Advance America Cash Advance Reports Record Earnings Per Share for the Fourth Quarter and Year
SPARTANBURG, S.C., Feb. 17 /PRNewswire-FirstCall/ --
Advance America, Cash Advance Centers, Inc. (NYSE:AEA) today reported the results of its operations for the year and quarter ended December 31, 2009.
Highlights of the Year and Quarter ended December 31, 2009: -- Diluted earnings per share for the year increased to $0.88, which represents a 46.7% increase over the prior year -- Diluted earnings per share for the quarter increased to $0.32, which represents a 220% increase over the same period in 2008 -- Center gross profit for the quarter increased $11.3 million to $49.8 million, which represents a 29.2% increase over the same period for the prior year -- The provision for doubtful accounts for the quarter decreased to 18.3% of revenue compared to 24.4% in the same period in the prior year
Commenting on the results of the fourth quarter of 2009, Advance America's President and Chief Executive Officer, Ken Compton, said, "Advance America's solid performance during the fourth quarter is the result of continued demand for the simple, reliable, transparent and cost-competitive financial services that we offer to consumers, coupled with a concentrated effort to reduce costs and improve our bottom-line performance. In 2009, we remained focused on offering high-quality customer service and short-term loan products that help meet the varying needs of American consumers. In fact, thanks to the efforts of a strong management team and thousands of dedicated employees, Advance America was able to produce the highest quarterly and yearly earnings per share since becoming a public company."
Revenues
For the year ended December 31, 2009, total revenues decreased 4.3% to $647.7 million, compared to $676.4 million for the same period in 2008. Total revenues for the quarter ended December 31, 2009, decreased 1.0% to $173.2 million, compared to $175.0 million for same period in 2008. These comparisons include the results of operations in Arkansas and New Mexico, states the Company exited in 2008, as well as operations in New Hampshire, a state in which the Company ceased making advances in January 2009. Revenues from these three states for the year and quarter ended December 31, 2008, were $12.2 million and $2.1 million, respectively. In addition, as a result of a new Ohio law enacted in November 2008, the contribution to revenues from our centers in that state decreased significantly. Revenue from Ohio declined by $17.1 million and $0.6 million for the year and quarter ended December 31, 2009, respectively, compared with the same periods in 2008.
Excluding revenues from Arkansas, New Mexico, New Hampshire, and Ohio for the years ended December 31, 2009 and 2008, total revenues increased by 0.1% during 2009 compared to 2008. Excluding revenues from those same states for the quarters ended December 31, 2009 and 2008, total revenues increased by 0.6% during the fourth quarter in 2009 compared to the same period in 2008.
For the quarter ended December 31, 2009, total revenues for centers opened prior to October 1, 2008 and still open as of December 31, 2009 increased 3.2% compared to the same period in 2008.
Loss Provision
The provision for doubtful accounts as a percentage of total revenues for the year ended December 31, 2009 was 19.2%, compared to 20.1% for 2008. For the quarter ended December 31, 2009, the provision for doubtful accounts as a percentage of total revenues was 18.3%, compared to 24.4% for the same period in 2008. For the year ended December 31, 2009, the Company sold approximately $3.4 million of previously written-off receivables, compared to $0.6 million during 2008. The Company sold approximately $1.3 million of previously written-off receivables during the quarter ended December 31, 2009, and did not sell any for the same period in 2008.
Expenses and Center Gross Profit
For the year ended December 31, 2009, the Company's advertising expense was $22.2 million, or 3.4% of revenue, compared to $20.3 million, or 3.0% of revenue, for 2008. For the quarter ended December 31, 2009, the Company's advertising expense was $6.9 million, or 4.0% of revenue, compared to $4.2 million, or 2.4% of revenues, for the same period in 2008.
Center expenses for the year and quarter ended December 31, 2009, were $485.6 million and $123.5 million, respectively, compared to $518.8 million and $136.5 million for the same periods in 2008. Excluding the provision for doubtful accounts and advertising expense for the quarter ended December 31, 2009, center expenses decreased by $4.6 million, or 5.2% compared to the same period in 2008. This decrease is primarily the result of center consolidation.
Center gross profit increased 2.8% to $162.1 million for 2009, from $157.7 million in 2008. For the quarter ended December 31, 2009, center gross profit increased 29.2% to $49.8 million, from $38.5 million for the quarter ended December 31, 2008.
For the year ended December 31, 2009, general and administrative expenses were $56.5 million, compared to $68.6 million for 2008, a decrease of 17.6%. General and administrative expenses for the quarter ended December 31, 2009, were $14.4 million, compared to $17.9 million for the same period in 2008, a decrease of 19.4%. The decrease in general and administrative expenses for the year and quarter ended December 31, 2009 is due primarily to lower public and government relations expenditures, and the Company's continued emphasis on controlling costs, partially offset by higher legal and settlement expenses.
For the year ended December 31, 2009, the Company's income tax expense was 38.1% of income before taxes, compared to 46.6% during the same period in 2008. The decrease is primarily due to a reduction in state taxes as a result of claims filed for recovery of taxes recognized in prior years, and significantly less in nondeductible lobbying expenditures and other discrete items.
Net Income and Earnings per Share
Net income for the year ended December 31, 2009 increased 40.9% to $54.2 million, compared to $38.5 million for the same period in 2008. Net income for the quarter ended December 31, 2009 increased 234.1% to $19.8 million, compared to $5.9 million for 2008.
Basic earnings per share were $0.89 and diluted earnings per share were $0.88 for the year ended December 31, 2009, compared to basic and diluted earnings per share of $0.60 for 2008. For the quarter ended December 31, 2009, basic and diluted earnings per share were $0.33 and $0.32, respectively, compared to basic and diluted earnings per share of $0.10 for the same period in 2008.
Center Closings
During 2009, the Company closed 220 centers in 27 different states and the United Kingdom, of which 30 were closed during the quarter ended December 31, 2009. The Company had approximately $6.7 million and $1.4 million of center closing costs during the year and quarter ended December 31, 2009, respectively, compared to $2.7 million and $0.7 million during the same periods in 2008, excluding any increases in the provision for doubtful accounts.
In addition, the Company currently intends to close approximately 100 additional centers in 2010, including 58 of its 139 centers in the Commonwealth of Virginia where the Company is consolidating its operations. A Virginia law that went into effect in January 2009 has substantially changed the loan terms for cash advance services in Virginia, and severely restricted viable operations for short-term lenders. Since the law went into effect, Advance America continued to offer cash advances in Virginia, in conformance with the new regulations, as well as an open-ended line of credit product. However, a State Corporation Commission ruling issued in December 2009 essentially blocks the Company from providing new open-ended lines of credit to consumers. Due to this latest action, Advance America believes that consolidating centers in Virginia is necessary. The Company estimates that the costs associated with these additional closings will be approximately $2.4 to $5.5 million, including approximately $1.5 to $3.7 million from Virginia, and anticipates that the majority of these charges will be incurred during the first quarter of 2010. Center closing costs for the quarter ended December 31, 2009 included a charge of $0.8 million associated with center closings in Virginia.
As of December 31, 2009, the Company had an operating network of 2,587 centers and 71 limited licensees in 32 states, the United Kingdom, and Canada.
Quarterly Dividend
Today, the Company's Board of Directors declared a regular quarterly dividend of $0.0625 per share. The dividend, the Company's twenty-first consecutive quarterly dividend, will be payable on March 5, 2010, to stockholders of record as of February 23, 2010.
As of December 31, 2009, the Company had returned approximately $371.4 million in cash to its stockholders through the repurchase of shares and the payment of quarterly dividends since becoming a public company in December of 2004.
Conference Call
The Company will discuss these results during a conference call on Thursday, February 18, 2010 at 8:00 a.m. (ET).
To listen to this call, please dial the conference telephone number (877) 627-6511. This call will also be webcast live and can be accessed at Advance America's website http://www.advanceamerica.net/. An audio replay of the call will be available online or by telephone at (888) 203-1112 (replay pass code: 3075724) until February 24, 2010.
About Advance America Cash Advance
Founded in 1997, Advance America, Cash Advance Centers, Inc. (NYSE:AEA) is the country's leading provider of cash advance services, with approximately 2,600 centers and 71 limited licensees in 32 states, the United Kingdom, and Canada. The Company offers convenient, less-costly credit options to consumers whose needs are not met by traditional financial institutions. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices. Please visit http://www.advanceamerica.net/ for more information.
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