DFC Global Misses on Earnings, Guides FY14

DFC Global Corp. (DLLR) reported operating net earnings of 21 cents per share for the fiscal first-quarter 2014 (ending Sep 30, 2013) that missed the Zacks Consensus Estimate of 26 cents per share. Results also plunged 61% year over year.

Adjusting for non-cash interest on convertible debt, unrealized foreign exchange gain, acquisition costs expense and other items, DFC Global incurred net loss of 2 cents, deteriorating from net earnings of 19 cents in the year-ago quarter.

Quarterly Operational Update

Total revenues of DFC Global for the quarter declined 5.5% to $261.1 million from the prior-year quarter. Lower consumer lending revenues (down 4.7% year over year), check cashing fees (down 7%), purchased gold sales (down 29%) and money transfer fees (down 8.4%) induced the overall downfall. However, results lagged the Zacks Consensus Estimate of $276 million.

Operating expenses escalated 5.7% year over year to $193 million. Increase in expenses was due to higher salaries and benefits, provision for loan losses, occupancy costs, maintenance and repairs, and cost of sale of purchased gold.

The extent of increase in operating expenses offset the improvement in revenues, thereby pulling down operating income by 27% year over year to $68.6 million.

Adjusted earnings before interest, tax, depreciation and amortization (:EBITDA) were $48.9 million, down 33% year over year.

Share Repurchase Update

During the quarter, DFC Global bought back 1 million shares at an average share price of $13.10. The company has exhausted its 5.0 million shares repurchase authorization. It is now authorized to buy back approximately 4.5 million additional shares under its newly authorized share repurchase plan.

Financial Position

DFC Global exited the quarter with cash and cash equivalents of 205.3 million, down 4.6% from the fiscal 2013-end level.

Total assets of DFC Global decreased 2% year over year to $1.76 billion as of Sep 30, 2012.

Long-term debt dropped 0.3% from fiscal 2013-end to $971.5 million as of Sep 30, 2013.

As of Sep 30, 2013, DFC Global had drawn $47.8 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 75.0 million and EUR 42.6 million of its respective SEK 115.0 million and EUR 10.8 million credit facilities in Scandinavia.

2014 Guidance

DFC Global reaffirmed its EBITDA guidance between $200.0 million and $240.0 million.

The company estimates earnings in the range of 65 cents to $1.27 per share.

Performance of Other Financial Service Companies

American Express Co. (AXP), also known as AmEx, reported its third-quarter 2013 operating earnings per share of $1.25. The result comfortably surpassed both the Zacks Consensus Estimate of $1.22 and the year-ago quarter earnings of $1.09 a share.

Discover Financial Services (DFS) reported third-quarter 2013 earnings per share (EPS) of $1.20, in line with the Zacks Consensus Estimate. However, EPS declined 3.2% from the year-ago quarter earnings of $1.24.

Euronet Worldwide Inc. (EEFT), reported third-quarter operating net income of 51 cents per share, beating the Zacks Consensus Estimate of 48 cents by 6.3%. Results also surpassed the year-ago operating net income of 38 cents per share by 31.6%.

Zacks Rank

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

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