CPS Announces Fourth Quarter and Full Year 2018 Earnings
February 12 2019 - 9:11PM
Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the
“Company”) today announced earnings of $5.4 million, or $0.22 per
diluted share, for its fourth quarter ended December 31, 2018. This
compares to a net loss of $10.0 million, or $0.46 per diluted
share, in the fourth quarter of 2017. The results for the
fourth quarter of 2018 include a $2.1 million net tax benefit
related to certain tax planning strategies and other adjustments.
Without the benefit, net income would have been $3.3 million, or
$0.13 per diluted share. For the fourth quarter of 2017, the loss
includes a non-cash income tax charge of $15.1 million representing
the write down of the Company’s deferred tax asset to reflect the
lowered tax rates enacted by the December 2017 tax act. Without the
charge, net income would have been $5.1 million or $0.20 per
diluted share.
Revenues for the fourth quarter of 2018 were
$91.2 million, a decrease of $16.0 million, or 14.9%, compared to
$107.2 million for the fourth quarter of 2017. Total
operating expenses for the fourth quarter of 2018 were $86.4
million compared to $99.0 million for the 2017 period. Pretax
income for the fourth quarter of 2018 was $4.8 million compared to
pretax income of $8.2 million in the fourth quarter of 2017, a
decrease of 41.8%.
For the twelve months ended December 31, 2018
total revenues were $389.8 million compared to $434.4 million for
the twelve months ended December 31, 2017, a decrease of
approximately $44.6 million, or 10.3%. Total expenses for the
twelve months ended December 31, 2018 were $371.1 million, a
decrease of $31.2 million, or 7.8%, compared to $402.3 million for
the twelve months ended December 31, 2017. Pretax income for
the twelve months ended December 31, 2018 was $18.7 million,
compared to $32.1 million for the twelve months ended December 31,
2017. Net income for the twelve months ended December 31,
2018 was $14.9 million compared to $3.8 million for the twelve
months ended December 31, 2017. The full-year 2018 results
include a $2.1 million net tax benefit related to certain tax
planning strategies and other adjustments. Without the benefit, net
income for 2018 would have been $12.8, or $0.51 per diluted share.
The full-year 2017 results include a non-cash income tax charge of
$15.1 million representing the write down of the Company’s deferred
tax asset to reflect the lowered tax rates enacted by the December
2017 tax act. Without the charge, net income would have been $18.9
million, or $0.69 per diluted share.
During the fourth quarter of 2018, CPS purchased
$251.8 million of new contracts compared to $225.2 million during
the third quarter of 2018 and $190.8 million during the fourth
quarter of 2017. The Company's receivables totaled $2.381
billion as of December 31, 2018, an increase from $2.343 billion as
of September 30, 2018 and an increase from $2.334 billion as of
December 31, 2017.
Annualized net charge-offs for the fourth
quarter of 2018 were 7.19% of the average portfolio as compared to
7.24% for the fourth quarter of 2017. Delinquencies greater
than 30 days (including repossession inventory) were 13.88% of the
total portfolio as of December 31, 2018, as compared to 11.25% as
of December 31, 2017.
“We are pleased to record our 29th consecutive
quarter of pre-tax earnings,” said Charles E. Bradley, Jr. “In
addition, our fourth quarter originations volume of $252 million
represented the highest quarterly levels since the second quarter
of 2016 and our October 2018-D securitization priced at the
tightest weighted average spreads since 2011.”
Conference
Call
CPS announced that it will hold a conference
call on Wednesday, February 13, 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 2286988.
A replay of the conference call will be available between
February 13, 2019 and February 20, 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
2286988. 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, provision for
credit losses and fair value of receivables, because these items
are dependent on the Company’s estimates of losses to be incurred.
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 Officer844 878-2777
Consumer Portfolio Services, Inc. and
Subsidiaries |
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Condensed Consolidated Statements of
Operations |
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(In thousands, except per share
data) |
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(Unaudited) |
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Three months ended |
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Twelve months ended |
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December 31, |
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December 31, |
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2018 |
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2017 |
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2018 |
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2017 |
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Revenues: |
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Interest
income |
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$ |
88,761 |
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$ |
105,100 |
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$ |
380,297 |
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$ |
424,174 |
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Other
income |
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2,457 |
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2,125 |
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9,478 |
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10,209 |
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91,218 |
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107,225 |
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389,775 |
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434,383 |
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Expenses: |
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Employee
costs |
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20,030 |
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19,160 |
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79,318 |
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72,967 |
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General
and administrative |
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8,307 |
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6,482 |
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31,037 |
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26,578 |
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Interest |
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26,409 |
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23,704 |
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101,466 |
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92,345 |
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Provision for credit losses |
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25,083 |
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43,660 |
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133,080 |
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186,713 |
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Other
expenses |
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|
6,605 |
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|
6,002 |
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|
26,171 |
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23,709 |
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86,434 |
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99,008 |
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371,072 |
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|
402,312 |
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Income
before income taxes |
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4,784 |
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8,217 |
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18,703 |
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32,071 |
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Income
tax expense |
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(568 |
) |
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18,168 |
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|
3,841 |
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|
28,306 |
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Net
income |
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$ |
5,352 |
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$ |
(9,951 |
) |
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$ |
14,862 |
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$ |
3,765 |
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Earnings
per share: |
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Basic |
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$ |
0.24 |
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$ |
(0.46 |
) |
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$ |
0.68 |
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$ |
0.17 |
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Diluted |
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$ |
0.22 |
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$ |
(0.46 |
) |
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$ |
0.59 |
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$ |
0.14 |
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Number
of shares used in computing earnings |
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per
share: |
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Basic |
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22,549 |
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21,702 |
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21,989 |
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22,687 |
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Diluted |
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24,411 |
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21,702 |
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24,988 |
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27,214 |
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Condensed Consolidated Balance
Sheets |
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(In thousands) |
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(Unaudited) |
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December 31, |
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December 31, |
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2018 |
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2017 |
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Assets: |
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Cash and
cash equivalents |
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$ |
12,787 |
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$ |
12,731 |
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Restricted cash and equivalents |
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|
117,323 |
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|
111,965 |
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Total
cash and cash equivalents |
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|
130,110 |
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|
124,696 |
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Finance
receivables |
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|
1,522,085 |
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|
2,304,984 |
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Allowance for finance credit losses |
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(67,376 |
) |
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(109,187 |
) |
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Finance
receivables, net |
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|
1,454,709 |
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2,195,797 |
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Finance
receivables measured at fair value |
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821,066 |
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- |
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Deferred
tax assets, net |
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|
19,188 |
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|
32,446 |
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Other
assets |
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|
60,607 |
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|
71,902 |
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$ |
2,485,680 |
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$ |
2,424,841 |
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Liabilities and Shareholders' Equity: |
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Accounts
payable and accrued expenses |
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$ |
31,692 |
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$ |
28,715 |
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Warehouse lines of credit |
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|
136,847 |
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|
112,408 |
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Residual
interest financing |
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39,106 |
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- |
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Securitization trust debt |
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2,063,627 |
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|
2,083,215 |
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Subordinated renewable notes |
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|
17,290 |
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|
16,566 |
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|
2,288,562 |
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|
2,240,904 |
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Shareholders' equity |
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|
197,118 |
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|
183,937 |
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$ |
2,485,680 |
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$ |
2,424,841 |
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Operating and Performance Data ($ in millions) |
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At and for the |
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At and for the |
|
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|
Three months ended |
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|
Twelve months ended |
|
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|
December 31, |
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|
December 31, |
|
|
|
|
|
|
2018 |
|
|
|
|
2017 |
|
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|
|
2018 |
|
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|
2017 |
|
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|
|
|
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|
Contracts purchased |
|
|
$ |
251.81 |
|
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|
$ |
190.78 |
|
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|
$ |
902.40 |
|
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|
$ |
859.07 |
|
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|
Contracts securitized |
|
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|
245.00 |
|
|
|
|
200.00 |
|
|
|
|
883.45 |
|
|
|
|
870.00 |
|
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|
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|
Total
portfolio balance |
|
|
$ |
2,380.85 |
|
|
|
$ |
2,333.53 |
|
|
|
$ |
2,380.85 |
|
|
|
$ |
2,333.53 |
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|
|
Average
portfolio balance |
|
|
|
2,371.05 |
|
|
|
|
2,339.06 |
|
|
|
|
2,341.96 |
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|
2,334.01 |
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|
Allowance for finance credit losses as % of fin. receivables |
|
|
|
4.43 |
% |
|
|
|
4.74 |
% |
|
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|
Aggregate allowance as % of fin. receivables (1) |
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|
5.91 |
% |
|
|
|
5.70 |
% |
|
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|
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Delinquencies |
|
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|
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|
|
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|
31+
Days |
|
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|
12.35 |
% |
|
|
|
9.81 |
% |
|
|
|
|
|
|
|
|
Repossession Inventory |
|
|
|
1.53 |
% |
|
|
|
1.44 |
% |
|
|
|
|
|
|
|
|
Total
Delinquencies and Repo. Inventory |
|
|
|
13.88 |
% |
|
|
|
11.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized net charge-offs as % of average portfolio |
|
|
|
7.19 |
% |
|
|
|
7.24 |
% |
|
|
|
7.74 |
% |
|
|
|
7.68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
rates (2) |
|
|
|
33.0 |
% |
|
|
|
34.7 |
% |
|
|
|
34.1 |
% |
|
|
|
35.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
For the |
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For the |
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|
Three months ended |
|
Twelve months ended |
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|
December 31, |
|
December 31, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
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|
2018 |
|
|
|
2017 |
|
|
|
|
|
$ |
(3) |
% (4) |
|
$ |
(3) |
% (4) |
|
$ |
(3) |
% (4) |
|
$ |
(3) |
% (4) |
|
Interest
income |
|
|
$ |
88.76 |
|
15.0 |
% |
|
$ |
105.10 |
|
18.0 |
% |
|
$ |
380.30 |
|
16.2 |
% |
|
$ |
424.17 |
|
18.2 |
% |
|
Servicing fees and other income |
|
|
|
2.46 |
|
0.4 |
% |
|
|
2.13 |
|
0.4 |
% |
|
|
9.48 |
|
0.4 |
% |
|
|
10.21 |
|
0.4 |
% |
|
Interest
expense |
|
|
|
(26.41 |
) |
-4.5 |
% |
|
|
(23.70 |
) |
-4.1 |
% |
|
|
(101.47 |
) |
-4.3 |
% |
|
|
(92.35 |
) |
-4.0 |
% |
|
Net
interest margin |
|
|
|
64.81 |
|
10.9 |
% |
|
|
83.52 |
|
14.3 |
% |
|
|
288.31 |
|
12.3 |
% |
|
|
342.04 |
|
14.7 |
% |
|
Provision for credit losses |
|
|
|
(25.08 |
) |
-4.2 |
% |
|
|
(43.66 |
) |
-7.5 |
% |
|
|
(133.08 |
) |
-5.7 |
% |
|
|
(186.71 |
) |
-8.0 |
% |
|
Risk
adjusted margin |
|
|
|
39.73 |
|
6.7 |
% |
|
|
39.86 |
|
6.8 |
% |
|
|
155.23 |
|
6.6 |
% |
|
|
155.33 |
|
6.7 |
% |
|
Core
operating expenses |
|
|
|
(34.94 |
) |
-5.9 |
% |
|
|
(31.64 |
) |
-5.4 |
% |
|
|
(136.53 |
) |
-5.8 |
% |
|
|
(123.25 |
) |
-5.3 |
% |
|
Pre-tax
income |
|
|
$ |
4.78 |
|
0.8 |
% |
|
$ |
8.22 |
|
1.4 |
% |
|
$ |
18.70 |
|
0.8 |
% |
|
$ |
32.07 |
|
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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|
|
Consumer Portfolio Servi... (NASDAQ:CPSS)
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From Aug 2024 to Sep 2024
Consumer Portfolio Servi... (NASDAQ:CPSS)
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