CPS Announces Fourth Quarter And Full Year 2021 Earnings

Rhea-AI Summary

Consumer Portfolio Services (CPSS) reported strong financial results for Q4 2021, with net income of $19.0 million ($0.71 per diluted share), up from $4.1 million ($0.17) in Q4 2020. Q4 revenues increased 11.1% to $69.4 million. Total operating expenses dropped 19.5% to $202.1 million for the year, leading to a pretax income of $65.7 million. New contract purchases reached $1.146 billion for 2021, a 54% increase year-over-year. The company also noted improved credit performance, with annualized net charge-offs at 2.57% compared to 5.18% in Q4 2020.

Positive

• Net income for Q4 2021 rose to $19.0 million, compared to $4.1 million in Q4 2020.
• Revenue for Q4 2021 increased by 11.1% to $69.4 million.
• Total operating expenses decreased by 19.5% for the full year 2021.
• New contract purchases for 2021 were $1.146 billion, marking a 54% increase year-over-year.
• Annualized net charge-offs improved to 2.57% in Q4 2021 from 5.18% a year earlier.

Negative

• Total revenues for the full year 2021 decreased by $3.4 million, or 1.2%, compared to 2020.

• Pretax income of $24.4 million for the fourth quarter and $65.7 million for 2021
• Net income of $19.0 million, or $0.71 per diluted share for the fourth quarter
• Net income of $47.5 million, or $1.84 per diluted share for 2021
• New contract purchases of $1.146 billion for the full year 2021  

LAS VEGAS, NV, Feb. 14, 2022 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $19.0 million, or $0.71 per diluted share, for its fourth quarter ended December 31, 2021. This compares to a net income of $4.1 million, or $0.17 per diluted share, in the fourth quarter of 2020. The results for the fourth quarter of 2021 include a net tax benefit of $680,000 related to revaluation of the Company’s net operating losses and other tax adjustments. Without the benefit, net income would have been $18.3 million, or $0.68 per diluted share.

Revenues for the fourth quarter of 2021 were $69.4 million, an increase of $7.0 million, or 11.1%, compared to $62.4 million for the fourth quarter of 2020. Total operating expenses for the fourth quarter of 2021 were $45.0 million compared to $56.0 million for the 2020 period.   Pretax income for the fourth quarter of 2021 was $24.4 million compared to pretax income of $6.5 million in the fourth quarter of 2020.

For the twelve months ended December 31, 2021 total revenues were $267.8 million compared to $271.2 million for the twelve months ended December 31, 2020, a decrease of approximately $3.4 million, or 1.2%. Total expenses for the twelve months ended December 31, 2021 were $202.1 million, a decrease of $48.9 million, or 19.5%, compared to $251.0 million for the twelve months ended December 31, 2020. Pretax income for the twelve months ended December 31, 2021 was $65.7 million, compared to $20.1 million for the twelve months ended December 31, 2020. Net income for the twelve months ended December 31, 2021 was $47.5 million, or $1.84 per diluted share. This compares to net income of $21.7 million, or $0.90 per diluted share for the twelve months ended December 31, 2020. Results for the twelve months ended December 31,2021 include a net tax benefit of $680,000 related to revaluation of the Company’s net operating losses and other tax adjustments. Without the benefit, net income for 2021 would have been $46.8 million, or $1.82 per diluted share. Results for the twelve months ended December 31, 2020 include a net tax benefit of $8.8 million related to the revaluation of the Company’s net operating losses and other tax adjustments. Without this tax benefit, net income and net income per diluted share for the twelve months ended December 31, 2020 would have been $12.9 million and $0.54 per share, respectively.

During the fourth quarter of 2021, CPS purchased $328.0 million of new contracts compared to $326.8 million during the third quarter of 2021 and $166.7 million during the fourth quarter of 2020. The Company's receivables totaled $2.209 billion as of December 31, 2021, an increase from $2.161 billion as of September 30, 2021 and an increase from $2.175 billion as of December 31, 2020.

Annualized net charge-offs for the fourth quarter of 2021 were 2.57% of the average portfolio as compared to 5.18% for the fourth quarter of 2020. Delinquencies greater than 30 days (including repossession inventory) were 10.53% of the total portfolio as of December 31, 2021, as compared to 12.08% as of December 31, 2020.

“We are excited to report the best full year financial results in the history of CPS,” said Charles E. Bradley, President and Chief Executive Officer.  “We originated $1.1 billion in new finance receivables, a 54% increase over 2020 and a 14% increase over 2019.  Our credit performance remains strong, and the capital markets continue to be receptive to our quarterly securitizations.”

Conference Call

CPS announced that it will hold a conference call on February 15, 2022, 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 9319729.

A replay of the conference call will be available between February 15, 2022 and February 22, 2022, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 9319729. 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 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, yet unknown, in the future. Any or all 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												Twelve months ended
			December 31,												December 31,
				2021						2020						2021						2020
Revenues:
Interest income			$	67,715					$	67,710					$	266,266					$	294,982
Mark to finance receivables measured at fair value				-						(6,477	)					(4,417	)					(29,528	)
Other income				1,650						1,201						5,962						5,707
				69,365						62,434						267,811						271,161
Expenses:
Employee costs				22,756						19,372						80,534						80,198
General and administrative				11,582						7,630						34,616						31,981
Interest				16,980						22,962						75,239						101,338
Provision for credit losses				(13,000	)					-						(14,590	)					14,113
Other expenses				6,667						5,996						26,266						23,411
				44,985						55,960						202,065						251,041
Income before income taxes				24,380						6,474						65,746						20,120
Income tax expense (benefit)				5,415						2,331						18,222						(1,557	)
Net income			$	18,965					$	4,143					$	47,524					$	21,677
Earnings per share:
Basic			$	0.88					$	0.18					$	2.11					$	0.96
Diluted			$	0.71					$	0.17					$	1.84					$	0.90
Number of shares used in computing earnings
per share:
Basic				21,661						22,555						22,562						22,611
Diluted				26,813						24,537						25,780						24,003
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
			December 31,						December 31,
				2021						2020
Assets:
Cash and cash equivalents			$	29,928					$	13,466
Restricted cash and equivalents				146,620						130,686
Finance receivables measured at fair value				1,749,098						1,523,726
Finance receivables				232,390						492,133
Allowance for finance credit losses				(56,206	)					(80,790	)
Finance receivables, net				176,184						411,343
Deferred tax assets, net				19,575						28,512
Other assets				38,173						38,162
			$	2,159,578					$	2,145,895
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses			$	43,648					$	43,112
Warehouse lines of credit				105,610						118,999
Residual interest financing				53,682						25,426
Securitization trust debt				1,759,972						1,803,673
Subordinated renewable notes				26,459						21,323
				1,989,371						2,012,533
Shareholders' equity				170,207						133,362
			$	2,159,578					$	2,145,895
Operating and Performance Data ($ in millions)
			At and for the												At and for the
			Three months ended												Twelve months ended
			December 31,												December 31,
				2021						2020						2021						2020
Contracts purchased			$	327.98					$	166.71					$	1,146.32					$	742.58
Contracts securitized				360.00						-						1,145.00						741.87
Total portfolio balance			$	2,209.43					$	2,174.97					$	2,209.43					$	2,174.97
Average portfolio balance				2,190.16						2,202.22						2,147.61						2,315.75
Allowance for finance credit losses as % of fin. receivables				24.19	%					16.42	%
Aggregate allowance as % of fin. receivables (1)				24.53	%					18.23	%
Delinquencies
31+ Days				9.50	%					10.43	%
Repossession Inventory				1.03	%					1.65	%
Total Delinquencies and Repo. Inventory				10.53	%					12.08	%
Annualized Net Charge-offs as % of Average Portfolio
Legacy portfolio				0.11	%					6.96	%					7.71	%					11.72	%
Fair Value portfolio				2.89	%					4.61	%					3.09	%					4.33	%
Total portfolio				2.57	%					5.18	%					4.70	%					6.51	%
Recovery rates (2)				63.3	%					41.9	%					54.5	%					38.7	%
			For the												For the
			Three months ended												Twelve months ended
			December 31,												December 31,
				2021						2020						2021						2020
			$ (3)			% (4)			$ (3)			% (4)			$ (3)			% (4)			$ (3)			% (4)
Interest income			$	67.72		12.4	%		$	67.71		12.3	%		$	266.27		12.4	%		$	294.98		12.7	%
Mark to finance receivables measured at fair value				-		0.0	%			(6.48	)	-1.2	%			(4.42	)	-0.2	%			(29.53	)	-1.3	%
Other income				1.65		0.3	%			1.20		0.2	%			5.96		0.3	%			5.71		0.2	%
Interest expense				(16.98	)	-3.1	%			(22.96	)	-4.2	%			(75.24	)	-3.5	%			(101.34	)	-4.4	%
Net interest margin				52.39		9.6	%			39.47		7.2	%			192.57		9.0	%			169.82		7.3	%
Provision for credit losses				13.00		2.4	%			-		0.0	%			14.59		0.7	%			(14.11	)	-0.6	%
Risk adjusted margin				65.39		11.9	%			39.47		7.2	%			207.16		9.6	%			155.71		6.7	%
Core operating expenses				(41.01	)	-7.5	%			(33.00	)	-6.0	%			(141.42	)	-6.6	%			(135.59	)	-5.9	%
Pre-tax income			$	24.38		4.5	%		$	6.47		1.2	%		$	65.75		3.1	%		$	20.12		0.9	%
(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 Q4 2021?

CPSS reported a net income of $19.0 million, or $0.71 per diluted share for Q4 2021.

How did CPSS's revenues perform in 2021?

CPSS's total revenues for the full year 2021 were $267.8 million, a decrease of approximately $3.4 million from 2020.

What is CPSS's outlook following their recent financial report?

CPS expressed strong confidence in continued credit performance and market receptivity to their securitizations.

What were the key financial metrics for CPSS in 2021?

CPSS achieved a pretax income of $65.7 million and net income of $47.5 million for the full year 2021.