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Executives

Daniel R. Feehan - Chief Executive Officer, President and Director

Thomas A. Bessant - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Bob Ramsey - FBR Capital Markets & Co., Research Division

John Hecht - Stephens Inc., Research Division

John J. Rowan - Sidoti & Company, LLC

David M. Scharf - JMP Securities LLC, Research Division

William R. Armstrong - CL King & Associates, Inc., Research Division

Bill Carcache - Nomura Securities Co. Ltd., Research Division

Daniel Furtado - Jefferies LLC, Research Division

Sameer Gokhale - Janney Montgomery Scott LLC, Research Division

Jordon Neil Hymowitz - Philadelphia Financial Management of San Francisco, LLC

R. Gregg Hillman

Cash America International, Inc. (CSH) Q2 2013 Earnings Call July 25, 2013 8:00 AM ET

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Cash America International Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, July 25, 2013. I would now like to turn the conference over to Daniel Feehan, President and CEO. Please go ahead, sir.

Daniel R. Feehan

Thank you, and good morning, ladies and gentlemen. Welcome to our earnings call for the second quarter of 2013. As usual, Tom Bessant, our Chief Financial Officer, is joining me this morning, and will be providing financial report on the second quarter following my introductory remarks.

Before proceeding with the prepared remarks, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements that are based on current expectations. Actual results and events could differ materially from those projected in the forward-looking statements because of a number of risks and uncertainties, which are discussed in our SEC filings and in the cautionary statement on our website under Investor Relations. We assume no obligation to update our forward-looking statements.

Also, I want to mention before we proceed, that a reconciliation of any non-GAAP information provided on this call to the most directly comparable GAAP information is available on the Investor Relations section of our website at www.cashamerica.com. Non-GAAP financial information is not meant as a substitute for GAAP results but is included solely for informational and comparative purposes.

Okay. Let's move on to the quarter here. Second quarter earnings release issued earlier this morning did confirm our pre-released estimate for earnings per share of $0.81, which we first disclosed in the press release on July 15. In our earnings release, we indicated the $0.81 would fall below the low end of our guidance range published in late April, and we identified lower demand from the loan products of the domestic portion of our retail services segment and higher expense levels as the primary contributing factor for the shortfall below the published guidance range, and Tom will provide additional color on those items in a moment.

While I admit being disappointed with our results, I can't say that I'm really shocked by the outcome this quarter. We had been tracking reasonably well for the first 2 months of the quarter, with earnings improvements in our e-commerce segment, offsetting the shortfalls of our retail services segment. But the ongoing weakness in loan demand in our U.S. storefronts throughout the quarter made June a particular tough month for us, causing our quarterly results to fall short of our expectations.

I think some of our followers were surprised that we did not attribute a large portion of the guidance shortfall to a further decline in gold prices. And while Tom will soon confirm to you that the decline in net revenue from the commercial sale of scrap gold certainly had a significant negative impact on a year-over-year basis this quarter, I can tell you that we had factored a large portion of that decline into the Q2 guidance we issued in late April when the spot price of gold was still above $1,400 an ounce prior to the pronounced decline later in the second quarter.

Also, the net revenue from over-the-counter retail sales actually beat our forecast for the quarter by an amount that was actually large enough to offset a significant portion of the higher expense levels that we mentioned in our pre-release. And I suspect we would have been on target had we gotten the growth we had forecasted for loan assets, both pawn and consumer loans in the 827 domestic lending locations of our retail services segment.

The traditional strong rebound in loan demand from the seasonably low first quarter tax refund period simply did not develop for us in Q2. And I don't have any explanation for the ongoing anemic loan demand in our storefronts other than the behavioral issues that I've been discussing for the past several quarters. We don't believe our customers are finding new sources of short-term credit other than perhaps some migration to the Internet, nor do we believe we are losing share to our competitors. I don't know that our storefront customers are consciously trying to deleverage but we don't see any indication that our traditional customers have regained enough confidence in their personal financial situation to risk additional personal leverage at this time.

This dynamic is particularly evident in those states with persistently high unemployment rates where we have large footprints, states like Nevada, Arizona, Illinois, Ohio and Florida. And clearly reigniting loan asset growth in our domestic storefront business remains our greatest challenge for the second half of the year.

When you examine the overall financial results for the company this quarter, you will see that the picture for the full enterprise has not really changed materially from what we've been discussing for the last 4 quarters, namely the retail services segment, which is dominated by our U.S. pawn business, continues to endure the headwinds of lower gold prices, shifting volumes of available scrap gold and overall loan demand that seems to be stuck in low gear.

At the same time, our e-commerce segment continues to expand its customer base in both the U.S. and U.K. with its non-payday consumer loan products, and it continues to post impressive gains in revenue, marginal profitability and earnings. Unfortunately, the gains of the e-commerce segment have not been enough to offset the year-over-year decline in profitability in the retail services segment.

But again, the challenging environment for our U.S. pawn business is not new news. In recent quarters, you have seen and heard from both Cash America and its competitors about the transitioning U.S. pawn business that I discussed in some detail on our last quarterly call in April. In fact, I believe this is the first quarter here in Q2 that I can ever remember that the 3 big public U.S. pawn competitors have all adjusted guidance downward at roughly the same time, an occurrence which I believe reflects a degree of difficulty of forecasting in this transitioning environment.

With the business in transition, I'm always looking for positive signs of progress, and I found a few of those in the retail services segment that I'd like to share with you now. First, we are seeing good growth in our general merchandise pawn loan assets in both the U.S. and Mexico. In the U.S., general merchandise pawn loans written and renewed this quarter were up almost 12% over the same quarter of last year, reflecting the shifting of the collateral base from jewelry to general merchandise. General merchandise is now 34% of our overall collateral base for pawn loans in the U.S. compared to approximately 30% this time last year.

In Mexico, general merchandise loans are now 77% of our pawn loan collateral base versus only 41% last year. The large movement in Mexico reflecting our strategy of migrating from gold-only locations to full format pawn shops there.

Another bright spot in the U.S. storefronts for this quarter was the previously mentioned increase in retail sales, which exceeded our expectations. Retail sales for Domestic Retail Services business were up 9.8% this quarter at a margin of 37.9%, which is consistent with the margin we experienced in Q1 and only down 100 basis points from our retail margin in the second quarter of last year.

Also, our U.S. redemption rates continue to track higher on a year-over-year basis, which is one of the reasons I'm not too concerned about the growth of inventories at quarter's end. A portion of that inventory growth reflects our shifting emphasis of retaining some jewelry for retail that we may have scrapped at this time last year when the spot price of gold was higher. And we do expect the gap in marginal profitably between retail and commercial sales will widen further throughout the second half of the year and our inventory turns will naturally slow as we attempt to gain greater margins with retail sales.

Finally, I consider our improving annualized yield on pawn loans in both the U.S. and Mexico as another bright spot this quarter, as it clearly evidences the quality of both pawn loan portfolios.

And moving on to e-commerce segment, you will note that the operating income of this segment slightly exceeded that of our retail services segment this quarter as a result of both asset growth and improving marginal profitability that is primarily a function of lower loss rates. I'm probably most encouraged from both the growth of our non-payday products, including installment loans and our line of credit offerings and the improving performance of these products based upon the work of both our analytics and collections teams in Chicago.

Today, our e-commerce segment, known as Enova, operates 2 brands in the U.S., CashNetUSA and NetCredit. CashNetUSA offers short-term single-pay products in 25 states, lines of credit in 6 states and installment loans now in 7 states. NetCredit now offers discrete installment loan products starting a higher credit quality customer in 10 states. Enova also operates multiple brands outside the U.S., serving customers with the DollarsDirect brand in both Canada and Australia, the QuickQuid brand for short-term offerings in the U.K. and the Pounds to Pocket brand for installment lending in the U.K. Enova has also just recently launched a line of credit offering in the U.K. under the brand name Flex Credit.

At the end of June, installment loans accounted for approximately 38% of Enova's combined gross consumer loan portfolio. Lines of credit accounted for approximately 17%; short-term loans in international markets, which is again primarily to the U.K., accounted for approximately 26%; and the remaining 19% of the gross consumer loan portfolio is made up of short-term single-pay loans in the U.S. And at 19% at the end of June this year compares to 26% at this time last year. We're obviously enjoying success with our strategy to diversify both the product set and geographic footprint of our e-commerce segment.

Now I mentioned the improving marginal profitability of the e-commerce segment a moment ago, which has been a key focus of our team at Enova. Practically all of the year-over-year improvement reflected in the current quarter is being driven by lower loss rates. But we do believe we have additional opportunities for marginal profitability improvements in the future with greater leverage of our marketing operations and technology cost as some of our newer product offerings scale and mature. We do expect a portion of those gains will be offset by costs associated with the ongoing investment for the development of expanded products and geographies, and we believe that this ongoing investment in innovation, that will be the underpinning of Enova's growth in future periods.

We do expect to see continued migration of consumers from storefront lenders to online and mobile platforms and we expect consumers will be more demanding for flexible credit offerings that can be tailored to their specific needs. We're also pursuing the sizable gap that we believe exists in the consumer credit markets for those people who, on the one hand, no longer fit the increasingly rigorous credit profile for prime offerings and, on the other hand, are not attracted to the non-prime offerings available today. Filling that gap with innovative consumer-friendly offerings is the key focus of our e-commerce segment today.

At the same time, our business development team at Enova is searching for other parts of the globe for opportunities to capture that early mover advantage for online financial services that has proved so successful for us in the U.S. and the U.K. We have identified a number of opportunities that are in the early stages of development and are hopeful of having something substantive on this front to discuss with you later this year.

Let me address the regulatory environment as it exists today. And fortunately, this regulatory report's going to be a bit shorter than the one I had to provide you in April. On the U.S. side, about the only new item worthy of mention regarding the activities of the Consumer Financial Protection Bureau is a recent Senate confirmation of Richard Cordray as Director of the agency. I'm assuming with that confirmation that the legal challenges to the constitutionality of his original recess appointment by President Obama will be dropped at this point. I believe it was inevitable that Director Cordray or someone similar will be confirmed as Director of the CFPB, and the official confirmation does not change my outlook regarding the activities of the agency.

I don't have any further insights into what, if anything, the CFPB may do that could affect our business here in the U.S., but I will say that it's one of very few online lenders in the U.S. operating a state-by-state license model. We would welcome any efforts the CFPB may take to address those lenders who have elected to operate outside the state regulatory environments.

And we previously discussed the activities of the Office of Fair Trading in the U.K. and we recently disclosed that we had received a letter of findings from the OFT in May related to this examination of our U.K. payday lending business. We believe many of our competitors have received similar letters.

The OFT has asked us to provide evidence of compliance in relation to general and specific concerns identified in the letter by July 29. We intend to provide a response to the OFT by that date, setting forth how we have rectified the areas of concern identified by the OFT or why we do not believe we have failed to comply with the irresponsible lending guidelines of the OFT.

Additionally, you may have seen that the OFT has recently referred to the payday lending industry to the Competition Commission in the U.K. for review. This commission's goal is to determine if any aspects of the payday lending industry prevent, restrict or distort competition. And if so, what actions should be taken. The Competition Commission is required to complete its report by June of 2015.

Finally, as I think everyone now knows, the Texas Legislature has adjourned its 2013 biennial session without passing any new legislation affecting our business in the state of Texas.

Now moving on to outlook. For the second half of 2013, Tom will present the details of our updated guidance in his prepared remarks momentarily. From a big picture perspective, we expect our e-commerce segment will continue its recent growth rates and potentially exceed the forecast that we had included for that segment in the earnings guidance issued in late April. We also expect our pawn business in Mexico to continue on course with its original business plan and achieve our established 2013 goals for asset growth and earnings improvement.

However, given the reality of the shortfall and the level of loan assets of our Domestic Retail Services business at the end of Q2, coupled with our expectation for further compression in both the volume and margins for the commercial sale of scrap gold in the second half of the year, we are now projecting operating income of our Domestic Retail Services business to be down on a year-over-year basis for the balance of the year by an amount that exceeds the expectations we have baked into our guidance in late April. These adjustments for our U.S. pawnshop business have forced us to lower our consolidated earnings guidance for the second half of the year.

Now before turning the call over to Tom, I'd like to mention 2 other developments we disclosed during the quarter. First was the completion of a $300 million 5.75% senior note offering with a maturity date of 2018. This offering was closed in mid-May and a portion of the proceeds were used to repay amounts outstanding under our bank line of credit. Now we obviously understood the negative rate arbitrage of using these proceeds to repay our bank line of credit that had a lower interest rate but we believe that securing this non-bank debt facility at historically attractive rates is a significant strategic move to strengthen our balance sheet for the pursuit of future growth opportunities in both segments our business.

Contemporaneously with the new senior debt, we amended our bank line of credit to extend the maturity date from March of 2015 to March of 2018 and reduce the total credit available on the line from $380 million to $280 million subject to an accordion feature whereby the revolving line of credit could be increased by an additional $100 million with the consent of increasing lenders. Again, we believe these balance sheet activities provide sufficient runway for us to pursue our strategic plan for the next 5 years.

The other item I'd like to mention is the pending acquisition of a 41-store chain of pawn lending locations operating in the state of Texas, primarily under the name of Top Dollar Pawn. We issued a press release on this acquisition on June 24 and this acquisition is scheduled to close during the third quarter and we're very excited about the quality of these locations and their personnel. We do expect this acquisition will be accretive to earnings immediately following the closing.

Now I'd like to pass over to Tom for his quarterly financial report.

Thomas A. Bessant

Thanks, Dan. Good morning to our listeners. As Dan covered in his prepared remarks, the second quarter of 2013 did come in, in line with our pre-released earnings expectation of $0.81 per share. The unusual expense items impacted the quarter negatively as consolidated lending operating activities produce operating income consistent with expectations at the outset of the quarter. However, this was due to the greater growth in the e-commerce business as the improvement loan loss expense is better than expected, which offset the lower levels of operating income from the retail services business.

There are 2 components in greater operating cost during the quarter, the first is related to the negative interest arbitrage that Dan discussed related to the very successful senior note offering completed in early May. Initially, the company intended to offer only $200 million in bonds and we increased the offering amount to $300 million based on the overwhelmingly positive response to the offering. And as Dan said, we fully paid off our line of credit and put $120 million in excess cash on the balance sheet.

At the same time, the company amended and extended the maturity date of its $280 million revolving line of credit with a group of 7 syndicated commercial banks. The amendment to the line of credit created a small one-time charge, which is also included in interest expense this quarter. This charge, coupled with the higher interest cost from the $300 million bond offering cost us about $0.04 per share out of the $0.10 miss for the quarter.

The second item in the remaining $0.06 per share was comprised of higher personnel costs, mostly due to greater incentive expense, as well as increased health insurance cost partially related to changes in the Affordable Health Care Act, which went into effect at the beginning of 2013. These operating costs can be seen through the comparison to the corporate services expenses shown in the attachments to the earnings release.

Focusing now on the financial results of the business units during the second quarter of 2013, you'll see the e-commerce business continued its string of successful quarters and posted a 22% increase in net revenue, which reached $106 million during the second quarter ended June 30, 2013, and a 21% increase in income from operations, which reached $36.4 million for the second quarter.

The e-commerce performance during second quarter was driven by growth in revenue and assets in both the U.S. and foreign product offerings, boosted by improved marginal profitability as loss rates associated with both the U.S. and foreign businesses moderated during the second quarter compared to the second quarter of 2012.

E-commerce losses, as a percentage of consumer loan fees, decreased to 39.9% in the second quarter of 2013 compared to 43.2% in the second quarter of 2012, as the company enjoyed improved performance in both the U.S. business, which reported losses as a percentage of fees at 38.1%, down from 41.5% in the prior year and the foreign business, which came in at 41.7% compared to 44.9% in the prior year.

In both cases, this is reflective of the anticipated expansion of marginal profitability of the business as we've discussed in prior periods.

E-commerce business continues to benefit from growth in its installment loan and line of credit products, which further diversify its offering away from a single payment U.S. product and is being met with a high degree of customer acceptance. Total balance of installment loans increased to 73% for the U.S. installment product, reaching a balance of $44.5 million and 58% for the non-U.S. installment loan product, which reached $86.4 million. More importantly, while these continue to be -- this growth continues to be high, the loss experience has begun to moderate as anticipated, contributing to the growth and marginal profitability in this segment.

The second quarter 2013 results for the e-commerce segment produced operating income growth of over 20%, which marks the ninth consecutive quarter of year-over-year growth at or above 20%, leading to a trailing 12-month operating income growth rate of approximately 34%.

In addition to the impressive growth rate, the businesses successfully continue to diversify its revenue and earnings away from the single pay U.S. consumer loan, which now comprises only 24% of e-commerce total revenue and 10% of consolidated Cash America revenue based on the second quarter of 2013.

Financial results of the retail services business for the second quarter of 2013 were down year-over-year as expected. The more gradual rate of growth from both pawn loans and consumer loans caused revenue and net revenue to be lower than our expectations as we started the second quarter. This led to a decrease in operating income of 16% to $35.2 million for the retail services segment.

While commercial dispositions of refined gold were lower in the quarter, the previously issued guidance already reflected this anticipated decline. Meanwhile, the company continues to place greater emphasis on the in-store retail disposition of jewelry while reducing reliance on scrap gold activities.

During the second quarter, you'll see the gross profit generated from the retail disposition of merchandise represents 78% of total gross profit dollars, up from 63% during the second quarter of 2012 and much closer to the 73% of total gross profit experienced during the first quarter of 2013.

While this is partially due to a 7.4% increase in retail sales in our lending locations domestically, these figures also include the impact of 35% lower volumes of gold ounces sold and reduced profitability on gold dispositions due to the lower market price of gold. The gross profit margin on commercial sale of goods, which includes scrap gold and diamonds was 22% in the second quarter of 2013 compared to 26% in the second quarter of 2012. However, as we said in our last call, the Q2 2013 results benefited from long-term gold hedges that were in place.

You'll note that the retail gross profit on disposition activities is down slightly year-over-year to 37.2% in 2013 compared to 37.9% in 2012. However, the Q2 2013 retail gross profit percentage is up sequentially compared to the first quarter of 2013 retail gross profit margin of 37.4%.

The growth in pawn loan balances in our domestic lending locations is unfortunately tracking to the similar slow growth rate that we experienced during 2012. Domestic pawn loan balances finished the period up 1.5% to $225 million and increased sequentially from the March 2013 level by about 13%, which is consistent with the prior year.

However, as you know, this rate of growth is below historical standards, which appear to be related to consumers' preference from moderated levels of borrowing consistent with the deleveraging activities observed throughout the country. The domestic pawn loan portfolio continues to perform well as redemption rates continue to be higher year-over-year and pawn loan yields continue to be up year-over-year, reaching 134.5% for the second quarter 2013 in the domestic portfolio, which did lead to a 4% growth rate in service charges on pawn loans, exceeding the level of asset growth experienced in the domestic pawn loan balance.

Unfortunately, the retail services segment also experienced a $2.4 million decrease in net fees from consumer loans and a $9.4 million drop in gross profit from the disposition proceeds, which led to a 5% decrease in Domestic Retail Services' net revenue for the second quarter of 2013.

Of course, the $9.4 million drop in gross profit dollars is primarily due to the impact of gold sales during the quarter. So while operations management maintained good control over store level operating comp, the decrease in net revenue led to a 22% decrease in Domestic Retail Services operating income year-over-year, which was $35.7 million compared to $45.8 million in the prior year.

Same store net revenue in the Domestic Retail Services locations was down 11% during the second quarter, which is comparable to the level experienced during the first quarter of 2013. Domestic loan balances on a same-store basis were down 4% year-over-year, which is consistent with the Q4 2012 year-end level, slightly below the first quarter 2013 same-store drop of 1%.

On a much more positive note, the Mexico based pawn operations continue their march towards solid performance as same-store pawn loan balances were up 44% to $4.6 million and same-store net revenue in the Mexico business was up 66%.

The Mexico pawn business reported a loss from operations of $535,000, down significantly from the $3.7 million loss experienced in the second quarter of 2012. When you add depreciation and amortization cost back to the 2013 Q2 operating loss, it would show a small loss of only $105,000. This figure is close to breakeven for this 47-store business after absorbing $1.2 million in administrative cost. Therefore, the stores themselves are profitable during the second quarter of 2013.

Pawn loan balance growth in the Mexico business continues to be heavily weighted toward general merchandise as jury loans comprise less than 25% of the total balance of pawn loans.

Now before moving to the outlook for the remainder of the year, I'd like to point out that the company had $132 million of cash on the balance sheet as of June 30, 2013, and no borrowings under its $280 million line of credit. In the first 6 months for the year, the company has invested approximately $22 million in capital expenditures and expects to complete a $102 million acquisition of a 41-store chain of pawnshops during the second -- I'm sorry, third quarter of 2013.

In addition, the company has repurchased approximately $41 million of stock in the open market during the first 6 months of 2013. Partially as a result of the investment in stock, the company's EBITDA per share for the 6-month period ended June 30, 2013, was $5.23 compared to $4.90 in the prior year representing a 7% increase on a 4% increase in consolidated EBITDA.

In addition, operating cash flow from the statement of cash flows for the company was $290.5 million, up 24% from $233.9 million for the 6-month period ended 2013 and 2012, respectively. The available liquidity from earnings and debt capacity affords the company flexibility to take advantage of strategic opportunities, including further share repurchases and acquisitions in future periods.

As we look towards the third quarter of 2013, the expectations are that retail services segment will continue to experience headwinds to achieve the above average growth in pawn loans and its short-term consumer loans. However, the retail services segment will benefit in future periods from the addition of the 41-store chain of pawnshops expected to be closed in the third quarter.

We do not anticipate a meaningful return to a higher level of gold prices in the near term. Therefore, we continue to expect a greater percentage of gross profit to come from retail disposition activities. As a result, the company will carry higher levels of inventory balances and will experience a moderation in inventory turnover prior to the heavy retail selling season of Q4 and next year's first quarter.

Offsetting some of the weak performance in Domestic Retail Services business will continue to be positive growth contributions from the company's e-commerce segment, which we expect will continue to experience the opportunity for expanded marginal profitability as the installment loan portfolios continue to mature and loss rates decrease year-over-year.

As a result, we're providing our third quarter 2013 guidance range of $0.75 to $0.85 compared to $0.37 per share in the third quarter of 2012, which included approximately $0.65 of charges primarily related to the company's reorganization of its Mexico-based pawn operations and a small amount related to the withdrawal of the Enova S1 last year.

In addition, we're reducing our full year 2013 outlook to between $4.15 and $4.35 per share compared to $3.42 per share reported in fiscal year 2012, which included approximately $1.15 of charges related to the company's reorganization with Mexico-based pawn operations, the voluntary refund to Ohio-based customers in the fourth quarter and amounts related to the withdrawal of the Enova S1, all during 2012.

And now I'll turn the call back over to Dan.

Daniel R. Feehan

Thanks, Tom. Operator, let's move to the Q&A session, please.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Bob Ramsey, FBR Capital Markets.

Bob Ramsey - FBR Capital Markets & Co., Research Division

I know you all said you were looking to hold or, I guess, maybe rather than scraps or sell more of the jewelry through retail sales channels. I'm just curious, one of your competitors had mentioned that they were actually sitting on some amount of scrap to scrap at a later point, so not retailing, but just delaying the sale of scrap, and I'm curious if you all have done any of that as well or whether you're still scrapping whatever's going to be scrapped and just shifting more of that to the retail channel?

Daniel R. Feehan

Yes, we're not -- we're really not trying to execute a strategy of playing the gold markets. So we're going to really look at trying to retail as much jewelries as we can across the counter. They have multiple benefits, quite frankly. I mean our view is we can get better margins, obviously, than are available in the scrap environment today. It also puts jewelry back in the hands of our consumers, who, our history will prove ultimately, come back and potentially pawn those items in the future, as part of the pawn cycle that we try to encourage in all our markets, but we're really not trying to play the commodity game of managing gold and having it set aside or scrap at a later point and take advantage of maybe an unpredictable spike in gold prices. So that's not part of our strategy today. But you will see our inventories are -- will be a little bit higher. Our tariff [ph] will slow a bit. We're doing a lot of things from a training and motivation incentive perspective. Again, our teams in the field focus on reenergizing our selling skills that, to some degree, I think, is by the nature of what's going on in the scrap environment over the last 3 or 4 years. Some of those skills may have atrophied a little bit in our organization and we're working hard to get them back.

Bob Ramsey - FBR Capital Markets & Co., Research Division

Okay, that's helpful. And then I just wanted to ask, the scrap margin this quarter was actually much better than I would've thought sort of considering the movement in gold. Can you remind me what you had sold forward entering this quarter, and what, if anything, you have sold forward at the end of the quarter and how to think about the trajectory of the scrapping margin, and I think it will be narrower but how you're thinking about it in the third quarter?

Thomas A. Bessant

Yes, Bob. I didn't really go back and recalculate what we hedged going in. As you know, we typically will hedge anywhere from 1/3 to 1/2 of our volume, but we were certainly on the low end of that going into the quarter. That did provide some cushion on our selling price. In our guidance estimates, we are not providing any benefit for future hedge positions, so we're really treating the gold margin as consistent with gold prices in the current range, which we call, $1,250 to $1,300 an ounce. We do execute hedging strategies and we do have some forwards out there, but there hasn't been a real significant period in recent environment and enjoy great enhancement to future gold prices with hedges. So we're just -- we're not really building in any of that into our future estimates right now.

Operator

Our next question comes from John Hecht of Stephens Inc.

John Hecht - Stephens Inc., Research Division

I guess a little follow-up to the last question is that I understand you're not accounting for any kind of hedging benefit, so what might we think is reasonable range for kind of given current market prices for scrap margins in the next couple quarters?

Thomas A. Bessant

John, it's going to come off the 22%. I would put it in a 10%, maybe 10% to 15% range short of gold prices coming back materially. We don't have any of that built into our expectations.

John Hecht - Stephens Inc., Research Division

And then you have -- sort of at a higher level, I mean Enova continues to do well from a demand side and obviously, just the overall productivity and growth of the business. While the retail business kind of later into the quarter, started relative to loan volume expectations and so forth, was weaker. I mean are you seeing any evidence of like increasing rates of cannibalization or anything that you could point to in that regard?

Daniel R. Feehan

No, John. We're really not. Again, our perspective is that, to a large degree, our customer base in the online platform is a bit different than our customer base in our storefronts. So we're not -- and we track that. We're not seeing significant movement out of our store fronts online, and a lot of the growth that we've experienced when we entered this quarter in the e-commerce segment came out of our new product offerings, both installment and line of credit offerings. So that's really -- again, getting back to try to be innovative in our product design, put things together that are more appealing to consumers, trying to capture customers that may have not traditionally been attracted to the non-prime space is all part of our strategy at Enova, and I think the team there has done a pretty good job with it. But we're not really seeing folks moving out of our storefronts into our online business.

John Hecht - Stephens Inc., Research Division

Okay. And then on the new products and installment line of credit products, are you able to decipher how much of that, the growth there is related to new customers versus transitioning customers within your portfolio?

Daniel R. Feehan

Yes, some of the states -- it varies state-by-state. Some of the states, given the nature of state laws and our offerings, et cetera, we've elected to move some customers out of our short-term products in the installment loan products. So in some states, we've had movement -- lateral movement out of the short-term and installment. In other places, we've gone in brand new and got a lot of new customer growth in our installment product and a lot of new customer growth in our line of credit products as well.

John Hecht - Stephens Inc., Research Division

Okay. So it sounds like a good mix based on geographical presence.

Daniel R. Feehan

Yes.

John Hecht - Stephens Inc., Research Division

And last question is that you've talked, particularly on the Enova side, about maybe considering new geographies. Is there any updated commentary in that regard?

Daniel R. Feehan

No. I just said in my prepared remarks, John, we identified some opportunity. We're actively working -- very actively working and yes, I'd prefer to have something more substantive to talk about, which again I hope in the second half of the year, we'll be able to talk about some opportunities.

Operator

Our next question comes from John Rowan of Sidoti & Company.

John J. Rowan - Sidoti & Company, LLC

Just a follow-up to the last question. Is Pennsylvania on the list of companies that you -- places you might expand Enova to? I know you don't want to answer very specifically, but is that just in the fray?

Daniel R. Feehan

It's not a place that, quite frankly, that I've got a great deal of confidence we'll be able to move into any time in the near term. A lot of the geographic expansion that we're really trying to focus on is outside the U.S. We have expanded in the U.S. into some markets with our NetCredit offering, which is installment offering for a higher credit profile customer. We're now in 10 states there. We think that there is somewhere between 15 and potentially, 18 states where we may be able to go with that product, based upon state regulations. But Pennsylvania is not -- while we're watching it with a great degree of interest, it's not one that I have a tremendously high level of confidence in getting to quickly.

John J. Rowan - Sidoti & Company, LLC

Okay. And then just to kind of go back to your prepared comments, you talked about June being the weak month, right? But the other comment was that after the big reduction in the loan portfolio in March, you didn't ramp up as quickly as you would have. Can you give me an idea of how the loan portfolio typically ramps up in this quarter? Is it always heavily weighted to June? Is that where you missed it because it meanders for the first 2 months of that quarter? Just kind of talk about it more on a monthly basis on how that came off of the March quarter and then didn't get into full swing by June.

Daniel R. Feehan

Yes, it's been weird this year, quite frankly, which I think has made some of the forecasting difficult on the asset side of the equation for our storefront business. So again, if you look at the activity, when you look at Q1, we actually had loan growth in Q1 that was better than expected in some markets and then lost some of that in Q2. And so from a monthly perspective, I mean we typically came out of the first quarter with March starting to show growth, April and May particularly being good months, and follow right into the summertime, June, July, all the way through back-to-school in late August, September. Those are our traditional high-loan and high-volume months. And it just hasn't ramped back from the low points that we got late, because of the late tax refund in March and early April. So we would've expected April and May weren't great months for loan growth, but we were expecting May and June to be better -- late May and June to be better than they turned out to be for us from a growth perspective. And again, I want to make sure that I reiterate the point that I think part of the issues we're dealing with here is again the transitioning environment from less emphasis on jewelry, both from our perspective and from our customers' perspective transitioning to general merchandise, because we did have good growth, as I mentioned in our prepared remarks, in our general merchandise collateral loans during the quarter. I think it takes some time to transition customers. It's not as convenient, it's not as easy to take your TV or your Xbox or your iPad that you're using on a daily basis and -- where if you had an excess piece of jewelry, it's a lot easier to -- and more motivating perhaps to go in and use those items. So again, I think we're in a transitioning environment here that takes some degree of training on our part and education from our customers' perspective of getting back to using more general merchandise for collateral. So...

John J. Rowan - Sidoti & Company, LLC

Okay, just make sure I wrote it down. So did you mention that you said general merchandise loans were up 12% year-over-year, is that the...

Daniel R. Feehan

That loans written -- yes, general merchandise and loans written and renewed in this quarter versus second quarter of last year, whereas our jewelry loans, you can do the math and our jewelry loans, written renewed would actually be down.

Operator

Our next question comes from David Scharf of JMP Securities.

David M. Scharf - JMP Securities LLC, Research Division

A couple of things. One, just trying to get a sense for how to think about the ongoing progression and improvement in losses in the e-commerce segment, particularly as the product mix continues to shift like we're seeing. Given what you're seeing in terms of the demand for installment in NetCredit and as we think about those less-mature products continuing to ramp, should we think about the magnitude of improvement in loss rates in the second half, and maybe the few quarters beyond there, kind of mirroring the type of improvement we see in the last few quarters? Or might that moderate a bit?

Daniel R. Feehan

Well, I think, we're expecting improvement, a year-over-year improvement in the second half of the year. It may moderate a bit because we've, of late, been seeing some good new customer growth. And as you know, having followed us for a while, loss rates are also impacted by your new and existing customer mix. So we've seen some, quite frankly, some very encouraging new customer mix in all of our product sets at Enova. So while we're expecting improvements, I wouldn't be surprised to see it moderate a little bit, given the most recent new customer growth that we're seeing in our product set.

David M. Scharf - JMP Securities LLC, Research Division

Got it. And I haven't been able to do the math, but can you give a sense -- within the installment product, both in the U.K. and the U.S. at Enova, what are the trends you're seeing in terms of the average loan size? Is it been holding pretty steady? Are you finding repeat borrowers are stepping up for larger transactions? What's going on in that front?

Daniel R. Feehan

Yes, it's been holding reasonably steady. For Enova, just in the CashNet loans in the installment lending area in the 7 states that we offer, those loans' average size is going to be $950 to $1,000. If you look at NetCredit, it's a higher offering. So it's going to probably be double that, close to $2,000 on average. In the U.K., we're going to be, on average, in the $1,100, $1,200, equivalent $1,100, $1,200 range on average so -- but that -- other than that NetCredit, which is again designed to appeal to a little different customer with a higher loan amount, potentially lower rate, I don't expect our installment lending activity outside of NetCredit to drive up average loan amount significantly.

David M. Scharf - JMP Securities LLC, Research Division

Got it. And just lastly, switching gears to domestic storefront. The pending acquisition that's closing in, in Q3, the 40, 41-store unit, did they see the same dynamic in terms of storefront demand tapering off here at the end of the quarter? And secondly, just based on kind of what's been unfolding, does it change sort of your kind of near-term outlook towards consolidation opportunities?

Daniel R. Feehan

I think when -- so their history or their results over the last 6 months or so would've been better than what we are reporting to you today for our domestic pawnshop business. But part of that is a function of there are 41 locations being in the state of Texas. Actually, our Texas market, which fortunately is our largest market, has performed better than our other markets. I mentioned in my comments that where we're certainly really seem to be struggling the most for our growth is, again, in those states that just have those nagging, persistent high unemployment levels. So places where we have large footprints and in places like Ohio and Nevada and Arizona and Florida, Illinois, to some degree, we're not getting as good performance as we're getting out of our Texas store. So to answer your question, I think with respect to future opportunities, we evaluate -- and fortunately, we've got a pretty good footprint around the country. And so when we're looking at potential opportunities, we've got a good idea of the regional and state differences that exist in the country and we're factoring those into our models. So when we look at this 41-store chain, today, we've -- and modeling that business going forward to determine what kind of value that we would apply to it, we've been pretty conservative on our outlook for any loan growth or -- and then very conservative with respect to the, particularly the commercial sales of scrap gold out of that business. So I do think that we're -- we will have other opportunities. I mean, I do think that other folks around the country are probably getting more motivated than they've been in a while to talk to us about selling their business. So I would expect to find other opportunities and we need to be prudent, quite frankly, given the environment and the dynamics that we face in our own business. We need to be prudent that we're clear on how we model these businesses before we determine a price.

Operator

Our next question comes from Bill Armstrong, CL King & Associates.

William R. Armstrong - CL King & Associates, Inc., Research Division

A couple of questions. Starting in Mexico, your pawn yield was up pretty substantially, and I know it's a small piece of the overall pie. But what might be driving that?

Thomas A. Bessant

What's driving that, Bill, is a mix between general merchandise and jewelry. Last year, of course, there was a different portfolio mix we -- before we closed that group of gold-only locations that brought that mix way up on a blended basis, so you're seeing the benefit of the change in strategy, the elimination of those gold-only stores. And as I said, the jewelry is less than 25% of that portfolio. Those yields are a little bit lower. General merchandise is more like a typical U.S. pawnshop and has a higher yield.

William R. Armstrong - CL King & Associates, Inc., Research Division

Okay. I thought it might be something like that. Moving to the U.S. pawn side, on the retail counters, are you seeing jewelry prices, retail jewelry prices declining, which might have the beneficial effect of making them more affordable for consumers? Are you seeing any impact from that yet?

Daniel R. Feehan

Well, yes, we manage that. Yes, in terms of our retail policies and discounting policies, et cetera. When you look at Arizona mounts, as we track, are actually coming down in our jewelry items appropriately. And that will ultimately and beginning to work its way into lower price points in the showcases for our customers. And quite frankly, it's paradoxically, I see that as a real benefit. One of the issues that I've been concerned about for the last few years, quite frankly, is given with the rise in gold prices and the impact that it's had on our items, on our cost per items to some degree in parts of the country, we've gotten ourselves. And it's just not us, it's our competitors as well. We've got ourselves in a position of having expensive price points in the showcases that have made it more difficult, I think, for our consumers to buy those items. So moving items out, not getting stuck here with aged inventories is an important part of our strategy. We will be discounting some items here in the second half of the year to move jewelry out as well, which I think is a smart thing to do. But again, our cost is coming down on a piece count perspective and an average piece count perspective and all those lower cost will reflect lower retail values in future periods as well. And again, I think that's an advantage for us to get back to price points in our showcases that are, quite frankly, more affordable, because our customers' discretionary incomes haven't increased, obviously, proportionately with the value of gold over the last few years. So it's been a bit of a struggle, quite frankly, to keep attractive-priced jewelry in our showcases.

William R. Armstrong - CL King & Associates, Inc., Research Division

Are you hearing any -- maybe anecdotal evidence from your store managers that maybe consumers are starting to shop, coming to the stores, shopping for gold or jewelry a little bit more, looking for maybe some lower prices?

Daniel R. Feehan

I haven't heard that, Bill. I mean I'd love to tell you, I have. I mean I've been out in the stores a lot recently and back out again next week. I think while the retail sales have again been much better than our scrap year-over-year sales this quarter, I'm not hearing a lot of anecdotal things that people have come in and say, "Oh, we noticed the price of gold has dropped $300 an ounce so we're in here to buy things." I don't think our consumers operate on that basis. Mostly anecdotal things that I'm hearing relates to the loan demand side of the equation, which, again, we'd like to get that kicked into a higher gear than we're in right now. But anecdotally, I keep hearing from our store managers around the country that our customers are self-regulating to a large degree. While we have an opportunity on the value of their collateral to loan more money. And clearly, we offer them what we think is a fair loan amount for their items. A lot of customers are taking a lot less. Again, they're trying to regulate their budgets and make sure they come back and pick the items up. I think the jewelry in particular, that we have in pawn today are things people don't want to forfeit, which is one of the reasons our redemption rates continue to be up year-over-year so -- but not on the retail side, I haven't heard a lot of that.

William R. Armstrong - CL King & Associates, Inc., Research Division

Okay. And then a final question regarding installment loans. What percentage of your new installment loan originations that are written are truly new loans versus renewals or rollovers of existing installment loans? I don't know if you have that number handy.

Daniel R. Feehan

I don't have it handy, no, sorry.

William R. Armstrong - CL King & Associates, Inc., Research Division

Any ideas?

Thomas A. Bessant

Yes. Well, I would point out, our installment loans are level-pay amortizing loans. Yes, there is a strategy in some multiunit, some are lenders after a few payments to renew the loan, perhaps increase the size of the loan, incur some fees to drive revenue. Our installment product is a classic installment product, which is designed for the customer to amortize the loan throughout the payment period. If the customer does have an interest in borrowing more money, we can certainly do that. We can pay off the loan and renew it at any time. But if your question is to kind of understand that strategy of enhancing loan yield by driving frequent renewals, that's not what these loans are designed to do.

William R. Armstrong - CL King & Associates, Inc., Research Division

Okay. So that's not your policy to have your store people kind of encouraging these customers to renew and enlarge?

Daniel R. Feehan

No, it's not part of our strategy. And most of this business is being done online. So when you look at our enterprise-wide installment loan portfolio, the vast majority of all of the non-single pay products that we're providing in the country are being done online.

William R. Armstrong - CL King & Associates, Inc., Research Division

Meaning that you don't have that face-to-face ability to kind of get the consumer to re-up?

Daniel R. Feehan

No. I just want to clarify the point when you commented on the storefront. We've got a very small segment of our overall enterprise-wide installment loan business being generated from our storefront operations.

Operator

And our next question comes from the line of Bill Carcache of Nomura Securities.

Bill Carcache - Nomura Securities Co. Ltd., Research Division

I was hoping you could share to me your perspective, Dan, on -- as the industry starts to shift, focused towards the retail channel based on everything that you've described, do you see the potential there for competition in that channel to increase and, ultimately, the potential that could drive some pressure on margins? Could you talk a little bit about that?

Daniel R. Feehan

My expectation is quite the opposite. My expectation is that competition will probably shrink, particularly in the pawn business, in future periods here. Part of what we've been dealing with for the last few years has been competition from these gold-buying shops that pop up quickly in the shopping centers and corners around the country that are just buying and selling gold. You can drive down the streets of a lot of the neighborhoods where we have shops, and over the last couple of years, you see a lot of these businesses and weren't doing anything but buying and selling. They weren't licensed to do loans, et cetera. I think the -- that business can become much more difficult and, quite honestly, if you'll recall, other comments I've made on previous quarters' calls, it's really somewhat a function of the gold value but it's also significantly a result of lower available scrap gold for disposition. Again, I think we went through 2000 -- and late '10 and 2011, early 2012, where, if you look at our business, and I think it existed throughout the country, people were unloading a lot of excess gold. And I think that game is over, to a large degree, and I think that those folks who have been competing with us in the gold business are going to have a difficult time remaining in business. So I, quite frankly, expect less competition going forward, and I think that's going to be good for our business. Again, I also think we'll have other opportunities for acquisitions of existing pawnshop businesses and that find it more difficult to operate in this environment. I've said before, operating -- pawn broking 101 with the fundamentals that existed prior to the big ramp in gold prices is a more difficult exercise than what some of our folks have been faced with over the last couple of years. We were -- if you go back to -- prior to the run-up in gold prices and look at our financial information, our scrap gross profit activity is part of our total disposition gross profit. We're in the mid-teens as a percentage. We got all the way up to 40%, 45% at the peak, and I expect that, that percentage to migrate back down to the mid-teens up to 20%. And that's a mix I'm comfortable with and one we know how to operate. It is more difficult, though, to operate on a store-by-store basis. So I'm encouraged that we're going to have less competition, not more.

Bill Carcache - Nomura Securities Co. Ltd., Research Division

Maybe to follow up on that point, isn't though the notion that this consumer's need -- the consumer's borrowing needs are kind of need-based, not really driven by gold prices and so regardless of what's happened with gold, they're going to now shift to general merchandise and to come up with the amount that they need to borrow. And so I guess in that sense, we're talking about general merchandise as being kind of the source of collateral for the loan. And so those -- the gold businesses weren't really -- some of these gold-buying shops didn't really plan that general merchandise space before anyway, so they weren't really competitors in general merchandise. So I guess, I was kind of getting at more competition within general merchandise, specifically, not gold. Do you see that increasing? And I guess, along those lines, is there any kind of issue with space, as we start moving more towards general merchandise in any of your locations? I know you guys have plenty of space, broadly speaking, but does that start to become more of an issue from a storage standpoint as the shift to general merchandise happens?

Daniel R. Feehan

Not overall. Obviously, specific discrete locations will -- could have an issue at some point. Overall, we look at the portfolio of our 827 locations here in the U.S. Today, I think the size of those locations, with the exception of the units that we have in Ohio today, are positioned well, I think, for additional general merchandise lending. So back to your competition question, I mean, I think all the pawnshops in the U.S. or, and if you go through the same transition of transitioning their business to general merchandise, to your point, as we've said many, many times, that it's a demand-driven business and people are going to ultimately -- that need the money are ultimately they're going to find collateral to bring in and pawn with us. I don't think that's an overnight transition for our customers. Again, I think going through the mental adjustment of not bringing in that extra chain or bracelet that's been sitting in the drawer that I haven't been wearing lately to get a loan versus bringing in something that they may be using actively today in the general merchandise category. I don't think that transition happens immediately. It takes time to get customers more aware of that collateral -- their ability to borrow on that collateral, particularly customers who may not have been using any general merchandise for the last 2 or 3 years or so. But it will happen. We've been there before, and I'm confident it will happen. It's just that I want to make sure everybody understands it doesn't happen in a matter of 1 or 2 quarters. It takes some time to transition your customer base into that model.

Bill Carcache - Nomura Securities Co. Ltd., Research Division

That's really helpful. I appreciate that. The last question, though, is with the higher inventory balances, what kind of impact on the psychology? You've talked in the past about potential impact on the psychology of the store managers to -- and their desire to want to lend when those inventory balances get high. As that happens, are you guys working with your store managers to kind of help with that kind of mental transition, I guess, from the standpoint of your store managers? And then maybe, if you can also share what's happened with LTVs as consumer demand has fallen? And that's it.

Daniel R. Feehan

Yes, so -- yes, it's a good point. On your first point, we are -- that's a key focus point of our field management team right now to make sure that our store managers who drive this business for us. I mean, they -- they're hired to act as entrepreneurs, and they -- they're making decisions each and every day that they're determining whether or not we're going to be successful. But our store field management team is very actively training and educating folks in making sure we're not getting too anxious about the inventory levels as we try to move stuff on the retail counter and not through the commercial markets. So that's under way. We're doing some things from an incentive compensation perspective to also deal with that particular issue that I think will be positive for us. But also, keeping our eye on inventory levels. We've been in this business a long time, and that's an Achilles' heel. If you're not constantly watching your inventory levels and making sure that the mix of your business is flowing properly, you can get yourself in a bind pretty quickly. So I promise you, we're keeping a close eye on that. Loan-to-value ratios on, obviously, jewelry have come down a bit. Our loan-to-value ratios on our general merchandise as collateral really haven't changed. Again, we're keeping up with that very closely, particularly on electronic side of the equation, where values -- price has changed pretty rapidly. So our loan-to-value ratios, as we manage them, general merchandise and our strategy really hasn't changed over the last quarter or 2 or 3 or 4, quite frankly, whereas our loan-to-value ratios on jewelry have obviously come down a bit.

Operator

Our next question comes from Dan Furtado, Jefferies & Company.

Daniel Furtado - Jefferies LLC, Research Division

My first question is just, have you guys given any thought to potentially securitizing the installment book?

Thomas A. Bessant

Well, right now, with 0 borrowings outstanding under our revolving line of credit, that's not something that we're currently entertaining. Obviously, that's a portfolio that, given the recent return -- I don't know how recent it is, but the return to the ABS -- return of the ABS market, I should say, that if we did need to monetize that, that's certainly an option.

Daniel Furtado - Jefferies LLC, Research Division

Gotcha. And then how about just kind of help me understand the operational differences and servicing one of the installment loans versus a single-pay loan?

Daniel R. Feehan

So the -- again, going to the predominance of our business being online, the servicing aspects of getting a customer into an installment loan from an application support perspective doesn't differ substantially from getting a customer through the application process for a single-pay loan. So we've got a big application support team in Chicago, working both on all our product sets. Then when you get into the collection side of the equation, it's not substantially different there. If customers are having difficulty making their payment, we're -- whether it's a single-pay payment that's due in full or an installment that's due that they can't make, we're on the phone or on a live chat with those folks working out arrangements for them to make those payments. So from an operational perspective, not substantially different.

Thomas A. Bessant

Yes. Danny, I'll just make -- hey, I'll make a point. I think one of your thesis on the U.K. business was need to build out the additional collections activities, following the OFT's action on the CPA and, of course, you know that was already well positioned prior to that and didn't incur those costs that some competitors did. But I think that evidence is, as you've heard me talked about in the past, an e-commerce application is not just about technology. It's about the backroom and the customer support. One of the differentiating factors that Enova possesses now and has possessed in the past is a robust backroom and customer support functions. So as we migrated into the installment products and other product mixes, it's not just about the technology interfacing over the Internet, it's about how you manage those customers. So at the end of the day, it's difficult, it's challenging. That's why it's hard for other people to do it, and that's why the lead position of Enova is important.

Daniel Furtado - Jefferies LLC, Research Division

Understood. And yes, you're absolutely correct about the back-office capabilities there.

Operator

Our next question comes from Sameer Gokhale of Janney Capital Markets.

Sameer Gokhale - Janney Montgomery Scott LLC, Research Division

I -- I'm sorry if I missed this earlier, but I just wanted to get a better sense for some of the trends in your domestic, single-pay loan business. Your short-term loan business as well as the foreign. And then year-over-year as there is a decline in the loans directly in both under domestic and foreign side, now -- I know you emphasized more on the installment loan product. And Dan, I think you've referenced that some of those folks from the single pay are now installment loan customers, but there seems to be a lot of factors affecting the business and it's part of caution on some of the consumer side, part of it is it's emphasizing of the installment loan product and there's some regulatory changes and pressures. And then on top of that, you have a new CEO at Enova. So I'm frankly just parse through these various items and trying to figure out ultimately, what does that mean for the short-term loan products? Should we expect continued declines, domestic and foreign, and that product will offset that growth in the other loan categories or just slower growth in short-term loans? Can help just help me parse through some of these various items and which might be some of the bigger pieces affecting the year-over-year decline? That will be helpful.

Daniel R. Feehan

Yes, so great question. Our short-term loan volume, both the U.S. and the U.K, on the single-pay product is down and the growth is coming in installment and lines of credit. And as I said, we just recently introduced the Flex Credit in the U.K., along with our installment offering there. So now we're seeing growth in those other products. Part of that is obviously our desire to diversify our product set, and that's been a stated goal of the business for quite some time. That mitigates a regulatory risk in any particular jurisdiction. But probably more importantly, it reflects what we have been hearing for some time from customers that they really want more flexibility with the credit opportunities than a single-pay product may give them. We're not abandoning the single-pay product. There's still a good market there, and there's still customers who prefer having a single-pay product. They don't want to enter into a longer-term installment or a line of credit offering. But there are -- we've got significant feedback from our customers that they really -- particularly in markets where we offer the alternative of a single-pay or an installment product, a substantial percentage of our customers have told us that they prefer the flexibility of having a longer-term payment with either a fixed biweekly or monthly payment amount that's easier for them to manage. So going forward, again, I said earlier, we've had some recent renewed growth in new customer volume in our short-term product, which we'll obviously service, and we're proud to do that. But I think as we move forward, that percentage of our overall business will continue to decline as a percentage of our overall business. Again, as I said in our prepared comments, the single-pay product in the U.S. is down to 19% of the loan portfolio of Enova was 26% this time last year. So you'll continue to see, I believe, the other products capture a larger share of our business going forward.

Sameer Gokhale - Janney Montgomery Scott LLC, Research Division

Okay, that's helpful. And just in terms of David Fisher joining and he's not been that long. I think he joined in January of this year, but have there been any changes to any of the product constructs or again, the servicing that you referenced earlier since he joined? Or are we to stay tune for any additional changes to come possibly?

Daniel R. Feehan

Yes, David has been in place since 1st of February. I'm really excited about his leadership at Enova. David brings a great degree of experience in the financial services arena and in the e-commerce financial services arena. So he's been an extraordinarily quick study on our business and has already, in my opinion, has real value with respect to some of the strategic initiatives that he is promoting there with respect to our product innovation and geographical expansion. So I can't tell you that David has brought a brand-new idea or perspective to Enova that has already generated significant value creation, but I'm confident with the things that he has in mind, that he'd like -- where he'd like to take the company, that we've got some pretty exciting things to talk about in the future. But nothing at this point, I think, has developed to a point where it's worthy of spending some time talking about right now.

Sameer Gokhale - Janney Montgomery Scott LLC, Research Division

Okay. And then just my last question was, you talked about some of those states where your competitors may be seeing more pressure. And I wanted to get a sense for if you're actually seeing or having more conversations in terms of people trying to actually exit the business to a sales, you or someone else. Or is this your hope that you may see -- start having more conversation? But I just wanted to get that sense of that pipeline, if you're actually seeing that currently with more of these companies in those states saying, "We want to sell because the environment is tough."

Daniel R. Feehan

Yes. I think the -- to be very straightforward in answering our question, we have seen more interest. I think the challenge going forward with that is evaluating those businesses, understanding the dynamics of the market in the particular areas where people want to sell and in making sure that we're doing our diligence, understanding where the business is heading and modeling it properly. But yes, the answer to your question is it's been more active in the past few months than it's been in a while.

Operator

Our next question comes from Jordon Hymowitz of Philly Financial.

Jordon Neil Hymowitz - Philadelphia Financial Management of San Francisco, LLC

In Mexico, have you heard anything or seen anything about the government of Poncho Ten Monte di Pieta [ph] expanding its retail operations down there?

Daniel R. Feehan

No.

Operator

And our final question comes from Gregg Hillman of First Wilshire Securities Management.

R. Gregg Hillman

Dan, in the last quarter, you gave a percentage for, I think, it was a domestic retail Payday Loan balance plus domestic e-commerce Payday Loan balance over a gross loan balance at 27%. Do you know what that figure was in the second quarter? I think it went up, but what's your calculation for what's in the second quarter?

Thomas A. Bessant

You're talking about the balance, just the balance?

R. Gregg Hillman

I think it's gross loan balance for Payday Loans, installments, line of credit products, all consumer products. You gave the ratio of 27% in the first quarter. And in the numerator, it was domestic retail. Store Payday Loan balance plus domestic e-commerce Payday Loan balance was in the numerator. And then the denominator, it was, I believe, gross loan balance for like maybe all consumer loans?

Thomas A. Bessant

Yes, yes. So I mean, as you know, Gregg, that'll shift around period to period. But in the retail services group, short-term loans is about $50 million. In the e-commerce group, short-term domestic loans is about $66 million. Aggregate loans are $418 million, so it comes out to about 27%. [indiscernible].

R. Gregg Hillman

Okay. So it was about the same. And then -- and to translate that, those loans into operating profit for the company that comes from Payday Loans in domestic, how would you approach that problem from statistics that are publicly available?

Thomas A. Bessant

I'm not sure you can get there. I haven't tried to study it from that side because I don't know if the short-term product is broken down quite that way. I think it may aggregate the foreign. But I'd be happy, Gregg, to look at that with you. Yes, we did talk about the fact on the percentage of aggregate fees. Just looking at the e-commerce business, it's 12% down and about 20%, 25% right now. But I'd have to really give that some more thought as it relates to actual profit contribution. Stores are getting difficult to bifurcate expenses. Perhaps, we can get there on a net-fee basis, so easier maybe to answer the question, but maybe we'll just take that one off-line. I'll be happy to go over it with you.

Operator

And Mr. Feehan, that was our final question. So I'd turn the call back over to you for any closing remarks.

Daniel R. Feehan

I'd like to thank everybody for joining the call today and look forward to talking again with you at the end of the third quarter. Thank you.

Operator

Ladies and gentlemen, that does conclude our conference call for today. We thank you for your participation and ask that you please disconnect all lines. Thank you, and have a good day.

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Source: Cash America International, Inc. (CSH) Management Discusses Q2 2013 Results - Earnings Call Transcript
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