Cash America shares jump 12 percent on earnings outlook

04/10/2014 5:09 PM

04/10/2014 5:10 PM

Shares of Fort Worth-based Cash America International leapt 12 percent Thursday after the pawnshop operator said first-quarter earnings should top previous estimates.

The company now expects to report that it earned $1.50 to $1.55 a share, up from $1.25, the top of its earlier outlook. Cash America said the improvement is based on lower losses on online consumer loans, better margins on retail sales and improved operating efficiencies. It expects to discuss its full earnings for the quarter that ended March 31 in a conference call with financial analysts the morning of April 24.

The company’s shares (ticker: CSH) closed Thursday at $43.24, adding $4.74, or 12.3 percent, despite a big decline in the broader market. Trading in Cash America’s shares was heavy at 1.8 million, more than five times its average daily volume.

Cash America also said its board authorized management to review a spinoff and other strategic alternatives for its online lending unit, Enova International. In 2012, the company withdrew plans for an initial public offering for the unit that had been announced the previous year, when it estimated that an IPO could raise up to $500 million.

In Thursday’s announcement, Cash America said a tax-free spinoff of at least 80 percent of Enova’s shares, if it takes place, would likely occur in late 2014 or early 2015. Enova would then become a separate publicly traded company.

Last year, Enova reported revenue of $766 million. Cash America overall reported $1.8 billion in revenue in 2013 and would continue to operate the chain’s 1,006 storefront locations if the spinoff takes place, the company said.

“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,” Cash America CEO Dan Feehan said in a news release.

“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.”

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