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New Mexico urged to limit ‘payday’ loan rates

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MARTIN: Encouraged by some developments

One of the worst things a person without the financial wherewithal to repay a loan can do is take out a so-called “payday” or “storefront” loan to buy Christmas gifts.

But, with the holidays here, and because it is so easy to get such loans, that’s exactly what many low-income people are likely to do. Predatory lenders encourage the practice.

That’s the message University of New Mexico law professor Nathalie Martin hopes to get out to would-be borrowers. She would also like to see interest rates capped statewide at 36 percent.

“I think it’s getting a little more likely that the state Legislature will act,” she said.

Martin – and others – are encouraged by a number of developments:

In 2007, with broad bipartisan support, President Bush signed the Military Lending Act, placing a 36 percent limit on interest rates on loans to armed forces personnel. In September, with lenders seeking to circumvent the MLA, the Defense Department proposed new and stronger regulations to shore up the law. The cities of Albuquerque, Santa Fe, Alamogordo and Las Cruces, and Doña Ana County – and the New Mexico Municipal League and Association of Counties – have adopted resolutions supporting a 36 percent annual percentage rate cap. Eighteen states have imposed interest rate limits of 36 percent or lower, most of them in recent years. In Georgia, it is now a crime to charge exorbitant interest on loans to people without the means to pay them back. In 2007, New Mexico enacted a law capping interest rates on “payday” loans at 400 percent. Many of the lenders quickly changed the loan descriptions from “payday” to “installment,” “title” or “signature” to get around the law.

But this past summer, the New Mexico Supreme Court, citing studies by Martin, held that “signature” loans issued by B&B Investment Group were “unconscionable.” B&B’s interest rates were 1,000 percent or higher.

High-interest lenders argue that they provide a much-needed source of funds for people who would not ordinarily qualify for loans, even those who are truly in need. One lender, Cash Store, in an ad typical for the industry promises borrowers that they can get “cash in hand in as little as 20 minutes during our regular business hours – no waiting overnight for the money you need” and boasts a loan approval rate of over 90 percent. It also offers “competitive terms and NO credit required. Be treated with respect by friendly store associates. Installment loans are a fast, easy way to get up to $2,500.”

Pushing a cap

Martin teaches commercial and consumer law. She also works in the law school’s “live clinic,” where she first came into contact with those she calls “real-life clients,” people who had fallen into the trap of payday loans.

“I would never have thought in my wildest dreams that this was legal, interest rates of 500 percent, 1,000 percent or even higher,” she said.

Martin is not alone in fighting sky-high interest rates and supporting a 36 percent cap.

Assistant Attorney General Karen Meyers of the Consumer Protection Division noted that it wasn’t simply interest rates that the Supreme Court unanimously objected to as procedurally unconscionable in New Mexico v. B&B Investment Group.

The court also addressed the way the loans were marketed and the fact that B&B “aggressively pursued borrowers to get them to increase the principal of their loans,” all of which constitutes a violation of law.

In another lawsuit from 2012, New Mexico v. FastBucks, the judge found the loans to be “Unfair or deceptive trade practices and unconscionable trade practices (which) are unlawful.”

Long legal road

Both the B&B and Fastbucks cases were filed in 2009 and ultimately went to trial. The time period indicates the commitment of the Attorney General’s Office and how long it takes a case to wend its way through the legal system.

Each of the cases dealt with one business entity, although they often do business under several names. B&B, for example, an Illinois company, operated as Cash Loans Now and American Cash Loans.

According to the president of B&B, James Bartlett, the company came to New Mexico to do business because “there was no usury cap” here.

Early this year, a survey by Public Policy Polling found that 86 percent of New Mexicans support capping interest at an annual rate of 36 percent. Many people think that is too high.

Meyers said predatory lending profits depend on repeat loans. Analysts estimate that the business only becomes profitable when customers have rolled over their loans four or five times.

‘Really heartbreaking’

“We have interviewed a lot of consumers,” she said. “It’s really heartbreaking.”

Steve Fischman, a former state senator and chairman of the New Mexico Fair Lending Coalition, said three-fourths of short-term borrowers in the state roll over loans into new loans, which is precisely what predatory lenders want.

“New Mexico is one of the worst states when it comes to such loans, because we have the weakest law,” he said.

The coalition is working with lawmakers to draft a bill that would impose the 36 percent cap. It is likely to come up in the next session. But the chances of passage, despite popular sentiment, are unknown.

The Legislature has failed to act in the past, Fischman said, largely because of the many paid lobbyists – including former lawmakers – working for the lenders. He described the Roundhouse back-slapping as “bipartisan corruption.”

The National Institute on Money in State Politics, a nonpartisan national archive of such donations, reports that, thus far this year, payday lenders have made 122 contributions totalling $97,630 to state lawmakers.

Opponents of storefront loans say one way some lenders entice the poor into taking out loans is to cajole them with smiles and misinformation. Loan offices – often in lower-income neighborhoods – often become places for people to hang out and socialize. Agents behind the loan office desks pass themselves off as friends.

But, Fischman said, “A lot of people thought Bernie Madoff was their friend.”

Creating crises

The Pew Charitable Trust and the Center for Responsible Lending, acting independently, reported last year that the cost of the loans turn temporary financial shortfalls into long-term crises. After rolling their initial loans over, perhaps more than once, borrowers find that they’re paying up to 40 percent of their paychecks to repay the loans.

Prosperity Works, an Albuquerque-based nonprofit striving to improve financial circumstances for lower-income New Mexicans, is a strong supporter of the effort to cap loans.

President and CEO Ona Porter said one drawback of the short-term, high-interest loans is the effect they often have on individuals’ credit ratings. “And credit scores are now used as a primary screen for employment,” she said.

The loans do little, if anything, to boost the state’s economy. A 2013 study by the Center for Community Economic Development found that, for every dollar spent on storefront loan fees, 24 cents is subtracted from economic activity.

UNM’s Martin has conducted five studies related to high-cost lending practices. She firmly believes that low-income people are better off if they don’t take out unlimited numbers of high-cost loans and that such forms of credit cause more harm than good.

“They are neither safe nor affordable,” she said.

[…]

First Cash Reports Third Quarter Earnings Per Share of $0.68; Acquisitions & Growth in Mexico Drive 14% Increase in …

ARLINGTON, Texas, Oct. 16, 2014 (GLOBE NEWSWIRE) — First Cash Financial Services, Inc. (FCFS), a leading international operator of retail pawn stores in the U.S. & Mexico, today announced revenue, net income and earnings per share for the three-month period ended September 30, 2014. The growth in revenue and earnings continued to be driven by the Company’s pawn operations in both the U.S. and Mexico.

Mr. Rick Wessel, chief executive officer, stated, “We are pleased to report third quarter operating results with core pawn revenues increasing 13% and pawn receivables up 14% over the prior year. These results were particularly impressive as the growth in core revenue and profits allowed us to achieve our third quarter earnings target despite a $0.02 per share impact from declines in the price of gold and the value of the Mexican peso as compared to our previous outlook. Driven by our pawn-focused business model, geographic diversification and more than 25 years of industry experience, we believe that we have managed to navigate these challenges with limited impact to our revenues and profitability.”

“Additionally, we announced several strategic acquisitions during the third quarter in key markets in both Mexico and the U.S. With these acquisitions and continued de novo store openings, we now have 868 large format, full-service stores, making First Cash the largest single operator in our combined markets. Including our small format stores, we expect to have over 1,000 total locations by the end of 2014.”

Earnings Highlights

Diluted earnings per share from continuing operations for the third quarter of 2014 totaled $0.68 compared to earnings per share of $0.79 in the third quarter of 2013. As a reminder, third quarter 2013 earnings per share included a non-recurring tax benefit of $0.11, while third quarter 2014 results include the impact of $0.05 of incremental interest expense from the Company’s senior note offering in March 2014. Current quarter results also reflect a $0.03 reduction in earnings per share from the non-core scrap jewelry sales versus the prior year. Year-to-date diluted earnings per share from continuing operations were $2.01 compared to $1.99 in the same prior-year period. Year-to-date earnings per share for 2014 include $0.08 of incremental interest expense related to the senior note offering and a $0.05 reduction in earnings from the non-core scrap jewelry sales compared to the prior year. EBITDA from continuing operations for the third quarter of 2014 totaled $36.2 million, an increase of 5% versus the prior-year period. Excluding gross profit from scrap jewelry sales, EBITDA from continuing operations for the third quarter of 2014 increased 10% compared to prior year. For the trailing twelve months, EBITDA totaled $143.0 million and net income was $83.0 million for the same period. A reconciliation of these non-GAAP financial measures to net income is provided elsewhere in this release.

Revenue Highlights

All revenue growth rates presented below are calculated on a constant currency basis by applying the currency exchange rate from the comparable prior-year period to the current year’s Mexican peso-denominated revenue. The average exchange rate for the third quarter of 2014 was 13.1 Mexican pesos / U.S. dollar versus 12.9 Mexican pesos / U.S. dollar in the comparable prior-year period.

Revenue from core pawn activities (retail sales and pawn service fees) increased 13% during the third quarter of 2014. Total revenue for the third quarter, which reflects revenue decreases from non-core jewelry scrapping and payday lending operations, was $175 million, a 2% increase compared to the third quarter of 2013. Year-to-date total revenue increased 9% compared to the first nine months of 2013. On a geographic basis, 56% of total third quarter revenue was generated in Mexico, while 44% was generated from U.S. operations. Consolidated retail merchandise sales increased by 15% for the third quarter of 2014 compared to the prior-year period. Retail sales in Mexico remained particularly strong, increasing 19%, while retail sales in the U.S. increased by 9%. Consolidated pawn loan fees increased 10% for the third quarter of 2014, with fees from Mexico up 13% and fees from the U.S. up 6% over the prior-year period. Same-store core revenue in the Company’s pawn stores (which excludes wholesale jewelry scrapping) increased 6% in Mexico and 2% overall, while decreasing 4% in the U.S in the third quarter, as compared to the prior-year period. Gross profit from non-core wholesale scrap jewelry operations in the third quarter of 2014 totaled $1.4 million, accounting for only 1% of net revenue for the quarter, compared to $2.8 million in the third quarter of 2013. The continued decline in the price of gold and continued downward trend in scrap gold volumes negatively impacted earnings during the third quarter by approximately $0.02 per share compared to the prior sequential quarter. The gross margin for scrap jewelry sales was 11% in the third quarter of 2014. Short-term loan and credit services revenue decreased 13% in the third quarter of 2014 compared to the prior-year period. The decline is primarily the result of additional regulatory restrictions in certain Texas markets and continued closings of payday loan-focused store locations in Texas. The non-core U.S. short-term loan business comprised only 5% of total revenue in the third quarter of 2014 and is anticipated to contribute less than 5% of total revenues in the fourth quarter. At quarter end, the Company operated 54 in-line payday-only stores in Texas versus 63 at the end of the prior-year period.

Pawn Operating Metrics

Total pawn loans outstanding (receivable from customers) increased by 14% on a year-over-year basis at quarter end as pawn loans grew 18% in Mexico and 11% in the U.S. On a same-store basis, pawn loans outstanding increased 4% in Mexico, where loan growth was especially strong in the interior markets. Same-store pawn loans were down 3.5% in the U.S. where 56% of loans were collateralized with jewelry. The decline in U.S. same-store pawn loan receivables is largely attributable to the impact of lower gold prices on the dollar amount of loans collateralized with gold jewelry. On a consolidated basis, same-store pawn loans outstanding were up slightly for the quarter. The consolidated gross margin on retail merchandise sales was 38% during the third quarter of 2014 compared to 40% in the third quarter of 2013, reflecting the continued shift to general merchandise inventories from higher margin jewelry. The average monthly pawn loan portfolio yield was unchanged at 13% for both the third quarter this year and last year, reflecting consistent pawn redemption trends. Consolidated annualized inventory turns for the trailing twelve months ended September 30, 2014 remained strong at 3.7 times per year and aged inventory (items held for over a year) accounted for only 3% of total inventory. Total inventories at September 30, 2014 increased 16% over the prior year, largely as a result of the 56 recently acquired stores. Operating efficiency improved during the third quarter, as the store-level operating margin was 26% during the third quarter of 2014 compared to 25% in the third quarter of 2013, reflecting a 13% increase in core revenues compared to a smaller 6% increase in total operating expenses. While the number of stores increased 11%, total operating and administrative expenses increased only 5% during the third quarter of 2014 compared to the same period last year.

Acquisitions and New Store Openings

In total, the Company added 68 large format pawn store locations during the third quarter of 2014, composed of 12 new store openings and 56 acquired stores. Year-to-date, a total of 93 stores have been opened or acquired. In August 2014, the Company completed the acquisition of a 47-store chain of large format pawn stores located in 13 states in Mexico. Additionally, in the U.S., the Company acquired five stores in Colorado and four stores in Texas. Third quarter earnings results include non-recurring transaction and integration costs of approximately $0.01 per share associated with these acquisition activities. As of September 30, 2014, the Company operated 988 stores composed of 672 stores in Mexico, of which 627 are large format, full-service pawn stores and 316 stores in the U.S., of which 240 are large format, full-service pawn stores.

Financial Metrics

Return on equity for the trailing twelve months ended September 30, 2014 was 19%, while return on assets was 12% for the same period. Consolidated net operating margin (pre-tax income) was 17% for the trailing twelve months ended September 30, 2014, while the store-level operating profit margin was 26% for the same period. The EBITDA margin from continuing operations was 21% for the trailing twelve months ended September 30, 2014. EBITDA from continuing operations is defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release.

Liquidity

As of September 30, 2014, the Company had $43 million in cash on its balance sheet and $143 million of availability under its revolving bank credit facility. The leverage ratio at September 30, 2014 (outstanding indebtedness divided by trailing twelve months EBITDA from continuing operations) was 1.5 to 1. Net debt, defined as funded debt less invested cash, was $199 million at September 30, 2014 and the ratio of net debt to equity was 0.46 to 1. Total EBITDA from continuing operations for the trailing twelve months ended September 30, 2014 was $143 million, while free cash flow totaled $67 million. EBITDA from continuing operations and free cash flow are defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release. During the third quarter of 2014, the Company funded $28 million in acquisitions and repurchased 536,000 shares of its common stock at an aggregate cost of $31 million. The stock repurchases completed the existing 1.5 million share repurchase authorization at a total cost of $83 million and at an average price of $55.09 per share. For the trailing twelve months ended September 30, 2014, the Company utilized operating cash flows, availability under its credit facility and the proceeds from the March 2014 $200 million senior unsecured note offering to invest $64 million in acquisitions, $27 million in capital expenditures and $44 million in stock repurchases.

Fiscal 2014 Outlook

As previously reported, the impact of the incremental borrowing costs from the March 2014 issuance of the Company’s senior unsecured notes will keep expected full year earnings at the low end of the initial guidance range of $3.00 to $3.15 per diluted share. The Company added 93 pawn stores year-to-date through September 30, 2014 and expects to end the year with at least 100 to 105 new stores. The Company will continue to look opportunistically for large format pawn acquisitions in strategic markets, which could further increase store additions for 2014. The Company’s guidance assumptions continue to reflect the impact of lower gold prices and reduced scrap volumes on scrap jewelry revenues and pawn loan balances and the continued contraction of non-core payday lending revenues. Earnings guidance estimates for 2014 are based on an average Mexican peso exchange rate of 13.4 to 1, gold prices in the range of $1,200 to $1,300 per ounce, and an anticipated income tax rate of approximately 30% to 31% for the remainder of fiscal 2014.

Additional Commentary and Analysis

Mr. Wessel further commented on the third quarter results, “During the quarter we remained very active on the acquisition front. The largest acquisition of the quarter was a 47-store chain of large format locations in Mexico purchased from a U.S. competitor who was exiting the Mexico market. With our 15 years of experience operating in Mexico and being the largest and, we believe, the most efficient large format operator, we are well positioned to drive incremental revenue and profitability from these locations with minimal additional investment. Not only did this acquisition increase our store base in Mexico by 8%, it also gives us an operating presence in two additional states in Mexico. I am pleased to report that we have already successfully integrated all 47 of these stores onto our proprietary point-of-sale and pawn management system and look forward to completing a rapid integration of the acquired locations. There is still significant opportunity for growth in Mexico and First Cash anticipates building out a store base of 1,000 or more large format locations in the country.”

“In the U.S., we continue to see significant expansion opportunities primarily through targeted local and regional acquisitions. Over the past 18 months, First Cash has acquired or opened 59 U.S. locations, including accretive regional acquisitions in Texas, South Carolina and Colorado. The integration of these acquisitions has been completed and we are rapidly optimizing inventory levels, margins and product mix. The pawn industry remains fragmented in the U.S. with approximately 80% of the stores still independently owned and operated, and we believe we can continue to expand our store base in the U.S. through strategic consolidation.”

“Over the past 25 years, the Company has experienced consistent demand across various economic cycles. We continue to believe we are well positioned to take advantage of the favorable population growth and demographic trends in our key markets. Although we are experiencing some short term headwinds from lower gold prices, weaker peso exchange rates and the continued decline in our non-core payday operations, First Cash has demonstrated a history of significant and consistent earnings growth. Trailing twelve months EBITDA from continuing operations has grown from $71 million in December 2009 to over $143 million today, a compounded growth rate of 16%. We believe our recent acquisition activity further strengthens the long-term growth potential of First Cash, and, coupled with our financial resources, provides a platform for future pawn-focused store growth, revenue growth and earnings growth.”

Forward-Looking Information

This release contains forward-looking statements about the business, financial condition and prospects of First Cash Financial Services, Inc. and its wholly owned subsidiaries (together, the “Company”). Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” or “anticipates,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

Forward-looking statements in this release include, without limitation, the Company’s expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity (including the availability of capital under existing credit facilities), cash flow, consumer demand for the Company’s products and services, income tax rates, currency exchange rates and the price of gold and the impacts thereof, earnings and related transaction expenses from acquisitions, the ability to successfully integrate acquisitions and other performance results. These statements are made to provide the public with management’s current assessment of the Company’s business. Although the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include, without limitation, the following:

changes in regional, national or international economic conditions, including inflation rates, unemployment rates and energy prices; changes in consumer demand, including purchasing, borrowing and repayment behaviors; changes in pawn forfeiture rates and credit loss provisions; changes in the market value of pawn collateral and merchandise inventories, including gold prices and the value of consumer electronics and other products; changes or increases in competition; the ability to locate, open and staff new stores and successfully integrate acquisitions; the availability or access to sources of used merchandise inventory; changes in credit markets, interest rates and the ability to establish, renew and/or extend the Company’s debt financing; the ability to maintain banking relationships for treasury services and processing of certain consumer lending transactions; the ability to hire and retain key management personnel; new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting pawn businesses, consumer loan businesses and credit services organizations (in both the United States and Mexico); risks and uncertainties related to foreign operations in Mexico; changes in import/export regulations and tariffs or duties; changes in anti-money laundering and gun control regulations; unforeseen litigation; changes in tax rates or policies in the U.S. and Mexico; changes in foreign currency exchange rates; inclement weather, natural disasters and public health issues; security breaches, cyber attacks or fraudulent activity; a prolonged interruption in the Company’s operations of its facilities, systems, and business functions, including its information technology and other business systems; the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements; and future business decisions.

These and other risks, uncertainties and regulatory developments are further and more completely described in the Company’s 2013 annual report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2014, including the risks described in Item 1A “Risk Factors” of the Company’s annual report. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this release speak only as of the date of this release, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

About First Cash

Founded in 1988, First Cash is a leading international operator of retail pawn stores, which account for approximately 95% of the Company’s revenues. First Cash focuses on serving cash and credit constrained consumers through its retail locations, which buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small consumer pawn loans secured by pledged personal property. Today, First Cash owns and operates 989 stores in 12 U.S. states and 29 states in Mexico.

First Cash is a component company in both the Standard & Poor’s SmallCap 600 Index(R) and the Russell 2000 Index(R). First Cash’s common stock (ticker symbol “FCFS”) is traded on the NASDAQ Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.

STORE COUNT ACTIVITY

The following table details store openings for the three months ended September 30, 2014:

Pawn Locations Consumer
Large Small Loan Total
Format (1) Format (2) Locations (3) Locations Domestic:

Total locations, beginning of period 230 23 57 310 New locations opened 3 — — 3 Locations acquired 9 — — 9 Locations closed or consolidated (2) (1) (3) (6) Total locations, end of period 240 22 54 316

International:

Total locations, beginning of period 571 17 28 616 New locations opened 9 — — 9 Locations acquired 47 — — 47 Total locations, end of period 627 17 28 672

Total:

Total locations, beginning of period 801 40 85 926 New locations opened 12 — — 12 Locations acquired 56 — — 56 Locations closed or consolidated (2) (1) (3) (6) Total locations, end of period 867 39 82 988

(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including consumer electronics, appliances, power tools, jewelry and other general merchandise items. At September 30, 2014, 129 of the U.S. large format pawn stores also offered consumer loans or credit services products.

(2) The small format locations typically have limited retail operations and primarily accept jewelry and small electronic items as pawn collateral and also offer consumer loans or credit services products.

(3) The Company’s U.S. free-standing, small format consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. The Company’s credit services operations also include an internet distribution channel for customers residing in the state of Texas.

The following table details store openings for the nine months ended September 30, 2014:

Pawn Locations Consumer

Large Small Loan Total
Format (1) Format (2) Locations (3) Locations Domestic:

Total locations, beginning of period 227 25 57 309 New locations opened 6 1 — 7 Locations acquired 10 — — 10 Store format conversions 1 (1) — — Locations closed or consolidated (4) (3) (3) (10) Total locations, end of period 240 22 54 316

International:

Total locations, beginning of period 552 17 28 597 New locations opened 29 — — 29 Locations acquired 47 — — 47 Locations closed or consolidated (1) — — (1) Total locations, end of period 627 17 28 672

Total:

Total locations, beginning of period 779 42 85 906 New locations opened 35 1 — 36 Locations acquired 57 — — 57 Store format conversions 1 (1) — — Locations closed or consolidated (5) (3) (3) (11) Total locations, end of period 867 39 82 988

(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including consumer electronics, appliances, power tools, jewelry and other general merchandise items. At September 30, 2014, 129 of the U.S. large format pawn stores also offered consumer loans or credit services products.

(2) The small format locations typically have limited retail operations and primarily accept jewelry and small electronic items as pawn collateral and also offer consumer loans or credit services products.

(3) The Company’s U.S. free-standing, small format consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. The Company’s credit services operations also include an internet distribution channel for customers residing in the state of Texas.

FIRST CASH FINANCIAL SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
(in thousands, except per share data) Revenue:

Retail merchandise sales $ 101,950 $ 89,772 $ 297,846 $ 255,442 Pawn loan fees 51,778 47,455 146,971 133,658 Consumer loan and credit services fees 9,474 10,918 27,674 32,770 Wholesale scrap jewelry revenue 11,798 25,234 37,612 53,775 Total revenue 175,000 173,379 510,103 475,645

Cost of revenue:

Cost of retail merchandise sold 62,780 53,546 182,363 152,677 Consumer loan and credit services loss provision 2,913 3,464 6,892 8,088 Cost of wholesale scrap jewelry sold 10,444 22,394 31,608 45,498 Total cost of revenue 76,137 79,404 220,863 206,263

Net revenue 98,863 93,975 289,240 269,382

Expenses and other income:

Store operating expenses 49,293 46,649 146,719 132,762 Administrative expenses 13,406 12,834 40,350 38,690 Depreciation and amortization 4,404 3,988 13,001 11,346 Interest expense 4,059 1,122 9,405 2,474 Interest income (179) (69) (522) (267) Total expenses and other income 70,983 64,524 208,953 185,005

Income from continuing operations before income taxes 27,880 29,451 80,287 84,377

Provision for income taxes 8,352 6,324 21,790 25,416

Income from continuing operations 19,528 23,127 58,497 58,961

Income (loss) from discontinued operations, net of tax 14 (272) 107 Net income $ 19,528 $ 23,141 $ 58,225 $ 59,068

Basic income per share:

Income from continuing operations $ 0.69 $ 0.80 $ 2.03 $ 2.03 Income (loss) from discontinued operations (0.01) — Net income per basic share $ 0.69 $ 0.80 $ 2.02 $ 2.03

Diluted income per share:

Income from continuing operations $ 0.68 $ 0.79 $ 2.01 $ 1.99 Income (loss) from discontinued operations (0.01) — Net income per diluted share $ 0.68 $ 0.79 $ 2.00 $ 1.99

Weighted average shares outstanding:

Basic 28,397 28,904 28,762 29,128 Diluted 28,805 29,353 29,160 29,637

FIRST CASH FINANCIAL SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, December 31,
2014 2013 2013
(in thousands) ASSETS

Cash and cash equivalents $ 42,760 $ 30,539 $ 70,643 Pawn loan fees and service charges receivable 19,481 17,673 16,689 Pawn loans 136,981 121,187 115,234 Consumer loans, net 1,510 1,375 1,450 Inventories 94,890 82,569 77,793 Other current assets 12,591 8,128 8,413 Total current assets 308,213 261,471 290,222

Property and equipment, net 115,115 102,029 108,137 Goodwill, net 264,875 230,477 251,241 Other non-current assets 16,464 8,677 9,373 Total assets $ 704,667 $ 602,654 $ 658,973

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current portion of notes payable $ — $ 3,297 $ 3,326 Accounts payable and accrued liabilities 50,178 35,446 38,023 Income taxes payable 9,718 7,412 Total current liabilities 50,178 48,461 48,761

Revolving unsecured credit facility 17,500 152,500 182,000 Notes payable, net of current portion 5,868 5,026 Senior unsecured notes 200,000 — — Deferred income tax liabilities 7,535 8,313 8,827 Total liabilities 275,213 215,142 244,614

Stockholders’ equity:

Preferred stock — — Common stock 395 393 394 Additional paid-in capital 182,119 176,018 176,675 Retained earnings 555,953 472,950 497,728 Accumulated other comprehensive income (loss) from cumulative foreign currency translation adjustments (12,379) (9,162) (7,751) Common stock held in treasury, at cost (296,634) (252,687) (252,687) Total stockholders’ equity 429,454 387,512 414,359 Total liabilities and stockholders’ equity $ 704,667 $ 602,654 $ 658,973

FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION
(UNAUDITED)

The following table details the components of revenue for the three months ended September 30, 2014 as compared to the three months ended September 30, 2013 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates, which is more fully described elsewhere in this release.

Three Months Ended
Increase/(Decrease)
September 30,
Constant Currency
2014 2013 Increase/(Decrease) Basis Domestic revenue:

Retail merchandise sales $ 39,298 $ 36,134 $ 3,164 9% 9% Pawn loan fees 22,515 21,241 1,274 6% 6% Consumer loan and credit services fees 8,792 10,086 (1,294) (13)% (13)% Wholesale scrap jewelry revenue 7,007 15,344 (8,337) (54)% (54)%
77,612 82,805 (5,193) (6)% (6)% International revenue:

Retail merchandise sales 62,652 53,638 9,014 17% 19% Pawn loan fees 29,263 26,214 3,049 12% 13% Consumer loan and credit services fees 682 832 (150) (18)% (17)% Wholesale scrap jewelry revenue 4,791 9,890 (5,099) (52)% (52)%
97,388 90,574 6,814 8% 9% Total revenue:

Retail merchandise sales 101,950 89,772 12,178 14% 15% Pawn loan fees 51,778 47,455 4,323 9% 10% Consumer loan and credit services fees 9,474 10,918 (1,444) (13)% (13)% Wholesale scrap jewelry revenue (1) 11,798 25,234 (13,436) (53)% (53)%
$ 175,000 $ 173,379 $ 1,621 1% 2%

(1) Wholesale scrap jewelry revenue during the three months ended September 30, 2014 consisted primarily of gold sales, of which approximately 8,400 ounces were sold at an average price of $1,224 per ounce, compared to approximately 17,300 ounces of gold sold at $1,343 per ounce in the prior-year period, which included the sale of approximately 7,700 ounces of gold produced in the second quarter of 2013, the sale of which was deferred to the third quarter of 2013.

FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)

The following table details the components of revenue for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates, which is more fully described elsewhere in this release.

Nine Months Ended
Increase/(Decrease)
September 30,
Constant Currency
2014 2013 Increase/(Decrease) Basis Domestic revenue:

Retail merchandise sales $ 122,750 $ 98,940 $ 23,810 24% 24% Pawn loan fees 65,798 57,289 8,509 15% 15% Consumer loan and credit services fees 25,614 30,151 (4,537) (15)% (15)% Wholesale scrap jewelry revenue 22,415 30,850 (8,435) (27)% (27)%
236,577 217,230 19,347 9% 9% International revenue:

Retail merchandise sales 175,096 156,502 18,594 12% 16% Pawn loan fees 81,173 76,369 4,804 6% 10% Consumer loan and credit services fees 2,060 2,619 (559) (21)% (19)% Wholesale scrap jewelry revenue 15,197 22,925 (7,728) (34)% (34)%
273,526 258,415 15,111 6% 9% Total revenue:

Retail merchandise sales 297,846 255,442 42,404 17% 19% Pawn loan fees 146,971 133,658 13,313 10% 12% Consumer loan and credit services fees 27,674 32,770 (5,096) (16)% (15)% Wholesale scrap jewelry revenue (1) 37,612 53,775 (16,163) (30)% (30)%
$ 510,103 $ 475,645 $ 34,458 7% 9%

(1) Wholesale scrap jewelry revenue during the nine months ended September 30, 2014 consisted primarily of gold, of which approximately 25,400 ounces sold at an average selling price of $1,282 per ounce, compared to approximately 32,000 ounces of gold sold at $1,491 per ounce in the prior-year period.

FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)

The following table details customer loans and inventories held by the Company and active credit service organization (“CSO”) credit extensions from an independent third-party lender as of September 30, 2014 as compared to September 30, 2013 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current-year balances at the prior-year end-of-period exchange rate, which is more fully described elsewhere in this release.

Increase/(Decrease)
Balance at September 30,
Constant Currency
2014 2013 Increase/(Decrease) Basis Domestic:

Pawn loans $ 67,014 $ 60,619 $ 6,395 11% 11% CSO credit extensions held by independent third-party (1) 10,027 12,073 (2,046) (17)% (17)% Other consumer loans 936 697 239 34% 34%
77,977 73,389 4,588 6% 6% International:

Pawn loans 69,967 60,568 9,399 16% 18% Other consumer loans 574 678 (104) (15)% (13)%
70,541 61,246 9,295 15% 18% Total:

Pawn loans 136,981 121,187 15,794 13% 14% CSO credit extensions held by independent third-party (1) 10,027 12,073 (2,046) (17)% (17)% Other consumer loans 1,510 1,375 135 10% 11%
$ 148,518 $ 134,635 $ 13,883 10% 12% Pawn inventories:

Domestic pawn inventories $ 42,431 $ 37,514 $ 4,917 13% 13% International pawn inventories 52,459 45,055 7,404 16% 19%
$ 94,890 $ 82,569 $ 12,321 15% 16%

(1) CSO amounts outstanding are composed of the principal portion of active CSO extensions of credit by an independent third-party lender, which are not included on the Company’s balance sheet, net of the Company’s estimated fair value of its liability under the letters of credit guaranteeing the extensions of credit.

FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)

The following table details the composition of pawn collateral and the average outstanding pawn loan receivable as of September 30, 2014 as compared to September 30, 2013.

Balance at September 30,
2014 2013 Composition of pawn collateral:

Domestic pawn loans:

General merchandise 44% 40% Jewelry 56% 60%
100% 100% International pawn loans:

General merchandise 88% 88% Jewelry 12% 12%
100% 100% Total pawn loans:

General merchandise 66% 65% Jewelry 34% 35%
100% 100% Average outstanding pawn loan amount:

Domestic pawn loans $ 163 $ 165 International pawn loans 70 69 Total pawn loans 98 96

FIRST CASH FINANCIAL SERVICES, INC.
NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)

The Company uses certain financial calculations such as EBITDA from continuing operations, free cash flow and constant currency results (as defined or explained below) as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items that the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined in Securities and Exchange Commission (“SEC”) rules. The Company uses these financial calculations in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items and other infrequent charges. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s operating performance and because management believes they provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating EBITDA from continuing operations, free cash flow and constant currency results are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP and are thus susceptible to varying calculations, EBITDA from continuing operations, free cash flow and constant currency results as presented may not be comparable to other similarly titled measures of other companies.

FIRST CASH FINANCIAL SERVICES, INC.
NON-GAAP FINANCIAL INFORMATION (CONTINUED)
(UNAUDITED)

Earnings from Continuing Operations Before Interest, Taxes, Depreciation and Amortization

The Company defines EBITDA from continuing operations as net income (loss) before income (loss) from discontinued operations net of tax, income taxes, depreciation and amortization, interest expense and interest income. EBITDA from continuing operations is commonly used by investors to assess a company’s leverage capacity, liquidity and financial performance. However, EBITDA from continuing operations has limitations as an analytical tool and should not be considered in isolation or as a substitute for net income (loss) or other statement of income data prepared in accordance with GAAP. The following table provides a reconciliation of net income to EBITDA from continuing operations (in thousands):

Trailing Twelve
Three Months Ended Nine Months Ended Months Ended
September 30, September 30, September 30,
2014 2013 2014 2013 2014 2013 Net income $ 19,528 $23,141 $ 58,225 $ 59,068 $ 83,003 $ 86,677 (Income) loss from discontinued operations, net of tax (14) 272 (107) 1,012 (104) Income from continuing operations 19,528 23,127 58,497 58,961 84,015 86,573 Adjustments:

Income taxes 8,352 6,324 21,790 25,416 32,087 38,745 Depreciation and amortization 4,404 3,988 13,001 11,346 17,016 14,828 Interest expense 4,059 1,122 9,405 2,474 10,423 3,265 Interest income (179) (69) (522) (267) (577) (336) Earnings from continuing operations before interest, taxes, depreciation and amortization $ 36,164 $ 34,492 $ 102,171 $ 97,930 $ 142,964 $ 143,075

EBITDA from continuing operations margin calculated as follows:

Total revenue from continuing operations $ 175,000 $ 173,379 $ 510,103 $ 475,645 $ 695,306 $ 653,902 Earnings from continuing operations before interest, taxes, depreciation and amortization $ 36,164 $ 34,492 $ 102,171 $ 97,930 $ 142,964 $ 143,075 EBITDA from continuing operations as a percentage of revenue 21% 20% 20% 21% 21% 22%

Leverage ratio (indebtedness divided by EBITDA from continuing operations):

Indebtedness

$ 217,500 $ 161,665 Earnings from continuing operations before interest, taxes, depreciation and amortization

$ 142,964 $ 143,075 Leverage ratio

1.5:1 1.1:1

FIRST CASH FINANCIAL SERVICES, INC.
NON-GAAP FINANCIAL INFORMATION (CONTINUED)
(UNAUDITED)

Free Cash Flow

For purposes of its internal liquidity assessments, the Company considers free cash flow, which is defined as cash flow from the operating activities of continuing and discontinued operations reduced by purchases of property and equipment and net cash outflow from loan receivables. Free cash flow is commonly used by investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, repurchase stock, or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for cash flow from operating activities, including discontinued operations, or other income statement data prepared in accordance with GAAP. The following table reconciles “net cash flow from operating activities” to “free cash flow” (in thousands):

Trailing Twelve Months Ended
September 30,
2014 2013 Cash flow from operating activities, including discontinued operations $ 102,027 $ 108,335 Cash flow from investing activities:

Loan receivables (8,095) (8,260) Purchases of property and equipment (26,528) (23,546) Free cash flow $ 67,404 $ 76,529

Constant Currency

The Company’s reporting currency is the U.S. dollar. However, certain performance metrics discussed in this release are presented on a “constant currency” basis, which may be considered a non-GAAP measurement of financial performance under GAAP. The Company’s management uses constant currency results to evaluate operating results of certain business operations in Mexico, which are transacted in Mexican pesos. Pawn scrap jewelry in Mexico is sold in U.S. dollars and, accordingly, does not require a constant currency adjustment. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. For balance sheet items, the end-of-period exchange rate of 13.1 to 1 at September 30, 2013 was used compared to the exchange rate of 13.5 to 1 at September 30, 2014. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended September 30, 2013 was 12.9 to 1, compared to the current-quarter rate of 13.1 to 1. The average exchange rate for the prior-year nine-month period ended September 30, 2013 was 12.7 to 1, compared to the current year-to-date rate of 13.1 to 1.

Professional ServicesFinanceMexico Contact:

For further information, please contact:
Gar Jackson
Global IR Group
Phone: (949) 873-2789
Email: gar@globalirgroup.com
Doug Orr, Executive Vice President and Chief Financial Officer
Phone: (817) 505-3199
Email: investorrelations@firstcash.com
Website: www.firstcash.com

[…]

Soccer-Manchester United confirm Falcao one-year loan

* Falcao loan deal confirmed

* Takes United summer spending to $250 million (Adds details, quotes)

LONDON, Sept 2 (Reuters) – Manchester United confirmed they had signed Colombian striker Radamel Falcao on a one-year loan deal from Monaco after the transfer window closed on Monday.

“#mufc is delighted to announce Radamel Falcao has joined on a 1-year loan from Monaco with an option to buy,” the Premier League team said on its Twitter feed.

Falcao was in Manchester for a medical examination ahead of the proposed season-long loan from Monaco, a move revealed to Reuters on Monday by a source close to the deal.

The 28-year-old scored 11 goals in 20 appearances for Monaco after joining from Atletico Madrid for a fee of around 50 million euros (65.65 million US dollar) last year.

“I am delighted to be joining Manchester United on loan this season,” Falcao said on United’s website (www.manutd.com).

“Manchester United is the biggest club in the world and is clearly determined to get back to the top. I am looking forward to working with Louis van Gaal and contributing to the team’s success at this very exciting period in the club’s history.”

Falcao, who missed the World Cup after suffering a serious knee injury, had been linked with several top European clubs, including Real Madrid.

He will compete with regular strikers captain Wayne Rooney and Dutchman Robin van Persie for a place in a reshaped United team.

“I am delighted Radamel has joined us on loan this season,” Van Gaal said.

“He is one of the most prolific goalscorers in the game. His appearance-to-goal ratio speaks for itself and, when a player of this calibre becomes available, it is an opportunity not to be missed.”

Financial details were not disclosed but British media reports suggested the deal cost United 6.0 million pounds (9.96 million US dollar).

Manchester United earlier completed the signing of versatile Netherlands international Daley Blind and the Falcao move tipped the club’s summer spending spree past 150 million pounds ($249 million) following the British record transfer fee paid to Angel di Maria.

They will recoup some of that cash after selling England forward Danny Welbeck to Arsenal, while Mexico striker Javier Hernandez has also departed on a season-long loan to Real Madrid.

United are still looking for their first win under Van Gaal having drawn two and lost one match in the Premier League and crashed out of the League Cup 4-0 to lower league MK Dons.

(1 US dollar = 0.6022 British pound) (Reporting by Ian Ransom in Melbourne, editing by Nick Mulvenney; Editing by Nick Mulvenney)

SoccerSports & RecreationManchester UnitedFalcaoMonaco […]

SDLP – Seadrill Partners LLC Announces Second Quarter 2014 Results

Highlights

Seadrill Partners reports net income attributable to Seadrill Partners LLC Members for the second quarter 2014 of US$31.2 million and net operating income of US$168.6 million.Generated distributable cash flow of US$51.9 million for the second quarter 2014 representing a coverage ratio of 1.09x.Declared an increased distribution for the second quarter of US$0.5425 per unit, an increase of 7% over the first quarter distribution.Completed US$1.1 billion add-on term loan B. Proceeds of the term loan refinanced existing indebtedness and increased liquidity.Issued a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited for general corporate purposesEconomic utilization for the second quarter of 94%

Subsequent Events

Completed the acquisition of an additional 28% interest in Seadrill Operating LP for US$373 million

Financial Results Overview

Seadrill Partners LLC1 reports:

Total contract revenues of US$339.6 million for the second quarter 2014 (the “second quarter”) compared to US$260.6 million in the first quarter of 2014 (the “first quarter”). The increase is primarily driven by a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

Operating income for the quarter of US$168.6 million compared to US$123.6 million in the preceding quarter. The increase is largely as a result of the West Auriga and uptime improvements described above.

Net Income for the quarter of US$94.3 million compared to US$43.8 million in the previous quarter. This is after the recognition of the gain/loss on derivative instruments, which reflected a loss of US$27.8 million in the second quarter as compared to a loss of US$49.2 million for the first quarter as a result of a decrease in long term interest rates in the second quarter as well as a higher level of interest rate swaps as at the end of the second quarter. The unrealized non-cash element of these amounts is US$23.5 million loss in the second quarter 2014 and a US$49.8 million loss for the first quarter 2014.

____________________

1) All references to “Seadrill Partners” and “the Company” refer to Seadrill Partners LLC and its subsidiaries, including the operating companies that indirectly own interests in the drilling rigs Seadrill Partners LLC owns: (i) a 30% limited partner interest in Seadrill Operating LP, as well as the non-economic general partner interest in Seadrill Operating LP through its 100% ownership of its general partner, Seadrill Operating GP LLC, (ii) a 51% limited liability company interest in Seadrill Capricorn Holdings LLC and (iii) a 100% limited liability company interest in Seadrill Partners Operating LLC. Seadrill Operating LP owns: (i) a 100% interest in the entities that own the West Aquarius, West Leo and the West Vencedor and (ii) an approximate 56% interest in the entity that owns and operates the West Capella. Seadrill Capricorn Holdings LLC owns 100% of the entities that own and operate the West Capricorn,West Sirius and West Auriga. Seadrill Partners Operating LLC owns 100% of the entities that own and operate the T-15 and T-16 tender barges.

Net income attributable to Seadrill Partners LLC Members was US$31.2 million for the second quarter compared to US$19.8 million for the previous quarter.

Distributable cash flow was US$51.9 million for Seadrill Partners` second quarter as compared to US$30.0 million for the previous quarter2 giving a coverage ratio of 1.09x for the second quarter. The increase is mainly as a result of a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

The coverage ratio has been negatively impacted by the increase in units outstanding following the June equity issuance as the second quarter distribution is payable on all outstanding units at the record date. Excluding the distribution in relation to the new units issues in the June equity offering, the coverage ratio would have been 1.22x.

Distribution for the period of US$0.5425 per unit, equivalent to an annual distribution of US$2.17, represents a 40% increase from the Company`s minimum quarterly distribution set at its IPO. Subsequent to the acquisition of an additional 28% ownership interest in Seadrill Operating LP the Company will own a 58% interest in the operating company. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

__________________

2) Please see Appendix A for a reconciliation of DCF to net income, the most directly comparable GAAP financial measure.

Operations

Seadrill Partners has an interest in nine rigs in operation. The fleet is comprised of four semi-submersible rigs, two drillships and three tender rigs operating in Canada, the US Gulf of Mexico, Ghana, Nigeria, Angola and Thailand respectively.

Overall economic utilization for the fleet was 94% for the second quarter. Following the operational issues related to third party equipment on the West Aquarius, operations have returned to normal as spare parts were located on similar units, demonstrating the synergies of being associated with a strong parent such as Seadrill Limited.

Total operating expenses for the second quarter were US$177.7 million, compared to US$151.7 million in the previous quarter the increase is largely as a result of the West Auriga operating for a full quarter. The Company has good cost controls in place and sees little risk of changes to the operating cost structure.

Acquisitions

On July 21, 2014 Seadrill Partners completed the acquisition of an additional 28% interest in Seadrill Operating LP for a total consideration of US$373 million. Seadrill Operating LP has an ownership interest in three ultra-deepwater drilling rigs, West Aquarius, West Leo and West Cappella, and one semi tender rig, the West Vencedor. The Company now owns a 58% interest in Seadrill Operating LP which in line with the ownership level of the Company`s other ultra-deepwater operating company which is 51% owned. The transaction increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The gross value of the 28% share acquired, after deducting the 44% non-controlling interest in the West Capella, was $804 million. The 28% share of the debt associated with the four rigs owned by Seadrill Operating L.P., net of the West Capella non-controlling interest, was $431 million. The equity portion was therefore $373 million.

The acquisition was funded with a combination of cash and proceeds from the US$300 million equity offering completed on June 19, 2014 and surplus funds from the Company`s recent term loan B financing. The Company sold a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited in June 2014.

Financing and Liquidity

As of June 30, 2014, the Company had cash and cash equivalents, on a consolidated basis, of US$523.3 million and two revolving credit facilities totaling US$200 million. One US$100mm facility is provided by Seadrill as the lender and the second US$100mm facility is provided by a syndicate of banks and is secured in connection with the $2.9 billion term loan B. As of June 30, 2014, these facilities were undrawn. Total debt was US$3,248.8 million as of June 30, 2014; US$251 million of this debt was originally incurred by Seadrill, as borrower, in connection with its acquisition of the drilling rigs.

As of June 30, 2014 the Company had two secured credit facilities, in addition to the term loan B. These facilities expire in 2015 and 2017. A refinancing strategy should be expected at maturity debt levels or higher. Additionally the Company has a US$109.5 million vendor loan from Seadrill maturing in 2016 relating to the acquisition of the T-15.

In June 2014, Seadrill Partners executed a US$1.1 billion add-on term loan B. The term loan was upsized from US$1 billion, priced at the existing rate of Libor plus 3%, subsequently swapped to a fixed rate of approximately 5.5% and will be borrowed on substantially the same terms as the Company`s existing US$1.8 billion senior secured term loan B incurred in February 2014. The 1% amortization profile of the new facility further enables the Company to more efficiently manage its replacement capital expenditure reserves by investing in new assets. Following the completion of the add-on term loan the Company`s BB-/Ba3 rating has been reaffirmed by both S&P and Moody`s.

The Board is confident that a similar refinancing can be executed on the remaining back to back loans and related party debt in order to complete the separation of Seadrill Partners` capital structure from Seadrill Limited and further facilitate Seadrill Partners` growth.

As of June 30, 2014, Seadrill Partners had interest rate swaps outstanding on principal debt of US$3,164.2 million. All of the interest rate swap agreements were entered into subsequent to the IPO Closing Date and represent approximately 97% of debt obligations as of June 30, 2014. The average swapped rate, excluding bank margins, is approximately 2.40%. The Company has a policy of hedging the significant majority of its long-term interest rate exposure in order to reduce the risk of a rising interest rate environment.

Market

The oil market fundamentals continue to be strong with high and stable oil prices. Except for very brief periods the oil price has remained above US$100 for the last 3.5 years and the global economy continues along its growth path following the financial crisis. Even with these strong macro fundamentals oil companies seem to be unable to generate free cash flow to grow their businesses and have entered into a period of selectivity on projects as costs escalated across their entire portfolio of projects. The current situation has some similarities to the situation in 2002-2003 when oil companies had limited free cash flow to develop new reserves. This led to an increase in oil price between 2003-2008 when Brent moved from approximately US$40 to US$100 and resulted in increased investment by the oil companies. Today, the the majority of low cost inventory has been produced and oil companies are entering a new phase in which recently discovered oil must be developed in order to grow production. These reserves are in the deep and ultra-deepwater and are far more complex than reserves discovered in prior periods. We can thereby assume that the amount of rig capacity which is needed to produce a barrel of offshore oil in the future will increase.

Over the long term, return on invested capital will be the ultimate driver of capital allocation decisions and the attractive economics of the deep and ultra-deepwater will lead to increased exploration and development spending in these regions. This view is supported by most of the major oil companies.

Ultra-Deepwater Floaters

The near term market for ultra-deepwater drilling units continues to be challenging partly driven by a reduction in exploration drilling which has led to a slower growth rate in overall upstream spending. However, there is evidence of positive developments in the number of tenders that have materialized for 2015 and 2016 projects. In the meantime, independent E&P`s could potentially fill some of the exploration gap that has been created by the cuts in exploration spending from the major oil companies.

The reported overall contracting activity has increased however we see some industry participants, especially those with older units and significant portions of their fleet requiring renewal in the short term, driving prices down. The uncertain cash flow profile of these older units is forcing contractors to make difficult decisions and lock up their best assets in order to gain some clarity on the near term outlook for their business. Older 4th and 5th generations assets are quickly losing pricing power and rates are falling faster than high-specification units. Many of these units are facing high capital expenditure requirements in order to remain part of the active fleet and owners of these assets face decisions to upgrade, swap out with a new unit, or retire the asset. We have seen two examples of this recently in Norway that may prove to be a leading indicator for trends in the global market. Worldwide, out of a total active floater fleet of approximately 300 units there are 128 units more than 25 years old. It is estimated that 70 of these units will be required to have 5 year classing surveys between now and 2017. The total cost for such a classifications can easily be in excess of US$100 million.

Seadrill Partners remains in the best possible competitive position with long term contracts, robust backlog and little exposure to the near term dayrate environment.

The longer term outlook for floaters remains solid. The number of newbuild announcements has rapidly declined and existing newbuild projects are extending delivery dates. Major oil companies continue to focus their activity on 6th generation units with high variable deckload capacity, dual BOP`s, and dual activity capabilities in a bid to advance the safety and efficiency of the rigs they employ. Several oil companies are also now introducing requirements for managed pressure drilling equipment. This is not simply a matter of preference that can dissipate if customer preferences change. This migration to a higher specification fleet is in part dictated by the increasingly challenging project requirements of recent discoveries. Oil companies must now develop the challenging reserves discovered in recent years in order to replace reserves and grow production.

The main driver on the demand side will be the anticipated need to drill development wells to bring ultra-deepwater production from the present level of approximately 1.3 million barrels per day to 5 million barrels per day forecast in 2020. The delivery of 73 ultra-deepwater newbuildings from today until 2018 will increase capacity. However, it can be anticipated that a significant part of the 128 rigs that are more than 25 years old will be retired from service as they come up for classing surveys due to uneconomic classification budgets. At the same time, ordering of new rigs has more or less stopped which sets the framework for a sharp upturn when demand and supply again are balanced.

Activity in Brazil has shown the most notable improvement as Petrobras tendered their first new rig in three years and is progressing through the acceptance process for the 2015 extensions. Following a year when the market saw a number of rigs leaving the country this is certainly a step forward. Although a seemingly bearish sign to see rigs leaving the biggest operator, it was in fact a very natural market development and a perfect example of the bifurcation and fleet renewal that is occurring on a global scale today. In addition to Petrobras` initial tender and expected extension of six rigs that have contracts expiring in 2015, it is expected that an additional three to four assets will be needed in the sort term to meet drilling requirements on the Libra field, with up to ten units expected to be required in total.

The West African market continues to be an active region for tendering activity as oil companies` move into their next budgeting cycle. In particular we see opportunities in Nigeria, Angola, and Ghana as companies work through regulatory approval processes. As demonstrated by Seadrill`s contract announcements for the West Jupiter and West Saturn, tenders will get completed; however patience and working constructively with stakeholders are key for success. Additionally, there is a clear trend that going forward companies will need to develop a strong local presence to be competitive in these markets. Not only is there political pressure to increase local content, but also a clear economic benefit in replacing international workers with local crew.

The US Gulf of Mexico is the primary market that may see a pickup in short term exploration activity given the number of indigenous independent E&P companies in the region. We have already seen opportunistic independent oil and gas companies use the present market weakness to tender for projects where profitability has improved due to lower rig rates. We see some potential to fill in a portion of the exploration spending that has been cut by the major oil companies. Longer term opportunities will materialize, however we expect this to be pushed into 2015 and 2016 similar to other regions.

In Mexico, the energy reform process is progressing at an impressive pace. Following the acceptance of major oil companies into the region and the beginning of formal licensing rounds, demand for floaters should follow. Seadrill continues to be well positioned with PEMEX having operated the West Pegasus for the last 2.5 years with a high degree of success and more recently mobilizing 5 jack-ups to the region. In the intermediate term, prior to the awarding of licenses to major oil companies there may an opportunity for a number of additional floaters based on the current budgeted spending from PEMEX.

Outlook

The second quarter of 2014 was a success for Seadrill Partners having executed an add-on US$1.1 billion term loan B and successful equity offering. Additionally, operations have improved materially since the challenges encountered during first quarter and we have achieved an overall economic uptime of 94%.

Distributions have grown 7% during the second quarter, and 40% since the Company`s IPO in 2012. This growth exceeds the Board`s anticipated annual growth rate of 15% at the time of the Company`s initial public offering in October 2012. Seadrill Partners achieved a coverage ratio of 1.09x during the second quarter even after taking into consideration the increased share count following the equity offering in June. The Company continues to target a coverage ratio of 1.1x after accounting for maintenance and replacement reserves.

This track record demonstrates Seadrill Partners` commitment to growth. The Board and management team remain committed to growing distributions by acquiring operating company units or additional assets. The Board is pleased the Company has managed to diversify its fleet and reached the point where it is prudent to acquire operating company units. By moving swiftly to acquire an additional 5 rigs since IPO Seadrill Partners has opened up a new avenue for distribution growth.

The add-on term loan B completed in June is another important step towards rationalizing Seadrill Parnters` debt structure which makes the Company well positioned for future growth. The transaction, originally marketed as a US$1 billion facility and upsized to US$1.1 billion, is an add-on to the existing US$1.8 billion facility executed in February of this year and priced at the existing loan`s rate of Libor plus 3%. This represents a continuation of the strategy to refinance existing debt of acquired rigs at the partnership level with a more appropriate amortization profile. The addition of another two units to the Borrower Group increases contract duration and further diversifies the cash flows supporting the Company`s credit. By upsizing the loan, the market has acknowledged Seadrill Partners` long term contracted cash flow, visible growth profile and high quality fleet.

During the remainder of the year the Company will continue to explore financing alternatives to refinance the remaining related party debt on the West Vencedor, T-15 and T-16 at the Seadrill Partners level and continue to manage the capital structure to maximize distributable cash flow.

Operationally, the Board and management team are pleased with the improvements shown during the second quarter. The 94% utilization rate reflects the return to normal operations of the West Aquarius and West Capricorn. The ability of an MLP to maintain distributions during periods of operational challenges is linked to fleet size. The West Aquarius would have had a much more pronounced impact had Seadrill Partners owned fewer assets in its portfolio. Seadrill Partner`s ability to quickly grow its fleet has put the Company in the position to manage through periodic downtime while growing distributions. Thus far in the third quarter The West Capricorn has experienced 21 days of downtime due to BOP issues but has now returned to service. Utilization for the rest of the fleet to date in the third quarter is approximately 95% and the Company currently expects to achieve its targeted coverage ratio for the third quarter.

Distributable cash flow for the third quarter of 2014 will be positively impacted by the cash contribution from the additional 28% interest in Seadrill Operating LP. The acquisition increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The Board remains committed to its high growth acquisition strategy in order to strengthen the fleet composition, diversify the customer base, and increase backlog. The Company`s modern best in class fleet and long term contracts protect the Company from the current short-term negative market sentiment. It is a realistic scenario that demand growth for development drilling will have outpaced supply growth when the Company`s existing contracts roll off. Significant old capacity is expected to leave the market, while limited newbuild projects are likely to be initiated. This may put the Company in a strong negotiating position when it comes time to re-contract units. With an orderbacklog of US$5.1 billion, a new fleet and solid prospects for future growth the Board looks optimistically toward the future.

August 27, 2014

The Board of Directors

Seadrill Partners LLC

London, UK.

Questions should be directed to:

Graham Robjohns: Chief Executive Officer

Rune Magnus Lundetrae: Chief Financial Officer

Seadrill Partners Fleet Status
Seadrill Partners 2Q 2014 Results


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Seadrill Partners LLC via GlobeNewswire
HUG#1851480

FinanceInvestment & Company InformationSeadrill […]

Uranium Resources Reports Lower Cash Burn Rate in 2Q Financial Results

CENTENNIAL, Colo.–(BUSINESS WIRE)–

Uranium Resources, Inc. (URRE) reports that it has continued to reduce its overall cash burn rate. URRE ended 2Q 2014 with cash and cash equivalents of $10.4 million and positive working capital of $8.7 million.

Highlights for 2Q 2014 and to date:

Net cash used in operating activities decreased by 30% to -$3.0 million in 2Q 2014 compared with -$4.3 million for 2Q 2013. Operating and mineral property expenses dropped by 35% to $1.1 million in 2Q 2014 from $1.6 million in 2Q 2013. During the second quarter, the Company drew a final $3.0 million from its senior convertible loan facility with its largest shareholder Resource Capital Fund V L.P. (RCF). The Company completed a Technical Report on the Juan Tafoya Project in New Mexico in June 2014.

Christopher M. Jones, President and Chief Executive Officer, said, “During 2014, we have demonstrated cash savings and improved overhead efficiency with 8% lower mineral property expenses and general and administrative expenses totaling $6.7 million in the first six months of 2014 compared with $7.3 million in the same period in 2013. We are on track with our drive to achieve a cash burn rate of under $1.0 million per month and are funded well into 2015.”

Financial Overview

The second quarter net loss of $3.1 million was 25% lower than in 2Q 2013 while corresponding net loss per share was $0.13 and $0.21, respectively. The smaller net loss compared with a year ago was due to significantly lower mineral property expenses by $0.6 million and no impairment in 2Q 2014 compared to $0.4 million in non-cash property impairment in 2Q 2013.

Mineral property expenses were $1.1 million in 2Q 2014 compared with $1.6 million a year ago, reflecting the completion of certain restoration activities in South Texas, while general and administrative expenses were $2.2 million compared with $1.9 million due to higher non-cash stock compensation expenses offsetting a lower cash payroll burden. As a result of the outstanding principal on the convertible loan, the second quarter interest expense of $624,000 was higher than 2Q 2013 and comprised $430,000 of non-cash debt amortization, $176,000 of interest paid on the convertible loan and other interest paid.

Cash and equivalents were $10.4 million at June 30, 2014 compared with $5.3 million at June 30, 2013 and $1.1 million at December 31, 2013. On August 1, 2014, the cash balance was approximately $9.0 million and total shares outstanding was 24.8 million.

Table 1: Financial Summary

($ in 000) Q2 2014 Q2 2013 Variance Cash and Cash Equivalents $ 10,420 $ 5,326 96 % Current Assets 11,136 5,727 94 % Current Liabilities 2,396 3,107 -23 % Working Capital 8,740 2,620 234 % Convertible Loan1 8,000 – n.a. Total Shareholders’ Equity $ 31,049 $ 36,669 -15 % 1. The current convertible loan totals $8.0 million at June 30, 2014. The convertible loan facility is recorded under long-term liabilities on the Company’s balance sheet at June 30, 2014 as a derivative liability at a fair value of $4.0 million and the convertible loan’s residual value of $3.4 million.

Table 2: Financial and Capital Summary

($ and Shares in 000, Except Per Share and Uranium Price) Q2 2014 Q2 2013 Variance

Six Months

Ended

June 30, 2014

Six Months

Ended

June 30, 2013

Variance Net Cash Used in Operations $ (3,033 ) $ (4,337 ) -30 % $ (6,783 ) $ (8,224 ) -18 % Operating and Mineral Property Expenses 1,062 1,634 -35 % 1,942 2,742 -29 % General and Administrative 2,157 1,940 11 % 4,799 4,575 5 % Interest Expense 624 10 6140 % 1,038 250 315 % Net Loss $ (3,128 ) $ (4,197 ) -25 % $ (6,588 ) $ (8,670 ) -24 % Net Loss Per Share $ (0.13 ) $ (0.21 ) -38 % $ (0.28 ) $ (0.47 ) -40 % Avg. Weighted Shares Outstanding 24,619 19,821 24 % 23,495 18,550 27 % Uranium Average Spot Price (source:UxC) $ 29.65 $ 40.36 -27 % $ 32.40 $ 41.52 -22 %

On April 29, 2014, the Company and RCF amended the convertible loan agreement to reduce the size of the second tranche to $3.0 million from $5.0 million and cancelled the undrawn third tranche of a further $5.0 million. With the receipt of $3.0 million from the second tranche of the convertible loan, URRE is now carrying a total of $8.0 million under the convertible loan. In July 2014, the Company received net proceeds of approximately $181,000 from the sale of shares utilizing the Company’s At The Market sales agreement.

All periods prior to 4Q 2013 were restated to expense certain costs. The restatement did not impact the Company’s cash position, financing agreements or progress on operating plans.

In other corporate matters, Director Terence J. Cryan was elected by the Board of Directors as the new Chairman, taking over those duties from long-serving Director Paul K. Willmott as announced in the Company’s news release of June 6, 2014. Mr. Willmott continues to serve as a director.

Operations Overview

At Kingsville Dome, the Company completed the pond restoration project in 1Q 2014. Lower-cost stabilization and monitoring work are ongoing and will continue for a few years according to regulatory requirements for Kingsville Dome as well as the depleted Vasquez well fields in South Texas. At Rosita, certain old wells are undergoing plugging. Both Rosita and Kingsville Dome remain on standby for a potential restart when there is a sustained recovery in uranium prices and such restart would be subject to project financing.

In New Mexico, pertaining to the Company’s Churchrock Project, the Company’s discussions with a subcommittee of the Navajo Nation Council Resources and Development Committee (RDC) to draft terms of an agreement to define mutual benefits for the Navajo Nation and the Company have terminated as the subcommittee has been dissolved. As announced in the Company’s news release of July 23, 2014, the Navajo Nation Council rescinded the Navajo Nation Resources and Development Committee’s December 2013 resolution that acknowledged the Company’s right of access and surface use at its Churchrock Project and that created the subcommittee.

There is no change to the Temporary Access Agreement between the Navajo Nation and the Company for the Company to access its Churchrock properties. The Company anticipates continuing to communicate with the Navajo Nation, but cannot predict with any certainty as to the timing or outcome of this matter.

Technical Reports

The Company completed a Technical Report on mineral resources at the Juan Tafoya Project in New Mexico, which adheres to the format of Canadian National Instrument 43-101. As reported in the Company’s June 12, 2014 news release, the Juan Tafoya Project has an estimated 4.2 million tons at an average uranium grade of 0.15% in non-reserve mineralized material categorized as Inferred Resources. The Juan Tafoya Technical Report, which is available on the Company’s website, recommends the Company advance this “project of merit” to the next stage of infill drilling to upgrade the mineral resource.

This was the second Technical Report completed by the Company this year. The Juan Tafoya Project is located 15 miles by road northeast of the Company’s Cebolleta Project, which has an estimated 5.6 million tons at an average uranium grade of 0.17% in Inferred Resources as described in the NI 43-101 compliant Technical Report of April 2014.

Uranium Market Commentary

According to UxC Consulting, the uranium spot price declined below $30.00 per pound at the end of April 2014. Industry analysts cite an oversupply of secondary supply from enrichment facilities for the continued weakness in uranium spot prices. Recent news from Japan reported that Japan moved closer to restarting nuclear power generation following the Nuclear Regulatory Authority’s first draft approval under new, more stringent safety regulations of two reactors at the Sendai power plant, with expectation of final approval with Sendai’s final submission of documents. The Company believes that overall uranium fundamentals have not changed and expects tightening supply and rising demand from expanding global nuclear power generation to bring about recovering uranium prices over the mid-term.

2014 Outlook

The Company continues to monitor the uranium market closely, adjusting business plan priorities in the face of cash conservation. As of a result of the legislation of the Navajo Nation Council, nullifying the RDC subcommittee, the Company has removed the 2014 goal of achieving meaningful progress with the RDC subcommittee in advancing the Churchrock Project.

During 2014, the Company expects to:

Generate NI 43-101 compliant technical reports for the Roca Honda and the Churchrock projects in New Mexico by the end of 2014, Evaluate and prioritize other projects for NI 43-101 compliant technical reports, Reduce and maintain cash burn rate to under $1.0 million per month, and Pursue additions of quality mineral resources within an economic haulage distance for processing at the Company’s two facilities in South Texas, as well as opportunistic, value-accretive acquisitions and/or operating/processing agreements.

Conference Call/Webcast Details

The Company is hosting a conference call and webcast to discuss its 2Q 2014 financial results and recent developments today, August 8, 2014, at 11:00 a.m. Eastern time (9:00 a.m. Mountain). The conference call and presentation are also available via a live webcast through the Company’s website, www.uraniumresources.com.

Dial-in Numbers:

+1 (800) 319-4610 (U.S. and Canada)

+1 (604) 638-5340 (International)

Conference ID:

Uranium Resources Conference Call

A replay of the call will be available on the Company’s website through August 29, 2014.

Replay Numbers:

+1 (800) 319-6413 (U.S. and Canada)

+1 (604) 638-9010 (International)

Code:

1426 followed by the # sign.

About Uranium Resources

Uranium Resources, Inc. was incorporated in 1977 to explore, develop and recover uranium. Uranium Resources controls minerals rights encompassing approximately 200,000 acres in the prolific Grants Mineral Belt in New Mexico, which holds one of the largest known concentrations of sandstone-hosted uranium deposits in the world. The Company has two licensed processing facilities and properties in Texas, and an NRC license to recover up to three million pounds of uranium per year using the in situ recovery (ISR) process at certain properties in New Mexico. The Company acquired these properties over the past 25 years, along with an extensive uranium information database of historic drill hole logs, assay certificates, maps and technical reports for the Western United States.

Cautionary Statement

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” and other similar words. All statements addressing operating performance, events or developments that the Company expects or anticipates will occur in the future, including but not limited to statements relating to the timing or occurrence of production at or restoration of the Company’s properties, , the resources included in the Juan Tafoya and Cebolleta Technical Reports, which consist solely of inferred resources, the timing, cost and results of any PEA or scoping level study regarding the Juan Tafoya or Cebolleta projects, future improvements in the demand for and price of uranium, the adequacy of funding for the Company through 2015, expected reductions in the Company’s operating expenses and burn rate, the ability of the Company to optimize technical and operational components, the completion of technical reports for the Company’s New Mexico properties, any agreement or progress with the Navajo Nation Council in advancing the Churchrock ISR project, additions of reserves and resources or acquisitions, and entry into operating or processing agreements are forward-looking statements. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties include, but are not limited to, the fact that NI 43-101 reports describe various types of “resources” which are not recognized by the SEC; inferred resources are the lowest standard of resource allowed under NI 43-101 standards and may not qualify as “mineralized material” under SEC staff positions; “reserves” are defined differently by the SEC and under NI 43-101 standards; the Company’s ability to raise additional capital in the future, spot price and long-term contract price of uranium; the outcome of negotiations with the Navajo Nation; the Company’s ability to reach agreements with current royalty holders; operating conditions at the Company’s projects; government and tribal regulation of the uranium industry and the nuclear power industry; world-wide uranium supply and demand; maintaining sufficient financial assurance in the form of sufficiently collateralized surety instruments; unanticipated geological, processing, regulatory and legal or other problems the Company may encounter; and other factors which are more fully described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of the Company’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on the Company’s forward-looking statements. Except as required by law, the Company disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this news release.

Qualified Person

Dean T. “Ted” Wilton, CPG-7659, Chief Geologist and Vice President of Uranium Resources, is a Qualified Person under Canada National Instrument 43-101 (“NI 43-101”). Mr. Wilton supervised the preparation of the scientific and technical information regarding the Juan Tafoya and Cebolleta projects for this news release. A description of the key assumptions, parameters and methods used to estimate the non-reserve mineralized material in inferred resources and data verification procedures and a discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, and other relevant factors, are contained in the Juan Tafoya and Cebolleta Technical Reports, which are available on the Company’s website.

Cautionary Note Regarding References to Resources and Reserves

Investors are cautioned that the requirements and terminology of NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards (the “CIM Standards”) differ significantly from the requirements and terminology of the SEC set forth in the SEC’s Industry Guide 7 (“SEC Industry Guide 7”). Accordingly, the Company’s disclosures regarding mineralization may not be comparable to similar information disclosed by the Company in the reports it files with the SEC. Without limiting the foregoing, while the terms “mineral resources,” “inferred resources,” “indicated resources” and “measured mineral resources” are recognized and required by NI 43-101 and the CIM Standards, they are not recognized by the SEC and are not permitted to be used in documents filed with the SEC by companies subject to SEC Industry Guide 7. Mineral resources which are not mineral reserves do not have demonstrated economic viability, and investors are cautioned not to assume that all or any part of a mineral resource will ever be converted into reserves. Further, inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher resource category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility study, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit amounts. In addition, the NI 43-101 and CIM Standards definition of a “reserve” differs from the definition in SEC Industry Guide 7. In SEC Industry Guide 7, a mineral reserve is defined as a part of a mineral deposit which could be economically and legally extracted or produced at the time the mineral reserve determination is made, and a “final” or “bankable” feasibility study is required to report reserves, the three-year historical price (or in certain circumstances, a contract price) is used in any reserve or cash flow analysis of designated reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. The Company discloses non-reserve mineralized material that is considered too speculative geologically to be categorized as reserves under SEC Industry Guide 7. Estimates of non-reserve mineralized material are subject to further exploration and development, are subject to many risks and highly speculative, and may not be converted to future reserves of the Company. Investors are cautioned not to assume that all or any part of such non-reserve mineralized material exists, or is economically or legally extractable. Mineralized material that is not reserves does not have any demonstrated economic viability.

Uranium Resources, Inc. Consolidated Balance Sheets (Unaudited) June 30, December 31, 2014 2013 ASSETS Current Assets: Cash and cash equivalents $ 10,419,968 $ 1,117,303 Prepaid and other current assets 716,217 685,678 Total Current Assets 11,136,185 1,802,981 Property, plant and equipment, at cost: Property, plant and equipment 96,411,460 96,407,310 Less accumulated depreciation, depletion and impairment (65,744,117 ) (65,566,411 ) Net property, plant and equipment 30,667,343 30,840,899 Restricted cash 4,010,967 4,010,937 Total Assets $ 45,814,495 $ 36,654,817 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 1,042,724 $ 1,243,169 Accrued liabilities 1,193,383 1,775,491 Current portion of asset retirement obligations 151,434 – Current portion of capital leases 8,650 10,543 Total Current Liabilities 2,396,191 3,029,203 Asset retirement obligations 3,637,068 3,833,608 Derivative liability – convertible loan 3,956,886 2,169,408 Convertible loan, related party 3,425,219 1,024,715 Other long-term liabilities and deferred credits 1,350,000 1,350,000 Long-term capital leases, less current portion – 4,495 Total Liabilities 14,765,364 11,411,429 Commitments and contingencies Stockholders’ Equity:

Common stock, 200,000,000 shares authorized, $.001 par value; 24,686,715 and 19,820,258 shares issued and outstanding, respectively

24,691 19,824 Paid-in capital 229,092,383 216,703,028 Accumulated deficit (198,058,525 ) (191,470,046 ) Less: Treasury stock (3,813 shares), at cost (9,418 ) (9,418 ) Total Stockholders’ Equity 31,049,131 25,243,388 Total Liabilities and Stockholders’ Equity $ 45,814,495 $ 36,654,817

Uranium Resources, Inc.

Consolidated Statements of Operations

(unaudited) Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013 (Restated) (Restated) Operating income/(expenses) Mineral property expenses $ (1,062,368 ) $ (1,633,476 ) $ (1,942,372 ) $ (2,742,453 ) General and administrative (2,157,218 ) (1,939,882 ) (4,798,718 ) (4,575,118 ) Accretion of asset retirement obligations (22,438 ) (97,435 ) (101,617 ) (194,870 ) Depreciation and amortization (76,800 ) (111,082 ) (177,706 ) (232,960 ) Impairment of uranium properties – (400,226 ) – (679,655 ) Total operating expenses (3,318,824 ) (4,182,101 ) (7,020,413 ) (8,425,056 ) Other income/(expenses) Gain on derivatives 805,879 – 1,459,647 – Interest expense (624,063 ) (9,908 ) (1,038,066 ) (249,626 ) Other income/(expense), net 8,566 (4,691 ) 10,353 4,535 Total other income/(expense) 190,382 (14,599 ) 431,934 (245,091 ) Net loss $ (3,128,442 ) $ (4,196,700 ) $ (6,588,479 ) $ (8,670,147 ) LOSS PER SHARE – BASIC AND DILUTED $ (0.13 ) $ (0.21 ) $ (0.28 ) $ (0.47 ) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 24,619,266 19,820,507 23,495,157 18,550,244 Uranium Resources, Inc. Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2014 2013 (Restated) Operating activities: Net loss $ (6,588,479 ) $ (8,670,147 ) Reconciliation of net loss to cash used in operations: Accretion/amortization of asset retirement obligations 101,617 194,870 Amortization of debt discount 647,629 – Unrealized gain – derivative liability (1,459,647 ) – Decrease in restoration and reclamation accrual (146,723 ) (933,897 ) Depreciation 177,706 232,960 Impairment of uranium properties – 679,655 Stock compensation expense 463,274 183,316 Other non-cash items, net 23,846 73,795 Effect of changes in operating working capital items: Decrease in receivables 19,185 270,876 (Increase)/decrease in prepaid and other current assets (49,754 ) 35,773 Decrease in payables, accrued liabilities and deferred credits 28,698 (291,301 ) Net cash used in operating activities (6,782,648 ) (8,224,100 ) Cash flows from investing activities: Additions to restricted cash – 5,481,573 Additions to/(reductions in) uranium properties – (115,244 ) Purchases of equipment (4,150 ) – Net cash provided by/(used in) investing activities (4,150 ) 5,366,329 Cash flows from financing activities: Proceeds from convertible loan 5,000,000 – Payments on borrowings (6,388 ) (80,444 ) Issuance of common stock, net 11,183,071 3,599,432 Payment of minimum withholding taxes on net share settlements of equity awards (87,220 ) – Net cash provided by financing activities 16,089,463 3,518,988 Net increase in cash and cash equivalents 9,302,665 661,217 Cash and cash equivalents, beginning of period 1,117,303 4,664,596 Cash and cash equivalents, end of period $ 10,419,968 $ 5,325,813 Cash paid during the period for: Interest $ 5,751 $ 2,970 Non-cash transactions: Common stock issued for payment of convertible loan fees and interest $ 501,250 $

Common stock issued for repayment of short-term loan principal and interest $ – $ 5,095,833 Common stock issued under stock-based compensation plans $ 191,730

Common stock issued for the settlement of litigation $ 333,847

Common stock issued for services $ – $ 291,500 Restricted stock issued for services $ – $ 47 FinanceInvestment & Company Information Contact:

Uranium Resources, Inc.

Wendy Yang, Investor Relations

(303) 681-7222

info@uraniumresources.com
www.uraniumresources.com […]

Title Loan Company Continues to Grow Throughout New Mexico

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TitleMax does not check your credit so it doesn’t matter if you have good, bad, or no credit. You can still be approved for a title loan as long as you have a clear car title.

Albuquerque, NM (PRWEB) May 24, 2014

TitleMax, one of the nation’s largest and fastest growing car title loan companies, is continuing to grow throughout the Western region of the United States including new store locations in Albuquerque, NM. Since opening its first store in New Mexico, July 2013, TitleMax has opened seven additional locations throughout the Greater Albuquerque-Santa Fe Area including the following cities: Albuquerque, Santa Fe, Clovis, and Los Lunas. Residents throughout these areas can visit these locations for all of their car title loan needs. To find a TitleMax closest to you, click Title Loans Stores.

TitleMax offers individuals with little, no, or even bad credit the opportunity to get a cash loan up to $10,000 based on collateral, not credit history. Store hours are Monday-Friday from 9:00 a.m. to 7:00 p.m. and Saturday from 10:00 a.m. to 4:00 p.m.

“TitleMax offers quick, cash title loans while providing superior customer service,” said Otto Bielss, Senior Vice President of Operations for TMX Finance. “TitleMax does not check your credit so it doesn’t matter if you have good, bad, or no credit. You can still be approved for a title loan as long as you have a clear car title.”

About Car Title Loans

A car title loan is a fast way for credit-challenged individuals to secure the short-term cash they need. To get a TitleMax car title loan in New Mexico, an individual must have a clear, or lien-free, car title and a government-issued ID. With these items, an individual can obtain a loan up to $10,000, while still maintaining the use of their vehicle. No insurance is required, there are no credit checks, and most loans can be completed in as little as 30 minutes.

About TitleMax

TitleMax, a subsidiary of TMX Finance, provides financial products to people without access to traditional credit alternatives. TitleMax has been a trusted consumer lender for over 14 years, helping hundreds of thousands of people in getting cash when they need it. Since its inception in 1998, TitleMax has grown to over 1,350 stores, spanning 16 states and provides car title loans to over 2,500 people each day.

Please visit http://www.titlemax.com for more information on car title loans and how TitleMax can be of service.


[…]

First Cash Reports First Quarter Earnings Per Share of $0.78; Core Revenues From Retail Sales and Pawn Fees Increase 20%

ARLINGTON, Texas, April 17, 2014 (GLOBE NEWSWIRE) — First Cash Financial Services, Inc. (FCFS), a leading international operator of over 830 retail pawn stores in the U.S. & Mexico, today announced record revenue, net income and earnings per share for the three-month period ended March 31, 2014. The growth in revenue and earnings continue to be driven by the Company’s pawn operations, which accounts for approximately 94% of total revenues.

Key First Quarter Highlights

Diluted earnings per share from continuing operations for the first quarter of 2014 increased 15%, totaling $0.78 compared to earnings per share of $0.68 in the first quarter of 2013. Net income from continuing operations for the first quarter of 2014 increased 14% to $23.0 million, compared to $20.2 million in the first quarter of 2013. First quarter earnings included a non-recurring tax benefit of approximately $0.12 per share, offset in large part by a tax-adjusted reduction in earnings of approximately $0.08 per share from reduced non-core scrap jewelry and payday loan operations as compared to the prior year. Significant steps were taken in the first quarter to increase and diversify the Company’s long-term capital structure. In February, the Company entered into a new five-year $160 million bank unsecured revolving credit facility, and in March it successfully completed a $200 million 6.75% senior unsecured note offering. With the new long-term capital in place, the Company now has over $70 million of excess cash and $160 million available under the bank facility to fund future growth and investment.

Revenue Highlights

All revenue growth rates presented below are calculated on a constant currency basis by applying the currency exchange rate from the comparable prior-year period to the current year’s Mexican peso-denominated revenue. The average exchange rate for the first quarter of 2014 was 13.2 Mexican pesos / U.S. dollar versus 12.7 Mexican pesos / U.S. dollar in the comparable prior-year period.

Revenue from core pawn operations (retail merchandise sales and pawn loan fees) increased 20% for the first quarter. Total revenue for the first quarter of 2014 was $170 million, an increase of 8% compared to the first quarter of 2013. Retail merchandise sales increased by 24% for the first quarter of 2014 compared to the prior-year period. First quarter retail sales in the U.S. increased 35%, while in Mexico, sales increased 16%. Consolidated revenue from pawn loan fees increased 13% for the first quarter of 2014. U.S. pawn loan fees increased 22% for the first quarter, while increasing 6% in Mexico. Same-store core revenue in the Company’s pawn stores (which excludes wholesale jewelry scrapping) increased 4% in Mexico, decreased 4% in the U.S. and increased 1%, on a consolidated basis, for the first quarter as compared to the prior-year period. While same-store retail sales increased 3%, same-store pawn fees were down 3% consistent with similar declines in the average loan size due to lower gold prices. Gross profit from non-core wholesale scrap jewelry operations in the first quarter of 2014 decreased $2.2 million, or 46%, compared to the same period last year, reflecting a 21% quarter over quarter decrease in the average market price of gold and a 28% decline in scrap gold production. The gross margin for scrap jewelry sales was 19% in the first quarter, compared to the prior-year margin of 20%. Scrap jewelry accounted for only 3% of net revenue for the quarter, compared to 5% in the first quarter of the prior year. Short-term loan and credit services revenue, primarily from small format stores in Texas, decreased 17% in the first quarter of 2014 compared to the prior-year quarter. The decline represents a continuation of regulatory and competitive pressures facing store-based payday lenders, especially in Texas. This non-core business comprised only 6% of total revenue in the first quarter and is anticipated to contribute less than 5% of total revenues by year end.

Pawn Metrics

The number of outstanding pawn loans at March 31, 2014 increased 30% in the U.S. and 11% in Mexico as compared to the same date last year, driven by unit growth and same-store increases in the number of loans collateralized with general merchandise (primarily consumer electronics, power tools and appliances). Year-over-year growth of 12% in the amount of pawn loans outstanding reflected a decrease in average loan size, primarily due to lower loan-to-value ratios on loans secured by jewelry. The consolidated gross margin on retail merchandise sales was 39% for the first quarter of 2014, compared to 41% for the comparable period in 2013. Retail margin trends reflect the continued shift in the Company’s consolidated retail product mix toward general merchandise inventory that carries slightly lower margins than retail jewelry items. Consolidated annualized inventory turns were 3.6 times per year. Aged inventories (items held for over a year) accounted for less than 3% of total inventories.

Acquisitions and New Store Openings

The Company added 12 large format pawn store locations during the first quarter of 2014, including 10 new stores, a single store acquisition and conversion of a small format store to a large format pawn store. As of March 31, 2014, First Cash had 605 stores in Mexico, of which 560 are large format, full-service pawn stores and 310 stores in the U.S., of which 229 are large format, full-service pawn stores. Over the past twelve months, the Company has added 98 large format pawn stores, representing an increase of 14%.

Financial Metrics

Return on equity for the trailing twelve months ended March 31, 2014, was 22%, while return on assets was 14%. Consolidated net operating margin (pre-tax income) was 18% for the trailing twelve month period, while the store-level operating profit margin was 26% for the trailing twelve month period. EBITDA from continuing operations for the trailing twelve months ended March 31, 2014, was $138 million, while free cash flow was $82 million. The EBITDA margin from continuing operations was 21% for the trailing twelve months ended March 31, 2014. EBITDA from continuing operations and free cash flow are defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release.

Liquidity

For the twelve months ended March 31, 2014, the Company utilized operating cash flows and availability under its credit facilities to invest $117 million in acquisitions, $39 million in stock repurchases and $28 million in capital expenditures. In March 2014, the Company completed an offering of $200 million of 6.75% senior unsecured notes due in April 2021. The Company used the net proceeds from the offering to repay all amounts outstanding under its revolving credit facility and to pay off the remaining balances on notes payable related to previous pawn store acquisitions. In February 2014, the Company entered into a new credit agreement with a group of commercial lenders, which provides for a five-year revolving unsecured credit facility of $160 million. The new credit facility matures in February 2019 and bears interest at the prevailing LIBOR rate plus a fixed spread of 2.5%. At March 31, 2014, the Company had no amounts outstanding and $160 million of availability under the facility. The leverage ratio at March 31, 2014 (outstanding indebtedness divided by trailing twelve months EBITDA from continuing operations) was 1.4 to 1. Net debt, defined as funded debt less invested cash, was $128 million at March 31, 2014 and the ratio of net debt to equity was 0.29 to 1. At March 31, 2014, the Company had 771,000 shares available for future buybacks under its current repurchase authorization.

Fiscal 2014 Outlook

The Company’s earnings outlook now includes the impact of the incremental borrowing costs from the March 2014 issuance of the senior unsecured notes, estimated to be $0.20 per share for the year. The incremental interest expense is partially offset by first quarter 2014 non-recurring tax benefit of approximately $0.12 per share related to the international tax restructuring implemented in fiscal 2013. Including the impact of the note offering and the partially offsetting tax benefit, the Company continues to expect fiscal 2014 fully diluted earnings per share to be within its previously announced range of $3.00 to $3.15 per diluted share, but likely to be at the lower end of the range. The EPS guidance range implies full year EBITDA growth in a range of 10% to 15%. The Company expects EBITDA growth of 8% to 14% in the second quarter. The Company expects to add approximately 75 to 85 new stores in 2014. It anticipates that most of the additions will continue to be large format pawn stores in Mexico, but also includes 10 to 15 new builds and small acquisitions in the U.S. Additionally, the Company will continue to look opportunistically for large format pawn acquisitions in strategic markets, which could further increase store additions for 2014. Revenue growth in 2014 is expected to be generated exclusively from core pawn operations, partially offset by the continued de-emphasis of payday lending operations. Approximately 95% of total 2014 revenues are expected to be derived from growing pawn operations. The guidance assumptions continue to reflect the impact of lower gold prices and reduced scrap volumes on scrap jewelry revenues and pawn loan balances and the continued contraction of non-core payday lending revenues. Earnings guidance estimates for 2014 are based on an average Mexican pesos exchange rate of 13.0:1; gold prices in the range of $1,200 to $1,300 per ounce; and an anticipated income tax rate of 32% to 33% for the remaining three quarters of fiscal 2014.

Commentary and Analysis

Mr. Rick Wessel, chief executive officer, commented on the first quarter results, “We are off to a solid start for 2014 and believe that we are well positioned for another year of strong growth in our core pawn operations. Core revenues, which are retail merchandise sales and pawn fees, grew 20% this quarter, led by strong retail merchandise sales in both the U.S. and Mexico, and continued growth in pawn fees. Core pawn revenue in the U.S. grew 30% in the first quarter, consisting of 35% retail growth and 22% pawn fee growth versus the same period a year ago. In Mexico, we saw our business strengthen in the first quarter after a significant seasonal slowdown in activity during the fourth quarter of 2013.”

“The significant first quarter revenue and earnings growth from core pawn operations was partially offset by an approximate $0.08 per share drag on tax-adjusted earnings from non-core scrap jewelry and payday lending operations, as compared to the first quarter of 2013. During the first quarter, we successfully closed down the 37 Cash & Go joint venture locations, further reducing exposure to payday lending products. We expect payday lending operations to generate less than 5% of revenues by year end.”

“During the first quarter, we took significant steps to substantially increase and diversify our long-term capital structure. First, we negotiated a new $160 million long-term bank credit facility that does not mature until February 2019. We followed that with a senior unsecured note offering of $200 million that does not mature until 2021. Our senior note offering was well received by both the rating agencies and investors. Given our unique retail pawn focus, we received a significantly better credit rating and a lower interest rate as compared to most other issuances in the traditional specialty finance sector. Our financing structure provides working and investment capital for organic business growth, strategic acquisitions and future share buybacks. With the new financing in place, the ratio of funded indebtedness to EBITDA from continuing operations was 1.4 to 1 at quarter end.”

“We believe that there are significant opportunities for growth in both the United States and in Mexico. In the U.S., the pawn industry continues to be highly fragmented, with the three major publicly traded companies currently only operating approximately 20% of the total industry pawn locations. In Mexico, where 70% of our pawn stores are located, we are the primary operator of large format stores and believe we have well over 50% of total market share in that category. Our large format stores in Mexico provide growth opportunities, as the majority of competitors’ stores in Mexico utilize the small format “jewelry-only” model. We ended the quarter with 560 large format locations in Mexico and believe that with our significant first-mover advantages, we can grow our large format store count in Mexico to approximately double where we are today.”

“Over the past 25 years, we have experienced consistent demand across economic cycles and believe we are well positioned to take advantage of the favorable demographic trends in our key markets. We believe our focus on retail merchandise sales of consumer electronics, tools, household appliances, and jewelry provides a compelling value proposition for mainstream consumers in both the U.S. and Mexico. Additionally, we believe that our lending products are appealing to customers because they provide a source of credit in less than 10 minutes, require no underwriting, credit check, or bank account, while avoiding collection activities and negative credit reporting.”

“In summary, we have demonstrated a history of significant and consistent earnings growth. Over the past five years, our EBITDA from continuing operations has grown from $71 million to almost $140 million today, a compounded growth rate of 17%. We believe our recent financing activity further strengthens the long-term growth potential of First Cash and provides us additional resources to continue to increase our pawn-focused store growth, revenues and earnings. We believe our focused business model, coupled with our strong balance sheet, positions us to drive sustainable long-term growth in shareholder value.”

Forward-Looking Information

This release contains forward-looking statements about the business, financial condition and prospects of First Cash Financial Services, Inc. and its wholly owned subsidiaries (together, the Company or First Cash). Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” or “anticipates,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

Forward-looking statements in this release include, without limitation, the Company’s expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity (including the availability of capital under existing credit facilities), cash flow, consumer demand for the Company’s products and services, income tax rates, currency exchange rates and the price of gold and the impacts thereof, earnings and related transaction expenses from acquisitions, the ability to successfully integrate acquisitions and other performance results. These statements are made to provide the public with management’s current assessment of the Company’s business. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include, without limitation, the following:

changes in regional, national or international economic conditions, including inflation rates, unemployment rates and energy prices; changes in consumer demand, including purchasing, borrowing and repayment behaviors; changes in pawn forfeiture rates and credit loss provisions; changes in the market value of pawn collateral and merchandise inventories, including gold prices and the value of consumer electronics and other products; changes or increases in competition; the ability to locate, open and staff new stores and successfully integrate acquisitions; the availability or access to sources of used merchandise inventory; changes in credit markets, interest rates and the ability to establish, renew and/or extend the Company’s debt financing; the ability to maintain banking relationships for treasury services and processing of certain consumer lending transactions; the ability to hire and retain key management personnel; new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting pawn businesses, consumer loan businesses and credit services organizations (in both the United States and Mexico); risks and uncertainties related to foreign operations in Mexico; changes in import/export regulations and tariffs or duties; changes in anti-money laundering and gun control regulations; unforeseen litigation; changes in tax rates or policies in the U.S. and Mexico; changes in foreign currency exchange rates; inclement weather, natural disasters and public health issues; security breaches, cyber attacks or fraudulent activity; a prolonged interruption in the Company’s operations of its facilities, systems, and business functions, including its information technology and other business systems; the implementation of new, or changes in, the interpretation of existing accounting principles or financial reporting requirements; and future business decisions.

These and other risks, uncertainties and regulatory developments are further and more completely described in the Company’s 2013 annual report on Form 10-K. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this release speak only as of the date of this release, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

About First Cash

Founded in 1988, First Cash is a leading international operator of retail pawn stores, which account for approximately 94% the Company’s revenues. First Cash focuses on serving cash and credit constrained consumers through its retail locations, which buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small consumer pawn loans secured by pledged personal property. Today, First Cash owns and operates 919 stores in 12 U.S. states and 26 states in Mexico.

First Cash is a component company in both the Standard & Poor’s SmallCap 600 Index(R) and the Russell 2000 Index(R). First Cash’s common stock (ticker symbol “FCFS“) is traded on the NASDAQ Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.

STORE COUNT ACTIVITY

The following table details store openings for the three months ended March 31, 2014:

Pawn Locations Consumer

Large Small Loan Total
Format (1) Format (2) Locations (3) Locations Domestic:

Total locations, beginning of period 227 25 57 309 New locations opened 2 1 — 3 Locations acquired 1 — — 1 Store format conversions 1 (1) — — Locations closed or consolidated (2) (1) — (3) Total locations, end of period 229 24 57 310

International:

Total locations, beginning of period 552 17 28 597 New locations opened 8 — — 8 Total locations, end of period 560 17 28 605

Total:

Total locations, beginning of period 779 42 85 906 New locations opened 10 1 — 11 Locations acquired 1 — — 1 Store format conversions 1 (1) — — Locations closed or consolidated (2) (1) — (3) Total locations, end of period 789 41 85 915
(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including consumer electronics, appliances, power tools, jewelry and other consumer hard goods. At March 31, 2014, 121 of the U.S. large format pawn stores also offered consumer loans or credit services products. (2) The small format locations typically have limited retail operations and primarily accept jewelry and small electronic items as pawn collateral and also offered consumer loans or credit services products. (3) The Company’s U.S. free-standing, small format consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. The Company’s credit services operations also include an internet distribution channel for customers residing in the state of Texas.
FIRST CASH FINANCIAL SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended
March 31,
2014 2013
(in thousands, except per share data) Revenue:

Retail merchandise sales $ 98,708 $ 81,770 Pawn loan fees 47,638 43,151 Consumer loan and credit services fees 9,784 11,767 Wholesale scrap jewelry revenue 13,647 23,224 Total revenue 169,777 159,912

Cost of revenue:

Cost of retail merchandise sold 60,490 48,039 Consumer loan and credit services loss provision 1,743 2,109 Cost of wholesale scrap jewelry sold 11,088 18,504 Total cost of revenue 73,321 68,652

Net revenue 96,456 91,260

Expenses and other income:

Store operating expenses 48,492 42,805 Administrative expenses 13,329 13,092 Depreciation and amortization 4,272 3,625 Interest expense 1,436 719 Interest income (81) (147) Total expenses and other income 67,448 60,094

Income from continuing operations before income taxes 29,008 31,166

Provision for income taxes 6,054 10,986

Income from continuing operations 22,954 20,180

Income (loss) from discontinued operations, net of tax (272) 84 Net income $ 22,682 $ 20,264

Basic income per share:

Income from continuing operations $ 0.79 $ 0.69 Income (loss) from discontinued operations (0.01) — Net income per basic share $ 0.78 $ 0.69

Diluted income per share:

Income from continuing operations $ 0.78 $ 0.68 Income (loss) from discontinued operations (0.01) — Net income per diluted share $ 0.77 $ 0.68

Weighted average shares outstanding:

Basic 28,952 29,313 Diluted 29,342 29,955

FIRST CASH FINANCIAL SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 31, December 31,
2014 2013 2013
(in thousands) ASSETS

Cash and cash equivalents $ 94,929 $ 38,339 $ 70,643 Pawn loan fees and service charges receivable 16,539 15,544 16,689 Pawn loans 113,938 104,636 115,234 Consumer loans, net 1,239 1,618 1,450 Inventories 72,279 64,771 77,793 Other current assets 7,615 8,458 8,413 Total current assets 306,539 233,366 290,222

Property and equipment, net 109,882 97,006 108,137 Goodwill, net 254,790 168,799 251,241 Other non-current assets 15,978 6,561 9,373 Total assets $ 687,189 $ 505,732 $ 658,973

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current portion of notes payable $ — $ 3,240 $ 3,326 Accounts payable and accrued liabilities 37,184 30,827 38,023 Income taxes payable 3,377 — 7,412 Total current liabilities 40,561 34,067 48,761

Revolving unsecured credit facility 52,000 182,000 Notes payable, net of current portion 7,531 5,026 Senior unsecured notes 200,000 — — Deferred income tax liabilities 9,292 17,155 8,827 Total liabilities 249,853 110,753 244,614

Stockholders’ equity:

Preferred stock — — Common stock 394 393 394 Additional paid-in capital 177,225 175,144 176,675 Retained earnings 520,410 434,146 497,728 Accumulated other comprehensive income (loss) from cumulative foreign currency translation adjustments (8,006) (709) (7,751) Common stock held in treasury, at cost (252,687) (213,995) (252,687) Total stockholders’ equity 437,336 394,979 414,359 Total liabilities and stockholders’ equity $ 687,189 $ 505,732 $ 658,973

FIRST CASH FINANCIAL SERVICES, INC. OPERATING INFORMATION (UNAUDITED)

The following table details the components of revenue for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates, which is more fully described elsewhere in this release.

Three Months Ended

Increase/(Decrease)
March 31,

Constant Currency
2014 2013 Increase/(Decrease) Basis Domestic revenue:

Retail merchandise sales $ 45,575 $ 33,712 $ 11,863 35% 35% Pawn loan fees 22,902 18,839 4,063 22% 22% Consumer loan and credit services fees 9,112 10,888 (1,776) (16)% (16)% Wholesale scrap jewelry revenue 8,543 13,950 (5,407) (39)% (39)%
86,132 77,389 8,743 11% 11% International revenue:

Retail merchandise sales 53,133 48,058 5,075 11% 16% Pawn loan fees 24,736 24,312 424 2% 6% Consumer loan and credit services fees 672 879 (207) (24)% (20)% Wholesale scrap jewelry revenue 5,104 9,274 (4,170) (45)% (45)%
83,645 82,523 1,122 1% 6% Total revenue:

Retail merchandise sales 98,708 81,770 16,938 21% 24% Pawn loan fees 47,638 43,151 4,487 10% 13% Consumer loan and credit services fees 9,784 11,767 (1,983) (17)% (17)% Wholesale scrap jewelry revenue (1) 13,647 23,224 (9,577) (41)% (41)%
$ 169,777 $ 159,912 $ 9,865 6% 8%
(1) Wholesale scrap jewelry revenue during the three months ended March 31, 2014 consisted primarily of gold, of which approximately 8,900 ounces sold at an average selling price of $1,304 per ounce, compared to approximately 12,400 ounces of gold sold at $1,650 per ounce in the prior-year period.

FIRST CASH FINANCIAL SERVICES, INC. OPERATING INFORMATION (CONTINUED) (UNAUDITED)

The following table details customer loans and inventories held by the Company and active credit services organization (“CSO”) credit extensions from an independent third-party lender as of March 31, 2014, as compared to March 31, 2013 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current-year balances at the prior-year end-of-period exchange rate, which is more fully described elsewhere in this release.

Increase/(Decrease)

Balance at March 31,

Constant Currency

2014 2013 Increase/(Decrease) Basis Domestic:

Pawn loans
$ 55,239 $ 46,094 $ 9,145 20% 20% CSO credit extensions held by independent third-party (1)
9,248 10,341 (1,093) (11)% (11)% Other consumer loans
633 838 (205) (24)% (24)%

65,120 57,273 7,847 14% 14% International:

Pawn loans
58,699 58,542 157 —% 6% Other consumer loans
606 780 (174) (22)% (18)%

59,305 59,322 (17) —% 6% Total:

Pawn loans
113,938 104,636 9,302 9% 12% CSO credit extensions held by independent third-party (1)
9,248 10,341 (1,093) (11)% (11)% Other consumer loans
1,239 1,618 (379) (23)% (21)%

$ 124,425 $ 116,595 $ 7,830 7% 10% Pawn inventories:

Domestic pawn inventories
$ 35,289 $ 28,044 $ 7,245 26% 26% International pawn inventories
36,990 36,727 263 1% 7%

$ 72,279 $ 64,771 $ 7,508 12% 15%

(1) CSO amounts outstanding are composed of the principal portion of active CSO extensions of credit by an independent third-party lender, which are not included on the Company’s balance sheet, net of the Company’s estimated fair value of its liability under the letters of credit guaranteeing the extensions of credit.

The following table details the composition of pawn collateral as of March 31, 2014, as compared to March 31, 2013.

Balance at March 31,
2014 2013 Domestic pawn loans:

General merchandise 42% 35% Jewelry 58% 65%
100% 100% International pawn loans:

General merchandise 88% 85% Jewelry 12% 15%
100% 100% Total pawn loans:

General merchandise 65% 63% Jewelry 35% 37%
100% 100%

FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION

The Company uses certain financial calculations such as EBITDA from continuing operations, free cash flow and constant currency results (as defined or explained below) as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items that the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined in SEC rules. The Company uses these financial calculations in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items and other infrequent charges. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s operating performance and because management believes they provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating EBITDA from continuing operations, free cash flow and constant currency results are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP and are thus susceptible to varying calculations, EBITDA from continuing operations, free cash flow and constant currency results as presented may not be comparable to other similarly titled measures of other companies.

Earnings from Continuing Operations Before Interest, Taxes, Depreciation and Amortization

The Company defines EBITDA from continuing operations as net income (loss) before income (loss) from discontinued operations net of tax, income taxes, depreciation and amortization, interest expense and interest income. EBITDA from continuing operations is commonly used by investors to assess a company’s leverage capacity, liquidity and financial performance. However, EBITDA from continuing operations has limitations as an analytical tool and should not be considered in isolation or as a substitute for net income (loss) or other statement of income data prepared in accordance with GAAP. The following table provides a reconciliation of net income to EBITDA from continuing operations (in thousands):

FIRST CASH FINANCIAL SERVICES, INC. UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)

Trailing Twelve Months Ended
March 31,
2014 2013 Net income $ 86,264 $ 83,111 Loss from discontinued operations, net of tax 989 556 Income from continuing operations 87,253 83,667 Adjustments:

Income taxes 30,781 43,211 Depreciation and amortization 16,008 13,544 Interest expense 4,209 2,130 Interest income (256) (282) Earnings from continuing operations before interest, taxes, depreciation and amortization $ 137,995 $ 142,270

EBITDA from continuing operations margin calculated as follows:

Total revenue from continuing operations $ 670,713 $ 618,374 Earnings from continuing operations before interest, taxes, depreciation and amortization 137,995 142,270 EBITDA from continuing operations as a percentage of revenue 21% 23%

Free Cash Flow

For purposes of its internal liquidity assessments, the Company considers free cash flow, which is defined as cash flow from the operating activities of continuing and discontinued operations reduced by purchases of property and equipment and net cash outflow from loan receivables. Free cash flow is commonly used by investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, repurchase stock, or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for cash flow from operating activities, including discontinued operations, or other income statement data prepared in accordance with GAAP. The following table reconciles “net cash flow from operating activities” to “free cash flow” (in thousands):

Trailing Twelve Months Ended
March 31,
2014 2013 Cash flow from operating activities, including discontinued operations $ 107,118 $ 84,885 Cash flow from investing activities:

Loan receivables 2,226 (12,357) Purchases of property and equipment (27,642) (22,319) Free cash flow $ 81,702 $ 50,209


FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)

Constant Currency

The Company’s reporting currency is the U.S. dollar. However, certain performance metrics discussed in this release are presented on a “constant currency” basis, which may be considered a non-GAAP measurement of financial performance under GAAP. The Company’s management uses constant currency results to evaluate operating results of certain business operations in Mexico, which are transacted in Mexican pesos. Pawn scrap jewelry in Mexico is sold in U.S. dollars and, accordingly, does not require a constant currency adjustment. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. For balance sheet items, the end-of-period exchange rate of 12.4 to 1 at March 31, 2013, was used, compared to the exchange rate of 13.1 to 1 at March 31, 2014. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended March 31, 2013 was 12.7 to 1, compared to the current-quarter rate of 13.2 to 1.

Professional ServicesFinance Contact:

Gar Jackson
Global IR Group
Phone: (949) 873-2789
Email: gar@globalirgroup.com
Doug Orr, Executive Vice President and Chief Financial Officer
Phone: (817) 505-3199
Email: investorrelations@firstcash.com
Website: www.firstcash.com

[…]

Cash America Announces Plans to Evaluate Separation of Online Business

FORT WORTH, Texas–(BUSINESS WIRE)–

Cash America International, Inc. (CSH) (the “Company”) today announced that its Board of Directors has authorized management to review potential strategic alternatives, including a tax-free spin-off, for the separation of its online lending business that comprises its e-commerce division, Enova International, Inc. (“Enova”). While a final decision has not been made, a spin-off would create a stand-alone, publicly traded online lending company with approximately $766 million in annual revenue as of December 31, 2013. If a spin-off were to occur, the Company would be separated into two publicly traded companies: Enova International, Inc., which would own and operate the Company’s online lending business with operations in the U.S., the U.K., Australia and Canada, and Cash America International, Inc., which would own and operate the Company’s storefront lending businesses that comprise its retail services division, with more than 1,000 locations operating in the U.S. and Mexico. If a spin-off were to occur, David Fisher, who has been Enova’s Chief Executive Officer since January 2013, would continue to serve in that role.

Company management will analyze the potential separation and expects to make a final recommendation to the Company’s Board of Directors in 2014. If the Board approves a separation, a transaction would likely be completed in late 2014 or early 2015, subject to market, regulatory and other conditions, including, if the separation takes the form of a tax-free spin-off, the receipt of a private letter ruling from the Internal Revenue Service and an opinion from the Company’s tax counsel. The Company currently expects that any spin-off would be in the form of a tax-free distribution of at least 80 percent of the Enova common stock to the Company’s shareholders. Jefferies LLC is advising the Company in connection with an evaluation of the potential separation alternatives.

The Company’s President and Chief Executive Officer, Daniel R. Feehan, said, “When we acquired Enova in 2006, it offered a single credit product in the U.S. Today, through its online websites, Enova now offers a variety of innovative credit products to consumers in the U.S., the U.K., Australia and Canada. Enova continues to explore additional products and geographies in which to leverage its strengths in technology, analytics, product innovation, marketing and customer service. We now think that pursuing a separation of the businesses and management teams into two discrete companies is potentially very beneficial for the operating activities and ongoing strategy of each business. As independent companies, both Cash America and Enova would be better positioned to focus on their industry-specific business strategies and the regulatory environments related to the specific products each company offers and to recruit and hire talent oriented to each specialized business discipline. This move would allow Enova to optimize its performance and provide greater flexibility to pursue its own e-commerce expansion opportunities. A separation would also allow Cash America to further sharpen its focus on its storefront lending operations and expanding its position as a leader in the storefront consumer-lending industry. As a result, a separation is expected to better position Cash America and Enova to pursue strategies that best fit their specific businesses.”

Company management is developing detailed plans for the Board of Directors’ further consideration. To execute a transaction, a substantial amount of work is required on structure, governance, corporate finance strategy, compensation, tax planning, acquiring any necessary regulatory approvals and other significant matters. The separation is subject to a number of conditions, including final approval by the Board of Directors of transaction specifics. In addition, external events beyond the control of Cash America and Enova could impact the timing or occurrence of a separation. There can be no assurance that any separation or other transaction will occur or, if one does occur, there can be no assurance as to its form, terms or timing. During the process, the Company will remain focused on delivering the best possible results for the benefit of its customers and shareholders.

The Company also issued a separate press release today related to its expectations for financial results for the first quarter ended March 31, 2014. In that release, management indicated that its financial performance was expected to exceed its previously published estimated earnings per share for the period. Cash America will conduct a conference call to discuss its first quarter earnings and the potential separation on Thursday, April 24, 2014, at 7:00 AM CST.

About the Company

As of December 31, 2013, Cash America International, Inc. (the “Company”) operated 1,006 total locations offering specialty financial services to consumers, which included the following:

869 lending locations in 22 states in the United States primarily under the names “Cash America Pawn,” “SuperPawn,” “Cash America Payday Advance,” and “Cashland;” 47 pawn lending locations in central and southern Mexico under the name “Cash America casa de empeño;” and 90 check cashing centers (all of which are unconsolidated franchised check cashing centers) operating in 14 states in the United States under the name “Mr. Payroll.”

Additionally, as of December 31, 2013, the Company offered consumer loans over the Internet to customers:

in 32 states in the United States at http://www.cashnetusa.com and http://www.netcredit.com; in the United Kingdom at http://www.quickquid.co.uk, http://www.quickquidflexcredit.co.uk and http://www.poundstopocket.co.uk; in Australia at http://www.dollarsdirect.com.au; and in Canada at http://www.dollarsdirect.ca.

For additional information regarding the Company and the services it provides, visit the Company’s websites located at:

http://www.cashamerica.com

http://www.poundstopocket.co.uk

http://www.enova.com

http://www.dollarsdirect.com.au

http://www.cashnetusa.com

http://www.dollarsdirect.ca

http://www.netcredit.com

http://www.quickquidflexcredit.co.uk

http://www.cashlandloans.com

http://www.mrpayroll.com

http://www.quickquid.co.uk

Forward-Looking Statements

This release contains forward-looking statements about the Company’s business, financial condition, operations and prospects, including the potential strategic alternatives for the separation of its online lending business that comprises its e-commerce division, Enova. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation: risks related to the potential separation of Enova, the effect of, compliance with or changes in domestic and foreign pawn, consumer credit, tax and other laws and governmental rules and regulations applicable to the Company’s business or changes in the interpretation or enforcement thereof; the regulatory and examination authority of the Consumer Financial Protection Bureau in the U.S. and the UK Financial Conduct Authority; changes in the political, regulatory or economic environment in foreign countries where the Company operates or in the future may operate; the Company’s ability to process or collect consumer loans through the Automated Clearing House system; the actions of third parties who provide, acquire or offer products and services to, from or for the Company; public perception of the Company’s business, including its consumer loan business and its business practices; the effect of any current or future litigation proceedings or any judicial decisions or rule-making that affect the Company, its products or its arbitration agreements; fluctuations, including a sustained decrease, in the price of gold or deterioration in economic conditions; a prolonged interruption in the Company’s operations of its facilities, systems and business functions, including its information technology and other business systems; changes in demand for the Company’s services and changes in competition; the Company’s ability to maintain an allowance or liability for estimated losses on consumer loans that are adequate to absorb credit losses; the Company’s ability to attract and retain qualified executive officers; the ability of the Company to open new locations in accordance with its plans or to successfully integrate newly acquired businesses into the Company’s operations; interest rate and foreign currency exchange rate fluctuations; changes in the capital markets, including the debt and equity markets; changes in the Company’s ability to satisfy its debt obligations or to refinance existing debt obligations or obtain new capital to finance growth; security breaches, cyber-attacks or fraudulent activity; acts of God, war or terrorism, pandemics and other events; the effect of any of such changes on the Company’s business or the markets in which it operates; and other risks and uncertainties indicated in the Company’s filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this release.

FinanceInvestment & Company InformationCash America Contact:

Cash America International, Inc.

Thomas A. Bessant, Jr., 817-335-1100

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Payday Loan Reform Still a Possibility

New Mexico legislators have proposed a constitutional amendment that would limit total charges on all short-term loans to an annual percentage rate (APR) of 36 percent. Currently, the effective APR of these loans can exceed 100 percent or 200 percent; but a 36 percent cap could eliminate most of these products.

An alternative to the interest-rate ceiling may be to try to generate other options for short-term borrowers, such as employer loans. An employer may already know whether a worker is a substantial credit risk, according to Dick Minzner, a former New Mexico Taxation and Revenue secretary. The state’s lending and employment laws would have to be altered to permit employers to make these loans and to charge fees or interest.

The availability of employer loans also would require changes in public perception, says Minzner, who recommends against the use of APR to evaluate these loans. A $500 loan for two weeks, at a fee or interest of $15 amounts to an APR of approximately 80 percent. While such a percentage rate might be criticized, Minzner says this would be a more favorable arrangement than the other types of short-term loans available in the existing market.

A market-based solution may be another alternative to existing payday loans. Advocacy groups and reform supporters say the short-term loan business could still thrive with much lower interest rates. If so, Minzner says, then a lender that charges lower rates should be able to get a substantial share of the market. He suggests that advocates who believe it is possible and important to reduce the cost of short-term loans find and fund someone who can operate a less expensive lending business. He also advises that an interim legislative committee, employers, and reform advocates address these issues before the next legislative session.

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Pawn Business Starting To Beat Out Payday Loans [EZCORP Inc …

Summary

With the pick-up in the economy, the profits payday lenders enjoyed in recent years may be over. Publicly-traded companies are moving to mitigate losses from their payday loans by boosting their pawn shop businesses. Investors should carefully examine payday lenders, taking loan positions to allow them to benefit from shifting of their business models.

A year ago, businesses operating in the payday lending space seemed to hit their strides as worthy investments. Their ability to capitalize on the financially strapped consumer with high-interest loans was a boon for many of these businesses.

However, now the tide is turning against them as regulations and an improved economy have left their loan products less desirable.

Not to be done, many of these companies have shifted their focus back to their main money-making source: the pawn business. While this area of their businesses is the strongest of any of their others, the rate of growth is a concern that investors should keep in mind if they are considering investing (or holding their positions) in these companies.

The players
Among the dominant players in the industry are First Cash Financial Services (FCFS), Cash America (CSH), and EZCORP (EZPW).

With a market cap of $1.4 billion, First Cash took a major proactive step to maintain its financial position. Last year, it bought 19 pawn stores in Texas for $70 million. The Texas market, specifically in Houston, is ripe for the picking when it comes to pawn stores. Its proximity to Mexico, another growing market for the pawn shop business, is also a plus for First Cash. It also announced last month the completion of its twelve-store large format pawn acquisition in South Carolina, bringing the grand total of such additions to 112 last year.

Cash America’s core business is its pawn business. Its market cap is in line with First Cash’s at about $1.2 billion. While First Cash was buying up pawn stores in Texas, Cash America was unloading its payday lending business in the area. It closed 28 lending locations in its Texas markets. Clearly, the loans made at these locations to the so-called under-banked or unbankable were not paying off for Cash America as lucratively as they did during the economic slowdown that was in full swing in 2008.

With a market cap of roughly $663 million, EZCORP is the smallest of the three companies mentioned in this article. Its largest core business is also the pawn shop business, while its consumer loan business is the second largest. Company officials say that its overall loan balance grew in 2013, despite regulatory changes (especially at the state level) that are making it difficult for these loans to be made. Governments began cracking down after finding that consumers were being taken advantage of with these payday loans. Several states passed laws limiting the fees and interest that can be charged, while others like Georgia have flat out banned them. No matter; EZCORP has shifted to making its loans online instead of at its brick-and-mortar stores. By making the loans online, there is a lesser chance in getting caught up in laws and regulations. However, the federal Consumer Finance Protection Bureau has begun exploring these online loans. It’s only a matter of time before the agency strikes at limiting these products.

Headwinds
There is also the issue of the competitive retail environment to consider.

The industry was growing in all directions, even creating new businesses. One of them, for example, is Landmark Cash, was formed specifically to match borrowers to payday loan lenders. It boasts being able to increase an applicant’s chance of being approved and they can be reviewed by several lenders instead of one.

When it released its fourth quarter and year-end earnings for 2013, Cash America had to admit that its domestic pawn lending business was under pressure. The reason stems from falling gold prices, which is a headwind that all of these pawn shop/payday lenders must contend with.

Cash America was being challenged by lower gross profit due mainly to the significant year-over-year fall of the price of gold. Lower levels of scrap gold volume has only aggravated the situation, and not just for Cash America; the change had affected all pawn shops. The increasingly competitive retail selling environment has also made it hard for the pawn shops to move their merchandise.

Future of pawn
Execs at these companies naturally say that the pawn shop business is growing. I don’t doubt that at all. However, my concern centers on how fast this area is growing, and if it will be enough to offset the loss of the windfall of revenues these companies reaped from making those high interest payday loans.

A red flag indicating these payday lenders/pawn shops won’t see any positive growth for at least the next few quarters is the guidance released when they reported their latest earnings. Cash America expects its EPS for the first quarter of 2014 will be between $1.15 and $1.25 per share. That compared to $1.40 per share in the prior year.

Without giving specifics, EZCORP’s CEO said year-over-year financial comparisons in the second quarter to be challenging:

“Our U.S. pawn and financial services businesses continue to anniversary gold volume declines and regulatory changes respectively.”

As far as its online businesses, officials expect they will have quarter-over-quarter improvement, but will not cross into profitability until the third quarter.

First Cash expects earnings for this year to be between $3.00 and $3.15 per diluted share. That’s based on its assumption that revenue from core pawn fees and merchandise sales will increase 15% to 18%, primarily driven by contributions from new and acquired stores in both the U.S. and Mexico.

In its last earnings report released in January, it was stated that:

“The projected core revenue growth rates in fiscal 2014 will continue to be partially tempered by expectations for the size and number of pawn loans collateralized with gold jewelry. The earnings guidance also reflects anticipated further revenue declines in 2014 from non-core scrap gold sales and payday lending fees.”

Go long or not at all
There is solace to be taken in these businesses recognizing, and moving quickly to address the issue of declining revenues from payday loans. Shifting to the pawn shop business is not without challenges, however, including falling gold prices and competition from traditional retailers. I’d move with caution when it comes to payday lenders unless you are prepared to go long these stocks as they beef up their pawn shop efforts.

Source:

Pawn Business Starting To Beat Out Payday Loans

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More…)

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