July 24, 2017

CPS Announces Second Quarter 2017 Earnings

  • Pretax income of $8.0 million
  • Net income of $4.6 million, or $0.17 per diluted share
  • New contract purchases of $234 million
  • Total managed portfolio increases to $2.34 billion from $2.31 billion at December 31, 2016

LAS VEGAS, NV, July 24, 2017 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the "Company") today announced earnings of $4.6 million, or $0.17 per diluted share, for its second quarter ended June 30, 2017.  This compares to net income of $7.3 million, or $0.25 per diluted share, in the second quarter of 2016.

Revenues for the second quarter of 2017 were $110.1 million, an increase of $5.1 million, or 4.9%, compared to $104.9 million for the second quarter of 2016.  Total operating expenses for the second quarter of 2017 were $102.1 million, an increase of $9.5 million, or 10.3%, compared to $92.6 million for the 2016 period.  Pretax income for the second quarter of 2017 was $8.0 million compared to pretax income of $12.3 million in the second quarter of 2016, a decrease of 35.5%.

For the six months ended June 30, 2017 total revenues were $217.7 million compared to $205.6 million for the six months ended June 30, 2016, an increase of approximately $12.1 million, or 5.9%.  Total expenses for the six months ended June 30, 2017 were $201.9 million, an increase of $20.9 million, or 11.5%, compared to $181.0 million for the six months ended June 30, 2016.  Pretax income for the six months ended June 30, 2017 was $15.7 million, compared to $24.6 million for the six months ended June 30, 2016.  Net income for the six months ended June 30, 2017 was $9.1 million compared to $14.5 million for the six months ended June 30, 2016

During the second quarter of 2017, CPS purchased $233.9 million of new contracts compared to $229.6 million during the first quarter of 2017 and $319.1 million during the second quarter of 2016.  The Company's managed receivables totaled $2.343 billion as of June 30, 2017, an increase from $2.323 billion as of March 31, 2017 and $2.254 billion as of June 30, 2016.

Annualized net charge-offs for the second quarter of 2017 were 7.62% of the average owned portfolio as compared to 6.94% for the second quarter of 2016.  Delinquencies greater than 30 days (including repossession inventory) were 9.64% of the total owned portfolio as of June 30, 2017, as compared to 8.58% as of June 30, 2016.

In the second quarter of 2017 our board of directors approved an increase to the aggregate authorization to repurchase our outstanding securities by $10 million. During the second quarter of 2017, CPS purchased 540,793 shares of stock in the open market at an average price of $4.54. For the six months ended June 30, 2017, CPS purchased 1,102,410 shares at an average price of $4.74.

"We are pleased with our second quarter results," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "We notched our 24th consecutive quarter of positive earnings and the capital markets continue to be very receptive to our quarterly issuances of bonds backed by our automobile receivables, as shown by our second quarter securitization where the weighted average spread over benchmarks was the best since the third quarter of 2014."

Conference Call

CPS announced that it will hold a conference call on Tuesday, July 25, 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 54724137.

A replay of the conference call will be available between July 25, 2017 and August 1, 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 54724137.  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) 
              
    Three months ended    Six months ended  
    June 30,    June 30,  
    2017    2016    2017    2016  
Revenues:             
Interest income  $  107,485   $  101,709   $  212,060   $  198,372  
Other income     2,587      3,224      5,610      7,210  
      110,072      104,933      217,670      205,582  
Expenses:             
Employee costs     17,572      15,678      35,352      30,822  
General and administrative     6,819      6,569      13,741      11,900  
Interest     23,236      19,727      45,324      37,548  
Provision for credit losses     48,550      44,423      95,717      88,619  
Other expenses     5,943      6,211      11,792      12,139  
      102,120      92,608      201,926      181,028  
Income before income taxes     7,952      12,325      15,744      24,554  
Income tax expense     3,380      5,053      6,692      10,068  
  Net income   $   4,572   $  7,272    $  9,052   $  14,486  
              
Earnings per share:             
  Basic  $  0.20   $  0.30   $  0.39   $  0.58  
  Diluted  $  0.17   $  0.25   $  0.32   $  0.49  
              
               
Number of shares used in computing earnings             
  per share:             
  Basic   23,076    24,538    23,296    24,917  
  Diluted   27,602    29,111    28,024    29,632  
              
              
Condensed Consolidated Balance Sheets 
(In thousands)
(Unaudited) 
              
              
    June 30,  December 31,       
    2017    2016        
Assets:             
Cash and cash equivalents  $   15,810   $  13,936        
Restricted cash and equivalents   118,298     112,754         
Total cash and cash equivalents   134,108    126,690        
              
Finance receivables   2,314,522     2,267,943        
Allowance for finance credit losses    (107,315)   (95,578)       
Finance receivables, net   2,207,207    2,172,365        
              
Deferred tax assets, net   45,198    42,845         
Other assets   61,283    68,502        
    $  2,447,796   $  2,410,402        
              
Liabilities and Shareholders' Equity:             
Accounts payable and accrued expenses  $  25,204   $  24,977        
Warehouse lines of credit    131,272    103,358        
Securitization trust debt   2,081,989    2,080,900        
Subordinated renewable notes   16,080    14,949         
    2,254,545    2,224,184        
              
Shareholders' equity   193,251    186,218         
   $  2,447,796    $  2,410,402        
             
             
Operating and Performance Data ($ in millions)            
              
    At and for the     At and for the  
    Three months ended    Six months ended  
    June 30,    June 30,  
    2017    2016    2017    2016  
              
Contracts purchased  $  233.90   $  319.11   $  463.55   $  631.41  
Contracts securitized     230.00      340.00      440.00      680.00  
              
Total managed portfolio  $  2,343.30    $  2,253.70   $  2,343.30   $  2,253.70  
Average managed portfolio     2,340.23      2,216.87      2,326.02      2,157.58  
              
Allowance for finance credit losses as % of fin. receivables   4.64%   4.06%       
              
Aggregate allowance as % of fin. receivables (1)    5.56%   5.02%       
              
Delinquencies             
31+ Days   8.30%    7.10%       
Repossession Inventory   1.34%   1.48%       
Total Delinquencies and Repo. Inventory   9.64%   8.58%       
              
Annualized net charge-offs as % of average owned portfolio   7.62%   6.94%   7.76%   7.24% 
               
Recovery rates (2)   35.6%   38.9%   35.4%   39.4% 
              
    For the   For the 
    Three months ended   Six months ended 
    June 30,   June 30, 
    2017   2016    2017   2016 
   $ (3) % (4) $ (3)  % (4) $ (3) % (4) $ (3) % (4)
Interest income  $  107.49  18.4% $  101.71  18.4% $  212.06  18.2% $  198.37  18.4%
Servicing fees and other income     2.59  0.4%    3.22  0.6%    5.61  0.5%    7.21  0.7%
Interest expense     (23.24) -4.0%    (19.73) -3.6%    (45.32) -3.9%    (37.55)  -3.5%
Net interest margin      86.84  14.8%    85.21  15.4%    172.35  14.8%    168.03  15.6%
Provision for credit losses     (48.55) -8.3 %    (44.42) -8.0%     (95.72) -8.2%    (88.62) -8.2%
Risk adjusted margin     38.29  6.5%    40.78  7.4%    76.63  6.6%    79.42  7.4%
Core operating expenses     (30.33) -5.2%    (28.46) -5.1%    (60.89) -5.2%    (54.86) -5.1%
Pre-tax income   $  7.95  1.4% $  12.33   2.2% $  15.74  1.4% $  24.55  2.3%
              
(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.     
             


Investor Relations Contact



Jeffrey P. Fritz, Chief Financial Officer

844 878-2777

Source: Consumer Portfolio Services, Inc.

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