DFC Global Corp.
) reported operating net earnings of 20 cents per share for the
fiscal second-quarter 2014 (ending Dec 31, 2013) that beat the
Zacks Consensus Estimate by a penny. Results, however, plunged
64% year over year.
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Adjusting for one-time items, DFC Global's net income of 6 cents
plummeted 87% year over year.
Decrease in commodity price of gold continued regulatory
transition in the United Kingdom and increasing weakness in the
value of the Canadian dollar adversely impacted the reported
Quarterly Operational Update
Total revenue of DFC Global for the quarter declined 9.4% to
$262.3 million from the prior-year quarter. Lower consumer
lending revenues (down 10.6% year over year), check cashing fees
(down 7.6%), purchased gold sales (down 33.7%) and money transfer
fees (down 8%) induced the overall downfall. Results also lagged
the Zacks Consensus Estimate of $270 million.
Operating expenses escalated 7.5% year over year to $207.9
million. The increase was due to higher salaries and benefits,
provision for loan losses, occupancy costs, advertising, and
maintenance and repairs.
Increase in operating expenses compounded with decline in
revenues pulling down the operating income by 45.3% year over
year to $54.4 million.
Adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) were $39.6 million, down 48.7% year over
Share Repurchase Update
During the quarter, DFC Global bought back 0.728 million shares
at an average share price of $11.77 exhausting its 5.0 million
common shares authorization. However, the board approved another
5.0 million share repurchase authorization. As on Dec 31, 2013,
the company is left with 3.8 million shares under its
DFC Global exited the quarter with cash and cash equivalents of
$196.2 million, up 8.6% from the fiscal 2013-end level.
Total assets of DFC Global slid 0.8% year over year to $1.72
billion as of Dec 31, 2013.
Long-term debt increased 3.7% from fiscal 2013-end to $975
million as of Dec 31, 2013.
As of Dec 31, 2013, DFC Global had drawn $30.7 million from its
$180 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 6.8 million of its
respective SEK 115.0 million and EUR 10.8 million credit
facilities in Scandinavia.
2014 Guidance Lowered
DFC Global lowered its EBITDA guidance to $170-$200 million from
$200.0-$240.0 million guided earlier. The revised guidance
accounts for slower-than-expected transition in the United
Kingdom to certain regulatory requirements, unfavorable trends in
Canadian dollar with respect to the U.S. dollar and decline in
gold commodity prices.
Operating earnings expectation was trimmed to 35-80 cents per
share from 65 cents-$1.27 per share for fiscal 2014, considering
a 38% effective tax rate.
Performance of Other Financial Service Companies
American Express Co.
), also known as AmEx, reported its fourth-quarter 2013 operating
earnings per share (EPS) of $1.21. While the result missed the
Zacks Consensus Estimate of $1.26, it remarkably surpassed the
year-ago quarter's earnings of 56 cents a share.
Discover Financial Services
) reported fourth-quarter earnings per share of $1.23, which
exceeded the Zacks Consensus Estimate of $1.17 per share. EPS
also improved 16% from the year-ago quarter's number of $1.06.
) reported fourth-quarter 2013 earnings of 29 cents per share,
which exceeded the Zacks Consensus Estimate by 70.6%. EPS also
surged 81% year over year.
DFC Global currently carries a Zacks Rank #3 (Hold).