the business factoring portfolio.

During 2016, the company determined that due to the net operating losses incurred for the years ended December 31, 2015 and 2016, the company did not meet the accounting requirements that would indicate that available domestic loss carry-forwards and deferred tax assets will be recognized in the future. Accordingly, a valuation allowance of $8.5 million was established at December 31, 2016, which resulted in a net tax charge for 2016. During 2017, the company established a valuation allowance related to the net operating loss carry-forwards associated with its Canadian operations, which resulted in a net tax charge for 2017.

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 single-pay, installment and title loans, check cashing, debit cards and money transfer services, through 258 branches in 14 states at December 31, 2017. 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 recently 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)
     
 Three Months Ended
December 31,
  Year Ended
December 31,
 
  2016   2017   2016   2017 
Revenues          
Consumer loan interest and fees$    24,526  $    23,932  $  108,108  $    88,841 
Other     2,253       2,445       9,131       9,373 
Total revenues     26,779       26,377       117,239       98,214 
Provision for losses   10,687     8,380     41,833     25,670 
Operating expenses     13,471       12,222       59,617       49,053 
Gross profit   2,621     5,775     15,789     23,491 
       
Corporate and Regional expenses   6,139     5,597     27,446     23,592 
Other expense, net     981       646       627       2,465 
Loss before income taxes   (4,499)      (468)    (12,284)    (2,566)
Provision for income taxes     7,201       645       4,484       973 
Net loss$    (11,700) $    (1,113) $    (16,768) $    (3,539)
       
Loss per share:      
Basic      
  Net loss$    (0.68) $    (0.06) $    (0.97) $    (0.20)
       
Diluted      
  Net loss$    (0.68) $    (0.06) $    (0.97) $    (0.20)
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,
2016
 December 31,
2017
ASSETS  (Unaudited) 
Current assets     
Cash and cash equivalents$  16,660  $  16,198 
Restricted cash   1,865     1,879 
Loans receivable, less allowance for losses of $9,836 at  December 31, 2016 and $7,755 at December 31, 2017   32,586     32,921 
Other current assets     6,500       3,748 
Total current assets   57,611     54,746 
Non-current loans receivable, less allowance for losses of $623 at  December 31, 2016 and $83 at December 31, 2017   1,664     258 
Property and equipment, net   6,039     8,241 
Other assets, net     8,041       7,313 
Total assets$  73,355  $  70,558 
      
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Current liabilities     
Accounts payable and other current liabilities$  10,420  $    9,355 
Revolving credit facility   2,250     2,500 
Subordinated debt     7,736       8,168 
Total current liabilities   20,406     20,023 
      
Non-current liabilities     3,361       4,471 
Total liabilities   23,767     24,494 
      
Stockholders’ equity     49,588       46,064 
Total liabilities and stockholders’ equity$  73,355  $  70,558 
      


    
QC Holdings, Inc.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
    
 Year Ended
December 31, 2016
 Year Ended
December 31, 2017
      
Operating activities:   
Net loss$  (16,768) $    (3,539)
Adjustments to reconcile net loss to net cash   51,049     29,394 
Changes in assets and liabilities     (29,110)      (23,409)
   Net operating     5,171       2,446 
    
Investing activities:   
Capital expenditures   (3,781)    (3,345)
Other     (867)      3 
   Net investing     (4,648)      (3,342)
    
Financing activities:   
Net repayment of borrowings     375 
Other     (83)      (50)
   Net financing     (83)      325 
    
Effect of exchange rate changes on cash and cash equivalents     105       109 
    
Net increase (decrease) in cash and cash equivalents   545     (462)
Cash and cash equivalents at beginning of year     16,115       16,660 
Cash and cash equivalents at end of year$  16,660  $  16,198 
    

 


Contact:
   Douglas E. Nickerson (913-234-5154)
   Chief Financial Officer