DFC Global Beats Earnings, Lags Revs

Zacks

DFC Global Corp. (DLLR) reported operating net earnings of 49 cents per share for the fiscal fourth quarter 2013 (ending Jun 30, 2013), which surpassed the Zacks Consensus Estimate of 47 cents per share. However, results lagged the year-ago earnings of 58 cents per share by 15.5%.

Including for one-time charges, DFC Global incurred a net income of 18 cents in the fiscal fourth quarter 2013, rebounding from a loss of 9 cents incurred in the year-ago quarter.

Quarterly Operational Update

Total revenue of DFC Global for the quarter inched up 0.9% year over year to $269.1 million. Higher consumer lending revenues (up 7.4% year over year) along with slight improvement in pawn service fees and sales (up 2.7% year over year) aided the upside. However, results were behind the Zacks Consensus Estimate by 21%.

Operating expenses escalated 20.2% year over year to $201.8 million. Increase in expenses were due to higher salaries and benefits, provision for loan losses, occupancy costs, advertising expenses, depreciation, bank charges and armored carrier services, maintenance and repairs, and other costs.

The extent of increase in operating expenses offset the increase in revenue, thereby pulling down operating income by 31.9% year over year to $67.3 million in the reported quarter.

Adjusted earnings before interest, tax, depreciation and amortization (:EBITDA) were $69.3 million, down 11.7% year over year.

Fiscal 2013 Highlights

DFC Global posted operating net earnings of $1.76 per share in fiscal 2013, down 18.5% year over year.

Net loss came in at 2 cents per share, plunging from $1.16 per share earned in the year ago period.

Total revenue for fiscal 2013 climbed 6.4% year over year on a constant currency basis to $1.1 billion.

Share Repurchase Update

During fiscal 2013, DFC Global bought back 3.5 million shares for approximately $4 million, at an average share price of $15.53. Subsequently, since Jun 30, it bought back another 0.4 million shares at an average price of $15.49.

Financial Position

DFC Global exited fiscal 2013 with cash and cash equivalents of 196.2 million, down 12.4% year over year.

Total assets of DFC Global decreased 2.1% year over year to $1.7 billion at Jun 30, 2012.

Long-term debt of the company increased 3.8% year over year to $975 million as of Jun 30, 2013.

At Jun 30, 2013, DFC Global had drawn $50 million from its $235 million global revolving credit facility. The company had also drawn £1.8 million of its £2.5 million credit facilities in the U.K., and SEK 25.0 million and EUR 4.0 million of its respective SEK 125.0 million and EUR 10.8 million credit facilities in Scandinavia.

2014 Guidance

DFC Global estimates to generate EBITDA between $200.0 million and $240.0 million.

The company also expects to incur expense in the range of $10.0 million – $15.0 million to support ongoing regulatory related activities, including regulatory advisory costs, legal opinions and analysis, and audit and regulatory compliance costs in fiscal 2014.

Performance of Other Financial Services Companies

American Express Co. (AXP), also known as AmEx, reported its second-quarter 2013 operating earnings per share of $1.27. The result outpaced both the Zacks Consensus Estimate of $1.21 and the year-ago quarter earnings of $1.15 a share.

Discover Financial Services (DFS) reported second-quarter 2013 earnings per share (EPS) of $1.20, surpassing the Zacks Consensus Estimate of $1.16. EPS also surpassed the year-ago quarter’s earnings of 99 cents.

Euronet Worldwide Inc. (EEFT), reported second-quarter net operating earnings of 44 cents per share, beating the Zacks Consensus Estimate of 41 cents by 7.3%. Results also surpassed the year-ago adjusted earnings of 25 cents by 76%.

Zacks Rank

DFC Global currently carries Zacks Rank #3 (Hold).

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