DFC Global Corp.
) reported operating earnings of 56 cents per share for fiscal
second quarter 2013 (ending Dec 31, 2012), which surpassed the
Zacks Consensus Estimate of 54 cents by 3.7%. Results improved
7.7% from 52 cents earned in the year-ago quarter. Post-tax
operating income amounted to $24.4 million in the reported
quarter, improving 3.8% from $23.5 million in the year-ago
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The operating results exclude non-recurring charges, the non-cash
interest expense resulting from the adoption of ASC 470-20 and
the non-cash amortization associated with the legacy
cross-currency interest rate swap agreements.
Including these charges, reported net income came in at $19.7
million or 45 cents per share in the quarter, comparing
unfavorably with reported net income of $26.6 million or 59 cents
in the prior-year quarter.
Total revenue for the quarter climbed 11.2% year over year to
$292.9 million, outperforming the Zacks Consensus Estimate by
1.7%. Higher consumer lending revenues largely aided the upside,
along with improvement in pawn service fees and sales and
purchased gold sales and money transfer fees.
Operating expenses escalated 15.5% year over year to $193.3
million, primarily attributable to higher salaries and benefits,
provision for loan losses, depreciation, advertising and
The magnitude of increase in operating costs was offset by the
rise in revenue, driving operating income to improve 3.7% year
over year to $99.6 million in the reported quarter.
Evaluation of Capital and Balance Sheet
At the end of Dec 2012, the debt structure of DFC Global
comprised $230.0 million of senior convertible notes due 2017,
$36.2 million of U.S. senior convertible notes due 2027 and
$120.0 million of U.S. senior convertible notes due 2028.
In addition, DFC Global has $600.0 million of senior unsecured
notes, which are not due before Dec 2016 and $36.6 million (SEK
240.0 million) term loan in Sweden due Jul 2016.
As of Sep 30, 2012, DFC Global had drawn $45 million from its
$235.0 million global revolving credit facility. The company had
also drawn £5.3 million of its £6.0 million credit facility in
the U.K. and SEK 35.0 million and EUR 14.8 million of its
respective SEK 125.0 million and EUR 18.8 million credit
facilities in Scandinavia, to fund pawn pledge books in U.K. and
Share Repurchase Update
In fiscal second quarter, DFC Global bought back 1.6 million
shares at an average share price of $16.89.
The company lowered the high end of its 2013 operating earnings
guidance. It comes to $2.35 and $2.45, revised from $2.35 and
$2.55 per share.
DFC Global has been diversifying in both sectors of products and
geography for years. It has completed several acquisitions
consistent with its objective to expand upon and diversify from
its core retail financial services business in Canada, UK and the
It strives to be one of the leading providers of financial
services to the ALICE (Asset Limited, Income Constrained,
Employed) and ARTI (Asset Rich, Temporarily Illiquid) demography.
As such, it expects to purchase more pawn lending store chains in
the United Kingdom and continental Europe. It also intends to
work on de novo stores and widen its exposure to secured jewelry
lending in select North American locations.
The company is also eyeing business prospects in the emerging
economies of Asia, Africa and South America.
DFC Global currently carries a Zacks Rank # 3 (Hold). Among
diversified financial services companies carrying a favorable
Zacks Rank #1 (Strong Buy),
Euronet Worldwide Inc.
) is expected to release its fourth-quarter results on Feb
FleetCor Technologies, Inc.
), carrying a Zacks Rank #2 (Buy) will report on Feb 7, after the
closing bell. Another Zacks Rank # 2 carrier
Apollo Residential Mortgage, Inc
) is also worth noting.