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Nicholas Financial Reports 2nd Quarter Fiscal Year 2020 Results

  • Originations year-over-year on new Contracts purchased for the three months ended September 30, 2019 increased by 12.7% compared to prior year second quarter
  • Originations year-over-year on Direct Loans for the three months ended September 30, 2019 increased by 65.5% compared to prior year second quarter
  • Gross Portfolio Yield for the three months ended September 30, 2019 decreased to 26.9% compared to 27.8% during the prior year second quarter
  • Interest and fee income on finance receivables for the three months ended September 30, 2019 decreased 19.7% due to a 17.0% decrease in average finance receivables, compared to prior year second quarter
  • Accounts 60+ days delinquent decreased to 3.2%, excluding Chapter 13 bankruptcy accounts, compared to 4.4% as of the prior year second quarter
  • Average APR on new Contracts purchased was 23.5% for the three months ended September 30, 2019 and September 30, 2018, respectively
  • Average APR on Direct Loan originations increased to 27.4% compared to 26.5% during the prior year second quarter

CLEARWATER, Fla., Nov. 08, 2019 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NICK) announced net income for the three months ended September 30, 2019 of $0.3 million compared to $0.6 million for the three months ended September 30, 2018.  Diluted net income per share was $0.03 for the three months ended September 30, 2019 as compared to $0.07 for the three months ended September 30, 2018. Revenue decreased 19.7% to $15.6 million for the three months ended September 30, 2019 as compared to $19.4 million for the three months ended September 30, 2018. The Company reported income before income taxes for the three months ended September 30, 2019 of $0.4 million compared $0.7 million for the three months ended September 30, 2018.   The Company recorded an income tax expense of approximately $0.1 million during the three months ended September 30, 2019 compared to an income tax expense of $0.1 million during the three months ended September 30, 2018. 

Net income for the six months ended September 30, 2019 of $0.9 million compared to $2.0 million for the six months ended September 30, 2018.  Diluted net income per share was $0.11 for the six months ended September 30, 2019 as compared to $0.25 for the six months ended September 30, 2018. Revenue decreased 15.6% to $32.2 million for the six months ended September 30, 2019 as compared to $38.2 million for the six months ended September 30, 2018. The Company reported income before income taxes for the six months ended September 30, 2019 of $1.2 million compared $2.7 million for the six months ended September 30, 2018.   The Company recorded an income tax expense of approximately $0.3 million during the six months ended September 30, 2019 compared to $0.7 million during the six months ended September 30, 2018. 

“Although our earnings for the 2nd Quarter of Fiscal Year 2020 were modest, we are very pleased overall with our operational successes and improvements,” said Doug Marohn, President and CEO.  “We were able to increase same store and overall loan production in both indirect contract purchases and direct loan originations with 51 branches for the three months ended for September 30, 2019 as compared to 59 branches for the three months ended September 30, 2018.  We also saw improvement in overall delinquency and in accounts 60+ days delinquent as compared to the prior year second quarter.  We did this while maintaining the integrity and discipline we desire in our new acquisition KPI’s in terms of structure (amount financed, APR, discount, term, etc.).”

Marohn continued, “We also remain focused on proliferating our direct loan product to all of the states in which we operate.  We are now operational in Florida, North Carolina, Georgia, Ohio. Tennessee and Alabama.  Indiana, Missouri, South Carolina and Kentucky are slated to go live in our 3rd Quarter.  Nicholas is also continuing to grow our branch network through expansion efforts in Columbia, South Carolina; Wichita, Kansas; and Milwaukee, Wisconsin.” 


 
Key Performance Indicators on Contracts Purchased
(Purchases in thousands)
    Number of
       Average                
Fiscal Year   Contracts   Principal Amount   Amount   Average     Average     Average
 /Quarter   Purchased   Purchased   Financed*^   APR*     Discount%*     Term*
2020   3,903   $ 39,158   $ 10,034   23.5 %   8.1 %   47
2   2,011     20,104     9,997   23.5 %   7.9 %   46
1   1,892     19,054     10,071   23.4 %   8.3 %   47
2019   7,684   $ 77,499   $ 10,086   23.5 %   8.2 %   47
4   2,151     21,233     9,871   23.5 %   8.0 %   46
3   1,625     16,476     10,139   23.5 %   8.1 %   47
2   1,761     17,845     10,133   23.5 %   8.4 %   47
1   2,147     21,945     10,221   23.7 %   8.3 %   48
2018   9,767   $ 109,575   $ 11,219   22.4 %   7.4 %   54
4   2,814     29,254     10,396   23.3 %   7.9 %   50
3   2,365     27,378     11,577   21.7 %   6.9 %   54
2   2,239     25,782     11,515   22.0 %   7.3 %   55
1   2,349     27,161     11,563   22.3 %   7.6 %   55
                                 


Key Performance Indicators on Direct Loans Originated
(Originations in thousands)
    Number of   Principal                
Fiscal Year   Loans   Amount   Average Amount   Average     Average
/Quarter   Originated   Originated   Financed*^   APR*     Term*
2020   1,285     5,044     3,904   27.8 %   25
2   739     2,988     4,043   27.4 %   25
1   546     2,056     3,765   28.2 %   24
2019   1,918   $ 7,741   $ 4,036   26.4 %   25
4   236     1,240     4,654   27.3 %   26
3   738     2,999     4,063   25.9 %   25
2   495     1,805     3,646   26.5 %   25
1   449     1,697     3,779   25.7 %   28
2018   2,036   $ 7,642   $ 3,754   25.2 %   29
4   380     1,445     3,752   25.0 %   29
3   622     2,218     3,566   25.2 %   28
2   501     1,953     3,897   25.1 %   29
1   533     2,026     3,801   25.4 %   30

*Each average included in the tables is calculated as a simple average.
^Average amount financed is calculated as a single loan amount.

Nicholas Financial, Inc. is a publicly-traded specialty consumer finance company, operating branch locations in both Southeastern and Midwestern U.S. states. The Company has approximately 7.9 million shares of voting common stock outstanding. For an index of Nicholas Financial, Inc.’s news releases or to obtain a specific release, visit our web site at www.nicholasfinancial.com.

Cautionary Note regarding Forward-Looking Statements

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties including risk relating to competition and our ability to increase and maintain yield and profitability at desirable levels, as well as risks relating to  general economic conditions, access to bank financing, our ability to expand the geographical scope of, and otherwise continue growing, our Direct Loan operations, and other risks detailed from time to time in the Company’s filings and reports with the Securities and Exchange Commission including the Company’s Annual Report on Form 10-K for the year ended March 31, 2019.  When used in this document, the words “anticipate”, “estimate”, “expect”, “will”, “may”, “plan,” “believe”, “intend” and similar expressions are intended to identify forward-looking statements.  Such statements are based on the beliefs of Company management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially from those anticipated, estimated or expect. All forward-looking statements and cautionary statements included in this document are made as of the date hereof based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement or cautionary statement.


Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)

  Three months ended   Six months ended
  September 30,   September 30,
  2019   2018   2019   2018
Revenue:                      
Interest and fee income on finance receivables $ 15,585   $ 19,404   $ 32,226   $ 38,163
Expenses:                      
Operating expenses   8,927     7,966     17,898     16,767
Provision for credit losses   4,000     8,374     8,385     13,801
Interest expense   2,298     2,386     4,786     4,926
Total expenses   15,225     18,726     31,069     35,494
Income before income taxes   360     678     1,157     2,669
Income tax expense   92     96     298     669
Net income $ 268   $ 582   $ 859   $ 2,000
Earnings per share:                      
Basic $ 0.03   $ 0.07   $ 0.11   $ 0.25
Diluted $ 0.03   $ 0.07   $ 0.11   $ 0.25
                       


Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)

  September 30,   March 31,
  2019   2019
Cash and restricted cash $ 13,928   $ 37,642
Finance receivables, net   199,452     202,042
Other assets   14,137     12,736
Intangibles   79     -
Goodwill   350     -
Total assets $ 227,946   $ 252,420
Credit facility $ 116,710   $ 142,619
Other liabilities   5,403     4,916
Total liabilities   122,113     147,535
Shareholders’ equity   105,833     104,885
Total liabilities and shareholders’ equity $ 227,946   $ 252,420
Book value per share $ 13.36   $ 13.26


           
  Three months ended     Six months ended  
  September 30,     September 30,  
  (In thousands)     (In thousands)  
Portfolio Summary 2019     2018     2019   2018  
Average finance receivables (1) $ 232,021     $ 279,680     $ 236,024     $ 287,980  
Average indebtedness (2) $ 139,929     $ 143,882     $ 144,486     $ 152,467  
Interest and fee income on finance receivables $ 15,585     $ 19,404     $ 32,226     $ 38,163  
Interest expense   2,298       2,386     $ 4,786     $ 4,926  
Net interest and fee income on finance receivables $ 13,287     $ 17,018     $ 27,440     $ 33,237  
Portfolio yield (3)   26.87 %     27.75 %     27.31 %     26.50 %
Interest expense as a percentage of average finance receivables   3.96 %     3.41 %     4.06 %     3.42 %
Provision for credit losses as a percentage of average finance receivables   6.90 %     11.98 %     7.11 %     9.58 %
Net portfolio yield (3)   16.01 %     12.36 %     16.15 %     13.50 %
Operating expenses as a percentage of average finance receivables   15.39 %     11.39 %     15.17 %     11.64 %
Pre-tax yield as a percentage of average finance receivables (4)   0.62 %     0.97 %     0.98 %     1.86 %
Net charge-off percentage (5)   11.40 %     11.85 %     10.01 %     10.37 %
Allowance percentage (6)   5.82 %     6.86 %     5.72 %     6.66 %

Note: All three-month and six-month statement of income performance indicators expressed as percentages have been annualized.               

(1) Average finance receivables represent the average of finance receivables throughout the period.
(2) Average indebtedness represents the average outstanding borrowings under the Credit Facility.
(3) Portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables. Net portfolio yield represents (a) interest and fee income on finance receivables minus (b) interest expense minus (c) the provision for credit losses, as a percentage of average finance receivables.
(4) Pre-tax yield represents net portfolio yield minus operating expenses, as a percentage of average finance receivables.
(5) Net charge-off percentage represents net charge-offs (charge-offs less recoveries) divided by average finance receivables, outstanding during the period.
(6) Allowance percentage represents the allowance for credit losses divided by average finance receivables outstanding during the period.


The following tables present certain information regarding the delinquency rates experienced by the Company with respect to automobile finance installment contracts (“Contracts”) and direct consumer loans (“Direct Loans”), excluding any Chapter 13 bankruptcy accounts:

(In thousands, except percentages)

Contracts Balance                                      
  Outstanding   30 – 59 days   60 – 89 days     90 – 119 days     120+     Total  
September 30, 2019 $ 212,396   $ 13,981   $ 4,950     $ 1,946     $ 42     $ 20,919  
          6.58 %   2.33 %     0.92 %     0.02 %     9.85 %
September 30, 2018 $ 256,095   $ 17,399   $ 7,132     $ 2,190     $ 2,043     $ 28,764  
          6.79 %   2.78 %     0.86 %     0.80 %     11.23 %
             
Direct Loans Balance                                      
  Outstanding   30 – 59 days   60 – 89 days     90 – 119 days     120+     Total  
September 30, 2019 $ 9,480   $ 219   $ 115     $ 56     -     $ 390  
          2.31 %   1.21 %     0.59 %     - %     4.11 %
September 30, 2018 $ 7,465   $ 162   $ 122     $ 27     $ 68     $ 379  
          2.17 %   1.63 %     0.36 %     0.91 %     5.08 %
                                           

The following table presents selected information on Contracts purchased and Direct Loans originated by the Company:    

           
  Contracts     Direct Loans  
  Three months ended     Three months ended  
  September 30,     September 30,  
  (Purchases in thousands)     (Originations in thousands)  
  2019     2018     2019     2018  
Purchases/Originations $ 20,104     $ 17,845     $ 2,988     $ 1,805  
Average APR   23.5 %     23.5 %   27.4 %   26.5 %
Average discount   7.9 %     8.4 %   N/A     N/A  
Average term (months)   46       47       25       25  
Average amount financed $ 9,997     $ 10,133     $ 4,043     $ 3,646  
Number of contracts   2,011       1,761       739       495  
                               
  Contracts     Direct Loans  
  Six months ended     Six months ended  
  September 30,     September 30,  
  (Purchases in thousands)     (Originations in thousands)  
  2019     2018     2019     2018  
Purchases/Originations $ 39,158     $ 39,790     $ 5,044     $ 3,502  
Average APR   23.5 %     23.6 %   27.8 %   26.1 %
Average discount   8.1 %     8.4 %   N/A     N/A  
Average term (months)   47       48       25       27  
Average amount financed $ 10,034     $ 10,177     $ 3,904     $ 3,713  
Number of contracts   3,903       3,908       1,285       944  
                               

The following table presents selected information on the entire Contract and Direct Loan portfolios of the Company:

           
  Contracts     Direct Loans  
  As of     As of  
  September 30,     September 30,  
Portfolio 2019     2018     2019     2018  
Average APR 22.7 %   22.4 %   26.5 %   25.1 %
Average discount 7.7 %   7.2 %   N/A     N/A  
Average term (months) 52     54     27     32  
Number of active contracts 27,294     30,548     2,921     2,458  
                       


       
Nicholas    Contact:  NASDAQ: NICK
Nicholas Financial, Inc.
Corporate Headquarters
2454 McMullen-Booth Rd.
Building C, Suite 501
Clearwater, FL 33759
  Kelly Malson
CFO
Ph #  (727)-726-0763
Web site: www.nicholasfinancial.com