October 17, 2016

CPS Announces Third Quarter 2016 Earnings

  • Pretax income of $12.5 million
  • Net income of $7.3 million, or $0.26 per diluted share
  • New contract purchases of $242 million
  • Total managed portfolio increases to $2.29 billion from $2.25 billion at June 30, 2016     

LAS VEGAS, NV, Oct. 17, 2016 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the "Company") today announced earnings of $7.3 million, or $0.26 per diluted share, for its third quarter ended September 30, 2016.  This compares to net income of $8.8 million, or $0.28 per diluted share, in the third quarter of 2015.

Revenues for the third quarter of 2016 were $108.5 million, an increase of $14.5 million, or 15.5%, compared to $94.0 million for the third quarter of 2015.  Total operating expenses for the third quarter of 2016 were $96.1 million, an increase of $17.7 million, or 22.6%, compared to $78.3 million for the 2015 period.  Pretax income for the third quarter of 2016 was $12.5 million compared to pretax income of $15.6 million in the third quarter of 2015, a decrease of 20.4%.

For the nine months ended September 30, 2016 total revenues were $314.1 million compared to $268.3 million for the nine months ended September 30, 2015, an increase of approximately $45.8 million, or 17.1%.  Total expenses for the nine months ended September 30, 2016 were $277.1 million, an increase of $54.3 million, or 24.4%, compared to $222.7 million for the nine months ended September 30, 2015.  Pretax income for the nine months ended September 30, 2016 was $37.0 million, compared to $45.6 million for the nine months ended September 30, 2015.  Net income for the nine months ended September 30, 2016 was $21.8 million compared to $25.7 million for the nine months ended September 30, 2015

During the third quarter of 2016, CPS purchased $242.1 million of new contracts compared to $319.1 million during the second quarter of 2016 and $287.5 million during the third quarter of 2015.  The Company's managed receivables totaled $2.292 billion as of September 30, 2016, an increase from $2.254 billion as of June 30, 2016 and $1.941 billion as of September 30, 2015.

Annualized net charge-offs for the third quarter of 2016 were 6.69% of the average owned portfolio as compared to 6.27% for the third quarter of 2015.  Delinquencies greater than 30 days (including repossession inventory) were 10.46% of the total owned portfolio as of September 30, 2016, as compared to 8.81% as of September 30, 2015.

"Our operating results for the third quarter of 2016 were in line with our expectations," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  "Our managed portfolio continues to grow and our earnings increased sequentially for the second consecutive quarter, even with a slight decrease in originations volumes.  Our operating leverage continues to improve and our third quarter securitization priced at a lower blended coupon than the prior quarter, reversing a four-quarter trend of consecutively higher blended coupons."

Conference Call

CPS announced that it will hold a conference call on Tuesday, October 18, 2016, 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 98489886.

A replay of the conference call will be available between October 18, 2016 and October 25, 2016, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 98489886.  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  Nine months ended 
   September 30,  September 30, 
    2016    2015    2016    2015  
Revenues:             
Interest income  $105,376   $90,584   $303,748   $257,843  
Servicing fees   26    73    73     283  
Other income   3,114    3,334    10,278    10,215  
    108,516    93,991    314,099    268,341  
Expenses:             
Employee costs   16,688    15,254    47,510    42,884  
General and administrative   6,316    5,005    18,216    14,949  
Interest    20,893    14,848    58,442    41,709  
Provision for credit losses    46,262    37,411    134,881    106,533  
Other expenses   5,902    5,824    18,040    16,668  
    96,061    78,342    277,089    222,743  
Income before income taxes   12,455    15,649    37,010    45,598  
Income tax expense   5,107    6,806    15,175    19,885  
Net income  $7,348   $8,843   $21,835   $25,713  
              
Earnings per share:             
Basic  $ 0.31   $0.34   $0.89   $0.99  
Diluted  $0.26   $0.28   $0.75    $0.81  
              
              
Number of shares used in computing earnings              
per share:             
Basic   23,894    26,093    24,574    25,989  
Diluted   28,503    31,476    29,253    31,796  
              
              
Condensed Consolidated Balance Sheets      
(In thousands)      
(Unaudited)      
              
   September 30,  December 31,       
    2016    2015        
Assets:             
Cash and cash equivalents  $11,494   $19,322        
Restricted cash and equivalents    116,403    106,054         
Total cash and cash equivalents   127,897    125,376        
                    
Finance receivables   2,257,151    1,985,093        
Allowance for finance credit losses   (96,843)   (75,603)       
Finance receivables, net    2,160,308    1,909,490         
                    
Finance receivables measured at fair value   7    61        
Deferred tax assets, net   43,197    37,597        
Other assets   57,626    56,401        
   $2,389,035   $2,128,925        
              
Liabilities and Shareholders' Equity:              
Accounts payable and accrued expenses  $33,563   $29,509        
Warehouse lines of credit   81,683    194,056        
Residual interest financing   6,856    9,042        
Securitization trust debt   2,073,409    1,720,021        
Subordinated renewable notes   14,353    15,138        
    2,209,864    1,967,766        
              
Shareholders' equity   179,171    161,159        
   $2,389,035   $2,128,925        
               
              
Operating and Performance Data ($ in millions)             
              
   At and for the  At and for the 
   Three months ended  Nine months ended 
   September 30,  September 30, 
    2016    2015    2016    2015  
              
Contracts purchased  $242.09    $287.54   $873.50   $791.33  
Contracts securitized   325.00    292.77    1,005.00    778.22  
               
Total managed portfolio  $2,291.86   $1,940.55   $2,291.86   $1,940.55  
Average managed portfolio   2,281.62    1,903.23    2,198.93    1,797.23  
              
Allowance for finance credit losses as % of fin. receivables   4.29%   4.14%       
              
Aggregate allowance as % of fin. receivables (1)   5.28%   5.07%       
              
Delinquencies             
31+ Days   8.98%   7.31%        
Repossession Inventory   1.48%   1.51%       
Total Delinquencies and Repo. Inventory   10.46%   8.81%       
               
Annualized net charge-offs as % of average owned portfolio   6.69%   6.27%   7.05%   6.50% 
              
Recovery rates (2)   36.1%   40.0%   38.4%   42.7% 
              
              
   For the For the
   Three months ended Nine months ended
   September 30, September 30,
    2016   2015   2016    2015 
   $
(3) % (4) $(3) % (4) $(3) % (4) $(3) % (4)
Interest income  $105.38  18.5% $90.58  19.0% $303.75  18.4% $257.84  19.1%
Servicing fees and other income   3.14  0.6%  3.41  0.7%  10.35  0.6%  10.50  0.8%
Interest expense     (20.89) -3.7%    (14.85) -3.1%    (58.44) -3.5%    (41.71) -3.1%
Net interest margin   87.62  15.4%  79.14  16.6%  255.66  15.5%  226.63  16.8 %
Provision for credit losses     (46.26) -8.1%    (37.41) -7.9%    (134.88) -8.2%    (106.53) -7.9%
Risk adjusted margin   41.36  7.3%  41.73  8.8%  120.78  7.3%  120.10  8.9 %
Core operating expenses   (28.91) -5.1%  (26.08) -5.5%  (83.77) -5.1%  (74.50) -5.5%
Pre-tax income  $12.46  2.2% $15.65  3.3% $37.01  2.2% $45.60  3.4%
              
(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 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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