Nonsense being posted hereDirect Cash foes not do pay day loans. They provide ATM's, debit terminals, prepaid phone cards and prepaid cash cards. The total revenue on the Q2 earnings report was $58 million, of which $51 million was from the ATM business. The main reasons Q2 was soft were the decline in the Aussie dollar relative to the Cdn dollar, some problems with the bank they deal with in Mexico - they have now changed banks there, and some cost increases. There is nothing wrong with their accounting, they aren't about to have a segment of their business taken away by the government or other such nonsense. Just have a look at their financial statements and mgt discussion on SEDAR. Everything is explained there. Q2 was a little soft, but it wasn't all that bad. Q3 is the busiest quarter for their ATM business in Canada and the US, and with the Mexican bank situation resolved, and the Aussie dollar regaining some strength vs the Canadian dollar, I would expect Q3 to be a pretty good report.
As far as the debt is concerned, it is a little high, but they did make a voluntary $10 million payment on their debt in Q2. EBITDA was about $32 million for the first 2 quarters, so probably somewhere around $65 million for the year. Total debt is about $185-$190 million, so the EBITDA multiple is just under 3 times. Their existing covenant is for max of 3.5 times, and they need to get it down to 2.5 times by the summer of 2015, unless, of course, they renegotiate this. 2.5 times would mean total debt of about $162 million at the current EBITDA level.
Nice little business, and I expect the share price is about to come back up significantly.