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CPS Announces Third Quarter 2019 Earnings

  • Pretax income of $2.8 million
  • Net income of $1.8 million, or $0.08 per diluted share
  • New contract purchases of $262 million

LAS VEGAS, NV, Oct. 29, 2019 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (CPSS) (“CPS” or the “Company”) today announced earnings of $1.8 million, or $0.08 per diluted share, for its third quarter ended September 30, 2019. This compares to net income of $3.2 million, or $0.13 per diluted share, in the third quarter of 2018. 

Revenues for the third quarter of 2019 were $85.5 million, a decrease of $10.1 million, or 10.6%, compared to $95.6 million for the third quarter of 2018.  Total operating expenses for the third quarter of 2019 were $82.7 million compared to $90.9 million for the 2018 period.  Pretax income for the third quarter of 2019 was $2.8 million compared to pretax income of $4.7 million in the third quarter of 2018, a decrease of 39.9%.

For the nine months ended September 30, 2019 total revenues were $260.1 million compared to $298.6 million for the nine months ended September 30, 2018, a decrease of approximately $38.5 million, or 12.9%.  Total expenses for the nine months ended September 30, 2019 were $251.8 million, a decrease of $32.8 million, or 11.5%, compared to $284.6 million for the nine months ended September 30, 2018.  Pretax income for the nine months ended September 30, 2019 was $8.3 million, compared to $13.9 million for the nine months ended September 30, 2018.  Net income for the nine months ended September 30, 2019 was $5.4 million compared to $9.5 million for the nine months ended September 30, 2018.

During the third quarter of 2019, CPS purchased $262.1 million of new contracts compared to $250.1 million during the second quarter of 2019 and $225.2 million during the third quarter of 2018.  The Company's receivables totaled $2.413 billion as of September 30, 2019, an increase from $2.399 billion as of June 30, 2019 and $2.343 billion as of September 30, 2018.

Annualized net charge-offs for the third quarter of 2019 were 8.07% of the average portfolio as compared to 8.03% for the third quarter of 2018.  Delinquencies greater than 30 days (including repossession inventory) were 15.74% of the total portfolio as of September 30, 2019, as compared to 11.58% as of September 30, 2018.

“In our third quarter just ended, we marked our fifth consecutive quarter of year over year increases in originations volume and the fifth consecutive quarter of growth in our managed portfolio,” reported Charles E. Bradley, Jr., Chairman and Chief Executive Officer.  “In addition, we notched our fourth consecutive quarter of year over year improvement in loan coupons and fees paid to dealers on new loans.”

Conference Call

CPS announced that it will hold a conference call on Wednesday, October 30, 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 7170238.

A replay of the conference call will be available between October 30, 2019 and November 6, 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 7170238.  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,  
      2019     2018     2019     2018  
Revenues:                          
Interest income     $ 83,528       $ 93,617       $ 253,822       $ 291,535    
Other income       1,994         2,014         6,255         7,022    
        85,522         95,631         260,077         298,557    
Expenses:                          
Employee costs       20,251         18,806         59,030         59,288    
General and administrative       8,185         7,784         25,109         22,730    
Interest       27,940         25,808         82,933         75,057    
Provision for credit losses       19,874         31,959         64,319         107,997    
Other expenses       6,443         6,568         20,411         19,566    
        82,693         90,925         251,802         284,638    
Income before income taxes       2,829         4,706         8,275         13,919    
Income tax expense       991         1,508         2,898         4,409    
Net income     $ 1,838       $ 3,198       $ 5,377       $ 9,510    
                           
Earnings per share:                          
Basic     $ 0.08       $ 0.14       $ 0.24       $ 0.44    
Diluted     $ 0.08       $ 0.13       $ 0.22       $ 0.38    
                           
                           
Number of shares used in computing earnings                          
per share:                          
Basic       22,526         22,636         22,378         21,800    
Diluted       24,066         24,735         24,102         25,178    
                           
                           
Condensed Consolidated Balance Sheets            
(In thousands)            
(Unaudited)            
                           
                           
      September 30,       December 31,                
      2019
    2018
             
Assets:                          
Cash and cash equivalents     $ 8,799       $ 12,787                
Restricted cash and equivalents       128,556         117,323                
Total cash and cash equivalents       137,355         130,110                
                           
Finance receivables       1,022,391         1,522,085                
Allowance for finance credit losses       (12,740 )       (67,376 )              
Finance receivables, net       1,009,651         1,454,709                
                           
Finance receivables measured at fair value       1,313,205         821,066                
Deferred tax assets, net       16,125         19,188                
Other assets       61,126         60,607                
      $ 2,537,462       $ 2,485,680                
                           
Liabilities and Shareholders' Equity:                          
Accounts payable and accrued expenses     $ 55,431       $ 31,692                
Warehouse lines of credit       157,761         136,847                
Residual interest financing       39,385         39,106                
Securitization trust debt       2,066,458         2,063,627                
Subordinated renewable notes       15,529         17,290                
        2,334,564         2,288,562                
                           
Shareholders' equity       202,898         197,118                
      $ 2,537,462       $ 2,485,680                
                           
                           
                           
Operating and Performance Data ($ in millions)                          
                           
                     
      At and for the     At and for the  
      Three months ended     Nine months ended  
      September 30,     September 30,  
      2019
    2018
    2019
    2018
 
                           
Contracts purchased     $ 262.11       $ 225.24       $ 755.29       $ 650.58    
Contracts securitized       244.12         239.87         739.12         638.45    
                           
Total portfolio balance     $ 2,412.64       $ 2,342.89       $ 2,412.64       $ 2,342.89    
Average portfolio balance       2,409.10         2,334.90         2,400.08         2,332.26    
                           
Allowance for finance credit losses as % of fin. receivables       1.25 %       4.86 %              
                           
Aggregate allowance as % of fin. receivables (1)       3.83 %       6.11 %              
                           
Delinquencies                          
31+ Days       13.64 %       10.13 %              
Repossession Inventory       2.10 %       1.45 %              
Total Delinquencies and Repo. Inventory       15.74 %       11.58 %              
                           
Annualized net charge-offs as % of average portfolio       8.07 %       8.03 %       7.96 %       7.92 %  
                           
Recovery rates (2)       34.4 %       34.8 %       34.0 %       34.5 %  
                           
      For the   For the
      Three months ended   Nine months ended
      September 30,   September 30,
        2019       2018       2019       2018  
        $ (3)   % (4)     $ (3)   % (4)     $ (3)   % (4)     $ (3)   % (4)
Interest income     $ 83.53   13.9 %   $ 93.62   16.0 %   $ 253.82   14.1 %   $ 291.54   16.7 %
Other income       1.99   0.3 %     2.01   0.3 %     6.26   0.3 %     7.02   0.4 %
Interest expense       (27.94 ) -4.6 %     (25.81 ) -4.4 %     (82.93 ) -4.6 %     (75.06 ) -4.3 %
Net interest margin       57.58   9.6 %     69.82   12.0 %     177.14   9.8 %     223.50   12.8 %
Provision for credit losses       (19.87 ) -3.3 %     (31.96 ) -5.5 %     (64.32 ) -3.6 %     (108.00 ) -6.2 %
Risk adjusted margin       37.71   6.3 %     37.86   6.5 %     112.83   6.3 %     115.50   6.6 %
Core operating expenses       (34.88 ) -5.8 %     (33.16 ) -5.7 %     (104.55 ) -5.8 %     (101.58 ) -5.8 %
Pre-tax income     $ 2.83   0.5 %   $ 4.71   0.8 %   $ 8.28   0.5 %   $ 13.92   0.8 %
                           
                           
                           
(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.