QCCO (MM)

QC Holdings, Inc. (OTC PINK:QCCO) reported a loss from continuing operations of $1.0 million and revenues of $135.5 million for the year ended December 31, 2015. The year ended December 31, 2015 includes $1.5 million (approximately $900,000 net of income taxes) in accrued costs associated with a tentative settlement of an outstanding legal matter.

For the year ended December 31, 2014, income from continuing operations totaled $5.1 million and revenues were $153.1 million. The year ended December 31, 2014 includes discontinued operations relating to branches that were closed during the year.

The revenue decline during 2015 compared to 2014 reflects lower interest and fees from the company’s consumer loan products, indicative of competitive pressures as customers explore alternative loan products and distribution channels.  Loan loss rates were slightly lower in 2015 versus 2014, indicative of similar branch level experience year-to-year and improvements in installment loan performance. The reduction in revenues exceeded the improved losses, resulting in a gross profit decline in $10.8 million year-to-year.

During 2016, QC will continue its efforts to expand the suite of products available to customers across its network, as well as to develop an online capability that will complement the branches by providing customers an alternative method for accessing lending products.

About QC Holdings, Inc.Headquartered in Overland Park, Kansas, QC Holdings, Inc. is a leading provider of consumer loans in the United States and Canada. In the United States, QC offers various products, including single-pay, installment and title loans, check cashing, debit cards and money transfer services, through 394 branches in 22 states at December 31, 2015. In Canada, the company, through its subsidiary Direct Credit Holdings Inc., is engaged in short-term, consumer Internet lending in various provinces.

Forward Looking Statement Disclaimer:  This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the company’s current expectations and are subject to a number of risks and uncertainties, which could cause actual results to differ materially from those forward-looking statements. These risks include (1) changes in laws or regulations or governmental interpretations of existing laws and regulations governing consumer protection or short-term lending practices, (2) uncertainties relating to the interpretation, application and promulgation of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act, including the impact of proposed rulemaking by the Consumer Financial Protection Bureau (CFPB), (3) ballot referendum initiatives by industry opponents to cap the rates and fees that can be charged to customers, (4) uncertainties related to the examination process by the CFPB and indirect rulemaking through the examination process, (5) litigation or regulatory action directed towards us or the short-term consumer loan industry, (6) volatility in our earnings, primarily as a result of fluctuations in loan loss experience and closures of branches, (7) risks associated with our dependence on cash management banking services and the Automated Clearing House for loan collections, (8) negative media reports and public perception of the short-term consumer loan industry and the impact on federal and state legislatures and federal and state regulators, (9) changes in our key management personnel, (10) risks associated with owning and managing non-U.S. businesses, and (11) other various risks. QC will not update any forward-looking statements made in this press release to reflect future events or developments.

(Financial and Statistical Information Follows)

QC Holdings, Inc.
Consolidated Condensed Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
		Year Ended
		December 31,
		2014				2015
Revenues
Consumer loan interest and fees		$	142,910			$	126,318
Other			10,155				9,183
Total revenues			153,065				135,501
Provision for losses			44,887				39,190
Operating expenses			67,666				66,629
Gross profit			40,512				29,682
Corporate and Regional expenses			26,863				28,042
Other expense, net			5,219				2,777
Income (loss) from continuing operations before income taxes			8,430				(1,137	)
Provision (benefit) for income taxes			3,351				(94	)
Income (loss) from continuing operations			5,079				(1,043	)
Gain from discontinued operations, net of income tax			266
Net income (loss)		$	5,345			$	(1,043	)
Earnings (loss) per share:
Basic
Net income (loss)		$	0.30			$	(0.06	)
Diluted
Net income (loss)		$	0.30			$	(0.06	)
Weighted average number of common shares outstanding:
Basic			17,484				17,351
Diluted			17,512				17,351

QC Holdings, Inc.
Consolidated Condensed Balance Sheets
(in thousands)
	December 31, 2014			December 31, 2015
ASSETS				(Unaudited)
Current assets
Cash and cash equivalents	$	14,220		$	16,115
Restricted cash		950			950
Loans receivable, less allowance for losses of $6,794 at December 31, 2014 and $6,395 at December 31, 2015		55,744			50,555
Other current assets		6,828			6,286
Total current assets		77,742			73,906
Non-current loans receivable, less allowance for losses of $2,133 at December 31, 2014 and $1,556 at December 31, 2015		5,603			3,802
Property and equipment, net		5,013			4,797
Other assets, net		13,141			11,486
Total assets	$	101,499		$	93,991
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and other current liabilities	$	10,247		$	11,407
Revolving credit facility		12,000			6,250
Subordinated debt					3,553
Total current liabilities		22,247			21,210
Non-current liabilities		5,482			4,967
Subordinated debt		3,415
Total liabilities		31,144			26,177
Stockholders’ equity		70,355			67,814
Total liabilities and stockholders’ equity	$	101,499		$	93,991

QC Holdings, Inc.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
	December 31, 2014					December 31, 2015
Operating activities:
Net income (loss)	$	5,345				$	(1,043	)
Adjustments to reconcile net income (loss) to net cash		51,390					42,806
Changes in assets and liabilities		(43,376	)				(31,131	)
Net operating		13,359					10,632
Investing activities:
Capital expenditures		(2,379	)				(2,220	)
Other		1,242					1,195
Net investing		(1,137	)				(1,025	)
Financing activities:
Net repayment of borrowings		(8,800	)				(5,750	)
Other		(1,712	)				(1,535	)
Net financing		(10,512	)				(7,285	)
Effect of exchange rate changes on cash and cash equivalents		(175	)				(427	)
Net increase in cash and cash equivalents		1,535					1,895
Cash and cash equivalents at beginning of year		12,685					14,220
Cash and cash equivalents at end of year	$	14,220				$	16,115

Contact:
Douglas E. Nickerson  (913-234-5154)
Chief Financial Officer