QC Holdings, Inc. Reports Third Quarter 2016 Results

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| Source: QC Holdings

OVERLAND PARK, Kan., Nov. 18, 2016 (GLOBE NEWSWIRE) -- QC Holdings, Inc. (OTC PINK:QCCO) reported a net loss of $1.9 million and revenues of $29.6 million for the third quarter ended September 30, 2016. For the nine months ended September 30, 2016, net loss totaled $5.1 million and revenues were $90.5 million. For the three months ended September 30, 2015, net loss totaled $1.5 million and revenues were $34.5 million. Net loss totaled $1.4 million and revenues totaled $101.0 million for the nine months ended September 30, 2015.

The three months and nine months ended September 30, 2016 include charges of $1.6 million (approximately $1.0 million net of income taxes) in connection with recording additional loan loss reserve, severance and lease liability costs in connection with the closure of all of the company’s branches in Washington, South Carolina and Virginia. The nine months ended September 30, 2016 include a charge of $2.7 million (approximately $1.7 million net of income taxes) due to a loan loss reserve for a business-to-business receivable and approximately $340,000 (approximately $206,000 net of income taxes) in severance and other costs. The three months and nine months ended September 30, 2015 include $1.5 million (approximately $900,000 net of income taxes) in accrued costs associated with a tentative settlement of an outstanding legal matter.

The decline in revenues during 2016 compared to 2015 reflects lower interest and fees from the company’s consumer loan products due to competitive pressures as customers explore alternative loan products and distribution channels. In addition, revenues were affected by 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. Loan loss rates were higher in 2016 versus 2015 as a result of the business-to-business loan reserve, the additional loan loss reserve associated with the closed branches and an increase in losses during the transition and integration of the branches acquired in the store swap.

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 279 branches in 14 states at October 31, 2016 (after consideration of branches to be closed in South Carolina, Virginia and Washington). 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 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) 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 
September 30,
   Nine Months Ended 
September 30,
 2015
 2016
 2015 2016
Revenues       
Consumer loan interest and fees$32,220  $27,186  $94,173  $83,582 
Other 2,259   2,379   6,809   6,878 
Total revenues 34,479   29,565   100,982   90,460 
Provision for losses 10,525   11,528   29,207   31,146 
Operating expenses 17,191   14,565   49,923   46,146 
Gross profit 6,763   3,472   21,852   13,168 
                     
Corporate and Regional expenses 7,787   7,513   21,221   21,307 
Other expense (income), net 819   (942)  2,091   (354)
Loss from continuing operations before income taxes (1,843)  (3,099)  (1,460)  (7,785)
Benefit for income taxes (350)  (1,152)  (72)  (2,717)
Net loss$(1,493) $(1,947) $(1,388) $(5,068)
                     
Loss per share:       
Basic       
Net loss$(0.09) $(0.11) $(0.08) $(0.29)
                     
Diluted                    
Net loss$(0.09) $(0.11) $(0.08) $(0.29)
Weighted average number of common shares outstanding:                    
Basic 17,333   17,333   17,357   17,333 
Diluted 17,333   17,333   17,357   17,333 
         


QC Holdings, Inc.
Consolidated Condensed Balance Sheets
(in thousands)
 
  December 31,
2015
   September 30,
2016
ASSETS      (Unaudited)
Current assets       
Cash and cash equivalents$16,115  $16,717 
Restricted cash 950   950 
Loans receivable, less allowance for losses of $6,395 at  December 31, 2015 and $10,784 at September 30, 2016 50,555   37,021 
Other current assets   6,286     10,070 
Total current assets 73,906   64,758 
Non-current loans receivable, less allowance for losses of $1,556 at  December 31, 2015 and $782 at September 30, 2016 3,802   1,921 
Property and equipment, net 4,797   6,114 
Other assets, net   11,486     12,289 
Total assets$93,991  $85,082 
        
LIABILITIES AND STOCKHOLDERS’ EQUITY       
Current liabilities       
Accounts payable and other current liabilities$11,407  $12,482 
Revolving credit facility 6,250     
Subordinated debt   3,553     7,661 
Total current liabilities 21,210   20,143 
        
Non-current liabilities 4,967   3,411 
Subordinated debt       
Total liabilities 26,177   23,554 
        
Stockholders’ equity   67,814     61,528 
Total liabilities and stockholders’ equity$93,991  $85,082 
        


QC Holdings, Inc.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
 
  Nine Months Ended
September 30, 2015

    Nine Months Ended
September 30, 2016

 
          
Operating activities:   
Net loss$(1,388) $(5,067)
Adjustments to reconcile net loss to net cash 32,215   33,196 
Changes in assets and liabilities (21,681)    (22,523)
Net operating   9,146     5,606 
        
Investing activities:       
Capital expenditures (928)  (2,973)
Other   1,187     58 
Net investing   259     (2,915)
        
Financing activities:       
Net repayment of borrowings (9,000)  (2,265)
Other   (1,485)    
Net financing (10,485)    (2,265)
        
Effect of exchange rate changes on cash and cash equivalents   (317)    176 
        
Net increase (decrease) in cash and cash equivalents (1,397)  602 
Cash and cash equivalents at beginning of year   14,220     16,115 
Cash and cash equivalents at end of period$12,823  $16,717 
        
Contact:
Douglas E. Nickerson  (913-234-5154)
Chief Financial Officer