Advance America (NYSE:AEA)

On 7/12/2011 we added AEA to the GeoSpecial list @ $8.45

Catalyst: 2011 first quarter EPS were up 31% over the same period last year. EPS outlook for the remainder of 2011 looked strong and easily beat 2011 first quarter EPS estimates which could lead to upside suprise quarters.  To see full notes, go here.

We are now removing AEA from the GeoSpeicial List @ $10.40 since they have entered into a definitive  agreement under which Grupo Elektra will acquire control of all of its outstanding shares for $10.50 per share in cash.

Peak performance: At the buyout price of $10.50, maximum return since being added on the GeoSpecial list would be 25%

MEXICO CITY and SPARTANBURG, S.C., Feb. 15, 2012 /PRNewswire/ -- Advance America, Cash Advance Centers, Inc. (NYSE: AEA) and Grupo Elektra, S.A.B. de C.V. (BMV: ELEKTRA) today announced that Advance America and subsidiaries of Grupo Elektra have entered into a definitive  agreement under which Grupo Elektra will acquire control of all of the outstanding shares of Advance America, a leading U.S. short-term lender, for $10.50 per share in cash, representing a 32.7% premium to the Company's closing price of $7.91 on February 15, 2012 . The total transaction value is approximately $780 million, including the Company's outstanding debt as of December 31, 2011.

Third Quarter 2011 Results

• Diluted earnings per share for the nine months and quarter were $0.67 and $0.24, respectively, compared to diluted earnings per share of $0.32 and $0.02 for the same periods in the prior year. $0.24 for third quarter 2011 vs $0.02 for third quarter 2010
• Net income for the nine months and quarter of $41.1 million and $14.6 million.
• Center gross profit for the nine months and quarter of $123.4 million and $43.0 million, respectively, increased 12.1% and 18.7% over the same periods in the prior year.
• Cash flow from operations for the nine months ended September 30, 2011, increased 41.4% over the same period in the prior year to $115.9 million.
• EBITDA from continuing operations for the trailing twelve months was $119.8 million, an increase of 32.5% over the comparable prior-year period.

Commenting on the results for the third quarter of 2011, Advance America's President and Chief Executive Officer, Patrick O'Shaughnessy said, "We are pleased to report to our third consecutive quarter of center gross profit and earnings growth. Customer service is the core of Advance America's business, and our strong results this quarter reflect our steadfast efforts to satisfy the varied needs of American consumers. In particular, our recent purchase of CompuCredit's retail storefront lending business, Advance America's first major acquisition in ten years, will help strengthen our Company's solid foundation and bolster our commitment to providing simple, reliable, transparent and affordable financial services. As always, we will continue to focus on new opportunities to generate value for our shareholders, and believe that we are well-positioned for the future."

SPARTANBURG, S.C., July 27, 2011 /PRNewswire/ -- Advance America, Cash Advance Centers, Inc. (NYSE: AEA) today reported the results of its operations for the six months and quarter ended June 30, 2011.

Highlights:

• Diluted earnings per share for the six months and quarter were $0.43 and $0.14, respectively.
• Net Income for the six months and quarter increased 42.7% and 67.9% over the same periods in the prior year to $26.6 million and $8.6 million.
• Center gross profit for the six months and quarter of $80.4 million and $32.1 million, respectively, increased 8.8% and 3.0% over the same periods in prior year.
• Cash flow from operations for the six months ended June 30, 2011, increased 56.8% over the same period in the prior year to $64.9 million.

 

Operating Results of Six Months and Quarter ended June 30, 2011:

Commenting on the results for the second quarter of 2011, Advance America's President and Chief Executive Officer, Patrick O'Shaughnessy said, "We continue to provide reliable and affordable financial services to our customers, who are reporting exceptionally high satisfaction ratings with our Company. While revenues have remained in-line with prior quarters as a result of some state law changes, the positive effects of our center consolidation efforts and our ongoing focus on controlling costs have yielded strong bottom-line performance. Advance America remains deeply committed to our core business principles of quality customer service and efficient operations, which we believe will effectively position the Company to yield growth for our shareholders in the future."

Revenues

For the six months and quarter ended June 30, 2011, total revenues decreased marginally to $284.8 million and $140.7 million, respectively, compared to $285.8 million and $141.4 million for the same periods in 2010.

These comparisons include the results of operations in Colorado, Illinois, Virginia, Washington and Wisconsin where regulatory changes have reduced the Company's revenue and profitability in 2011, and Arizona, where the Company ceased operations in the third quarter of 2010. Revenues in these six states were $10.7 million for the quarter ended June 30, 2011, compared to $20.2 million for the same period in 2010. Excluding revenues in those states, total revenues for the quarter ended June 30, 2011, increased by 7.3%, compared to the same period in 2010.

For the quarter ended June 30, 2011, total revenues for the Company's centers opened prior to April 1, 2010 and still open as of June 30, 2011 increased 3.8% compared to the same period in 2010.

Excluding centers in Colorado, Illinois, Virginia, Washington and Wisconsin, total revenues from the Company's centers opened prior to April 1, 2010 and still open as of June 30, 2011 increased 8.0% for the quarter ended June 30, 2011, compared to the same period in 2010.

Net Income and Earnings per Share

Net income for the first six months of 2011 increased 42.7% to $26.6 million compared to $18.6 million for the same period in 2010. Net income for the quarter ended June 30, increased 67.9% to $8.6 million, compared to $5.1 million for the same period in 2010.

Diluted earnings per share were $0.43 for the six months ended June 30, 2011, compared to diluted earnings per share of $0.30 for the same period in 2010. For the quarter ended June 30, 2011, diluted earnings per share were $0.14, compared to diluted earnings per share of $0.08 for the same period in 2010.

On July 7 2011, we coded AEA as a GeoSpecial @ $8.45. Some of the reasons for this include:

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• The leader of non-bank cash advance services.
• 2011 First quarter EPS were up 31% over the same period last year.
• EPS for the next three quarters is expected to grow anywhere from 17% to 50%. We generally like to see a minimum of 20% growth, however the PEG ratio of .19 is still favorable. Furthermore the company easily beat 2011 first quarter EPS estimates which could lead to upside surprise quarters.
• Has paid 26 consecutive quarterly dividends.
• Company has routinely bought back stock.
• Reeled in a 15% return on equity(ROE) for full year 2010. 28% projected ROE for 2011 based off first quarters 7% ROE.
• Competitive advantage in this weakened economy because it provides less costly credit options to consumers whose needs are not met by traditional financial institutions.
• Annualized operating cash flow is tracking at $83 million which comfortably exceeds its current liabilities plus its interest expense.

Reasons why we did not code AEA as a GeoBargain:

• 2011 first quarter revenues were flat compared to same period last year.
• Weak revenue growth could limit PE expansion.
• Company operates in low PE industry
• 35% debt to equity ratio is greater then our preferred maximum threshold of 20%, but not that bad for industry there in.
• Share count slightly higher then we like.