Market Overview

CPS Announces Second Quarter 2018 Earnings

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  • Pretax income of $4.7 million
  • Net income of $3.2 million, or $0.13 per diluted share
  • New contract purchases of $215 million
  • Residual interest securitization raises $40.0 million

LAS VEGAS, NV, July 24, 2018 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (NASDAQ:CPSS) ("CPS" or the "Company") today announced earnings of $3.2 million, or $0.13 per diluted share, for its second quarter ended June 30, 2018. This compares to net income of $4.6 million, or $0.17 per diluted share, in the second quarter of 2017.

Revenues for the second quarter of 2018 were $99.4 million, a decrease of $10.7 million, or 9.7%, compared to $110.1 million for the second quarter of 2017.  Total operating expenses for the second quarter of 2018 were $94.7 million compared to $102.1 million for the 2017 period.  Pretax income for the second quarter of 2018 was $4.7 million compared to pretax income of $8.0 million in the second quarter of 2017, a decrease of 41.5%.

For the six months ended June 30, 2018 total revenues were $202.9 million compared to $217.7 million for the six months ended June 30, 2017, a decrease of approximately $14.7 million, or 6.8%.  Total expenses for the six months ended June 30, 2018 were $193.7 million, a decrease of $8.2 million, or 4.1%, compared to $201.9 million for the six months ended June 30, 2017.  Pretax income for the six months ended June 30, 2018 was $9.2 million, compared to $15.7 million for the six months ended June 30, 2017.  Net income for the six months ended June 30, 2018 was $6.3 million compared to $9.1 million for the six months ended June 30, 2017. 

During the second quarter of 2018, CPS purchased $214.7 million of new contracts compared to $210.6 million during the first quarter of 2018 and $233.9 million during the second quarter of 2017.  The Company's receivables totaled $2.329 billion as of June 30, 2018, a decrease from $2.332 billion as of March 31, 2018 and $2.343 billion as of June 30, 2017.

Annualized net charge-offs for the second quarter of 2018 were 7.58% of the average portfolio as compared to 7.62% for the second quarter of 2017.  Delinquencies greater than 30 days (including repossession inventory) were 10.07% of the total portfolio as of June 30, 2018, as compared to 9.64% as of June 30, 2017.

"We are pleased to record our 27th consecutive quarter of positive pre-tax earnings," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "Our quarterly asset-backed securities transactions continue to be well received and in May 2018 we also securitized our residual interests in 17 existing securitizations to raise $40 million in additional capital."

Conference Call

CPS announced that it will hold a conference call on Wednesday, July 25, 2018, at 2:00 p.m. ET to discuss its quarterly operating results.  Those wishing to participate by telephone may dial-in at 877 312-5502 or 253 237-1131 approximately 10 minutes prior to the scheduled time. The conference identification number is 3392867.

A replay of the conference call will be available between July 25, 2018 and August 1, 2018, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 3392867.  A broadcast of the conference call will also be available live and for 90 days after the call via the Company's web site at www.consumerportfolio.com.

About Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc. is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems, low incomes or limited credit histories. We purchase retail installment sales contracts primarily from franchised automobile dealerships secured by late model used vehicles and, to a lesser extent, new vehicles. We fund these contract purchases on a long-term basis primarily through the securitization markets and service the contracts over their lives.

Forward-looking statements in this news release include the Company's recorded revenue, expense and provision for credit losses, because these items are dependent on the Company's estimates of incurred losses.  The accuracy of such estimates may be adversely affected by various factors, which include (in addition to risks relating to the economy generally) the following: possible increased delinquencies; repossessions and losses on retail installment contracts; incorrect prepayment speed and/or discount rate assumptions; possible unavailability of qualified personnel, which could adversely affect the Company's ability to service its portfolio; possible increases in the rate of consumer bankruptcy filings, which could adversely affect the Company's rights to collect payments from its portfolio; other changes in government regulations affecting consumer credit; possible declines in the market price for used vehicles, which could adversely affect the Company's realization upon repossessed vehicles; and economic conditions in geographic areas in which the Company's business is concentrated. All of such factors also may affect the Company's future financial results, as to which there can be no assurance. Any implication that the results of the most recently completed quarter are indicative of future results is disclaimed, and the reader should draw no such inference. Factors such as those identified above in relation to the provision for credit losses may affect future performance.

Investor Relations Contact

Jeffrey P. Fritz, Chief Financial Officer
844 878-2777

Consumer Portfolio Services, Inc. and Subsidiaries            
Condensed Consolidated Statements of Operations            
(In thousands, except per share data)            
(Unaudited)            
                           
       Three months ended       Six months ended   
       June 30,       June 30,   
        2018         2017         2018         2017    
Revenues:                          
Interest income     $   97,012       $   107,485       $   197,918       $   212,060    
Other income         2,350           2,587           5,008           5,610    
          99,362           110,072           202,926           217,670    
Expenses:                          
Employee costs         19,842           17,572           40,483           35,352    
General and administrative         7,450           6,819           14,946           13,741    
Interest         25,187           23,236           49,249           45,324    
Provision for credit losses         35,531           48,550           76,038           95,717    
Other expenses         6,698           5,943           12,997           11,792    
          94,708           102,120           193,713           201,926    
Income before income taxes         4,654           7,952           9,213           15,744    
Income tax expense         1,489           3,380           2,901           6,692    
  Net income      $   3,165       $   4,572       $   6,312       $   9,052    
                           
Earnings per share:                          
  Basic     $   0.15       $   0.20       $   0.30       $   0.39    
  Diluted     $   0.13       $   0.17       $   0.25       $   0.32    
                           
                           
Number of shares used in computing earnings                          
  per share:                          
    Basic       21,178         23,076         21,375         23,296    
    Diluted       25,123         27,602         25,393         28,024    
                           
                           
Condensed Consolidated Balance Sheets            
(In thousands)            
(Unaudited)            
                           
                           
      June 30,     December 31,              
        2018         2017                
Assets:                          
Cash and cash equivalents     $   17,435       $   12,731                
Restricted cash and equivalents       119,940         111,965                
Total cash and cash equivalents       137,375         124,696                
                           
Finance receivables       1,887,530         2,304,984                
Allowance for finance credit losses       (94,376 )       (109,187 )              
Finance receivables, net       1,793,154         2,195,797                
                           
Finance receivables measured at fair value       412,895         -                
Deferred tax assets, net       31,430         32,446                
Other assets       65,816         71,902                
      $   2,440,670       $   2,424,841                
                           
Liabilities and Shareholders' Equity:                          
Accounts payable and accrued expenses     $   27,313       $   28,715                
Warehouse lines of credit       137,930         112,408                
Residual interest financing       39,269         -                
Securitization trust debt       2,030,705         2,083,215                
Subordinated renewable notes       15,831         16,566                
        2,251,048         2,240,904                
                           
Shareholders' equity       189,622         183,937                
      $   2,440,670       $   2,424,841                
                           
                           
                           
Operating and Performance Data ($ in millions)                          
                           
                     
                     
       At and for the       At and for the   
       Three months ended       Six months ended   
       June 30,       June 30,   
        2018         2017         2018         2017    
                           
Contracts purchased     $   214.74       $   233.90       $   425.34       $   463.55    
Contracts securitized         205.00           230.00           398.58           440.00    
                           
Total portfolio balance     $   2,329.18       $   2,343.30       $   2,329.18       $   2,343.30    
Average portfolio balance         2,330.29           2,340.23           2,330.94           2,326.02    
                           
Allowance for finance credit losses as % of fin. receivables       5.00 %       4.64 %              
                           
Aggregate allowance as % of fin. receivables (1)       6.16 %       5.56 %              
                           
Delinquencies                          
31+ Days       8.60 %       8.30 %              
Repossession Inventory       1.47 %       1.34 %              
Total Delinquencies and Repo. Inventory       10.07 %       9.64 %              
                           
Annualized net charge-offs as % of average portfolio       7.58 %       7.62 %       7.87 %       7.76 %  
                           
Recovery rates (2)       34.9 %       35.6 %       34.4 %       35.4 %  
                           
       For the     For the 
       Three months ended     Six months ended 
       June 30,     June 30, 
        2018       2017       2018       2017  
      $ (3 ) % (4)   $ (3 ) % (4)   $ (3 ) % (4)   $ (3 ) % (4)
Interest income     $   97.01   16.7 %   $   107.49   18.4 %   $   197.92   17.0 %   $   212.06   18.2 %
Servicing fees and other income         2.35   0.4 %       2.59   0.4 %       5.01   0.4 %       5.61   0.5 %
Interest expense         (25.19 ) -4.3 %       (23.24 ) -4.0 %       (49.25 ) -4.2 %       (45.32 ) -3.9 %
Net interest margin          74.18   12.7 %       86.84   14.8 %       153.68   13.2 %       172.35   14.8 %
Provision for credit losses         (35.53 ) -6.1 %       (48.55 ) -8.3 %       (76.04 ) -6.5 %       (95.72 ) -8.2 %
Risk adjusted margin         38.64   6.6 %       38.29   6.5 %       77.64   6.7 %       76.63   6.6 %
Core operating expenses         (33.99 ) -5.8 %       (30.33 ) -5.2 %       (68.43 ) -5.9 %       (60.89 ) -5.2 %
Pre-tax income     $   4.65   0.8 %   $   7.95   1.4 %   $   9.21   0.8 %   $   15.74   1.4 %
                           
                           
                           
(1)  Includes allowance for finance credit losses and allowance for repossession inventory.              
(2)  Wholesale auction liquidation amounts (net of expenses) as a percentage of the account balance at the time of sale.        
(3)  Numbers may not add due to rounding.                          
(4)  Annualized percentage of the average portfolio balance.  Percentages may not add due to rounding.            
                           

 

 

 

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