CPS Announces First Quarter 2022 Earnings

Rhea-AI Summary

Consumer Portfolio Services, Inc. (CPSS) reported its best quarterly results since inception, with a net income of $21.1 million, or $0.75 per diluted share, for Q1 2022, up from $5.2 million in Q1 2021. Revenues increased by 17.8% to $74.4 million, while operating expenses decreased by 18.4% to $45.0 million. Notably, the company purchased $410 million in new contracts, a record high. Despite a rise in delinquencies to 8.52%, annualized net charge-offs improved to 3.3%. The strong metrics in credit performance boost the company's outlook for 2022.

Positive

• Record net income of $21.1 million for Q1 2022, a significant increase from $5.2 million in Q1 2021.
• Revenue growth of 17.8% year-over-year, totaling $74.4 million.
• Operating expenses decreased by $10.1 million (18.4%) compared to Q1 2021.
• New contract purchases at an all-time high of $410 million.

Negative

• Delinquencies greater than 30 days increased to 8.52% from 7.77% year-over-year.

• Pretax income of $29.3 million, compared to $7.9 million in the prior year period
• Net income of $21.1 million, or $0.75 per diluted share
• New contract purchases of $410.0 million
• Each of the above represent all-time quarterly records since our inception in 1991

LAS VEGAS, NV, April 18, 2022 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $21.1 million, or $0.75 per diluted share, for its first quarter ended March 31, 2022. This compares to net income of $5.2 million, or $0.21 diluted share, in the first quarter of 2021.

Revenues for the first quarter of 2022 were $74.4 million, an increase of $11.3 million, or 17.8%, compared to $63.1 million for the first quarter of 2021. Total operating expenses for the first quarter of 2022 were $45.0 million compared to $55.2 million for the 2021 period for a decrease of $10.1 million, or 18.4%.   Pretax income for the first quarter of 2022 was $29.3 million compared to pretax income of $7.9 million in the first quarter of 2021, an increase of 269.2%.

During the first quarter of 2022, CPS purchased $410.0 million of new contracts compared to $328.0 million during the fourth quarter of 2021 and $205.5 million during the first quarter of 2021. The Company's receivables totaled $2.324 billion as of March 31, 2022, an increase from $2.209 billion as of December 31, 2021 and $2.119 billion as of March 31, 2021.

Annualized net charge-offs for the first quarter of 2022 were 3.3% of the average portfolio as compared to 6.3% for the first quarter of 2021. Delinquencies greater than 30 days (including repossession inventory) were 8.52% of the total portfolio as of March 31, 2022, as compared to 7.77% as of March 31, 2021.

“I’m proud to report on the best quarterly results in the 31-year history of the Company”, said Charles E. Bradley, Jr., President and Chief Executive Officer. “Our first quarter originations volume was 25% greater than the fourth quarter of 2021 and approximately double the volume from the first quarter of 2021. We continue to see strong metrics in credit performance and are looking forward to the remainder of 2022.”  

Conference Call

CPS announced that it will hold a conference call on Tuesday, April 19, 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 3771614.

A replay of the conference call will be available between April 19 and April 26, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 3771614. 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 figures representing allowances for remaining expected lifetime credit losses, its pandemic-related markdown of carrying value for the portion of its portfolio accounted for at fair value, its pandemic-related charge to the provision for credit losses for the its legacy portfolio, its estimates of fair value (most significantly for its receivables accounted for at fair value), its provision for credit losses, its entries offsetting the preceding, and figures derived from any of the preceding.  In each case, such figures are forward-looking statements because they are dependent on the Company’s estimates of losses to be incurred in the future. The accuracy of such estimates may be adversely affected by various factors, which include (in addition to risks relating to the COVID-19 pandemic and 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. The accuracy of such estimates may also be affected by the effects of the COVID-19 pandemic and of governmental responses to said pandemic, which have included prohibitions on certain means of enforcement of receivables, and may include additional restrictions, as yet unknown, in the future. Any or 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 losses to be incurred in the future may affect future performance.

Investor Relations Contact

Jeffrey P. Fritz, Chief Financial Officer
844 878-2777

 

Consumer Portfolio Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
			Three months ended
			March 31,
				2022						2021
Revenues:
Interest income			$	70,060					$	66,093
Mark to finance receivables measured at fair value				2,400						(4,417	)
Other income				1,906						1,436
				74,366						63,112
Expenses:
Employee costs				22,152						20,159
General and administrative				8,231						7,748
Interest				16,400						20,946
Provision for credit losses				(9,400	)					-
Other expenses				7,655						6,315
				45,038						55,168
Income before income taxes				29,328						7,944
Income tax expense				8,213						2,780
Net income			$	21,115					$	5,164
Earnings per share:
Basic			$	0.99					$	0.23
Diluted			$	0.75					$	0.21
Number of shares used in computing earnings
per share:
Basic				21,221						22,741
Diluted				28,197						24,967
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
			March 31,						December 31,
				2022						2021
Assets:
Cash and cash equivalents			$	21,726					$	29,928
Restricted cash and equivalents				164,550						146,620
Finance receivables measured at fair value				1,903,857						1,749,098
Finance receivables				186,745						232,390
Allowance for finance credit losses				(45,001	)					(56,206	)
Finance receivables, net				141,744						176,184
Deferred tax assets, net				18,913						19,575
Other assets				26,760						38,173
			$	2,277,550					$	2,159,578
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses			$	56,988					$	43,648
Warehouse lines of credit				147,026						105,610
Residual interest financing				49,434						53,682
Securitization trust debt				1,813,478						1,759,972
Subordinated renewable notes				26,756						26,459
				2,093,682						1,989,371
Shareholders' equity				183,868						170,207
			$	2,277,550					$	2,159,578
Operating and Performance Data ($ in millions)
			At and for the
			Three months ended
			March 31,
				2022						2021
Contracts purchased			$	409.96					$	205.48
Contracts securitized				330.00						245.00
Total portfolio balance			$	2,324.35					$	2,119.07
Average portfolio balance				2,273.48						2,138.66
Allowance for finance credit losses as % of fin. receivables				24.10	%					17.88	%
Aggregate allowance as % of fin. receivables (1)				24.50	%					19.06	%
Delinquencies
31+ Days				7.39	%					6.34	%
Repossession Inventory				1.13	%					1.43	%
Total Delinquencies and Repo. Inventory				8.52	%					7.77	%
Annualized Net Charge-offs as % of Average Portfolio
Legacy portfolio				0.84	%					12.63	%
Fair Value portfolio				3.53	%					4.61	%
Total portfolio				3.29	%					6.30	%
Recovery rates (2)				61.4	%					43.3	%
			For the
			Three months ended
			March 31,
			2022						2021
			$ (3)			% (4)			$ (3)			% (4)
Interest income			$	70.06		12.3	%		$	66.09		12.4	%
Mark to finance receivables measured at fair value				2.40		0.4	%			(4.42	)	-0.8	%
Other income				1.91		0.3	%			1.44		0.3	%
Interest expense				(16.40	)	-2.9	%			(20.95	)	-3.9	%
Net interest margin				57.97		10.2	%			42.17		7.9	%
Provision for credit losses				9.40		1.7	%			-		0.0	%
Risk adjusted margin				67.37		11.9	%			42.17		7.9	%
Core operating expenses				(38.04	)	-6.7	%			(34.22	)	-6.4	%
Pre-tax income			$	29.33		5.2	%		$	7.94		1.5	%
(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.

 

 

FAQ

What were the earnings results for CPSS in Q1 2022?

CPSS reported a net income of $21.1 million, or $0.75 per diluted share.

How did revenue change for CPSS in the first quarter of 2022?

Revenues increased by 17.8%, reaching $74.4 million for Q1 2022.

What is the significance of CPSS's new contract purchases in Q1 2022?

CPSS purchased $410 million in new contracts, marking an all-time quarterly record.

How did operating expenses for CPSS change in Q1 2022?

Operating expenses decreased by 18.4% to $45.0 million compared to Q1 2021.

What was the annualized net charge-off rate for CPSS in Q1 2022?

The annualized net charge-off rate was 3.3% for Q1 2022.