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CPS Announces Second Quarter 2023 Earnings

Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc.
  • Revenues of $84.9 million compared to $82.0 million in the prior year period

  • Pretax income of $18.6 million

  • Net income of $14.0 million, or $0.55 per diluted share

  • New contract purchases of $318.4 million

LAS VEGAS, Aug. 02, 2023 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $14.0 million, or $0.55 per diluted share, for its second quarter ended June 30, 2023. This compares to a net income of $25.3 million, or $0.91 per diluted share, in the second quarter of 2022.

Revenues for the second quarter of 2023 were $84.9 million, an increase of $2.9 million, or 3.5%, compared to $82.0 million for the second quarter of 2022. Total operating expenses for the second quarter of 2023 were $66.3 million compared to $47.8 million for the 2022 period.   Pretax income for the second quarter of 2023 was $18.6 million compared to pretax income of $34.2 million in the second quarter of 2022.

For the six months ended June 30, 2023 total revenues were $168.0 million compared to $156.4 million for the six months ended June 30, 2023, an increase of approximately $11.6 million, or 7.4%. Total expenses for the six months ended June 30, 2023 were $130.9 million, an increase of $38.1 million, or 41.0%, compared to $92.8 million for the six months ended June 30, 2022. Pretax income for the six months ended June 30, 2023 was $37.0 million, compared to $63.5 million for the six months ended June 30, 2022, a decrease of $26.5 million. Net income for the six months ended June 30, 2023 was $27.8 million compared to $46.4 million for the six months ended June 30, 2022.

During the second quarter of 2023, CPS purchased $318.4 million of new contracts compared to $415.2 million during the first quarter of 2023 and $548.1 million during the second quarter of 2022. The Company's receivables totaled $2.910 billion as of June 30, 2023, an increase from $2.882 billion as of March 31, 2023 and an increase from $2.555 billion as of June 30, 2022.

Annualized net charge-offs for the second quarter of 2023 were 6.29% of the average portfolio as compared to 3.51% for the second quarter of 2022. Delinquencies greater than 30 days (including repossession inventory) were 11.72% of the total portfolio as of June 30, 2023, as compared to 9.71% as of June 30, 2022.

We reported strong results for the second quarter,” said Charles E. Bradley, Chief Executive Officer. “We are seeing continued growth in our loan portfolio and interest income while achieving operating leverage improvement. In addition, our most recent securitization was very well received in the capital markets.”

Conference Call

CPS announced that it will hold a conference call on Thursday, August 3, 2023, at 3:00 p.m. ET to discuss its second quarter 2023 operating results.

Those wishing to participate can pre-register for the conference call at the following link https://register.vevent.com/register/BI282f193943fc4b5fb5e1a6e02aea184c. Registered participants will receive an email containing conference call details for dial-in options. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay will be available beginning two hours after conclusion of the call for 12 months via the Company’s website at https://ir.consumerportfolio.com/investor-relations.

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 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 figures representing allowances for remaining expected lifetime credit losses, its estimates of fair value (most significantly for its receivables accounted for at fair value), its provision for credit losses, its entries offsetting the preceding, and figures derived from any of the preceding. In each case, such figures are forward-looking statements because they are dependent on the Company’s estimates of losses to be incurred in the future. The accuracy of such estimates may be adversely affected by various factors, which include 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. Any or 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 losses to be incurred in the future may affect future performance.

Investor Relations Contact

Danny Bharwani, Chief Financial Officer

949-753-6811

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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

82,637

 

 

 

$

75,670

 

 

 

$

162,699

 

 

 

$

145,730

 

 

Mark to finance receivables measured at fair value

 

-

 

 

 

 

4,700

 

 

 

 

-

 

 

 

 

7,100

 

 

Other income

 

 

2,221

 

 

 

 

1,648

 

 

 

 

5,259

 

 

 

 

3,554

 

 

 

 

 

84,858

 

 

 

 

82,018

 

 

 

 

167,958

 

 

 

 

156,384

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Employee costs

 

 

21,147

 

 

 

 

20,591

 

 

 

 

43,180

 

 

 

 

42,743

 

 

General and administrative

 

 

11,783

 

 

 

 

8,280

 

 

 

 

23,180

 

 

 

 

16,511

 

 

Interest

 

 

35,706

 

 

 

 

18,771

 

 

 

 

68,465

 

 

 

 

35,171

 

 

Provision for credit losses

 

 

(9,700

)

 

 

 

(8,000

)

 

 

 

(18,700

)

 

 

 

(17,400

)

 

Other expenses

 

 

7,318

 

 

 

 

8,160

 

 

 

 

14,798

 

 

 

 

15,815

 

 

 

 

 

66,254

 

 

 

 

47,802

 

 

 

 

130,923

 

 

 

 

92,840

 

 

Income before income taxes

 

 

18,604

 

 

 

 

34,216

 

 

 

 

37,035

 

 

 

 

63,544

 

 

Income tax expense

 

 

4,650

 

 

 

 

8,896

 

 

 

 

9,258

 

 

 

 

17,109

 

 

Net income

 

$

13,954

 

 

 

$

25,320

 

 

 

$

27,777

 

 

 

$

46,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.67

 

 

 

$

1.18

 

 

 

$

1.35

 

 

 

$

2.18

 

 

Diluted

 

$

0.55

 

 

 

$

0.91

 

 

 

$

1.09

 

 

 

$

1.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in computing earnings

 

 

 

 

 

 

 

 

 

 

 

 

per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,866

 

 

 

 

21,370

 

 

 

 

20,643

 

 

 

 

21,296

 

 

Diluted

 

 

25,373

 

 

 

 

27,687

 

 

 

 

25,384

 

 

 

 

27,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,081

 

 

 

$

13,490

 

 

 

 

 

 

 

 

Restricted cash and equivalents

 

 

148,063

 

 

 

 

149,299

 

 

 

 

 

 

 

 

Finance receivables measured at fair value

 

 

2,618,420

 

 

 

 

2,476,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance receivables

 

 

52,080

 

 

 

 

92,304

 

 

 

 

 

 

 

 

Allowance for finance credit losses

 

 

(5,721

)

 

 

 

(21,753

)

 

 

 

 

 

 

 

Finance receivables, net

 

 

46,359

 

 

 

 

70,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax assets, net

 

 

7,367

 

 

 

 

10,177

 

 

 

 

 

 

 

 

Other assets

 

 

26,588

 

 

 

 

32,634

 

 

 

 

 

 

 

 

 

 

$

2,853,878

 

 

 

$

2,752,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

57,384

 

 

 

$

55,421

 

 

 

 

 

 

 

 

Warehouse lines of credit

 

 

245,272

 

 

 

 

285,328

 

 

 

 

 

 

 

 

Residual interest financing

 

 

49,749

 

 

 

 

49,623

 

 

 

 

 

 

 

 

Securitization trust debt

 

 

2,225,072

 

 

 

 

2,108,744

 

 

 

 

 

 

 

 

Subordinated renewable notes

 

 

21,204

 

 

 

 

25,263

 

 

 

 

 

 

 

 

 

 

 

2,598,681

 

 

 

 

2,524,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

255,197

 

 

 

 

228,389

 

 

 

 

 

 

 

 

 

 

$

2,853,878

 

 

 

$

2,752,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating and Performance Data ($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At and for the

 

 

At and for the

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts purchased

 

$

318.39

 

 

 

$

548.13

 

 

 

$

733.54

 

 

 

$

958.09

 

 

Contracts securitized

 

 

362.87

 

 

 

 

430.00

 

 

 

 

732.73

 

 

 

 

760.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total portfolio balance (5)

 

$

2,910.29

 

 

 

$

2,554.85

 

 

 

$

2,910.29

 

 

 

$

2,554.85

 

 

Average portfolio balance (5)

 

 

2,903.99

 

 

 

 

2,469.95

 

 

 

 

2,880.29

 

 

 

 

2,371.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquencies (5)

 

 

 

 

 

 

 

 

 

 

 

 

31+ Days

 

 

10.25

%

 

 

 

8.65

%

 

 

 

 

 

 

 

Repossession Inventory

 

 

1.47

%

 

 

 

1.06

%

 

 

 

 

 

 

 

Total Delinquencies and Repo. Inventory

 

 

11.72

%

 

 

 

9.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized Net Charge-offs as % of Average Portfolio (5)

 

 

6.29

%

 

 

 

3.51

%

 

 

 

5.75

%

 

 

 

3.54

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recovery rates (2)

 

 

43.7

%

 

 

 

56.7

%

 

 

 

42.8

%

 

 

 

58.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

 

For the

 

 

Three months ended

 

Six months ended

 

 

June 30,

 

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

$ (3)

% (4)

 

$ (3)

% (4)

 

$ (3)

% (4)

 

$ (3)

% (4)

Interest income

 

$

82.64

 

11.4

%

 

$

75.67

 

12.3

%

 

$

162.70

 

11.3

%

 

$

145.73

 

12.3

%

Mark to finance receivables measured at fair value

 

-

 

-

 

 

 

4.70

 

0.8

%

 

 

-

 

0.0

%

 

 

7.10

 

0.6

%

Other income

 

 

2.22

 

0.3

%

 

 

1.65

 

0.3

%

 

 

5.26

 

0.4

%

 

 

3.55

 

0.3

%

Interest expense

 

 

(35.71

)

-4.9

%

 

 

(18.77

)

-3.0

%

 

 

(68.47

)

-4.8

%

 

 

(35.17

)

-3.0

%

Net interest margin

 

 

49.15

 

6.8

%

 

 

63.25

 

10.2

%

 

 

99.49

 

6.9

%

 

 

121.21

 

10.2

%

Provision for credit losses

 

 

9.70

 

1.3

%

 

 

8.00

 

1.3

%

 

 

18.70

 

1.3

%

 

 

17.40

 

1.5

%

Risk adjusted margin

 

 

58.85

 

8.1

%

 

 

71.25

 

11.5

%

 

 

118.19

 

8.2

%

 

 

138.61

 

11.7

%

Core operating expenses

 

 

(40.25

)

-5.5

%

 

 

(37.03

)

-6.0

%

 

 

(81.16

)

-5.6

%

 

 

(75.07

)

-6.3

%

Pre-tax income

 

$

18.60

 

2.6

%

 

$

34.22

 

5.5

%

 

$

37.04

 

2.6

%

 

$

63.54

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.

 

 

 

 

(5) Excludes third party portfolios.

 

 

 

 

 

 

 

 

 

 

 

 




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