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Nicholas Financial Reports 4th Quarter and Fiscal Year 2021 Results

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·11 min read
In this article:
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  • Income year-over-year before income taxes for the three months ended March 31, 2021 increased by 399.6% compared to prior year fourth quarter

  • Pre-tax yield as a percentage of average finance receivables for the three months ended March 31, 2021 increased to 4.92% compared to 1.03% during the prior year fourth quarter

  • Net Portfolio Yield for the three months ended March 31, 2021 increased to 24.22% compared to 17.10% during the prior year fourth quarter

  • Contracts purchased year-over-year for the three months ended March 31, 2021 increased by 25.3% compared to prior year fourth quarter

  • Amount financed year-over-year on Direct Loans for the three months ended March 31, 2021 increased by 5.8% compared to prior year fourth quarter

  • Accounts 60+ days delinquent decreased to 1.9%, excluding Chapter 13 bankruptcy accounts, compared to 2.9% as of the prior year fourth quarter

CLEARWATER, Fla., June 02, 2021 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended March 31, 2021 of $1.9 million compared to $2.3 million for the three months ended March 31, 2020. Diluted net income per share was $0.24 for the three months ended March 31, 2021 as compared to $0.29 for the three months ended March 31, 2020. Total revenue decreased 10.8% to $13.3 million for the three months ended March 31, 2021 as compared to $14.9 million for the three months ended March 31, 2020, which included gains of $0.5 million on equity investments during the three months ended March 31, 2021. The Company reported income before income taxes for the three months ended March 31, 2021 of $2.8 million compared to $0.6 million for the three months ended March 31, 2020. The Company recorded an income tax expense of approximately $0.9 million during the three months March 31, 2021 compared to an income tax benefit of $1.7 million during the three months ended March 31, 2020.

The Company announced net income for the year ended March 31, 2021 of $8.4 million compared to $3.5 million for the year ended March 31, 2020. Diluted net income per share was $1.09 for the year ended March 31, 2021 as compared to $0.45 for the year ended March 31, 2020. Total revenue decreased 9.8% to $56.0 million for the year ended March 31, 2021 as compared to $62.1 million for the year ended March 31, 2020, which included gains of $1.8 million on equity investments during the year ended March 31, 2021. The Company reported income before income taxes for the year ended March 31, 2021 of $10.9 million compared to $2.2 million for the year ended March 31, 2020. The Company recorded an income tax expense of approximately $2.6 million during the year ended March 31, 2021 compared to an income tax benefit of $1.2 million during the year ended March 31, 2020.

For the year ended March 31, 2021, the Company originated $88.2 million in finance receivables, collected $118.6 million in principal payments, reduced debt by a net amount of $35.3 million, repurchased $0.9 million of common stock, and increased cash by $8.3 million.

“We are very pleased with our 4th Quarter and overall Fiscal Year-end results,” commented Doug Marohn, President and CEO of Nicholas Financial, Inc. “We continue to produce excellent portfolio performance, recognizing very low delinquency and net write-offs, the likes of which we have not seen in years. We were also able to enjoy year-over-year increases in both Indirect and Direct originations and loan volumes. The year-over-year increase on Indirect originations was the first we have seen since my return to Nicholas, and it was especially gratifying to see this during the pandemic.”

“The ability to once again report substantially increased earnings is a testament to our core business strategy as well as to the hard-working men and women who execute that strategy every day,” Marohn continued. “Our commitment to the branch-based model with a local office in every market we service allows us to better support our dealer partners and our borrowing customers. This approach has also facilitated the expansion of our Direct Loan products to virtually every NFI branch office. As we continue to increase our core product market share in the existing branch markets, we remain focused on growing the Direct Loan business, as well as expanding our branch network in Western States.”

Key Performance Indicators on Contracts Purchased

(Purchases in thousands)

Number of

Principal

Average

Fiscal Year

Contracts

Amount

Amount

Average

Average

Average

/Quarter

Purchased

Purchased#

Financed*^

APR*

Discount%*

Term*

2021

7,307

$

74,025

$

10,135

23.4

%

7.5

%

46

4

2,429

24,637

10,143

23.2

%

7.5

%

46

3

1,483

15,285

10,307

23.4

%

7.5

%

46

2

1,709

17,307

10,127

23.5

%

6.8

%

46

1

1,686

16,796

9,962

23.5

%

8.0

%

46

2020

7,647

$

76,696

$

10,035

23.4

%

7.9

%

47

4

1,991

19,658

9,873

23.5

%

7.9

%

46

3

1,753

17,880

10,200

23.3

%

7.6

%

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


Key Performance Indicators on Direct Loans Originated
(Originations in thousands)

Number of

Principal

Average

Fiscal Year

Loans

Amount

Amount

Average

Average

/Quarter

Originated

Originated

Financed*^

APR*

Term*

2021

3,497

$

14,148

$

4,131

29.6

%

25

4

753

3,284

4,362

29.6

%

25

3

1,265

4,605

3,641

30.9

%

22

2

924

3,832

4,147

29.2

%

25

1

555

2,427

4,373

28.7

%

26

2020

3,142

$

12,638

$

4,017

28.2

%

25

4

720

3,104

4,310

28.6

%

25

3

1,137

4,490

3,949

28.4

%

24

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

%

24

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

*Each average included in the tables is calculated as a simple average.
^Average amount financed is calculated as a single loan amount.
#Bulk portfolio purchase excluded for period-over-period comparability

Nicholas Financial, Inc. (NASDAQ:NICK) is a specialized consumer finance company, operating branch locations in primarily Southeastern and Midwestern U.S. States. The Company engages primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. Additionally, Nicholas Financial originates direct consumer loans (“Direct Loans”) and sells consumer-finance related products. For an index of Nicholas Financial, Inc’s new releases or to obtain a specific release, please visit our website 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, including expectations regarding the impact of COVID-19 on the Company’s business, its ability to obtain the expected financial and tax benefits from the CARES Act, and its ability to obtain loan forgiveness under its PPP loan, 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, including in connection with the current COVID-19 pandemic, 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, 2020. 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

Twelve months ended

March 31,

March 31,

2021

2020

2021

2020

Revenue:

Interest and fee income on finance receivables

$

12,816

$

14,896

$

54,211

$

62,095

Gain on equity investments

470

-

1,809

-

Total revenue

13,286

14,896

56,020

62,095

Expenses:

Operating expenses

8,963

8,583

31,844

34,432

Provision for credit losses

250

3,919

7,250

16,901

Interest expense

1,320

1,843

5,980

8,515

Total expenses

10,533

14,345

45,074

59,848

Income before income taxes

2,753

551

10,946

2,247

Income tax expense (benefit)

884

(1,744

)

2,595

(1,219

)

Net income

$

1,869

$

2,295

$

8,351

$

3,466

Earnings per share:

Basic

$

0.24

$

0.29

$

1.09

$

0.45

Diluted

$

0.24

$

0.29

$

1.09

$

0.45

Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)

March 31,

March 31,

2021

2020

Cash and restricted cash

$

32,977

$

24,684

Finance receivables, net

170,318

199,781

Repossessed assets

685

1,340

Operating lease right-of-use assets

3,392

2,598

Other assets

5,066

10,415

Total assets

$

212,438

$

238,818

Credit facility, net of debt issuance costs

$

86,154

$

124,255

Note payable

3,244

-

Operating lease liabilities

3,367

2,652

Other liabilities

4,451

4,332

Total liabilities

97,216

131,239

Shareholders’ equity

115,222

107,579

Total liabilities and shareholders’ equity

$

212,438

$

238,818

Book value per share

$

14.95

$

13.78


Three months ended

Twelve months ended

March 31,

March 31,

(In thousands)

(In thousands)

Portfolio Summary

2021

2020

2021

2020

Average finance receivables (1)

$

185,750

$

213,666

$

199,102

$

226,541

Average indebtedness (2)

$

92,761

$

121,733

$

107,615

$

132,552

Interest and fee income on finance receivables

$

12,816

$

14,896

$

54,211

$

62,095

Interest expense

1,320

1,843

5,980

8,515

Net interest and fee income on finance receivables

$

11,496

$

13,053

$

48,231

$

53,580

Portfolio yield (3)

27.60

%

27.89

%

27.23

%

27.41

%

Interest expense as a percentage of average finance receivables

2.84

%

3.45

%

3.00

%

3.76

%

Provision for credit losses as a percentage of average finance receivables

0.54

%

7.34

%

3.64

%

7.46

%

Net portfolio yield (3)

24.22

%

17.10

%

20.59

%

16.19

%

Operating expenses as a percentage of average finance receivables

19.30

%

16.07

%

15.99

%

15.20

%

Pre-tax yield as a percentage of average finance receivables (4)

4.92

%

1.03

%

4.60

%

0.99

%

Net charge-off percentage (5)

6.83

%

11.29

%

6.16

%

10.01

%

Finance receivables

$

184,237

$

219,366

Allowance percentage (6)

3.34

%

5.09

%

Total reserves percentage (7)

7.49

%

9.18

%

Note: All three-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 finance receivables outstanding as of ending balance sheet date.

(7)

Total reserves percentage represents the allowance for credit losses, purchase price discount, and unearned dealer discounts divided by finance receivables outstanding as of ending balance sheet date.

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

March 31, 2021

$

170,195

$

6,289

$

2,430

$

896

$

42

$

9,657

3.70

%

1.43

%

0.53

%

0.02

%

5.67

%

March 31, 2020

$

207,247

$

14,977

$

4,290

$

1,893

$

19

$

21,179

7.23

%

2.07

%

0.91

%

0.01

%

10.22

%

Direct Loans

Balance

Outstanding

30 – 59 days

60 – 89 days

90 – 119 days

120+

Total

March 31, 2021

$

13,909

$

253

$

101

$

81

$

10

$

445

1.82

%

0.73

%

0.58

%

0.07

%

3.20

%

March 31, 2020

$

11,844

$

344

$

136

$

59

$

0

$

539

2.90

%

1.15

%

0.50

%

0.00

%

4.55

%

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

March 31,

March 31,

(Purchases in thousands)

(Originations in thousands)

2021

2020

2021

2020

Purchases/Originations

$

24,637

$

19,658

$

3,284

$

3,104

Average APR

23.2

%

23.5

%

29.6

%

28.6

%

Average discount

7.5

%

7.9

%

N/A

N/A

Average term (months)

46

46

25

25

Average amount financed

$

10,143

$

9,873

$

4,362

$

4,310

Number of contracts

2,429

1,991

753

720

Contracts

Direct Loans

Twelve months ended

Twelve months ended

March 31,

March 31,

(Purchases in thousands)

(Originations in thousands)

2021

2020

2021

2020

Purchases/Originations

$

74,025

$

76,696

$

14,148

$

12,638

Average APR

23.4

%

23.4

%

29.6

%

28.2

%

Average discount

7.5

%

7.9

%

N/A

N/A

Average term (months)

46

47

25

25

Average amount financed

$

10,135

$

10,035

$

4,131

$

4,017

Number of contracts

7,307

7,647

3,497

3,142

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

Contracts

Direct Loans

As of

As of

March 31,

March 31,

Portfolio

2021

2020

2021

2020

Average APR

22.8

%

22.6

%

28.5

%

27.3

%

Average discount

7.6

%

7.6

%

N/A

N/A

Average term (months)

51

52

26

26

Number of active contracts

22,760

26,894

4,017

3,481


Contact:

Irina Nashtatik

NASDAQ: NICK

CFO
Ph # (727)-726-0763

Web site: www.nicholasfinancial.com