Press Release Details
IRVINE, CA, Oct 28, 2008 (MARKET WIRE via COMTEX News Network) -- Consumer Portfolio Services, Inc. (NASDAQ: CPSS) ("CPS" or the "Company") today announced results for its third quarter ended September 30, 2008.
Total revenues for the third quarter of 2008 decreased approximately $11.1 million, or 10.8%, to $91.7 million, compared to $102.8 million for the third quarter of 2007. Total operating expenses for the third quarter of 2008 were $104.4 million, an increase of $7.9 million, or 8.2%, as compared to $96.4 million for the 2007 period.
Net loss for the third quarter of 2008 was $(6.3) million, or $(0.32) per diluted share, compared to net income of $3.7 million, or $0.16 per diluted share, for the year-ago quarter. The financial results for the third quarter of 2008 were negatively impacted by the completion of the previously announced structured whole loan sale in September 2008. The Company incurred a loss on the transaction as the effective purchase price of the sold receivables was less than the carrying value on the Company's balance sheet.
For the nine months ended September 30, 2008, total revenues increased approximately $8.8 million, or 3.1%, to $293.8 million, compared to $285.0 million for the nine months ended September 30, 2007. Total expenses for the nine months ended September 30, 2008 were $300.0 million, an increase of $32.9 million, or 12.3%, as compared to $267.1 million for the nine months ended September 30, 2007.
Net loss for the nine months ended September 30, 2008 was $(2.7) million, or $(0.14) per diluted share, compared to net income of $10.4 million, or $0.45 per diluted share, for the nine months ended September 30, 2007. As discussed above, the financial results for the third quarter of 2008 were negatively impacted by the completion of the previously announced structured whole loan sale in September 2008.
During the third quarter of 2008, CPS purchased $33.6 million of contracts from dealers as compared to $79.8 million during the second quarter of 2008 and $340.2 million during the third quarter of 2007. During the first nine months of 2008, CPS purchased $289.6 million of contracts from dealers as compared to $1,016.5 million during the first nine months of 2007. The Company's managed receivables totaled $1,829.5 million as of September 30, 2008, as compared to $2,053.1 million as of September 30, 2007, as follows ($ in millions):
September 30, September 30,
Originating Entity 2008 2007
------------- -------------
CPS $ 1,606.6 $ 1,987.7
TFC 27.0 63.1
MFN 0.0 0.2
SeaWest 0.2 1.4
As Third Party Servicer 195.7 0.7
------------- -------------
Total $ 1,829.5 $ 2,053.1
As previously reported, in September 2008 the Company completed a structured whole loan sale with the sale of $199 million of automobile purchase receivables. In addition, the Company extended the maturity of one of its warehouse credit facilities from September 30, 2008 to November 28, 2008.
Annualized net charge-offs during the first nine months of 2008 were 7.2% of the average owned portfolio as compared to 5.0% during the same period in 2007. Delinquencies greater than 30 days (including repossession inventory) were 7.7% of the total owned portfolio as of September 30, 2008, as compared to 6.1% as of September 30, 2007. The increase in net charge-off and delinquency percentages can be partly attributed to the aging of the portfolio and the decrease in the size of the managed portfolio as new contract purchases have not replaced portfolio run-off.
"While the completion of the whole loan sale negatively impacted our earnings, the quality of our franchise allowed us to access liquidity during this very difficult capital markets environment," said Charles E. Bradley, Jr., Chief Executive Officer. "We expect the operating landscape to be challenging in the near term and have made adjustments to our business accordingly. We have scaled back our operating infrastructure to focus on servicing our portfolio and maximizing collections while maintaining our best dealer relationships. With these moves, we feel confident in our ability to weather the current economic turbulence and should be well positioned to exploit a tremendous industry opportunity once the capital markets stabilize."
Conference Call
CPS announced that it will hold a conference call tomorrow, October 29, 2008, at 1:30 p.m. EDT to discuss its quarterly earnings. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time.
A replay will be available between October 29, 2008 and November 5, 2008, beginning one hour after conclusion of the call, by dialing 800-642-1687 or 706-645-9291 for international participants, with pin number 68472980. A broadcast of the conference call will also be available live and for 30 days after the call via the Company's web site at www.consumerportfolio.com and at www.streetevents.com.
About Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. is a specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able to obtain financing from traditional sources.
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 future 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 or the effects of changes in bankruptcy law, 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 earnings, 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 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 Nine months ended
September 30, September 30,
------------------- -------------------
2008 2007 2008 2007
-------- --------- -------- ---------
Revenues:
Interest income 87,706 $ 97,423 281,924 $ 267,361
Servicing fees 235 274 944 668
Other income 3,775 5,058 10,930 17,020
-------- --------- -------- ---------
91,716 102,755 293,798 285,049
-------- --------- -------- ---------
Expenses:
Employee costs 12,455 11,566 38,824 33,704
General and administrative 21,460 6,335 36,380 18,386
Interest 40,963 36,382 120,952 99,600
Provision for credit losses 25,961 36,300 91,764 98,458
Other expenses 3,515 5,832 12,033 16,914
-------- --------- -------- ---------
104,354 96,415 299,953 267,062
-------- --------- -------- ---------
Income (loss) before income taxes (12,638) 6,340 (6,155) 17,987
Income tax expense (benefit) (6,312) 2,663 (3,432) 7,591
-------- --------- -------- ---------
Net income (loss) $ (6,326) $ 3,677 $ (2,723) $ 10,396
======== ========= ======== =========
Earnings (loss) per share:
Basic $ (0.32) $ 0.18 $ (0.14) $ 0.49
Diluted (0.32) 0.16 (0.14) 0.45
Number of shares used in computing
earnings (loss) per share:
Basic 19,693 20,779 19,275 21,279
Diluted 19,693 22,438 19,275 23,184
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
2008 2007
------------ ------------
Cash $ 23,230 $ 20,880
Restricted cash 167,774 170,341
------------ ------------
Total Cash 191,004 191,221
Finance receivables 1,573,219 2,068,004
Allowance for finance credit losses (66,919) (100,138)
------------ ------------
Finance receivables, net 1,506,300 1,967,866
Residual interest in securitizations 1,200 2,274
Deferred tax assets, net 53,867 58,835
Other assets 65,887 62,617
------------ ------------
$ 1,818,258 $ 2,282,813
============ ============
Accounts payable and other liabilities $ 24,768 $ 36,097
Warehouse lines of credit 8,692 235,925
Residual interest financing 68,250 70,000
Securitization trust debt 1,550,717 1,798,302
Senior secured debt, related party 19,813 ---
Subordinated debt 28,182 28,134
------------ ------------
1,700,422 2,168,458
------------ ------------
Shareholders' equity 117,836 114,355
------------ ------------
$ 1,818,258 $ 2,282,813
============ ============
Operating and Performance Data At and for the At and for the
($ in thousands) Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Contract purchases 33,636 340,244 289,560 1,016,547
Total managed portfolio 1,829,468 2,053,135 1,829,468 2,053,135
Average managed portfolio 1,880,787 2,008,911 2,005,682 1,839,382
Net interest margin (1) 46,743 61,041 160,972 167,761
Risk adjusted margin (2) 20,782 24,741 69,208 69,303
Core operating expenses (3) 37,430 23,733 87,237 69,004
Annualized % of average
managed portfolio (4) 7.96% 4.73% 5.80% 5.00%
Allowance for finance credit
losses as % of fin.
receivables 4.25% 4.84%
Aggregate allowance as % of
fin. receivables (5) 6.03% 5.82%
Delinquencies
31+ Days 5.20% 4.61%
Repossession Inventory 2.48% 1.45%
Total Delinquencies and
Repossession Inventory 7.68% 6.06%
Annualized net charge-offs as %
of average owned portfolio 7.89% 5.58% 7.20% 4.95%
(1) Interest income less interest expense.
(2) Net interest margin less provision for credit losses.
(3) Total expenses less interest and provision for credit losses.
(4) 2008 results include a loss on the $199 million structured whole loan
sale completed in September 2008.
(5) Includes allowance for finance credit losses and allowance for
repossession inventory.
Investor Relations Contacts
Consumer Portfolio Services, Inc.
Robert E. Riedl
949-753-6800
Erica Waldow
888-505-9200
SOURCE: Consumer Portfolio Services, Inc.