Market Overview

CPS Announces Second Quarter 2019 Earnings

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  • Pretax income of $2.8 million
  • Net income of $1.8 million, or $0.08 per diluted share
  • New contract purchases of $250 million

LAS VEGAS, NV, July 24, 2019 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (NASDAQ:CPSS) ("CPS" or the "Company") today announced earnings of $1.8 million, or $0.08 per diluted share, for its second quarter ended June 30, 2019. This compares to net income of $3.2 million, or $0.13 per diluted share, in the second quarter of 2018. 

Revenues for the second quarter of 2019 were $86.3 million, a decrease of $13.0 million, or 13.1%, compared to $99.4 million for the second quarter of 2018.  Total operating expenses for the second quarter of 2019 were $83.6 million compared to $94.7 million for the 2018 period.  Pretax income for the second quarter of 2019 was $2.8 million compared to pretax income of $4.7 million in the second quarter of 2018, a decrease of 40.5%.

For the six months ended June 30, 2019 total revenues were $174.6 million compared to $202.9 million for the six months ended June 30, 2018, a decrease of approximately $28.4 million, or 14.0%.  Total expenses for the six months ended June 30, 2019 were $169.1 million, a decrease of $24.6 million, or 12.7%, compared to $193.7 million for the six months ended June 30, 2018.  Pretax income for the six months ended June 30, 2019 was $5.4 million, compared to $9.2 million for the six months ended June 30, 2018.  Net income for the six months ended June 30, 2019 was $3.5 million compared to $6.3 million for the six months ended June 30, 2018.

During the second quarter of 2019, CPS purchased $250.1 million of new contracts compared to $243.0 million during the first quarter of 2019 and $214.7 million during the second quarter of 2018.  The Company's receivables totaled $2.399 billion as of June 30, 2019, an increase from $2.393 billion as of March 31, 2019 and $2.329 billion as of June 30, 2018.

Annualized net charge-offs for the second quarter of 2019 were 7.82% of the average portfolio as compared to 7.58% for the second quarter of 2018.  Delinquencies greater than 30 days (including repossession inventory) were 14.83% of the total portfolio as of June 30, 2019, as compared to 10.07% as of June 30, 2018.

"We are pleased to report that this quarter represented our fourth consecutive quarter of year over year increases in quarterly originations volume," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "In addition, since Q3 of 2018, we have seen consecutive quarterly increases in the coupon rates on new receivables and lower fees paid to dealers."

Conference Call

CPS announced that it will hold a conference call on Thursday, July 25, 2019, at 1:00 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 3196842.

A replay of the conference call will be available between July 25, 2019 and August 1, 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 3196842.  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,   
        2019         2018         2019         2018    
Revenues:                          
Interest income     $   84,449       $   97,012       $   170,294       $   197,918    
Other income         1,876           2,350           4,261           5,008    
          86,325           99,362           174,555           202,926    
Expenses:                          
Employee costs         19,706           19,842           38,779           40,483    
General and administrative         8,750           7,450           16,924           14,946    
Interest         27,703           25,187           54,993           49,249    
Provision for credit losses         20,489           35,531           44,445           76,038    
Other expenses         6,907           6,698           13,968           12,997    
          83,555           94,708           169,109           193,713    
Income before income taxes         2,770           4,654           5,446           9,213    
Income tax expense         970           1,489           1,907           2,901    
  Net income      $   1,800       $   3,165       $   3,539       $   6,312    
                           
Earnings per share:                          
  Basic     $   0.08       $   0.15       $   0.16       $   0.30    
  Diluted     $   0.08       $   0.13       $   0.15       $   0.25    
                           
                           
Number of shares used in computing earnings                          
  per share:                          
  Basic       22,362         21,178         22,302         21,375    
  Diluted       23,978         25,123         24,119         25,393    
                           
                           
Condensed Consolidated Balance Sheets            
(In thousands)            
(Unaudited)            
                           
                           
      June 30,     December 31,              
        2019         2018                
Assets:                          
Cash and cash equivalents     $   9,745       $   12,787                
Restricted cash and equivalents       125,486         117,323                
Total cash and cash equivalents       135,231         130,110                
                           
Finance receivables       1,180,253         1,522,085                
Allowance for finance credit losses       (32,664 )       (67,376 )              
Finance receivables, net       1,147,589         1,454,709                
                           
Finance receivables measured at fair value       1,158,365         821,066                
Deferred tax assets, net       17,119         19,188                
Other assets       66,509         60,607                
      $   2,524,813       $   2,485,680                
                           
Liabilities and Shareholders' Equity:                          
Accounts payable and accrued expenses     $   53,960       $   31,692                
Warehouse lines of credit       139,224         136,847                
Residual interest financing       39,292         39,106                
Securitization trust debt       2,077,286         2,063,627                
Subordinated renewable notes       14,368         17,290                
        2,324,130         2,288,562                
                           
Shareholders' equity       200,683         197,118                
      $   2,524,813       $   2,485,680                
                           
                           
Operating and Performance Data ($ in millions)                          
                           
                     
                     
       At and for the       At and for the   
       Three months ended       Six months ended   
       June 30,       June 30,   
        2019         2018         2019         2018    
                           
Contracts purchased     $   250.14       $   214.74       $   493.17       $   425.34    
Contracts securitized         230.00           205.00           495.00           398.58    
                           
Total portfolio balance     $   2,399.22       $   2,329.18       $   2,399.22       $   2,329.18    
Average portfolio balance         2,398.92           2,330.29           2,395.57           2,330.94    
                           
Allowance for finance credit losses as % of fin. receivables       2.77 %       5.00 %              
                           
Aggregate allowance as % of fin. receivables (1)       4.66 %       6.16 %              
                           
Delinquencies                          
31+ Days       13.15 %       8.60 %              
Repossession Inventory       1.68 %       1.47 %              
Total Delinquencies and Repo. Inventory       14.83 %       10.07 %              
                           
Annualized net charge-offs as % of average portfolio       7.82 %       7.58 %       7.90 %       7.87 %  
                           
Recovery rates (2)       34.1 %       34.9 %       33.9 %       34.4 %  
                           
       For the     For the 
       Three months ended     Six months ended 
       June 30,     June 30, 
        2019       2018       2019       2018  
        $ (3)   % (4)     $ (3)   % (4)     $ (3)   % (4)     $ (3)   % (4)
Interest income     $   84.45   14.1 %   $   97.01   16.7 %   $   170.29   14.2 %   $   197.92   17.0 %
Servicing fees and other income         1.88   0.3 %       2.35   0.4 %       4.26   0.4 %       5.01   0.4 %
Interest expense         (27.70 ) -4.6 %       (25.19 ) -4.3 %       (54.99 ) -4.6 %       (49.25 ) -4.2 %
Net interest margin          58.62   9.8 %       74.18   12.7 %       119.56   10.0 %       153.68   13.2 %
Provision for credit losses         (20.49 ) -3.4 %       (35.53 ) -6.1 %       (44.45 ) -3.7 %       (76.04 ) -6.5 %
Risk adjusted margin         38.13   6.4 %       38.64   6.6 %       75.12   6.3 %       77.64   6.7 %
Core operating expenses         (35.36 ) -5.9 %       (33.99 ) -5.8 %       (69.67 ) -5.8 %       (68.43 ) -5.9 %
Pre-tax income     $   2.77   0.5 %   $   4.65   0.8 %   $   5.45   0.5 %   $   9.21   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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