OVERLAND PARK, Kan., May 5, 2015 (GLOBE NEWSWIRE) -- QC Holdings, Inc. (Nasdaq:QCCO) reported income from continuing operations of $1.1 million and revenues of $34.5 million for the quarter ended March 31, 2015. For the three months ended March 31, 2014, income from continuing operations totaled $3.2 million and revenues were $38.5 million.
The three months ended March 31, 2014 include discontinued operations relating to branches that were closed during the period. Schedules reconciling adjusted EBITDA to income from continuing operations for the three months ended March 31, 2015 and 2014 are provided below.
Revenues declined 10.4%, or $4.0 million, quarter-to-quarter largely due to lower interest and fees from the company's single-pay product. This decline reflects competitive pressures as customers explore alternative loan products and distribution channels.
Operating expenses, exclusive of loan losses, decreased $302,000 (to $16.6 million) during the three months ended March 31, 2015 versus prior year's first quarter. This decrease was primarily attributable to reduced compensation, partially offset by higher marketing costs.
Loan losses were essentially the same quarter-to-quarter. The loss ratio increased to 23.4% in first quarter 2015 versus 21.1% in last year's first quarter. The increase in the loss ratio is attributable to higher charge-offs in the Centralized Lending segment as a result of less-restrictive underwriting during the early phases of the product launch. The Branch Lending segment reported a lower loss rate in first quarter 2015 due to a reduced rate of charge-offs as a percentage of revenues, partially offset by a decline in the collection rate.
Regional and corporate expenses totaled $7.1 million during the three months ended March 31, 2015, an increase of $186,000 over the $6.9 million in first quarter 2014. This increase is due to higher discretionary compensation in first quarter 2015 compared to first quarter 2014.
** Dividend Declaration **
QC's Board of Directors declared a special cash dividend of $0.025 per common share, payable June 2, 2015 to stockholders of record as of May 19, 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 single-pay, installment and title loans, open-end credit, check cashing, prepaid debit cards and money transfer services, through 407 branches in 23 states at March 31, 2015. 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 proposed 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) risks associated with owning and managing non-U.S. businesses, and (11) the other risks detailed under Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014 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 March 31, |
||
| 2014 | 2015 | |
| Revenues | ||
| Consumer loan interest and fees | $ 35,721 | $ 32,078 |
| Other | 2,779 | 2,437 |
| Total revenues | 38,500 | 34,515 |
| Operating expenses | ||
| Salaries and benefits | 8,349 | 7,898 |
| Provision for losses | 8,139 | 8,062 |
| Occupancy | 4,663 | 4,605 |
| Depreciation and amortization | 472 | 432 |
| Other | 3,433 | 3,680 |
| Total operating expenses | 25,056 | 24,677 |
| Gross profit | 13,444 | 9,838 |
| Regional expenses | 2,250 | 2,116 |
| Corporate expenses | 4,683 | 5,003 |
| Depreciation and amortization | 472 | 196 |
| Interest expense | 416 | 241 |
| Other expense, net | 244 | 519 |
| Income from continuing operations before income taxes | 5,379 | 1,763 |
| Provision for income taxes | 2,197 | 676 |
| Income from continuing operations | 3,182 | 1,087 |
| Gain from discontinued operations, net of income tax | 271 | -- |
| Net income | $ 3,453 | $ 1,087 |
| Earnings per share: | ||
| Basic | ||
| Continuing operations | $ 0.18 | $ 0.06 |
| Discontinued operations | 0.02 | -- |
| Net income | $ 0.20 | $ 0.06 |
| Diluted | ||
| Continuing operations | $ 0.18 | $ 0.06 |
| Discontinued operations | 0.02 | -- |
| Net income | $ 0.20 | $ 0.06 |
| Weighted average number of common shares outstanding: | ||
| Basic | 17,441 | 17,363 |
| Diluted | 17,441 | 17,363 |
| 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 dispositions and foreign currency effects) 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. 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 | ||
| March 31, | ||
| 2014 | 2015 | |
| Income from continuing operations | $ 3,182 | $ 1,087 |
| Provision for income taxes | 2,197 | 676 |
| Depreciation and amortization | 944 | 628 |
| Interest expense | 416 | 241 |
| Non-cash items related to property dispositions and foreign currency effects | 244 | 519 |
| Restricted stock expense | 166 | 44 |
| Adjusted EBITDA | $ 7,149 | $ 3,195 |
| QC Holdings, Inc. | ||
| Consolidated Balance Sheets | ||
| (in thousands) | ||
| December 31, | March 31, | |
| 2014 | 2015 | |
| ASSETS | (Unaudited) | |
| Current assets | ||
| Cash and cash equivalents | $ 14,220 | $ 16,673 |
| Restricted cash and other | 950 | 950 |
| Loans receivable, less allowance for losses of $6,794 at December 31, 2014 and $5,956 at March 31, 2015 | 55,744 | 44,028 |
| Assets held for sale | 2,110 | 934 |
| Prepaid expenses and other current assets | 4,718 | 5,467 |
| Total current assets | 77,742 | 68,052 |
| Non-current loans receivable, less allowance for losses of $2,133 at December 31, 2014 and $1,905 at March 31, 2015 | 5,603 | 3,828 |
| Property and equipment, net | 5,013 | 4,457 |
| Intangible assets, net | 835 | 749 |
| Other assets, net | 12,306 | 12,065 |
| Total assets | $ 101,499 | $ 89,151 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Accounts payable | $ 638 | $ 488 |
| Accrued expenses and other current liabilities | 6,692 | 6,551 |
| Deferred revenue | 2,917 | 2,096 |
| Revolving credit facility | 12,000 | -- |
| Total current liabilities | 22,247 | 9,135 |
| Non-current liabilities | 5,482 | 5,059 |
| Long-term debt | 3,415 | 3,449 |
| Total liabilities | 31,144 | 17,643 |
| Commitments and contingencies | ||
| Stockholders' equity | 70,355 | 71,508 |
| Total liabilities and stockholders' equity | $ 101,499 | $ 89,151 |
| QC Holdings, Inc. | ||
| Selected Statistical and Operating Data | ||
| (in thousands, except Average Loan, Average Term and Average Fee) | ||
|
Three Months Ended March 31, |
||
| 2014 | 2015 | |
| Unaudited | Unaudited | |
| Operating Data – Single-Pay Loans: | ||
| Loan volume | $ 165,083 | $ 144,854 |
| Average loan (principal plus fee) | 390 | 385 |
| Average fee | 60 | 59 |
| Operating Data – Installment Loans: | ||
| Loan volume | $ 10,800 | $ 8,608 |
| Average loan (principal) | 745 | 737 |
| Average term (days) | 249 | 242 |
| Revenues: | ||
| Single-pay loan fees | $ 25,088 | $ 22,036 |
| Installment loan interest and fees | 9,478 | 8,665 |
| Open-end credit fees | 1,060 | 1,310 |
| Title loan fees | 95 | 67 |
| Consumer loan interest and fees | 35,721 | 32,078 |
| Credit services fees | 1,400 | 1,161 |
| Check cashing fees | 761 | 664 |
| Other fees | 618 | 612 |
| Other revenues | 2,779 | 2,437 |
| Total revenues | $ 38,500 | $ 34,515 |
| Loss Data: | ||
| Provision for losses, continuing operations: | ||
| Charged-off to expense | $ 19,075 | $ 16,978 |
| Recoveries | (8,969) | (7,618) |
| Adjustment to provision for losses based on evaluation of outstanding receivables | (1,967) | (1,298) |
| Total provision for losses | $ 8,139 | $ 8,062 |
| Provision for losses as a percentage of revenues | 21.1% | 23.4% |
| Provision for losses as a percentage of loan volume (all products) | 4.4% | 5.0% |