Jan 07. 2011
Q3 2010 data
Mar. 17, 2011 Updated with full year 2010 data.
Check list:
1.Major Business.
Payday loans: 70%. 556 branches at end of 2009. 523 branches at end of 2010
Buy here pay here car sales: 10%.
Others loans etc: 20%
2.Price, Book value, Share outstanding, Market Cap.
Current price $3.81. Book value $3.19. Shares: 17.3m. Market Cap: $65m.
3.Current ratio. Debt/Current Asset ratio. Debt maturity and interest. Inventory level. Cash level.
Current ratio:2:1.
Loan receivable: $76m, including $9.7m reserved for loses.
Cash $16.3m
Total debt: 45m.
Credit facility: 2007 Dec to 2012 Dec. LIBOR+2% to LIBOR+3%
Term loan: $50m. 5 years, 2008-2012. At Dec. 2010, $27.7m outstanding.
Credit: $45m. At Dec. 2010, $17.2m outstanding.
Covenant: Leverage ratio < 2:1. TTM EBIDTA > $28m
Leasing obligation: $26.8m at Dec. 2010.
4.Revenue, Earning, Deficit check. Revenue/Price ratio.
2011 2010 2009 2008 2007 2006 2005
(1) $844m $903m $1.16b $1.27b $1.23b $1.03b $0.99b
(2) $40.8m $37.8m $41.1m $51.2m $46.6m $33.8m
(3) $188m $184m $220m $179m $178m $149m $137m
(4) $0.57 $0.66 $1.10 $0.75 $0.75 $0.45 $0.26
(5) $49 m $45m $58m $71m $75m $16m $0
(6) $0.20 $0.30 $0.30 $0.30 $2.9 $0.10 $0
(7) $3m $16.5m $23m $14m $14m -$10m $18m
(1)payday loans volume. (2) Provision for losses (3) Revenue (4)Income per share (5)Debt (6) Dividend (7)FCF
Revenue/Price > 3
5.Free Cash flow
FCF minus dividend for the past five years should be positive.
6.Dividend history. Dividend policy.
Some current dividend.
7.SG&A, R&D expense.
No big hike on SG&A number. Is there any future leasing obligations? Flexible cost structure is preferred.
For tech company, R&D expense decreased or increased?
8.Insider holding. Management compensation. Options.
Don Early(Dad, CEO) + (Mary Early, Director) + Darrin Andersen(Son. COO) controls around 55% of total shares.
Top 5 earn $3.5m to $4.65m from 2007 to 2009
9. Insider trading info, stock buy back.
For 2010, bought back 600k shares for $2.6m. Average price $4.29.
At Dec. 2009, bought back 4.7m share with $51.8m
At Dec. 2010, bought back 5.3m share with $54.4m, $5.4m left.
10.Employee numbers. Revenue/Employee. Compensation/Employee.
At end of 2009: 1866(1622 for branch + 244 for other).
At end of 2010: 1681(1445 of branches, 236 of others).
At end of 2011: 1593(1376 of branches+217 others) + 25 in Canada.
Average 3 employees per a branch. At end of 2010, many branches are run by one employee. Compensation around $27.7k per one branch employee.
11. Auditor
Grant Thornton LLP
12.Industry comparison.
Advance America, Cash Advance Centers (Public, NYSE:AEA)
Cash America International, Inc.(Public, NYSE:CSH)
Dollar Financial Corp. (Public, NASDAQ:DLLR)
EZCORP, Inc. (Public, NASDAQ:EZPW)
First Cash Financial Services, Inc. (Public, NASDAQ:FCFS)
In all, around 20k branches in U.S. and $30B in payday loan volume.
AEA 2500+ branchs, revenue around 3 times of QCCO.
CSH 250 branches, more pawn stores. revenue over billion.
DLLR, EZPW, FCFS: seems not depended in U.S.
Washington:
32 branches, las changed at Jan. 01, 2010 which caps $15 per $100 interest for below $500, $10 per $100 for above $500. Maximum $700 or 30% of income in loan. Only one loan at a time. No more than 8 loans in 12 months. No fee installment plan if borrower can't pay in time. 90 days for below $400, 180 days for above $400.
For nine months 2010, it should had $9m in revenue and $3.4m in gross profit. In Q3 it reports revenue down $4.5m and profit down $3.4m. So they are make no profit now.
Arizona:
35 branches, law changed at July 1st 2010 caped 36% APR.
It should had $3.26m revenue and $1.23m gross profit in 2009 per quarter. In Q3 2010, it reports Arizona revenue down $3.3m, gross profit down $2.7m, which means no revenue and a lost of $1.5m this quarter. This could have been used to close most of the 35 branches.(To close them all it need $53k*35=$1.9m). However, it kept the branches running for loses.
(Aug. 2012)
Missouri
100 branches, very likely will pass a law at Nov. 2012 to cap 36% APR.
"In 2011, our Missouri branches accounted for approximately 23% and 35% of our revenues and gross profits, respectively. The loss of revenues and gross profit would likely cause us to violate one or more of the financial covenants under our current credit agreement and our outstanding subordinated notes and would likely result in an immediate termination of our regular cash dividend on our common stock."
(3) Debt issue
Currently it has $30m term loan and $13m in credit. However, at Sept. 30, 2010, the bank amended the agreement that require the company to generate $28m in EBITDA in any trailing 4 quarters. For 3Q of 2010, its EBITDA is $21.1m, for Q3 only, its EBITDA is $5.6m. So for Q4 2010, it must generate $6.9m EBITDA which is challenging.
Feb. 04, 2011
Whole 2010 data released.
1. Net income 0.66 per share. Q4 net income $0.19 per share.
2. Based on their web information, Arizona branches number reduced to 25.
3. Whole year EBITDA is $11.94m(Net income) + $8.12m(Tax) + $2.40m(Interest) + $2.65m(Depreciation) + $3.29m(Depreciation) = $28.4m Seems just satisfied the debt agreement. (Actually the number of EBITDA is $33m. I should include discontinued operation loss $2.27m and stock options expense $2.17m)
Feb. 09, 2012
Full 2011 data:
1. Total branch is now around 480.
2. Bought Canadian online lending business. Around $8m in annual revenue.
Aug.01, 2012
1. It is likely the Missouri will cap 36% APR at Nov. 2012 vote.
2. Debt is around $33m+$3m(to CEO).
Dec. 21, 2012
Yesterday after market it released a filing that it sold $16.8m auto loan receivables to other party for just $11.8m. That is a huge discount. Their auto division is not doing good.
At Sept 30, 2012, it has $71.5m receivable with allowance for lost $6m. It comes at 8.4%. While yesterday, it sold the auto loans receivables at 5/16.8 = 29.7% discount. I am not quite sure if I calc is correct. But this sounds no good. Previously I like the business that it is pretty profitable despite that troubled law cases. However, I definitely overlooked its auto loan business. Better stay away for now.
Advance America, Cash Advance Centers (Public, NYSE:AEA)
Cash America International, Inc.(Public, NYSE:CSH)
Dollar Financial Corp. (Public, NASDAQ:DLLR)
EZCORP, Inc. (Public, NASDAQ:EZPW)
First Cash Financial Services, Inc. (Public, NASDAQ:FCFS)
In all, around 20k branches in U.S. and $30B in payday loan volume.
AEA 2500+ branchs, revenue around 3 times of QCCO.
CSH 250 branches, more pawn stores. revenue over billion.
DLLR, EZPW, FCFS: seems not depended in U.S.
13.Major events.
Business acquisition, law suit etc.
14.Concerns.
(1) Federal laws to limit payday loans.
A single new law will put the company out of business.
(2) State level laws to limit payday loans.
In 2009, average revenue per branch $373k, gross profit $141k. Fixed cost per month per branch is $7.2k. Salaries per branch per month cost $6.9k. Closing a branch cost $53k.
There are states after states passed new law restrict payday loans.
South Carolina:
59 branches, law changed at Jan. 01, 2010 which caps $15 per $100 interest , Maximum $600 in loan. Only one loan at a time. No roll over to next with 2 days colling off period. The law is not all bad since it might reduce lost rates.
For nine months in 2010, it should had $16.5m revenue and $6.2m in gross profit. In Q3 it reports revenue down $6.1m and gross profit down $5.3m. Those branches made very little now.
Business acquisition, law suit etc.
14.Concerns.
(1) Federal laws to limit payday loans.
A single new law will put the company out of business.
(2) State level laws to limit payday loans.
In 2009, average revenue per branch $373k, gross profit $141k. Fixed cost per month per branch is $7.2k. Salaries per branch per month cost $6.9k. Closing a branch cost $53k.
There are states after states passed new law restrict payday loans.
South Carolina:
59 branches, law changed at Jan. 01, 2010 which caps $15 per $100 interest , Maximum $600 in loan. Only one loan at a time. No roll over to next with 2 days colling off period. The law is not all bad since it might reduce lost rates.
For nine months in 2010, it should had $16.5m revenue and $6.2m in gross profit. In Q3 it reports revenue down $6.1m and gross profit down $5.3m. Those branches made very little now.
Washington:
32 branches, las changed at Jan. 01, 2010 which caps $15 per $100 interest for below $500, $10 per $100 for above $500. Maximum $700 or 30% of income in loan. Only one loan at a time. No more than 8 loans in 12 months. No fee installment plan if borrower can't pay in time. 90 days for below $400, 180 days for above $400.
For nine months 2010, it should had $9m in revenue and $3.4m in gross profit. In Q3 it reports revenue down $4.5m and profit down $3.4m. So they are make no profit now.
Arizona:
35 branches, law changed at July 1st 2010 caped 36% APR.
It should had $3.26m revenue and $1.23m gross profit in 2009 per quarter. In Q3 2010, it reports Arizona revenue down $3.3m, gross profit down $2.7m, which means no revenue and a lost of $1.5m this quarter. This could have been used to close most of the 35 branches.(To close them all it need $53k*35=$1.9m). However, it kept the branches running for loses.
(Aug. 2012)
Missouri
100 branches, very likely will pass a law at Nov. 2012 to cap 36% APR.
"In 2011, our Missouri branches accounted for approximately 23% and 35% of our revenues and gross profits, respectively. The loss of revenues and gross profit would likely cause us to violate one or more of the financial covenants under our current credit agreement and our outstanding subordinated notes and would likely result in an immediate termination of our regular cash dividend on our common stock."
(3) Debt issue
Currently it has $30m term loan and $13m in credit. However, at Sept. 30, 2010, the bank amended the agreement that require the company to generate $28m in EBITDA in any trailing 4 quarters. For 3Q of 2010, its EBITDA is $21.1m, for Q3 only, its EBITDA is $5.6m. So for Q4 2010, it must generate $6.9m EBITDA which is challenging.
Feb. 04, 2011
Whole 2010 data released.
1. Net income 0.66 per share. Q4 net income $0.19 per share.
2. Based on their web information, Arizona branches number reduced to 25.
3. Whole year EBITDA is $11.94m(Net income) + $8.12m(Tax) + $2.40m(Interest) + $2.65m(Depreciation) + $3.29m(Depreciation) = $28.4m Seems just satisfied the debt agreement. (Actually the number of EBITDA is $33m. I should include discontinued operation loss $2.27m and stock options expense $2.17m)
Feb. 09, 2012
Full 2011 data:
1. Total branch is now around 480.
2. Bought Canadian online lending business. Around $8m in annual revenue.
Aug.01, 2012
1. It is likely the Missouri will cap 36% APR at Nov. 2012 vote.
2. Debt is around $33m+$3m(to CEO).
Dec. 21, 2012
Yesterday after market it released a filing that it sold $16.8m auto loan receivables to other party for just $11.8m. That is a huge discount. Their auto division is not doing good.
At Sept 30, 2012, it has $71.5m receivable with allowance for lost $6m. It comes at 8.4%. While yesterday, it sold the auto loans receivables at 5/16.8 = 29.7% discount. I am not quite sure if I calc is correct. But this sounds no good. Previously I like the business that it is pretty profitable despite that troubled law cases. However, I definitely overlooked its auto loan business. Better stay away for now.
