Cash America 2Q14 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. Full transcripts can be found at Seeking Alpha

Our customers are feeling more confident

“First and probably most importantly is the strengthening of consumer confidence of the demographic segment of the population we serve in our shops. Again, I think our customers are feeling better about the economic world they live in and seem to be more active in our shops both at the loan counter and at the retail counter.”

Strong loan growth

” really good, strong pawn loan growth, which we haven’t seen in a while.”

Comps get easier

“this second quarter of 2014 should be the final quarter of very difficult year-over-year comps on profits from the sale of scrap gold.”

Jewelry back to 60% of asset base

“In the fourth quarter of 2011, the jewelry component of our collateral base peaked at almost 73%. At the end of this second quarter of 2014, jewelry accounts for approximately 60% of our asset base, which is closer to the traditional mix we experienced prior to 2009.”

Decided to spin off ENOVA

“management has recently determined that the most attractive separation option is currently a tax-free distribution of the shares of Enova to our shareholders, a technique commonly referred to as a spinoff.”

CEO leaving next year

“I’d like to comment on the press release issued last night announcing my planned retirement as CEO when my current contract expires at the end of April next year”

People are feeling better

“by and large, our entire base of business in the U.S. is being impacted by similar trends. And we had to conclude, Bill simply that consumers are feeling better about the economic environment that they’re in with respect to a similar employment situation and the overall economic prospects for them. We’re seeing them back borrowing money at a higher rate than we’ve experienced for the last couple of years. And they’re also spending with us at higher rates than we’ve seen for the last couple of years. So you really can’t conclude much other than the fact that people are feeling better about their economic situation.”

Also some impact from larger banks restricting credit to lower end

“You also have the impact of — recently, you had large banks, Wells Fargo, Fifth Third, U.S. Bank, who quit offering their direct deposit advance on their checking accounts. We think that’s had the probably bigger impact on our online U.S. business than as in our storefront, but clearly, anytime that there’s disruption in the availability of other forms of credit that people can’t get to, falling back on secured lending is always something that they have an option to do. So we are perhaps seeing a little bit of that activity as well.”

Main issue UK regulators are reviewing is affordability

“I mean the big issue that they’re dealing with is affordability. And we’re adjusting our — have been adjusting our activities very significantly with respect to the process around affordability”

It means we’ll be writing fewer loans to higher quality customers, which is what the regulator wants

“that will reduce — significantly reduce the volume of business and new loans that we’re writing in the U.K., which means we’re going to be writing fewer loans of higher-credit-quality customers, which then means the impacts of CPA and rate change are going to be less impactful because we’re starting with a lower base of business and a higher-quality customer, which is what the FCA is trying to drive the industry towards.’