QC Holdings, Inc. Reports 2016 Results

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| Source: QC Holdings

OVERLAND PARK, Kan., March 31, 2017 (GLOBE NEWSWIRE) -- QC Holdings, Inc. (OTC PINK:QCCO) reported a net loss of $16.8 million and revenues of $117.2 million for the year ended December 31, 2016. Net loss totaled $1.0 million and revenues totaled $135.5 million for the year ended December 31, 2015.

The year ended December 31, 2016 includes charges of: i) $2.7 million due to a loan loss reserve for a business-to-business receivable; ii) $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 during the second half of 2016; and iii) $800,000 in severance and other costs. In addition, due to the net operating losses incurred for the years ended December 31, 2015 and 2016, the company has determined that it has not met the accounting requirements that would indicate that available loss carry-forwards and deferred tax assets will be recognized in the future. Accordingly, a valuation allowance of $8.5 million has been established at December 31, 2016, which resulted in a net tax charge for 2016.

The year ended December 31, 2015 includes $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 276 branches in 14 states at December 31, 2016 (after consideration of branches to be closed in Virginia). 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)
 
   Year Ended 
December 31,
 
   2015   2016  
Revenues     
Consumer loan interest and fees $126,318  $108,108  
Other    9,183     9,131  
Total revenues  135,501   117,239  
Provision for losses  39,190   41,833  
Operating expenses    66,629     59,617  
  Gross profit  29,682   15,789  
Corporate and Regional expenses  28,042   27,446  
Other expense, net    2,777     627  
Loss from continuing operations before income taxes  (1,137)  (12,284) 
Provision (benefit) for income taxes    (94)    4,484  
Net loss $  (1,043) $  (16,768) 
          
Loss per share:     
Basic     
Net loss $  (0.06) $  (0.97) 
          
Diluted     
Net loss $  (0.06) $  (0.97) 
Weighted average number of common shares outstanding:         
Basic  17,351   17,333  
Diluted  17,351   17,333  



QC Holdings, Inc.
Consolidated Condensed Balance Sheets
(in thousands)
 
  December 31,
2015
  December 31,
2016
ASSETS
    (Unaudited) 
Current assets    
Cash and cash equivalents$16,115 $16,660 
Restricted cash 950  1,865 
Loans receivable, less allowance for losses of $6,395 at December 31, 2015 and $9,836 at December 31, 2016 50,555  32,586 
Other current assets   6,286    6,500 
Total current assets 73,906  57,611 
Non-current loans receivable, less allowance for losses of $1,556 at December 31, 2015 and $623 at December 31, 2016 3,802  1,664 
Property and equipment, net 4,797  6,039 
Other assets, net   11,486    8,041 
Total assets$ 93,991 $ 73,355 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities    
Accounts payable and other current liabilities$11,407 $10,420 
Revolving credit facility 6,250  2,250 
Subordinated debt   3,553    7,736 
Total current liabilities 21,210  20,406 
     
Non-current liabilities   4,967    3,361 
Total liabilities 26,177  23,767 
     
Stockholders’ equity   67,814    49,588 
Total liabilities and stockholders’ equity$ 93,991 $ 73,355 
         


QC Holdings, Inc.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
 
  Year Ended
December 31,
2015
   Year Ended
December 31,
2016
 
         
Operating activities:    
Net loss$(1,043) $(16,768) 
Adjustments to reconcile net loss to net cash 42,806   51,049  
Changes in assets and liabilities   (31,131)    (29,110) 
Net operating   10,632     5,171  
           
Investing activities:          
Capital expenditures (2,220)  (3,782) 
Other   1,195     (866) 
Net investing   (1,025)    (4,648) 
           
Financing activities:          
Net repayment of borrowings (5,750)   
Other   (1,535)    (83) 
Net financing   (7,285)    (83) 
           
Effect of exchange rate changes on cash and cash equivalents   (427)    105  
           
Net increase in cash and cash equivalents 1,895   545  
Cash and cash equivalents at beginning of year   14,220     16,115  
Cash and cash equivalents at end of year$ 16,115  $ 16,660  
           

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