CPS Announces First Quarter 2021 Earnings
May 10 2021 - 4:30PM
Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the
“Company”) today announced earnings of $5.2 million, or $0.21 per
diluted share, for its first quarter ended March 31, 2021. For the
prior year, in the first quarter of 2020, net income was $10.8
million, or $0.45 per diluted share. Results for the three months
ended March 31, 2020 include a net tax benefit of $8.8 million
related to the revaluation of the Company’s net operating losses
and other tax adjustments. Without this tax benefit, net income and
net income per diluted share for the first quarter of 2020 would
have been $2.0 million and $0.08 per share, respectively.
Revenues for the first quarter of 2021 were
$63.1 million, a decrease of $7.7 million, or 10.8%, compared to
$70.8 million for the first quarter of 2020. Total operating
expenses for the first quarter of 2021 were $55.2 million compared
to $67.7 million for the 2020 period for a decrease of $12.5
million, or 18.5%. Pretax income for the first quarter
of 2021 was $7.9 million compared to pretax income of $3.1 million
in the first quarter of 2020, an increase of 155.3%.
During the first quarter of 2021, CPS purchased
$205.5 million of new contracts compared to $166.7 million during
the fourth quarter of 2020 and $266.0 million during the first
quarter of 2020. The Company's receivables totaled $2.119 billion
as of March 31, 2021, a decrease from $2.175 billion as of December
31, 2020 and $2.435 billion as of March 31, 2020.
Annualized net charge-offs for the first quarter
of 2021 were 6.30% of the average portfolio as compared to 6.99%
for the first quarter of 2020. Delinquencies greater than 30 days
(including repossession inventory) were 7.77% of the total
portfolio as of March 31, 2021, as compared to 12.41% as of March
31, 2020.
“We are pleased with our first quarter results
and look forward to continued recovery from the effects of the
pandemic for the remainder of 2021,” reported Charles E. Bradley,
Jr., President and Chief Executive Officer. “Our first quarter 2021
originations were the highest quarterly volumes since the onset of
the pandemic, our credit performance is as strong as any time in
recent memory and our January 2021 securitization resulted in the
lowest aggregate cost of funds of any securitization in our
history.”
Conference Call
CPS announced that it will hold a conference
call on Tuesday, May 11, 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 7645419.
A replay of the conference call will be
available between May 11 and May 18, beginning two hours after
conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for
international participants, with conference identification number
7645419. 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 figures representing allowances for
remaining expected lifetime credit losses, its pandemic-related
markdown of carrying value for the portion of its portfolio
accounted for at fair value, its pandemic-related charge to the
provision for credit losses for the its legacy portfolio, its
estimates of fair value (most significantly for its receivables
accounted for at fair value), its provision for credit losses, its
entries offsetting the preceding, and figures derived from any of
the preceding. In each case, such figures are forward-looking
statements because they are dependent on the Company’s estimates of
losses to be incurred in the future. The accuracy of such estimates
may be adversely affected by various factors, which include (in
addition to risks relating to the COVID-19 pandemic and 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. The accuracy of such estimates
may also be affected by the effects of the COVID-19 pandemic and of
governmental responses to said pandemic, which have included
prohibitions on certain means of enforcement of receivables, and
may include additional restrictions, as yet unknown, in the future.
Any or 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 losses to be incurred in the future may affect
future performance.
Investor Relations Contact
Jeffrey P. Fritz, Chief Financial Officer844 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, |
|
|
|
|
2021 |
|
|
|
|
2020 |
|
Revenues: |
|
|
|
|
|
|
Interest income |
|
|
$ |
66,093 |
|
|
|
$ |
79,136 |
|
Mark to finance receivables
measured at fair value |
|
|
|
(4,417 |
) |
|
|
|
(10,350 |
) |
Other income |
|
|
|
1,436 |
|
|
|
|
1,981 |
|
|
|
|
|
63,112 |
|
|
|
|
70,767 |
|
Expenses: |
|
|
|
|
|
|
Employee costs |
|
|
|
20,159 |
|
|
|
|
21,842 |
|
General and
administrative |
|
|
|
7,748 |
|
|
|
|
8,669 |
|
Interest |
|
|
|
20,946 |
|
|
|
|
26,991 |
|
Provision for credit
losses |
|
|
|
- |
|
|
|
|
3,613 |
|
Other expenses |
|
|
|
6,315 |
|
|
|
|
6,540 |
|
|
|
|
|
55,168 |
|
|
|
|
67,655 |
|
Income before income
taxes |
|
|
|
7,944 |
|
|
|
|
3,112 |
|
Income tax expense
(benefit) |
|
|
|
2,780 |
|
|
|
|
(7,680 |
) |
Net income |
|
|
$ |
5,164 |
|
|
|
$ |
10,792 |
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
Basic |
|
|
$ |
0.23 |
|
|
|
$ |
0.48 |
|
Diluted |
|
|
$ |
0.21 |
|
|
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in
computing earnings |
|
|
|
|
|
|
per share: |
|
|
|
|
|
|
Basic |
|
|
|
22,741 |
|
|
|
|
22,539 |
|
Diluted |
|
|
|
24,967 |
|
|
|
|
23,879 |
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
2021 |
|
|
|
|
2020 |
|
Assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
9,197 |
|
|
|
$ |
13,466 |
|
Restricted
cash and equivalents |
|
|
|
159,404 |
|
|
|
|
130,686 |
|
Finance
receivables measured at fair value |
|
|
|
1,533,723 |
|
|
|
|
1,523,726 |
|
|
|
|
|
|
|
|
Finance
receivables |
|
|
|
411,109 |
|
|
|
|
492,133 |
|
Allowance
for finance credit losses |
|
|
|
(73,497 |
) |
|
|
|
(80,790 |
) |
Finance
receivables, net |
|
|
|
337,612 |
|
|
|
|
411,343 |
|
|
|
|
|
|
|
|
Deferred tax
assets, net |
|
|
|
27,503 |
|
|
|
|
28,512 |
|
Other
assets |
|
|
|
28,368 |
|
|
|
|
38,162 |
|
|
|
|
$ |
2,095,807 |
|
|
|
$ |
2,145,895 |
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity: |
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
|
$ |
50,370 |
|
|
|
$ |
43,112 |
|
Warehouse
lines of credit |
|
|
|
71,097 |
|
|
|
|
118,999 |
|
Residual
interest financing |
|
|
|
20,540 |
|
|
|
|
25,426 |
|
Securitization trust debt |
|
|
|
1,791,583 |
|
|
|
|
1,803,673 |
|
Subordinated
renewable notes |
|
|
|
23,740 |
|
|
|
|
21,323 |
|
|
|
|
|
1,957,330 |
|
|
|
|
2,012,533 |
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
138,477 |
|
|
|
|
133,362 |
|
|
|
|
$ |
2,095,807 |
|
|
|
$ |
2,145,895 |
|
|
|
|
|
|
|
|
Operating and Performance Data
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and for the |
|
|
|
Three months ended |
|
|
|
March 31, |
|
|
|
|
2021 |
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
Contracts purchased |
|
|
$ |
205.48 |
|
|
|
$ |
266.00 |
|
Contracts securitized |
|
|
|
184.37 |
|
|
|
|
260.00 |
|
|
|
|
|
|
|
|
Total portfolio balance |
|
|
$ |
2,119.07 |
|
|
|
$ |
2,435.07 |
|
Average portfolio balance |
|
|
|
2,138.66 |
|
|
|
|
2,426.20 |
|
|
|
|
|
|
|
|
Allowance for finance credit
losses as % of fin. receivables |
|
|
|
17.88 |
% |
|
|
|
14.73 |
% |
|
|
|
|
|
|
|
Aggregate allowance as % of
fin. receivables (1) |
|
|
|
19.06 |
% |
|
|
|
17.54 |
% |
|
|
|
|
|
|
|
Delinquencies |
|
|
|
|
|
|
31+ Days |
|
|
|
6.34 |
% |
|
|
|
10.18 |
% |
Repossession Inventory |
|
|
|
1.43 |
% |
|
|
|
2.23 |
% |
Total Delinquencies and Repo. Inventory |
|
|
|
7.77 |
% |
|
|
|
12.41 |
% |
|
|
|
|
|
|
|
Annualized Net Charge-offs as
% of Average Portfolio |
|
|
|
|
|
|
Legacy portfolio |
|
|
|
12.63 |
% |
|
|
|
10.25 |
% |
Fair Value portfolio |
|
|
|
4.61 |
% |
|
|
|
5.24 |
% |
Total portfolio |
|
|
|
6.30 |
% |
|
|
|
6.99 |
% |
|
|
|
|
|
|
|
Recovery rates (2) |
|
|
|
43.3 |
% |
|
|
|
36.2 |
% |
|
|
|
For the |
|
|
|
Three months ended |
|
|
|
March 31, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
$ |
(3 |
) |
% (4) |
|
$ |
(3 |
) |
% (4) |
Interest income |
|
|
$ |
66.09 |
|
12.4 |
% |
|
$ |
79.14 |
|
13.0 |
% |
Mark to finance receivables
measured at fair value |
|
|
|
(4.42 |
) |
-0.8 |
% |
|
|
(10.35 |
) |
-1.7 |
% |
Other income |
|
|
|
1.44 |
|
0.3 |
% |
|
|
1.98 |
|
0.3 |
% |
Interest expense |
|
|
|
(20.95 |
) |
-3.9 |
% |
|
|
(26.99 |
) |
-4.4 |
% |
Net interest margin |
|
|
|
42.17 |
|
7.9 |
% |
|
|
43.78 |
|
7.2 |
% |
Provision for credit
losses |
|
|
|
- |
|
0.0 |
% |
|
|
(3.61 |
) |
-0.6 |
% |
Risk adjusted margin |
|
|
|
42.17 |
|
7.9 |
% |
|
|
40.16 |
|
6.6 |
% |
Core operating expenses |
|
|
|
(34.22 |
) |
-6.4 |
% |
|
|
(37.05 |
) |
-6.1 |
% |
Pre-tax income |
|
|
$ |
7.94 |
|
1.5 |
% |
|
$ |
3.11 |
|
0.5 |
% |
|
|
|
|
|
|
|
|
(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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