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Consumer Portfolio Services, Inc. Reports 2008 Second Quarter Earnings IRVINE, CA--(MARKET WIRE)--Jul 15, 2008 -- Consumer Portfolio Services, Inc. (CPSS - News)
("CPS" or the "Company") today announced earnings for its
second quarter
ended June 30, 2008.
Total revenues for the second quarter of 2008 increased approximately $3.0 million, or 3.1%, to $98.8 million, compared to $95.8 million for the second quarter of 2007. Total operating expenses for the second quarter of 2008 were $96.1 million, an increase of $6.5 million, or 7.3%, as compared to $89.6 million for the 2007 period. Pretax income for the second quarter of 2008 decreased to $2.7 million, compared to pretax income of $6.2 million for the second quarter of 2007. Net income for the second quarter of 2008 was $1.5 million, or $0.08 per diluted share, compared to net income of $3.5 million, or $0.15 per diluted share, for the year-ago quarter. For the six months ended June 30, 2008, total revenues increased approximately $19.8 million, or 10.9%, to $202.1 million, compared to $182.3 million for the six months ended June 30, 2007. Total expenses for the six months ended June 30, 2008 were $195.6 million, an increase of $25.0 million, or 14.6%, as compared to $170.6 million for the six months ended June 30, 2007. Pretax income for the six months ended June 30, 2008 decreased to $6.5 million, compared to pretax income of $11.6 million for the six months ended June 30, 2007. Net income for the six months ended June 30, 2008 was $3.6 million, or $0.18 per diluted share, compared to net income of $6.7 million, or $0.29 per diluted share, for the six months ended June 30, 2007. During the second quarter of 2008, CPS purchased $79.8 million of contracts from dealers as compared to $176.1 million during the first quarter of 2008 and $346.0 million during the second quarter of 2007. During the first half of 2008, CPS purchased $255.9 million of contracts from dealers as compared to $676.3 million during the first half of 2007. The Company's managed receivables totaled $1,979.5 million as of June 30, 2008, as compared to $1,900.3 million as of June 30, 2007, as follows ($ in millions):
Originating Entity June 30, 2008 June 30, 2007
------------------ ------------- -------------
CPS $1,920.1 $1,834.6
TFC 59.0 62.1
MFN 0.0 0.2
SeaWest 0.3 2.1
As Third Party Servicer for SeaWest Financial 0.1 1.3
--- ---
Total $1,979.5 $1,900.3As previously reported, the Company completed its first securitization since September 2007 in April 2008 with the sale of $244.4 million of triple A rated notes. At quarter end and subsequently, CPS raised $25 million in senior secured financing and amended its residual credit facility, which will give the Company the option, if certain conditions are met, to extend the maturity by an additional year to June 2010. Annualized net charge-offs during the first half of 2008 were 6.75% of the average owned portfolio as compared to 4.60% during the same period in 2007. Delinquencies greater than 30 days (including repossession inventory) were 6.12% of the total owned portfolio as of June 30, 2008, as compared to 4.85% as of June 30, 2007. "Against the backdrop of the uncertain economy and the turbulent capital markets environment, we are pleased with the second quarter's resilient financial and operating performance," said Charles E. Bradley, Jr., Chief Executive Officer. "Over the last nine months, we have accomplished several important objectives that should afford us the operational flexibility to navigate the Company through these challenging times. These items include the financings we completed last week, the slowdown in new contract purchases implemented this year and the increase in pricing for new contract purchases. In addition, the primary credit metrics of our new contract purchases are the best we have seen in over 10 years." "Asset performance metrics for the quarter were well within the range of our expectations. While the portfolio delinquency and net charge-off levels have increased vs. last year, our total managed portfolio has declined since the beginning of the year and the slightly weaker 2006 and 2007 vintages have seasoned into their peak loss periods." Conference Call CPS announced that it will hold a conference call tomorrow, July 16, 2008, at 1:30 p.m. EDT to discuss its quarterly earnings. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time. A replay will be available between July 16, 2008 and July 23, 2008, beginning one hour after conclusion of the call, by dialing 800-642-1687 or 706-645-9291 for international participants, with pin number 55619407. A broadcast of the conference call will also be available live and for 30 days after the call via the Company's web site at www.consumerportfolio.com and at www.streetevents.com. About Consumer Portfolio Services, Inc. Consumer Portfolio Services, Inc. is a specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able to obtain financing from traditional sources. 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 future 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 or the effects of changes in bankruptcy law, 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 earnings, 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 provision for credit losses may affect future performance.
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,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Interest income $ 94,856 $ 89,448 $ 194,218 $ 169,938
Servicing fees 280 113 708 395
Other income 3,645 6,239 7,156 11,961
--------- --------- --------- ---------
98,781 95,800 202,082 182,294
--------- --------- --------- ---------
Expenses:
Employee costs 12,886 11,335 26,368 22,139
General and administrative 7,574 6,082 14,921 12,051
Interest 40,955 33,714 79,989 63,218
Provision for credit losses 30,894 32,670 65,803 62,159
Other expenses 3,763 5,762 8,518 11,080
--------- --------- --------- ---------
96,072 89,563 195,599 170,647
--------- --------- --------- ---------
Income before income taxes 2,709 6,237 6,483 11,647
Income taxes 1,220 2,749 2,880 4,928
--------- --------- --------- ---------
Net income $ 1,489 $ 3,488 $ 3,603 $ 6,719
========= ========= ========= =========
Earnings per share:
Basic $ 0.08 $ 0.16 $ 0.19 $ 0.31
Diluted 0.08 0.15 0.18 0.29
Number of shares used in computing
earnings per share:
Basic 18,830 21,539 19,063 21,533
Diluted 19,411 23,405 19,692 23,562
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2008 2007
------------ ------------
Cash $ 21,799 $ 20,880
Restricted cash 177,716 170,341
------------ ------------
Total Cash 199,515 191,221
Finance receivables 1,915,351 2,068,004
Allowance for finance credit losses (88,610) (100,138)
------------ ------------
Finance receivables, net 1,826,741 1,967,866
Residual interest in securitizations 1,503 2,274
Deferred tax assets, net 58,845 58,835
Other assets 57,213 62,617
------------ ------------
$ 2,143,817 $ 2,282,813
============ ============
Accounts payable and other liabilities $ 44,525 $ 36,097
Warehouse lines of credit 148,052 235,925
Residual interest financing 86,836 70,000
Securitization trust debt 1,712,164 1,798,302
Senior secured debt, related party 5,693 ---
Subordinated debt 28,775 28,134
------------ ------------
2,026,045 2,168,458
------------ ------------
Shareholders' equity 117,772 114,355
------------ ------------
$ 2,143,817 $ 2,282,813
============ ============
Operating and Performance Data
($ in thousands) At and for the At and for the
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Contract purchases 79,834 346,030 255,924 676,302
Total managed portfolio 1,979,492 1,900,255 1,979,492 1,900,255
Average managed portfolio 2,023,572 1,843,346 2,068,129 1,754,618
Net interest margin (1) 53,901 55,734 114,229 106,720
Risk adjusted margin (2) 23,007 23,064 48,426 44,561
Core operating expenses (3) 24,223 23,179 49,807 45,270
Annualized % of average managed
portfolio 4.79% 5.03% 4.82% 5.16%
Annualized return on managed
assets (4) 0.54% 1.35% 0.63% 1.33%
Allowance for finance credit
losses as % of fin. receivables 4.63% 5.20%
Aggregate allowance as % of
fin. receivables (5) 5.91% 5.95%
Delinquencies
31+ Days 4.13% 3.50%
Repossession Inventory 1.99% 1.35%
Total Delinquencies and
Repossession Inventory 6.12% 4.85%
Annualized net charge-offs as %
of average owned portfolio 6.85% 4.13% 6.75% 4.60%
(1) Interest income less interest expense.
(2) Net interest margin less provision for credit losses.
(3) Total expenses less interest and provision for credit losses.
(4) Pretax income divided by average managed portfolio.
(5) Includes allowance for finance credit losses and allowance for
repossession inventory.Contact: Investor Relations Contacts:
Consumer Portfolio Services, Inc.
Robert E. Riedl
949-753-6800
Erica Waldow
888-505-9200
Source: Consumer Portfolio Services, Inc.
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