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MicroFinancial Inc Reports Operating Results (10-Q)

August 14, 2009 | About:
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MicroFinancial Inc (MFI) filed Quarterly Report for the period ended 2009-06-30.

MicroFinancial Incorporated is a specialized commercial finance company that leases and rents `microticket` equipment and provides other financing services. MicroFinancial Inc. formerly Boyle Leasing Technologies through subsidiary TimePayment provides leasing and financing services through vendors to small businesses. TimePayment leases and rents commercial equipment automated teller machines espresso machines credit card terminals computers vending machines water purification equipment wireless communications devices and more. The company\'s services are provided through a network of independent vendors; these equipment vendors submit their clients\' financing applications to TimePayment via the Internet telephone fax or e-mail. MicroFinancial Inc has a market cap of $49.5 million; its shares were traded at around $3.5 with a P/E ratio of 12.1 and P/S ratio of 1.2. The dividend yield of MicroFinancial Inc stocks is 5.7%.

Highlight of Business Operations:

Total revenues for the three months ended June 30, 2009 were $11.1 million, an increase of $1.5 million, or 15.4%, from the three months ended June 30, 2008. The overall increase was due to an increase of $1.5 million in income on financing leases, an increase of $0.4 in fees and other income, partially offset by a decrease of $0.3 million in rental income, and a decrease of $65,000 in income on service contracts. The increase in income on financing leases is a result of the continued growth in new lease originations. The decline in rental income is the result of the attrition of Leasecomm rental contracts which is partially offset by TimePayment lease contracts coming to term and converting to rentals. Service contact revenue continues to decline since we have not funded any new service contracts since 2004.

Our selling, general and administrative (SG&A) expenses include costs of maintaining corporate functions including accounting, finance, collections, legal, human resources, sales and underwriting, and information systems. SG&A expenses also include service fees and other marketing costs associated with our portfolio of leases and rental contracts. SG&A expenses increased by $294,000 for the three months ended June 30, 2009, as compared to the three months ended June 30, 2008. The increase was primarily driven by increases in compensation expense of $304,000 and employee benefits of $78,000, offset by a $77,000 decrease in legal expenses. The increase in compensation related expenses is the result of an increase in the number of employees. The number of employees as of June 30, 2009 was 106 compared to 86 as of June 30, 2008.

As of March 31, 2009, we had a liability of $293,000 for unrecognized tax benefits and a liability of $160,000 for accrued interest and penalties related to various state income tax matters. As of June 30, 2009 we had a liability of $293,000 for unrecognized tax benefits and a liability of $170,000 for accrued interest and penalties. Of these amounts, approximately $300,000 would impact our effective tax rate after a $161,000 federal tax benefit for state income taxes. The increase in the unrecognized tax benefits relates to $10,000 in additional accrued interest

Dealer funding was $19.6 million for the three months ended June 30, 2009, an increase of $1.1 million or 9.5%, compared to the six months ended June 30, 2008. We continue to concentrate on our business development efforts, which include increasing the size of our vendor base and sourcing a larger number of applications from those vendors. Receivables due in installments, estimated residual values, net investment in service contracts and net investment in rental contracts increased from $170.3 million at March 31, 2009 to $180.6 million at June 30, 2009. Net cash provided by operating activities increased by $3.1 million, or 26.7%, to $14.3 million during the three months ended June 30, 2009 as compared to the three months ended June 30, 2008.

Total revenues for the six months ended June 30, 2009 were $22.0 million, an increase of $3.1 million, or 16.4%, from the six months ended June 30, 2008. The overall increase was due to an increase of $3.4 million in income on financing leases, and a $0.8 increase in fees and other income partially offset by a decrease of $0.8 million in rental income, a decrease of $135,000 in service contracts and a decrease of $73,000 in interest income. The increase in income on financing leases is a result of the continued growth in new lease originations. The decline in rental income is the result of the attrition of Leasecomm rental contracts which is partially offset by TimePayment lease contracts coming to term and converting to rentals. Service contact revenue continues to decline since we have not funded any new service contracts. The decrease in interest income is a direct result of the decrease in invested cash.

rental contracts. SG&A expenses increased by $627,000 for the six months ended June 30, 2009, as compared to the six months ended June 30, 2008. The increase was primarily driven by increases in compensation expense of $524,000 and an increase in employee benefits $144,000 as a result of an increase in the number of employees.

Read the The complete Report

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