U.S. Markets closed

CPS Announces Fourth Quarter and Full Year 2018 Earnings

  • Pretax income of $4.8 million
  • Net income of $5.4 million, or $0.22 per diluted share, includes a $2.1 million income tax benefit
  • New contract purchases of $252 million, the largest quarterly volume since the second quarter of 2016

LAS VEGAS, NV, Feb. 12, 2019 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (CPSS) (“CPS” or the “Company”) today announced earnings of $5.4 million, or $0.22 per diluted share, for its fourth quarter ended December 31, 2018. This compares to a net loss of $10.0 million, or $0.46 per diluted share, in the fourth quarter of 2017.  The results for the fourth quarter of 2018 include a $2.1 million net tax benefit related to certain tax planning strategies and other adjustments. Without the benefit, net income would have been $3.3 million, or $0.13 per diluted share. For the fourth quarter of 2017, the loss includes a non-cash income tax charge of $15.1 million representing the write down of the Company’s deferred tax asset to reflect the lowered tax rates enacted by the December 2017 tax act. Without the charge, net income would have been $5.1 million or $0.20 per diluted share.

Revenues for the fourth quarter of 2018 were $91.2 million, a decrease of $16.0 million, or 14.9%, compared to $107.2 million for the fourth quarter of 2017.  Total operating expenses for the fourth quarter of 2018 were $86.4 million compared to $99.0 million for the 2017 period.  Pretax income for the fourth quarter of 2018 was $4.8 million compared to pretax income of $8.2 million in the fourth quarter of 2017, a decrease of 41.8%.

For the twelve months ended December 31, 2018 total revenues were $389.8 million compared to $434.4 million for the twelve months ended December 31, 2017, a decrease of approximately $44.6 million, or 10.3%.  Total expenses for the twelve months ended December 31, 2018 were $371.1 million, a decrease of $31.2 million, or 7.8%, compared to $402.3 million for the twelve months ended December 31, 2017.  Pretax income for the twelve months ended December 31, 2018 was $18.7 million, compared to $32.1 million for the twelve months ended December 31, 2017.  Net income for the twelve months ended December 31, 2018 was $14.9 million compared to $3.8 million for the twelve months ended December 31, 2017.  The full-year 2018 results include a $2.1 million net tax benefit related to certain tax planning strategies and other adjustments. Without the benefit, net income for 2018 would have been $12.8, or $0.51 per diluted share. The full-year 2017 results include a non-cash income tax charge of $15.1 million representing the write down of the Company’s deferred tax asset to reflect the lowered tax rates enacted by the December 2017 tax act. Without the charge, net income would have been $18.9 million, or $0.69 per diluted share.

During the fourth quarter of 2018, CPS purchased $251.8 million of new contracts compared to $225.2 million during the third quarter of 2018 and $190.8 million during the fourth quarter of 2017.  The Company's receivables totaled $2.381 billion as of December 31, 2018, an increase from $2.343 billion as of September 30, 2018 and an increase from $2.334 billion as of December 31, 2017.

Annualized net charge-offs for the fourth quarter of 2018 were 7.19% of the average portfolio as compared to 7.24% for the fourth quarter of 2017.  Delinquencies greater than 30 days (including repossession inventory) were 13.88% of the total portfolio as of December 31, 2018, as compared to 11.25% as of December 31, 2017.

“We are pleased to record our 29th consecutive quarter of pre-tax earnings,” said Charles E. Bradley, Jr. “In addition, our fourth quarter originations volume of $252 million represented the highest quarterly levels since the second quarter of 2016 and our October 2018-D securitization priced at the tightest weighted average spreads since 2011.”

Conference Call

CPS announced that it will hold a conference call on Wednesday, February 13, 2019, 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 2286988.

A replay of the conference call will be available between February 13, 2019 and February 20, 2019, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 2286988.  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, provision for credit losses and fair value of receivables, because these items are dependent on the Company’s estimates of losses to be incurred. 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     Twelve months ended    
      December 31,     December 31,    
        2018         2017         2018         2017      
Revenues:                            
Interest income     $ 88,761       $ 105,100       $ 380,297       $ 424,174      
Other income       2,457         2,125         9,478         10,209      
        91,218         107,225         389,775         434,383      
Expenses:                            
Employee costs       20,030         19,160         79,318         72,967      
General and administrative       8,307         6,482         31,037         26,578      
Interest       26,409         23,704         101,466         92,345      
Provision for credit losses       25,083         43,660         133,080         186,713      
Other expenses       6,605         6,002         26,171         23,709      
        86,434         99,008         371,072         402,312      
Income before income taxes       4,784         8,217         18,703         32,071      
Income tax expense       (568 )       18,168         3,841         28,306      
Net income     $ 5,352       $ (9,951 )     $ 14,862       $ 3,765      
                             
Earnings per share:                            
Basic     $ 0.24       $ (0.46 )     $ 0.68       $ 0.17      
Diluted     $ 0.22       $ (0.46 )     $ 0.59       $ 0.14      
                             
                             
Number of shares used in computing earnings                            
per share:                            
Basic       22,549         21,702         21,989         22,687      
Diluted       24,411         21,702         24,988         27,214      
                             
                             
Condensed Consolidated Balance Sheets              
(In thousands)              
(Unaudited)              
                             
                             
      December 31,     December 31,                
        2018         2017                  
Assets:                            
Cash and cash equivalents     $ 12,787       $ 12,731                  
Restricted cash and equivalents       117,323         111,965                  
Total cash and cash equivalents       130,110         124,696                  
                             
Finance receivables       1,522,085         2,304,984                  
Allowance for finance credit losses       (67,376 )       (109,187 )                
Finance receivables, net       1,454,709         2,195,797                  
                             
Finance receivables measured at fair value       821,066         -                  
Deferred tax assets, net       19,188         32,446                  
Other assets       60,607         71,902                  
      $ 2,485,680       $ 2,424,841                  
                             
Liabilities and Shareholders' Equity:                            
Accounts payable and accrued expenses     $ 31,692       $ 28,715                  
Warehouse lines of credit       136,847         112,408                  
Residual interest financing       39,106         -                  
Securitization trust debt       2,063,627         2,083,215                  
Subordinated renewable notes       17,290         16,566                  
        2,288,562         2,240,904                  
                             
Shareholders' equity       197,118         183,937                  
      $ 2,485,680       $ 2,424,841                  
                             
                             
                             
                             
                             
                             
                             
                             
                             
Operating and Performance Data ($ in millions)                            
                             
                       
                       
      At and for the     At and for the    
      Three months ended     Twelve months ended    
      December 31,     December 31,    
        2018         2017         2018         2017      
                             
Contracts purchased     $ 251.81       $ 190.78       $ 902.40       $ 859.07      
Contracts securitized       245.00         200.00         883.45         870.00      
                             
Total portfolio balance     $ 2,380.85       $ 2,333.53       $ 2,380.85       $ 2,333.53      
Average portfolio balance       2,371.05         2,339.06         2,341.96         2,334.01      
                             
Allowance for finance credit losses as % of fin. receivables       4.43 %       4.74 %                
                             
Aggregate allowance as % of fin. receivables (1)       5.91 %       5.70 %                
                             
Delinquencies                            
31+ Days       12.35 %       9.81 %                
Repossession Inventory       1.53 %       1.44 %                
Total Delinquencies and Repo. Inventory       13.88 %       11.25 %                
                             
Annualized net charge-offs as % of average portfolio       7.19 %       7.24 %       7.74 %       7.68 %    
                             
Recovery rates (2)       33.0 %       34.7 %       34.1 %       35.1 %    
                             
      For the   For the  
      Three months ended   Twelve months ended  
      December 31,   December 31,  
        2018       2017       2018       2017    
      $ (3) % (4)   $ (3) % (4)   $ (3) % (4)   $ (3) % (4)  
Interest income     $ 88.76   15.0 %   $ 105.10   18.0 %   $ 380.30   16.2 %   $ 424.17   18.2 %  
Servicing fees and other income       2.46   0.4 %     2.13   0.4 %     9.48   0.4 %     10.21   0.4 %  
Interest expense       (26.41 ) -4.5 %     (23.70 ) -4.1 %     (101.47 ) -4.3 %     (92.35 ) -4.0 %  
Net interest margin       64.81   10.9 %     83.52   14.3 %     288.31   12.3 %     342.04   14.7 %  
Provision for credit losses       (25.08 ) -4.2 %     (43.66 ) -7.5 %     (133.08 ) -5.7 %     (186.71 ) -8.0 %  
Risk adjusted margin       39.73   6.7 %     39.86   6.8 %     155.23   6.6 %     155.33   6.7 %  
Core operating expenses       (34.94 ) -5.9 %     (31.64 ) -5.4 %     (136.53 ) -5.8 %     (123.25 ) -5.3 %  
Pre-tax income     $ 4.78   0.8 %   $ 8.22   1.4 %   $ 18.70   0.8 %   $ 32.07   1.4 %  
                             
                             
                             
(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 portfolio balance. Percentages may not add due to rounding.