Cash America International, Inc Q1 2010 Earnings Call Transcript

Now I'll turn to some of the financial metrics and highlights for the pawn lending segment and we'll follow that up with a discussion of the cash advance lending segment concluding with our outlook for the second quarter of 2010 and full year 2010 expectations.

As you look at the total pawn lending segment you'll see that revenue is up 7% and operating income is up 12%. However, on further revue you'll notice that the US pawn business performed at levels better than the overall pawn segment with an increase in operating income on 16% on a revenue increase that's just 7%.

The company's Mexico-based pawn operations, which added 62 gross locations over the last 12 months, did not experience the typical recovery from its seasonal loan balance declines which normally occur in December and January. This caused our Mexico pawn business to report lower operating income than the prior year finishing below our expectations for the quarter.

Pawn loan balance denominated in Mexico Pesos finished the quarter at MXN 282.3 million, up 13% year-over-year. However, you may remember that we finished the fourth quarter of 2009 up 40% year-over-year. Given this model's reliance on pawn loan asset levels to drive revenue, this drop off generated only a 14% increase in revenue year-over-year while expenses from opening almost 50% more stores over the last 12 months continued to grow, rising 46%, and operating income came in about $1.2 million below the prior year.

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