October 23, 2017

CPS Announces Third Quarter 2017 Earnings

  • Pretax income of $8.1 million
  • Net income of $4.7 million, or $0.17 per diluted share
  • New contract purchases of $205 million
  • Total managed portfolio increases to $2.35 billion from $2.31 billion at December 31, 2016

LAS VEGAS, NV, Oct. 23, 2017 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the "Company") today announced earnings of $4.7 million, or $0.17 per diluted share, for its third quarter ended September 30, 2017.  This compares to net income of $7.3 million, or $0.26 per diluted share, in the third quarter of 2016.

Revenues for the third quarter of 2017 were $109.5 million, an increase of $1.0 million, or 0.9%, compared to $108.5 million for the third quarter of 2016.  Total operating expenses for the third quarter of 2017 were $101.4 million, an increase of $5.3 million, or 5.5%, compared to $96.1 million for the 2016 period.  Pretax income for the third quarter of 2017 was $8.1 million compared to pretax income of $12.5 million in the third quarter of 2016, a decrease of 34.9%.

For the nine months ended September 30, 2017 total revenues were $327.2 million compared to $314.1 million for the nine months ended September 30, 2016, an increase of approximately $13.1 million, or 4.2%.  Total expenses for the nine months ended September 30, 2017 were $303.3 million, an increase of $26.2 million, or 9.5%, compared to $277.1 million for the nine months ended September 30, 2016.  Pretax income for the nine months ended September 30, 2017 was $23.9 million, compared to $37.0 million for the nine months ended September 30, 2016.  Net income for the nine months ended September 30, 2017 was $13.7 million compared to $21.8 million for the nine months ended September 30, 2016

During the third quarter of 2017, CPS purchased $204.7 million of new contracts compared to $233.9 million during the second quarter of 2017 and $242.1 million during the third quarter of 2016.  The Company's managed receivables totaled $2.346 billion as of September 30, 2017, an increase from $2.343 billion as of June 30, 2017 and $2.292 billion as of September 30, 2016.

Annualized net charge-offs for the third quarter of 2017 were 7.96% of the average owned portfolio as compared to 6.69% for the third quarter of 2016.  Delinquencies greater than 30 days (including repossession inventory) were 10.27% of the total owned portfolio as of September 30, 2017, as compared to 10.46% as of September 30, 2016.

In October, 2017 our board of directors approved an increase to the aggregate authorization to repurchase our outstanding securities by $10 million. During the third quarter of 2017, CPS purchased 1,189,660 shares of stock in the open market at an average price of $4.28. For the nine months ended September 30, 2017, CPS purchased 2,292,070 shares at an average price of $4.51.

"Once again, our quarterly results are in line with our expectations as the company continues to prosper in a challenging environment," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "Our third and fourth-quarter securitizations, completed in July and October, respectively, were both well received in the market, with the fourth quarter deal pricing at the tightest weighted average spread since our 2014-B securitization.  In addition, we continue to return earnings to shareholders by purchasing shares of the Company's stock in the open market."   

Conference Call

CPS announced that it will hold a conference call on Tuesday, October 24, 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 1857939.

A replay of the conference call will be available between October 24, 2017 and October 31, 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 1857939.  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    Nine months ended  
    September 30,    September 30,  
    2017    2016    2017    2016  
Revenues:             
Interest income  $  107,014   $  105,376   $  319,074   $   303,748  
Other income     2,474      3,140      8,084      10,351  
      109,488      108,516      327,158      314,099  
Expenses:             
Employee costs     18,455      16,688      53,807      47,510  
General and administrative     6,355      6,316      20,096      18,216  
Interest     23,317      20,893      68,641      58,442  
Provision for credit losses     47,336      46,262      143,053      134,881  
Other expenses     5,916      5,902      17,707      18,040  
       101,379      96,061      303,304      277,089  
Income before income taxes     8,109      12,455      23,854      37,010  
Income tax expense     3,446      5,107      10,138       15,175  
  Net income   $  4,663   $  7,348   $  13,716   $  21,835  
              
Earnings per share:             
  Basic  $  0.21   $  0.31   $  0.60   $  0.89  
  Diluted  $  0.17   $  0.26   $  0.50   $  0.75  
              
              
Number of shares used in computing earnings             
  per share:             
  Basic   22,473    23,894    23,019    24,574  
  Diluted   26,779    28,503    27,606    29,253  
              
              
              
Condensed Consolidated Balance Sheets      
(In thousands)      
(Unaudited)      
              
              
   September 30,  December 31,       
    2017    2016        
Assets:             
Cash and cash equivalents  $  12,038   $  13,936        
Restricted cash and equivalents   115,026     112,754         
Total cash and cash equivalents   127,064    126,690        
               
Finance receivables   2,317,727    2,267,943        
Allowance for finance credit losses   (108,619)   (95,578)       
Finance receivables, net   2,209,108    2,172,365        
               
Deferred tax assets, net   47,652     42,845        
Other assets   66,561    68,502        
   $  2,450,385   $  2,410,402        
              
Liabilities and Shareholders' Equity:             
Accounts payable and accrued expenses  $  29,262   $  24,977        
Warehouse lines of credit   106,632    103,358        
Securitization trust debt   2,103,567    2,080,900        
Subordinated renewable notes   16,229    14,949        
    2,255,690    2,224,184        
              
Shareholders' equity   194,695    186,218        
   $  2,450,385   $  2,410,402        
             
             
              
             
Operating and Performance Data ($ in millions)            
             
               
    At and for the    At and for the  
    Three months ended    Nine months ended  
    September 30,    September 30,  
    2017    2016    2017    2016  
              
Contracts purchased  $  204.74   $  242.09   $  668.28   $  873.50  
Contracts securitized     230.00      325.00      670.00      1,005.00  
              
Total managed portfolio  $  2,346.00   $  2,291.86   $  2,346.00   $  2,291.86  
Average managed portfolio     2,344.96      2,281.62      2,332.33      2,198.93  
              
Allowance for finance credit losses as % of fin. receivables   4.69%   4.29%       
              
Aggregate allowance as % of fin. receivables (1)   5.59%   5.28%       
              
Delinquencies             
31+ Days   8.90%   8.98%        
Repossession Inventory   1.37%   1.48%       
Total Delinquencies and Repo. Inventory   10.27%   10.46%       
              
Annualized net charge-offs as % of average owned portfolio   7.96%    6.69%   7.83%   7.05% 
              
Recovery rates (2)   34.6%   36.1 %   35.2%   38.4% 
              
    For the   For the 
    Three months ended   Nine months ended 
    September 30,   September 30, 
    2017   2016   2017   2016 
    $(3)% (4)  $(3)% (4)  $(3)% (4)  $(3)% (4)
Interest income  $  107.01 18.3% $  105.38 18.5% $  319.07 18.2% $  303.75 18.4%
Servicing fees and other income     2.47 0.4%    3.14  0.6%    8.08 0.5%    10.35 0.6%
Interest expense     (23.32)-4.0%    (20.89)-3.7%    (68.64)-3.9%    (58.44)-3.5%
Net interest margin      86.17 14.7%    87.62 15.4%    258.52 14.8%    255.66 15.5%
Provision for credit losses     (47.34)-8.1%    (46.26)-8.1%    (143.05)-8.2%    (134.88)-8.2%
Risk adjusted margin     38.84 6.6%    41.36 7.3%    115.46 6.6%    120.78 7.3%
Core operating expenses     (30.73)-5.2%    (28.91)-5.1%    (91.61)-5.2%    (83.77)-5.1%
Pre-tax income  $  8.11 1.4% $  12.46 2.2% $  23.85 1.4% $  37.01 2.2%
              
              
              
(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.     
             
             

 


 

 

Source: Consumer Portfolio Services, Inc.

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