Dollar Financial Corp. F1Q09 (Qtr End 9/30/08) Earnings Call Transcript

Transcript by:

Dollar Financial Corp. (DLLR)

F1Q09 Earnings Call

October 30, 2008 5:00 pm ET

Executives

Jeffrey A. Weiss – Chief Executive. Officer

Randall Underwood – Chief Financial Officer

Julie Prozeller – Financial Dynamics

Analysts

John Rowan – Sidoti & Company

Dennis Telzrow – Stephens, Inc.

John Hecht – JMP Securities

Robert Napoli – Piper Jaffray

Henry Coffey -- Sterne, Agee & Leach

Richard Shane -- Jeffries & Co.

Presentation

Operator

Hello and welcome to the Dollar Financials Corp fiscal 2009 first quarter financial results conference call. (Operator Instructions). I would now like to turn the call over to Julie Prozeller of Financial Dynamics.

Julie Prozeller – Financial Dynamics

Thank you, good afternoon everyone, joining us today from Dollar Financial Corp, are Mr. Jeff Weiss Chairman and CEO and Mr. Randy Underwood Executive Vice President and CFO.

Before we begin our conference call I would like to remind you that the remarks made during this conference call with reference to future expectations, transplants, forecasts, and the performance of Dollar Financial Corp and its subsidiaries and it’s markets are forward looking statements within in the meanings of the Private Security Litigation Reform Act of 1995.

These forward-looking statements reflect the company’s current beliefs; estimates and expectations involve a number of risks and uncertainties. Today the company will be commenting on previously issued guidance on expectation of future results. As a reminder these statements indicate the expectation of the Dollar Financial management team as of this date. These statements supersede any and all previous statements made by the company regarding the matters addressed.

These statements are forward-looking statements and cannot be guaranteed and may prove to be wrong. This outlook is based upon various assumptions, which include but are not limited to the following. No material change in the products and services offered in all locations as of October 30, 2008, no material change in the company’s current store development acquisition plans.

No material adverse results and litigation or regulatory proceedings involving the company that currently exists or that may arise in the future and of course can be affected by changes in the currency exchange rate.

Factors that could effect results further are outlined in the company's annual report and form 10-Qs and 10-Ks. The company’s statement will include a discussion of adjusted EBITDA, which is a non-GAAP financial measure. The most comparable GAAP financial measure to adjusted EBITDA is income before income taxes.

The reconciliation between adjusted EBITDA and income before income taxes is consistent with the company’s reconciliation as presented in the recent press release dated October 30, 2008 which is available on the company’s website at www.dfc.com. I would now like to turn the call over to Jeff for an overview of the recent quarter's activities. Jeff?

Jeffrey A. Weiss

Thank you Julie, good afternoon everybody, just like the Phillies we are again pleased with our results for the quarter as we achieved record revenue of $153.1 million driven by growth in all of our [inaudible]. Although these are unprecedented times with extreme economic volatility we are confident in the strength and resiliency of our business model. Our growth strategy continues to focus on developing our business as a multi-product, multi-country, multi-channel retailer of basic financial services to the under bank consumer.

We continue to be the most diversified company in our sector in terms of both products and geography. We believe this diversification helps manage specific product line and regulatory risks while providing a broader foundation on which to build sustainable earnings growth and shareholder value.

Clearly no one is immune to these turbulent economic times; however, our recession resistant business model remains sound. The key challenge facing us today is the volatility in the currency markets, which Randy will discuss in more detail later in the quarter.

Although we are seeing some slight erosion in the size of our customer's checks it has not been significant as our customers are generally in jobs that need to be done despite economic turmoil. Our customer base is primarily composed of service sector workers. Workers who typically work at non-discretionary jobs, hospitals, fast food restaurants, retail store chains, janitorial services, and other general skilled and semi-skilled areas, many of which are recession resistant. For example, no matter what the state of the economy someone still needs to cut hair, flip burgers, and work the cash register at gas stations or convenience stores.

In addition service sector workers consistently adjust to loosing a job quickly. For example, they loose a job in a pizza parlor, there’s a job they can find with similar pay in other businesses, like McDonald’s or Dunkin' Donuts.

Unlike an accountant or auto mechanic whose skill and pay level may require a more focused and lengthy job search, our customers are willing to do whatever jobs are available. Historically these customer characteristics tend to dampen the effect of the economic cycle in our business.

Over the past few months the global financial markets course has been very volatile driven by falling home values and record mortgage default. Only a small percentage of our customers are homeowners and as a result are not directly impacted by the current economic crisis. While it remains difficult to predict exactly how and to what extent the current credit crisis will filter through the overall economy, thus far we have not seen a significant impact from the current credit crisis on our business.

We have noticed that over the last several quarters the collections environment is becoming somewhat more difficult. The softening global economy, higher year-over-year gasoline and energy costs as well as price increases in other everyday necessities are stretching the average consumer's budget.

Read the rest of this transcript for free on seekingalpha.com