Regional Management Corp (RM) Faces Net Loss in Q4 2023 Despite Record Revenue
Net Loss: RM reported a net loss of $7.6 million and a diluted loss per share of $0.80 for Q4 2023.
Revenue Growth: Despite the net loss, RM achieved a record total revenue of $141.7 million, a 7.3% increase from the prior-year period.
Loan Portfolio Expansion: Net finance receivables grew to $1.8 billion, marking a 4.2% increase year-over-year.
Delinquency Improvement: 30+ day contractual delinquency rate improved to 6.9%, a 20 basis point improvement from the previous year.
Dividend Declaration: RM's Board of Directors declared a dividend of $0.30 per common share for Q1 2024.
Liquidity and Capital: RM ended the quarter with $112.6 million in available liquidity and a funded debt-to-equity ratio of 4.3 to 1.0.
On February 7, 2024, Regional Management Corp (NYSE:RM) released its 8-K filing, detailing the financial results for the fourth quarter ended December 31, 2023. The company, a diversified consumer finance entity providing installment loan products, faced a net loss of $7.6 million and a diluted loss per share of $0.80. This loss included a significant impact from three discrete actions taken in the quarter, amounting to a $12.6 million, or $1.34 per share, adjustment.
Despite the net loss, RM's total revenue for the quarter reached a record $141.7 million, a 7.3% increase from the prior-year period. This growth was primarily driven by an increase in interest and fee income related to higher average net finance receivables and a 30 basis point increase in interest and fee yield compared to the prior-year period. The company's net finance receivables also grew to $1.8 billion, a 4.2% increase year-over-year, with large loan net finance receivables increasing by 5.5% and representing 71.9% of the total loan portfolio.
RM's President and CEO, Robert W. Beck, commented on the quarter's results and the company's outlook.
We took a series of actions in the fourth quarter to put the business back on a more normalized earnings trajectory for 2024, including strong first quarter profits," said Beck. "While these actions were difficult, they were necessary to position the business for stronger results."
Beck also expressed optimism for 2024, citing an improving economic outlook, falling inflation, growing real wages, low unemployment, and the potential for lower funding costs.
The fourth quarter saw a 30+ day contractual delinquency rate of 6.9%, a 20 basis point improvement from the previous year. General and administrative expenses increased to $64.8 million, which included a $2.0 million charge associated with restructuring. The operating expense ratio for the quarter was 14.8%, inclusive of a 50-basis point impact from the restructuring.
Looking ahead, RM's Board of Directors has declared a dividend of $0.30 per common share for the first quarter of 2024, with payment scheduled for March 14, 2024, to shareholders of record as of February 22, 2024.
As of December 31, 2023, RM had available liquidity of $112.6 million and a funded debt-to-equity ratio of 4.3 to 1.0. The company's debt consisted of $195.5 million on its senior revolving credit facility, $50.1 million on its revolving warehouse credit facilities, and $1.2 billion through its asset-backed securitizations.
RM's financial position and strategic actions taken in the fourth quarter of 2023 indicate a focus on stabilizing and improving earnings for the future. While the net loss reflects the impact of restructuring and loan sales, the record revenue and improved delinquency rates suggest a resilient operational performance. Investors and stakeholders will be watching closely as RM navigates the evolving economic landscape in 2024.
Explore the complete 8-K earnings release (here) from Regional Management Corp for further details.
This article first appeared on GuruFocus.
