Cash America's 4Q net income falls on charges

FORT WORTH, Texas (AP) -- Cash America International Inc. said Thursday that its net income fell sharply in the fourth quarter, as the pawn shop and payday lender booked hefty charges related to trimming operations in Mexico and other costs.

But the company's adjusted results exceeded Wall Street's expectations, helping boost shares more than 7 percent in afternoon trading.

Cash America makes money from loans to consumers, from service fees and from selling jewelry, electronics and other goods in its pawn shops.

The company reported net income of $24.5 million, or 79 cents per share, for the three months ended Dec. 31. That compares with net income of $37.8 million, or $1.18 per share, in the prior-year quarter.

The results included a charge of $7 million, or 23 cents per share, for the closure of 115 pawn shops in Mexico, as well as an after-tax charge of $8.4 million, or 27 cents per share, related to company refunds to some customers in Ohio.

Stripping out those one-time charges, Cash America's adjusted earnings amounted to $1.29 per share, the company said.

Analysts, on average, had forecast earnings of $1.18 per share, according to FactSet.

Total revenue for the quarter rose 4 percent to $491.6 million from $474 million a year earlier. Analysts had expected $364.7 million.

Cash America's loan products, driven by higher loan balances outstanding, fueled much of the increase in quarterly revenue, the company said.

At the end of the quarter, combined consumer loan balances totaled $439.8 million, an increase of 27 percent from a year earlier.

Pawn service fees grew 5 percent, while consumer loan fees jumped 24 percent. Cash America's e-commerce segment posted a 30 percent increase in revenue.

"The e-commerce segment remains the bright spot in the company's operations," said Janney Capital Markets analyst Sameer Gokhale. Online lending drove overall consumer loan fees up 23.8 percent compared with the prior year, Gokhale said, maintaining a "Buy" rating on the stock.

For all of 2012, Cash America's net income fell to $107.5 million, or $3.42 per share, compared with net income of $136 million, or $4.25 per share, in 2011. Excluding one-time charges, full-year earnings were $4.57 per share, the company said.

Revenue for 2012 climbed to $1.80 billion from $1.58 billion the year before.

Cash America expects first-quarter earnings per share to range from $1.35 and $1.42. Analysts are anticipating earnings of $1.27 per share, on average, with estimates ranging from $1.18 to $1.41.

The company projects that its 2013 earnings per share will range from $4.75 to $5.15. Analysts expect earnings of $4.96 per share.

Meanwhile, the company's board of directors declared a cash dividend of 3.5 cents, payable on Feb. 20 to shareholders of record on Feb. 6.

The board also authorized a buyback of up to 2.5 million shares in the company.

The new stock buyback authorization replaces a previous plan to purchase up to 2.5 million shares that required roughly 40 percent of the shares to be purchased by the end of last month.

Sterne, Agee analyst Henry Coffey said if the company is fully active in its buyback program and continues to set aside low levels of money to cover uncollected loans, it could see the top end of its guidance for the year.

He also said he expects a "favorable outcome for the industry" from deliberations in the Texas legislature over the rights of cities in the state to set rates and terms on financial service products. The bill would only effect store-based lending, not online loans.

Coffey kept a "Buy" rating and $45 price target on the stock.

Cash America shares added $3.04, or 7 percent, to $46.20 in afternoon trading. Earlier, shares traded as high as $47.24, short of the 52-week high of $49.42 recorded in March.