Cass Information Systems, Inc. (Nasdaq: CASS), the
leading provider of transportation, energy, telecom and waste
invoice payment and information services, reported second quarter
2020 earnings of $.37 per diluted share, a decrease of 29% from the
$.52 per diluted share it earned in the second quarter of 2019. Net
income for the period was $5.4 million, compared to $7.7 million in
2019.
2nd Quarter
YTD
2020
2019
% Change
2020
2019
% Change
Transportation Invoice Volume
7.3 million
9.2 million
(20.9)
15.6 million
18.2 million
(14.3)
Transportation Dollar Volume
$5.7 billion
$7.1 billion
(20.0)
$12.2 billion
$14.1 billion
(13.8)
Facility Expense Transaction
Volume*
6.7 million
6.9 million
(2.7)
13.2 million
13.9 million
(4.8)
Facility Expense Dollar Volume*
$3.1 billion
$3.7 billion
(17.9)
$6.5 billion
$7.4 billion
(11.3)
Revenues
$33.9 million
$39.4 million
(13.9)
$72.1 million
$77.8 million
(7.3)
Net Income
$5.4 million
$7.7 million
(29.2)
$13.0 million
$15.8 million
(18.1)
Diluted Earnings per Share
$.37
$.52
(28.8)
$.89
$1.08
(17.6)
*Includes Energy, Telecom and Waste
2020 2nd Quarter Recap
Second quarter revenue decreased 14% with net income down 29%.
The dramatic impact of COVID-19 on the company’s customers led to
the declines, compounded by the decision of the U.S. Federal Reserve to lower interest rates
to near-zero levels. The general economic slowdown and lower energy
prices also hurt results.
Transportation volumes for invoices and dollars declined 21% and
20%, respectively. With manufacturing companies representing an
important component of the transportation customer base, the
previously reported contraction in the sector, combined with the
effects of COVID-19, created significant challenges. Nevertheless,
the division continues to grow its customer roster, which should
provide a solid foundation for recovery.
Facility-related (electricity, gas, waste and telecom expense
management) invoice and dollar volume declined 3% and 18%,
respectively, as the impact of COVID-19 spawned customer
bankruptcies or significant losses in dollar volume in the
restaurant, retail and hospitality sectors as customers either
temporarily closed locations or operated with minimal services.
Otherwise, the company’s facility-related customer lineup remains
stable, offering optimism about rebound prospects.
Consolidated operating expenses were $2.6 million (9%) lower as
personnel expense decreased due to the decline in transportation
and facility-related transaction volumes.
Remote Workforce Success
Cass continues to successfully operate its remote workforce
program with most employees around the globe now working and
conducting business remotely. The company will continue operating
in this fashion until the risks related to the pandemic subside and
the safety and health of its employees can be assured.
Cass Bank CARES Act Participation
In support of the Coronavirus Aid,
Relief, and Economic Security Act, Cass Bank processed
nearly 350 applications for Paycheck
Protection Program loans of approximately $170 million
to provide cash to small business and self-employed taxpayers
during the COVID-19 crisis. The loans were primarily made to bank
customers and are 100% guaranteed by the Small Business Administration.
“While these are not the financial results we prefer to report,
I am pleased that the company has remained financially strong and
profitable during these unprecedented times,” noted Eric H. Brunngraber, Cass chairman and chief
executive officer. “The pandemic’s dramatic impact on the economy
has shown the value of being a strong and reliable business
partner. We are encouraged by the fact that we continue to sign new
business. It bodes well for the future, especially when base
business activity returns.”
2020 First Half Recap
For the six-month period ended June 30, 2020, Cass earned $.89
per diluted share, a decrease of 18% from the $1.08 per diluted
share it earned in the same period in 2019. Net income was $13.0
million, compared to $15.8 million in 2019. Revenues declined 7%,
from $77.8 million in 2019 to $72.1 million in 2020.
Consolidated operating expenses were down 4%, or $2.1 million,
due to the lower transaction volumes previously cited.
Cash Dividend Declared
On July 21, 2020, the company’s board of directors declared a
third quarter dividend of $.27 per share payable September 15, 2020
to shareholders of record September 4, 2020. Cass has continuously
paid regularly scheduled cash dividends since 1934.
“The on-going dividend payments reflect the board’s confidence
in the company’s long-term prospects, underpinned by its strong
capital base,” Brunngraber
noted.
About Cass Information Systems
Cass Information Systems, Inc. is a leading provider of
integrated information and payment management solutions. Cass
enables enterprises to achieve visibility, control and efficiency
in their supply chains, communications networks, facilities and
other operations. Disbursing over $60 billion annually on behalf of
clients, and with total assets of $1.7 billion, Cass is uniquely
supported by Cass Commercial Bank. Founded in 1906 and a
wholly owned subsidiary, Cass Bank provides sophisticated financial
exchange services to the parent organization and its clients. Cass
is part of the Russell 2000®.
More information is available at www.cassinfo.com.
Note to Investors
Certain matters set forth in this news release may contain
forward-looking statements that are provided to assist in the
understanding of anticipated future financial performance. However,
such performance involves risks and uncertainties that may cause
actual results to differ materially from those in such statements.
For a discussion of certain factors that may cause such
forward-looking statements to differ materially from the company’s
actual results, see the company’s reports filed from time to time
with the Securities and Exchange Commission including the company’s
annual report on Form 10-K for the year ended December 31,
2019.
Selected Consolidated
Financial Data
The following table presents
selected unaudited consolidated financial data (in thousands,
except per share data) for the periods ended June 30, 2020 and
2019:
Quarter
Ended
June 30, 2020
Quarter
Ended
June 30, 2019
Six Months
Ended
June 30, 2020
Six Months
Ended
June 30, 2019
Transportation Invoice Volume
7,294
9,222
15,574
18,170
Transportation Dollar Volume
$
5,697,627
$
7,121,202
$
12,164,678
$
14,106,975
Facility Expense Transaction Volume
6,704
6,892
13,213
13,886
Facility Expense Dollar Volume
$
3,064,038
$
3,733,075
$
6,522,684
$
7,350,503
Payment and Processing Fees
$
22,661
$
26,852
$
48,164
$
53,309
Net Investment Income
10,761
12,022
21,809
23,379
Gain on Sales of Securities
−
8
1,069
19
Other
513
512
1,036
1,057
Total Revenues
$
33,935
$
39,394
$
72,078
$
77,764
Personnel
$
20,891
$
22,803
$
43,318
$
45,080
Occupancy
938
998
1,879
1,957
Equipment
1,617
1,552
3,252
3,021
Other
3,911
4,618
7,837
8,375
Total Operating Expenses
$
27,357
$
29,971
$
56,286
$
58,433
Income from Operations before Income
Taxes
$
6,578
$
9,423
$
15,792
$
19,331
Income Tax Expense
1,139
1,739
2,808
3,484
Net Income
$
5,439
$
7,684
$
12,984
$
15,847
Basic Earnings per Share
$
.38
$
.53
$
.90
$
1.10
Diluted Earnings per Share
$
.37
$
.52
$
.89
$
1.08
Average Earning Assets
$
1,624,415
$
1,430,983
$
1,556,143
$
1,434,777
Net Interest Margin
2.88
%
3.52
%
3.04
%
3.47
%
Allowance for Loan Losses to Loans
1.17
%
1.33
%
1.17
%
1.33
%
Non-performing Loans to Total Loans
−
−
−
−
Net Loan (Recoveries) / Charge-offs to
Loans
−
−
−
−
Provision for Loan Losses
$
400
$
−
$
725
$
250
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200723005113/en/
Kenn Entringer at Casey Communications, Inc. (314) 721-2828
kentringer@caseycomm.com
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