Cash America 2Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“While I admit being disappointed with our results, I can’t say that I’m really shocked by the outcome this quarter.”

“the ongoing weakness in loan demand in our U.S. storefronts throughout the quarter made June a particular tough month for us, causing our quarterly results to fall short of our expectations.”

“I think some of our followers were surprised that we did not attribute a large portion of the guidance shortfall to a further decline in gold prices. And while Tom will soon confirm to you that the decline in net revenue from the commercial sale of scrap gold certainly had a significant negative impact on a year-over-year basis this quarter, I can tell you that we had factored a large portion of that decline into the Q2 guidance ”

“Also, the net revenue from over-the-counter retail sales actually beat our forecast for the quarter by an amount that was actually large enough to offset a significant portion of the higher expense levels that we mentioned in our pre-release.”

“we would have been on target had we gotten the growth we had forecasted for loan asset”

“We don’t believe our customers are finding new sources of short-term credit other than perhaps some migration to the Internet, nor do we believe we are losing share to our competitors. I don’t know that our storefront customers are consciously trying to deleverage but we don’t see any indication that our traditional customers have regained enough confidence in their personal financial situation to risk additional personal leverage at this time.”

“This dynamic is particularly evident in those states with persistently high unemployment rates where we have large footprints”

“the challenging environment for our U.S. pawn business is not new news”

“I don’t have any further insights into what, if anything, the CFPB may do that could affect our business here in the U.S., but I will say that it’s one of very few online lenders in the U.S. operating a state-by-state license model. We would welcome any efforts the CFPB may take to address those lenders who have elected to operate outside the state regulatory environments.”

“I think it takes some time to transition customers. It’s not as convenient, it’s not as easy to take your TV or your Xbox or your iPad that you’re using on a daily basis and — where if you had an excess piece of jewelry, it’s a lot of easier to — and more motivating perhaps to go in and use those items.”

“I’m not hearing a lot of anecdotal things that people have come in and say, “Oh, we noticed the price of gold has dropped $300 an ounce or we’re in here to buy things.” I don’t think our consumers operate on that basis. ”

“anecdotally, I keep hearing from our store managers around the country that our customers are self-regulating to a large degree. While we have an opportunity on the value of their collateral to loan more money. And clearly, we offer them what we think is a fair loan amount for their items. A lot of customers are taking a lot less. Again, they’re trying to regulate their budgets and make sure they come back and pick the items up. I think the jewelry in particular, that we haven’t pawned today are things people don’t want to forfeit, which is one of the reasons our redemption rates continue to be up year-over-year”

“My expectation is that competition will probably shrink, particularly in the pawn business, in future periods here. Part of what we’ve been dealing with for the last few years has been competition from these gold-buying shops that pop up quickly in the shopping centers and corners around the country that are just buying and selling gold. You can drive down the streets of a lot of the neighborhoods where we have shops, and over the last couple of years, you see a lot of these businesses and weren’t doing anything but buying and selling. They weren’t licensed to do loans, et cetera. I think the — that business can become much more difficult and, quite honestly, if you’ll recall, other comments I’ve made on previous quarters’ calls, it’s really somewhat a function of the gold value but it’s also significantly a result of lower available scrap gold for disposition. Again, I think we went through 2000 — and late ’10 and 2011, early 2012, where, if you look at our business, and I think it existed throughout the country, people were unloading a lot of excess gold. And I think that game is over, to a large degree, and I think that those folks who have been competing with us in the gold business are going to have a difficult time remaining in business.”