Dollar Financial Corp. reaffirms fiscal year guidance
At a Wachovia-sponsored conference, Dollar Financial Corp. (Nasdaq: DLLR) this morning maintained its guidance for fiscal year 2007 ending June 30. The Berwyn, Penn.-based payday lender expects revenue between $400 million and $405 million and profit in the range of $66 million to $68 million. This compares with fiscal year 2006 revenue of $328.5 million and profit of $34.5 million.
“Our public guidance has remained unchanged,” CFO Randy Underwood told the audience. “Fiscal year 2007 ends here in a few days and I’m comfortable with that guidance. We have not changed it.”
The company operates almost 1,300 locations in the United States, Canada and Britain. Dollar Financial franchises some locations, but the company does not plan to renew franchise contracts as it wants to control each location, Underwood said.
Underwood emphasized international growth opportunities in the presentation. Significant, under-served markets exist on the international market, he said. The company used its American stores as a “cash cow and plowed the cash flow into Canada and the United Kingdom.” The company is currently the largest Western Union money transfer provider in Canada and the United Kingdom, he said.
“We are the dominant player in Canada and the U.K. by a long shot,” Underwood said.
The number of service sector, or blue collar, individuals, who comprise the majority of Dollar Financial’s customers, is expanding, Underwood said. The service sector is also the fastest growing segment of any economy that the company does business in, he said.
“The service sector demand for financial services continues to grow and escalate,” he said. “The sector is also projected to continue to be the fastest growing in terms of population growth.”
Dollar Financial is “excited” about building additional stores in Canada, Underwood said. A typical Canadian store costs about $200,000 to start and brings in $200,000 in annual income by the third year of operation, he said.
“It’s a very, very nice and attractive model that I would not have any difficulty showing to you several years from now,” he said.
Also during the presentation, Underwood said:
• Dollar Financial is working on finding ways to develop additional products
• The company plans to build more stores in more locations
• The company’s offering of $175 million senior convertible notes announced late last week provides Dollar Financial with “dry powder” for future growth
In midday trading, shares in Dollar Financial were up $0.04, or 0.14%, at $28.95.
