CPS Announces First Quarter 2017 Earnings
April 19 2017 - 4:30PM
Consumer Portfolio Services, Inc. (Nasdaq:CPSS) (“CPS” or the
“Company”) today announced earnings of $4.5 million, or $0.16 per
diluted share, for its first quarter ended March 31, 2017.
This compares to net income of $7.2 million, or $0.24 per diluted
share, in the first quarter of 2016.
Revenues for the first quarter of 2017 were
$107.6 million, an increase of $6.9 million, or 6.9%, compared to
$100.6 million for the first quarter of 2016. Total operating
expenses for the first quarter of 2017 were $99.8 million, an
increase of $11.4 million, or 12.9%, compared to $88.4 million for
the 2016 period. Pretax income for the first quarter of 2017
was $7.8 million compared to pretax income of $12.2 million in the
first quarter of 2016, a decrease of 36.3%.
During the first quarter of 2017, CPS purchased
$229.6 million of new contracts compared to $215.3 million during
the fourth quarter of 2016 and $312.3 million during the first
quarter of 2016. The Company's managed receivables totaled
$2.323 billion as of March 31, 2017, an increase from $2.308
billion as of December 31, 2016 and $2.142 billion as of March 31,
2016.
Annualized net charge-offs for the first quarter
of 2017 were 7.91% of the average owned portfolio as compared to
7.57% for the first quarter of 2016. Delinquencies greater
than 30 days (including repossession inventory) were 9.74% of the
total owned portfolio as of March 31, 2017, as compared to 8.97% as
of March 31, 2016.
"We are pleased with our first quarter results,"
said Charles E. Bradley, Jr., Chairman and Chief Executive
Officer. “Despite the challenges facing our industry, such as
higher delinquencies and lower recoveries at the wholesale
auctions, we marked our 23rd consecutive quarter of positive
earnings.”
Conference
Call
CPS announced that it will hold a conference
call on Thursday, April 20, 2017, 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 8553937.
A replay of the conference call will be
available between April 20, 2017 and April 27, 2017, beginning two
hours after conclusion of the call, by dialing 855 859-2056 or 404
537-3406 for international participants, with conference
identification number 8553937. 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.
|
|
Consumer Portfolio Services, Inc. and
Subsidiaries |
|
Condensed Consolidated Statements of
Operations |
|
(In thousands, except per share
data) |
|
(Unaudited) |
|
|
|
|
|
|
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|
|
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|
Three months ended |
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March 31, |
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|
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|
|
2017 |
|
|
2016 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
Interest income |
|
|
$ |
104,575 |
|
|
|
$ |
96,663 |
|
|
|
Other income |
|
|
|
3,023 |
|
|
|
|
3,986 |
|
|
|
|
|
|
|
107,598 |
|
|
|
|
100,649 |
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Employee costs |
|
|
|
17,780 |
|
|
|
|
15,143 |
|
|
|
General and
administrative |
|
|
|
6,922 |
|
|
|
|
5,331 |
|
|
|
Interest |
|
|
|
22,088 |
|
|
|
|
17,821 |
|
|
|
Provision for credit
losses |
|
|
|
47,167 |
|
|
|
|
44,197 |
|
|
|
Other expenses |
|
|
|
5,849 |
|
|
|
|
5,928 |
|
|
|
|
|
|
|
99,806 |
|
|
|
|
88,420 |
|
|
|
Income before income
taxes |
|
|
|
7,792 |
|
|
|
|
12,229 |
|
|
|
Income tax expense |
|
|
|
3,312 |
|
|
|
|
5,015 |
|
|
|
Net
income |
|
|
$ |
4,480 |
|
|
|
$ |
7,214 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.19 |
|
|
|
$ |
0.29 |
|
|
|
Diluted |
|
|
$ |
0.16 |
|
|
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
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Number of shares used
in computing earnings |
|
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per share: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
23,517 |
|
|
|
|
25,296 |
|
|
|
Diluted |
|
|
|
28,223 |
|
|
|
|
30,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Condensed Consolidated Balance
Sheets |
|
(In thousands) |
|
(Unaudited) |
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March 31, |
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|
December 31, |
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|
|
2017 |
|
|
2016 |
|
|
Assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
12,071 |
|
|
|
$ |
13,936 |
|
|
|
Restricted cash and equivalents |
|
|
|
129,197 |
|
|
|
|
112,754 |
|
|
|
Total
cash and cash equivalents |
|
|
|
141,268 |
|
|
|
|
126,690 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance
receivables |
|
|
|
2,286,172 |
|
|
|
|
2,267,943 |
|
|
|
Allowance for finance credit losses |
|
|
|
(99,255 |
) |
|
|
|
(95,578 |
) |
|
|
Finance
receivables, net |
|
|
|
2,186,917 |
|
|
|
|
2,172,365 |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax assets, net |
|
|
|
43,039 |
|
|
|
|
42,845 |
|
|
|
Other
assets |
|
|
|
59,759 |
|
|
|
|
62,404 |
|
|
|
|
|
|
$ |
2,430,983 |
|
|
|
$ |
2,404,304 |
|
|
|
|
|
|
|
|
|
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|
Liabilities and
Shareholders' Equity: |
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses |
|
|
$ |
23,720 |
|
|
|
$ |
18,879 |
|
|
|
Warehouse lines of
credit |
|
|
|
120,286 |
|
|
|
|
103,358 |
|
|
|
Securitization trust
debt |
|
|
|
2,082,040 |
|
|
|
|
2,080,900 |
|
|
|
Subordinated renewable
notes |
|
|
|
15,272 |
|
|
|
|
14,949 |
|
|
|
|
|
|
|
2,241,318 |
|
|
|
|
2,218,086 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity |
|
|
|
189,665 |
|
|
|
|
186,218 |
|
|
|
|
|
|
$ |
2,430,983 |
|
|
|
$ |
2,404,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating and
Performance Data ($ in millions) |
|
|
|
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At and for the |
|
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|
|
Three months ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Contracts
purchased |
|
|
$ |
229.64 |
|
|
|
$ |
312.30 |
|
|
|
Contracts
securitized |
|
|
|
210.00 |
|
|
|
|
340.00 |
|
|
|
|
|
|
|
|
|
|
|
|
Total managed
portfolio |
|
|
$ |
2,323.22 |
|
|
|
$ |
2,141.63 |
|
|
|
Average managed
portfolio |
|
|
|
2,311.81 |
|
|
|
|
2,098.29 |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for finance
credit losses as % of fin. receivables |
|
|
|
4.34 |
% |
|
|
|
3.81 |
% |
|
|
|
|
|
|
|
|
|
|
|
Aggregate allowance as
% of fin. receivables (1) |
|
|
|
5.43 |
% |
|
|
|
5.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
Delinquencies |
|
|
|
|
|
|
|
|
31+
Days |
|
|
|
8.12 |
% |
|
|
|
7.15 |
% |
|
|
Repossession Inventory |
|
|
|
1.62 |
% |
|
|
|
1.81 |
% |
|
|
Total
Delinquencies and Repo. Inventory |
|
|
|
9.74 |
% |
|
|
|
8.97 |
% |
|
|
|
|
|
|
|
|
|
|
|
Annualized net
charge-offs as % of average owned portfolio |
|
|
|
7.91 |
% |
|
|
|
7.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
Recovery rates (2) |
|
|
|
35.2 |
% |
|
|
|
39.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the |
|
|
|
|
Three months ended |
|
|
|
|
March 31, |
|
|
|
|
2017 |
|
2016 |
|
|
|
|
$ (3) |
|
% (4) |
|
$ (3) |
|
% (4) |
|
Interest income |
|
|
$ |
104.58 |
|
|
18.1 |
% |
|
$ |
96.66 |
|
|
18.4 |
% |
|
Servicing fees and
other income |
|
|
|
3.02 |
|
|
0.5 |
% |
|
|
3.99 |
|
|
0.8 |
% |
|
Interest expense |
|
|
|
(22.09 |
) |
|
-3.8 |
% |
|
|
(17.82 |
) |
|
-3.4 |
% |
|
Net interest
margin |
|
|
|
85.51 |
|
|
14.8 |
% |
|
|
82.83 |
|
|
15.8 |
% |
|
Provision for credit
losses |
|
|
|
(47.17 |
) |
|
-8.2 |
% |
|
|
(44.20 |
) |
|
-8.4 |
% |
|
Risk adjusted
margin |
|
|
|
38.34 |
|
|
6.6 |
% |
|
|
38.63 |
|
|
7.4 |
% |
|
Core operating
expenses |
|
|
|
(30.55 |
) |
|
-5.3 |
% |
|
|
(26.40 |
) |
|
-5.0 |
% |
|
Pre-tax income |
|
|
$ |
7.79 |
|
|
1.3 |
% |
|
$ |
12.23 |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(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 managed portfolio.
Percentages may not add due to rounding. |
|
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Investor Relations Contact
Jeffrey P. Fritz, Chief Financial Officer
844 878-2777
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