Earnings Release
CPS Announces Second Quarter 2016 Earnings
• Pretax income of $12.3 million
-- Net income of $7.3 million, or $0.25 per diluted share
-- New contract purchases of $319 million
-- Total managed portfolio increases to $2.25 billion from $2.14 billion at March 31, 2016
Consumer Portfolio Services, Inc. (CPSS) ("CPS" or the "Company") today announced earnings of $7.3 million, or $0.25 per diluted share, for its second quarter ended June 30, 2016. This compares to net income of $8.5 million, or $0.27 per diluted share, in the second quarter of 2015.
Revenues for the second quarter of 2016 were $104.9 million, an increase of $16.6 million, or 18.8%, compared to $88.4 million for the second quarter of 2015. Total operating expenses for the second quarter of 2016 were $92.6 million, an increase of $19.5 million, or 26.6%, compared to $73.2 million for the 2015 period. Pretax income for the second quarter of 2016 was $12.3 million compared to pretax income of $15.2 million in the second quarter of 2015, a decrease of 18.9%.
For the six months ended June 30, 2016 total revenues were $205.6 million compared to $174.4 million for the six months ended June 30, 2015, an increase of approximately $31.2 million, or 17.9%. Total expenses for the six months ended June 30, 2016 were $181.0 million, an increase of $36.6 million, or 25.4%, compared to $144.4 million for the six months ended June 30, 2015. Pretax income for the six months ended June 30, 2016 was $24.6 million, compared to $29.9 million for the six months ended June 30, 2015. Net income for the six months ended June 30, 2016 was $14.5 million compared to $16.9 million for the six months ended June 30, 2015.
During the second quarter of 2016, CPS purchased $319.1 million of new contracts compared to $312.3 million during the first quarter of 2016 and $269.9 million during the second quarter of 2015. The Company’s managed receivables totaled $2.254 billion as of June 30, 2016, an increase from $2.142 billion as of March 31, 2016 and $1.822 billion as of June 30, 2015.
Annualized net charge-offs for the second quarter of 2016 were 6.94% of the average owned portfolio as compared to 6.59% for the second quarter of 2015. Delinquencies greater than 30 days (including repossession inventory) were 8.58% of the total owned portfolio as of June 30, 2016, as compared to 7.49% as of June 30, 2015.
"We are pleased with our operating results for the second quarter of 2016," said Charles E. Bradley, Jr., Chairman and Chief Executive Officer. "Our originations volumes increased both sequentially and year over year, our managed portfolio continues to grow, and we continue to achieve good execution in the market for our asset-backed securitizations."
Conference Call
CPS announced that it will hold a conference call on Thursday, July 28, 2016, 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.
A replay of the conference call will be available between July 28, 2016 and August 4, 2016, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 51614443. 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.
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Consumer Portfolio Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three months ended
Six months ended
Interest income
$
101,709
$
84,900
$ 198,372
$ 167,259
Other income
3,200
3,399
7,163
6,881
104,933
88,361
205,582
174,350
Employee costs
15,678
13,144
30,822
27,630
General and administrative
6,569
5,108
11,900
9,944
Interest
19,727
13,688
37,548
26,861
Provision for credit losses
44,423
35,683
88,619
69,122
Other expenses
6,211
5,538
12,139
10,844
92,608
73,161
181,028
144,401
Income before income taxes
12,325
15,200
24,554
29,949
Income tax expense
5,053
6,663
10,068
13,079
Net income
$
7,272
$
8,537
$ 14,486
$ 16,870
Basic
$
0.30
$
0.33
$ 0.58
$ 0.65
Diluted
$
0.25
$
0.27
$ 0.49
$ 0.53
Number of shares used in computing earnings per share:
Basic
24,538
26,234
24,917
25,936
Diluted
29,111
31,917
29,632
31,955
Condensed Consolidated Balance Sheets
Cash and cash equivalents
$
15,752
$
19,322
Restricted cash and equivalents
115,268
106,054
Total cash and cash equivalents
131,020
125,376
Finance receivables
2,218,389
1,985,093
Allowance for finance credit losses
(90,168
)
(75,603
)
Finance receivables, net
2,128,221
1,909,490
Finance receivables measured at fair value
13
61
Deferred tax assets, net
40,350
37,597
Liabilities and Shareholders’ Equity:
Accounts payable and accrued expenses
$
38,509
$
29,509
Warehouse lines of credit
165,103
194,056
Residual interest financing
7,455
9,042
Securitization trust debt
1,956,620
1,720,021
Subordinated renewable notes
15,257
15,138
Shareholders’ equity
171,965
161,159
Operating and Performance Data ($ in millions)
At and for the
At and for the
Three months ended
Six months ended
Contracts purchased
$
319.11
$
269.90
$ 631.41
$ 503.79
Contracts securitized
340.00
227.13
680.00
485.46
Total managed portfolio
$
2,253.70
$
1,822.18
$ 2,253.70
$ 1,822.18
Average managed portfolio
2,216.87
1,783.87
2,157.58
1,744.23
Allowance for finance credit losses as % of fin. receivables
4.06
%
4.18
%
Aggregate allowance as % of fin. receivables (1)
5.02
%
5.00
%
Repossession Inventory
1.48
%
1.37
%
Total Delinquencies and Repo. Inventory
8.58
%
7.49
%
Annualized net charge-offs as % of average owned portfolio
6.94
%
6.59
%
7.24
%
6.62
%
Recovery rates (2)
38.9
%
44.8
%
39.4
%
44.4
%
Three months ended
Six months ended
$
(3
)
% (4)
$
(3
)
% (4)
$ (3
) % (4)
$ (3
) % (4)
Investor Relations Contact
Jeffrey P. Fritz, Chief Financial Officer
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