EX-99.2 3 cpss_8k-ex9902.htm NEWS RELEASE

Exhibit 99.2

 

 

NEWS RELEASE

 

CPS ANNOUNCES SECOND 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 $250 million

 

LAS VEGAS, NV, July 24, 2019 (GlobeNewswire) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $1.8 million, or $0.08 per diluted share, for its second quarter ended June 30, 2019. This compares to net income of $3.2 million, or $0.13 per diluted share, in the second quarter of 2018.

 

Revenues for the second quarter of 2019 were $86.3 million, a decrease of $13.0 million, or 13.1%, compared to $99.4 million for the second quarter of 2018. Total operating expenses for the second quarter of 2019 were $83.6 million compared to $94.7 million for the 2018 period. Pretax income for the second quarter of 2019 was $2.8 million compared to pretax income of $4.7 million in the second quarter of 2018, a decrease of 40.5%.

 

For the six months ended June 30, 2019 total revenues were $174.6 million compared to $202.9 million for the six months ended June 30, 2018, a decrease of approximately $28.4 million, or 14.0%. Total expenses for the six months ended June 30, 2019 were $169.1 million, a decrease of $24.6 million, or 12.7%, compared to $193.7 million for the six months ended June 30, 2018. Pretax income for the six months ended June 30, 2019 was $5.4 million, compared to $9.2 million for the six months ended June 30, 2018. Net income for the six months ended June 30, 2019 was $3.5 million compared to $6.3 million for the six months ended June 30, 2018.

 

During the second quarter of 2019, CPS purchased $250.1 million of new contracts compared to $243.0 million during the first quarter of 2019 and $214.7 million during the second quarter of 2018. The Company's receivables totaled $2.399 billion as of June 30, 2019, an increase from $2.393 billion as of March 31, 2019 and $2.329 billion as of June 30, 2018.

 

Annualized net charge-offs for the second quarter of 2019 were 7.82% of the average portfolio as compared to 7.58% for the second quarter of 2018. Delinquencies greater than 30 days (including repossession inventory) were 14.83% of the total portfolio as of June 30, 2019, as compared to 10.07% as of June 30, 2018.

 

“We are pleased to report that this quarter represented our fourth consecutive quarter of year over year increases in quarterly originations volume,” said Charles E. Bradley, Jr., Chairman and Chief Executive Officer. “In addition, since Q3 of 2018, we have seen consecutive quarterly increases in the coupon rates on new receivables and lower fees paid to dealers.”

 

Conference Call

 

CPS announced that it will hold a conference call on Thursday, July 25, 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 3196842.

A replay of the conference call will be available between July 25, 2019 and August 1, 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 3196842. 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.

 

 

 

 

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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

 

 

 

 

 

 

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Consumer Portfolio Services, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Revenues:                
Interest income  $84,449   $97,012   $170,294   $197,918 
Other income   1,876    2,350    4,261    5,008 
    86,325    99,362    174,555    202,926 
Expenses:                    
Employee costs   19,706    19,842    38,779    40,483 
General and administrative   8,750    7,450    16,924    14,946 
Interest   27,703    25,187    54,993    49,249 
Provision for credit losses   20,489    35,531    44,445    76,038 
Other expenses   6,907    6,698    13,968    12,997 
    83,555    94,708    169,109    193,713 
Income before income taxes   2,770    4,654    5,446    9,213 
Income tax expense   970    1,489    1,907    2,901 
Net income  $1,800   $3,165   $3,539   $6,312 
                     
Earnings per share:                    
Basic  $0.08   $0.15   $0.16   $0.30 
Diluted  $0.08   $0.13   $0.15   $0.25 
                     
                     
Number of shares used in computing earnings per share                    
Basic   22,362    21,178    22,302    21,375 
Diluted   23,978    25,123    24,119    25,393 

 

 

 

 

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Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

   June 30,   December 31, 
   2019   2018 
Assets:          
Cash and cash equivalents  $9,745   $12,787 
Restricted cash and equivalents   125,486    117,323 
Total cash and cash equivalents   135,231    130,110 
           
Finance receivables   1,180,253    1,522,085 
Allowance for finance credit losses   (32,664)   (67,376)
Finance receivables, net   1,147,589    1,454,709 
           
Finance receivables measured at fair value   1,158,365    821,066 
Deferred tax assets, net   17,119    19,188 
Other assets   66,509    60,607 
   $2,524,813   $2,485,680 
           
Liabilities and Shareholders' Equity:          
Accounts payable and accrued expenses  $53,960   $31,692 
Warehouse lines of credit   139,224    136,847 
Residual interest financing   39,292    39,106 
Securitization trust debt   2,077,286    2,063,627 
Subordinated renewable notes   14,368    17,290 
    2,324,130    2,288,562 
           
Shareholders' equity   200,683    197,118 
   $2,524,813   $2,485,680 

 

 

 

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Operating and Performance Data ($ in millions) 
                 
             
             
   At and for the   At and for the 
   Three months ended   Six months ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
                 
Contracts purchased  $250.14   $214.74   $493.17   $425.34 
Contracts securitized   230.00    205.00    495.00    398.58 
                     
Total portfolio balance  $2,399.22   $2,329.18   $2,399.22   $2,329.18 
Average portfolio balance   2,398.92    2,330.29    2,395.57    2,330.94 
                     
Allowance for finance credit losses as % of fin. receivables   2.77%    5.00%           
                     
Aggregate allowance as % of fin. receivables (1)   4.66%    6.16%           
                     
Delinquencies                    
31+ Days   13.15%    8.60%           
Repossession Inventory   1.68%    1.47%           
Total Delinquencies and Repo. Inventory   14.83%    10.07%           
                     
Annualized net charge-offs as % of average portfolio   7.82%    7.58%    7.90%    7.87% 
                     
Recovery rates (2)   34.1%    34.9%    33.9%    34.4% 

 

 

 

 

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   For the   For the 
   Three months ended   Six months ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
   $ (3)   %(4)   $ (3)   %(4)   $ (3)   %(4)   $ (3)   %(4) 
Interest income  $84.45    14.1%   $97.01    16.7%   $170.29    14.2%   $197.92    17.0% 
Servicing fees and other income   1.88    0.3%    2.35    0.4%    4.26    0.4%    5.01    0.4% 
Interest expense   (27.70)   -4.6%    (25.19)   -4.3%    (54.99)   -4.6%    (49.25)   -4.2% 
Net interest margin   58.62    9.8%    74.18    12.7%    119.56    10.0%    153.68    13.2% 
Provision for credit losses   (20.49)   -3.4%    (35.53)   -6.1%    (44.45)   -3.7%    (76.04)   -6.5% 
Risk adjusted margin   38.13    6.4%    38.64    6.6%    75.12    6.3%    77.64    6.7% 
Core operating expenses   (35.36)   -5.9%    (33.99)   -5.8%    (69.67)   -5.8%    (68.43)   -5.9% 
Pre-tax income  $2.77    0.5%   $4.65    0.8%   $5.45    0.5%   $9.21    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.  

 

 

 

 

 

 

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