Cash America International, Inc. Q2 2010 Earnings Call Transcript

One more housekeeping item, we relabeled cash advance fees and related headings to consumer loans because we are including more than just cash advance products in this category. Consumer loans include cash advance activities, but also include installment loans and our auto equity loan products. We've also changed card services to micro-line of credit to more accurately reflect the characteristics of this loan product. Hopefully, that orientation to our new segment reporting and labeling is helpful to you. I think you'll find, as we have, that this new differentiation of businesses is more useful as we look at the operations of the company.

So let's look at the same quarter of 2010. You'll see that a large part of the success in the second quarter is due to the retail services division, which performed very well, posting a 23% increase in income from operations and a 4% increase in total revenue. Driving the performance for the quarter was a 10% increase in financing service charges on pawn loans and a 12% increase in the gross profit on the disposition of merchandise. The performance of this segment was led by US pawn activities, which was recovering from a significant drop in pawn loan balances during the first quarter of 2010 as a result of higher tax refunds during the quarter.

And I remember that we discussed in our April call that US pawn loan balances dropped 18% sequentially from December 2009 to March 2010. We finished the first quarter of 2010 with US pawn loan balances up 2.5%. And we saw a slow to steady growth during the second quarter of 2010 as we finish the quarter with US pawn loan balances at 4.4%, which led to an 8% increase in financing service charges within the domestic retail services group.

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