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CPS Announces First Quarter 2019 Earnings

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  • Pretax income of $2.7 million
  • Net income of $1.7 million, or $0.07 per diluted share
  • New contract purchases of $243 million

LAS VEGAS, NV, April 18, 2019 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (NASDAQ:CPSS) ("CPS" or the "Company") today announced earnings of $1.7 million, or $0.07 per diluted share, for its first quarter ended March 31, 2019. This compares to net income of $3.1 million, or $0.12 per diluted share, in the first quarter of 2018.

Revenues for the first quarter of 2019 were $88.2 million, a decrease of $15.3 million, or 14.8%, compared to $103.6 million for the first quarter of 2018.  Total operating expenses for the first quarter of 2019 were $85.6 million compared to $99.0 million for the 2018 period.  Pretax income for the first quarter of 2019 was $2.7 million compared to pretax income of $4.6 million in the first quarter of 2018, a decrease of 41.3%.

During the first quarter of 2019, CPS purchased $243.0 million of new contracts compared to $251.8 million during the fourth quarter of 2018 and $210.6 million during the first quarter of 2018.  The Company's receivables totaled $2.393 billion as of March 31, 2019, an increase from $2.381 billion as of December 31, 2018 and an increase from $2.332 billion as of March 31, 2018.

Annualized net charge-offs for the first quarter of 2019 were 7.98% of the average portfolio as compared to 8.16% for the first quarter of 2018.  Delinquencies greater than 30 days (including repossession inventory) were 12.12% of the total portfolio as of March 31, 2019, as compared to 8.74% as of March 31, 2018.

"This quarter was our 30th consecutive quarter of positive pre-tax earnings.  We achieved year over year growth in originations volumes and portfolio size and we're looking forward the challenges and opportunities ahead of us in 2019," said Charles E. Bradley, Jr., President and CEO. 

Conference Call

CPS announced that it will hold a conference call on Friday, April 19, 2019, at 12:00 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 3479959.

A replay of the conference call will be available between April 19, 2019 and April 26, 2019, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 3479959.  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 
       March 31, 
        2019         2018  
Revenues:            
Interest income     $   85,845       $   100,906  
Other income         2,385           2,657  
          88,230           103,563  
Expenses:            
Employee costs         19,073           20,641  
General and administrative         8,174           7,495  
Interest         27,290           24,062  
Provision for credit losses         23,956           40,507  
Other expenses         7,061           6,301  
          85,554           99,006  
Income before income taxes         2,676           4,557  
Income tax expense         937           1,412  
  Net income      $   1,739       $   3,145  
             
Earnings per share:            
  Basic     $   0.08       $   0.15  
  Diluted     $   0.07       $   0.12  
             
             
Number of shares used in computing earnings            
  per share:            
  Basic       22,242         21,576  
  Diluted       24,259         25,664  
             
             
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
             
             
      March 31,     December 31,
        2019         2018  
Assets:            
Cash and cash equivalents     $   8,914       $   12,787  
Restricted cash and equivalents       135,508         117,323  
Total cash and cash equivalents       144,422         130,110  
             
Finance receivables       1,344,360         1,522,085  
Allowance for finance credit losses       (48,196 )       (67,376 )
Finance receivables, net       1,296,164         1,454,709  
             
Finance receivables measured at fair value       997,552         821,066  
Deferred tax assets, net       18,281         19,188  
Other assets       74,826         60,607  
      $   2,531,245       $   2,485,680  
             
Liabilities and Shareholders' Equity:            
Accounts payable and accrued expenses     $   54,804       $   31,692  
Warehouse lines of credit       117,104         136,847  
Residual interest financing       39,199         39,106  
Securitization trust debt       2,109,024         2,063,627  
Subordinated renewable notes       12,986         17,290  
        2,333,117         2,288,562  
             
Shareholders' equity       198,128         197,118  
      $   2,531,245       $   2,485,680  
             
             
Operating and Performance Data ($ in millions)            
             
       
       At and for the 
       Three months ended 
       March 31, 
        2019         2018  
             
Contracts purchased     $   243.03       $   210.59  
Contracts securitized         265.00           193.60  
             
Total portfolio balance     $   2,393.17       $   2,332.32  
Average portfolio balance         2,392.21           2,331.59  
             
Allowance for finance credit losses as % of fin. receivables       3.59 %       4.82 %
             
Aggregate allowance as % of fin. receivables (1)       5.40 %       5.95 %
             
Delinquencies            
31+ Days       10.39 %       7.14 %
Repossession Inventory       1.73 %       1.60 %
Total Delinquencies and Repo. Inventory       12.12 %       8.74 %
             
Annualized net charge-offs as % of average portfolio       7.98 %       8.16 %
             
Recovery rates (2)       33.6 %       33.8 %
             

 

       For the     
       Three months ended     
       March 31,     
        2019       2018      
      $ (3)   % (4)   $ (3)   % (4)    
Interest income     $   85.85     14.4 %   $   100.91     17.3 %    
Servicing fees and other income         2.39     0.4 %       2.66     0.5 %    
Interest expense         (27.29 )   -4.6 %       (24.06 )   -4.1 %    
Net interest margin          60.94     10.2 %       79.50     13.6 %    
Provision for credit losses         (23.96 )   -4.0 %       (40.51 )   -6.9 %    
Risk adjusted margin         36.98     6.2 %       38.99     6.7 %    
Core operating expenses         (34.31 )   -5.7 %       (34.44 )   -5.9 %    
Pre-tax income     $   2.68     0.4 %   $   4.56     0.8 %    
                   
                   
(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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