CPS Announces Second Quarter 2022 Earnings

Rhea-AI Summary

Consumer Portfolio Services (CPSS) reported significant growth in its second-quarter results for 2022, achieving a net income of $25.3 million, or $0.91 per diluted share, up from $9.7 million, or $0.39 per diluted share, in the same period last year. Pretax income surged to $34.2 million, a 147% increase year-over-year. Revenues hit $82.0 million, compared to $66.8 million in 2021, while new contract purchases increased by 33.7% to $548.1 million. Operating expenses fell to $47.8 million from $52.9 million in 2021, enhancing overall profitability.

Positive

• Net income increased to $25.3 million, a 161% rise year-over-year.
• Revenues grew by 22.6% to $82.0 million compared to Q2 2021.
• Pretax income jumped 147% to $34.2 million compared to the prior year's quarter.
• New contract purchases rose 33.7% to $548.1 million, indicating strong demand.
• Operating expenses decreased by 9.6%, providing better margins.

Negative

• Annualized net charge-offs increased to 3.57%, up from 2.79% year-over-year.
• Delinquencies over 30 days rose to 9.71%, compared to 8.28% in the prior year.

• Pretax income of $34.2 million, a 147% increase over the prior year period
• Net income of $25.3 million, or $0.91 per diluted share
• New contract purchases of $548.1 million, a 33.7% increase over the first quarter of 2022
  

LAS VEGAS, NV, July 25, 2022 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $25.3 million, or $0.91 per diluted share, for its second quarter ended June 30, 2022. This compares to net income of $9.7 million, or $0.39 per diluted share, in the second quarter of 2021.

Revenues for the second quarter of 2022 were $82.0 million, compared to $66.8 million for the second quarter of 2021. Total operating expenses for the second quarter of 2022 were $47.8 million compared to $52.9 million for the 2021 period for a decrease of $5.1 million, or 9.6%. Pretax income for the second quarter of 2022 was $34.2 million compared to pretax income of $13.9 million in the second quarter of 2021, an increase of $20.3 million.

For the six months ended June 30, 2022 total revenues were $156.4 million compared to $129.9 million for the six months ended June 30, 2021, an increase of approximately $26.5 million, or 20.4%. Total expenses for the six months ended June 30, 2022 were $92.8 million, a decrease of $15.2 million, or 14.1%, compared to $108.1 million for the six months ended June 30, 2021. Pretax income for the six months ended June 30, 2022 was $63.5 million, compared to $21.8 million for the six months ended June 30, 2021, an increase of $41.7 million. Net income for the six months ended June 30, 2022 was $46.4 million compared to $14.9 million for the six months ended June 30, 2021.

During the second quarter of 2022, CPS purchased $548.1 million of new contracts compared to $410.0 million during the first quarter of 2022 and $286.0 million during the second quarter of 2021. The Company's receivables totaled $2.555 billion as of June 30, 2022, an increase from $2.324 billion as of March 31, 2022 and $2.116 billion as of June 30, 2021.

Annualized net charge-offs for the second quarter of 2022 were 3.57% of the average portfolio as compared to 2.79% for the second quarter of 2021. Delinquencies greater than 30 days (including repossession inventory) were 9.71% of the total portfolio as of June 30, 2022, as compared to 8.28% as of June 30, 2021.

“I’m proud to announce that in this past quarter we broke records for quarterly originations and pre-tax earnings,” reported Charles E. Bradley, Jr., Chief Executive Officer. “All areas of the Company are performing at high levels.”

Conference Call

CPS announced that it will hold a conference call on Tuesday, July 26, 2022 at 1:00 p.m. ET to discuss its second quarter 2022 operating results.

Those wishing to participate can pre-register for the conference call at the following link https://register.vevent.com/register/BIca2d8dafe11e4a0eab6c314d9b398f1b. Registered participants will receive an email containing conference call details for dial-in options. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the schedule start time. A replay will be available beginning two hours after conclusion of the call for 12 months via the Company’s website at https://ir.consumerportfolio.com/investor-relations.

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												Six months ended
			June 30,												June 30,
				2022						2021						2022						2021
Revenues:
Interest income			$	75,670					$	65,440					$	145,730					$	131,533
Mark to finance receivables measured at fair value				4,700						-						7,100						(4,417	)
Other income				1,648						1,329						3,554						2,765
				82,018						66,769						156,384						129,881
Expenses:
Employee costs				20,591						19,448						42,743						39,607
General and administrative				8,280						7,831						16,511						15,579
Interest				18,771						18,980						35,171						39,925
Provision for credit losses				(8,000	)					-						(17,400	)					-
Other expenses				8,160						6,634						15,815						12,950
				47,802						52,893						92,840						108,061
Income before income taxes				34,216						13,876						63,544						21,820
Income tax expense				8,896						4,163						17,109						6,943
Net income			$	25,320					$	9,713					$	46,435					$	14,877
Earnings per share:
Basic			$	1.18					$	0.43					$	2.18					$	0.65
Diluted			$	0.91					$	0.39					$	1.66					$	0.59
Number of shares used in computing earnings  per share:
Basic				21,370						22,842						21,296						22,791
Diluted				27,687						25,130						27,943						25,048
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
			June 30,						December 31,
				2022						2021
Assets:
Cash and cash equivalents			$	11,348					$	29,928
Restricted cash and equivalents				157,021						146,620
Finance receivables measured at fair value				2,174,133						1,749,098
Finance receivables				149,010						232,390
Allowance for finance credit losses				(35,672	)					(56,206	)
Finance receivables, net				113,338						176,184
Deferred tax assets, net				17,523						19,575
Other assets				27,110						38,173
			$	2,500,473					$	2,159,578
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses			$	62,415					$	43,648
Warehouse lines of credit				228,906						105,610
Residual interest financing				49,497						53,682
Securitization trust debt				1,934,156						1,759,972
Subordinated renewable notes				27,208						26,459
				2,302,182						1,989,371
Shareholders' equity				198,291						170,207
			$	2,500,473					$	2,159,578
Operating and Performance Data ($ in millions)
			At and for the												At and for the
			Three months ended												Six months ended
			June 30,												June 30,
				2022						2021						2022						2021
Contracts purchased			$	548.13					$	286.01					$	958.09					$	491.49
Contracts securitized				430.00						240.00						760.00						485.00
Total portfolio balance (5)			$	2,554.85					$	2,115.61					$	2,554.85					$	2,115.61
Average portfolio balance (5)				2,469.95						2,118.67						2,371.72						2,128.67
Allowance for finance credit losses as % of fin. receivables				23.94	%					21.22	%
Aggregate allowance as % of fin. receivables (1)				24.54	%					21.80	%
Delinquencies (5)
31+ Days				8.65	%					7.34	%
Repossession Inventory				1.06	%					0.94	%
Total Delinquencies and Repo. Inventory				9.71	%					8.28	%
Annualized Net Charge-offs as % of Average Portfolio (5)
Legacy portfolio				4.16	%					5.10	%					2.70	%					8.27	%
Fair Value portfolio				3.52	%					2.29	%					3.53	%					3.43	%
Total portfolio				3.57	%					2.79	%					2.38	%					4.37	%
Recovery rates (2)				56.7	%					57.8	%					58.8	%					50.6	%

			For the												For the
			Three months ended												Six months ended
			June 30,												June 30,
				2022						2021						2022						2021
			$ (3)			% (4)			$ (3)			% (4)			$ (3)			% (4)			$ (3)			% (4)
Interest income			$	75.67		12.3	%		$	65.44		12.4	%		$	145.73		12.3	%		$	131.53		12.4	%
Mark to finance receivables measured at fair value				4.70		0.8	%			-		0.0	%			7.10		0.6	%			(4.42	)	-0.4	%
Other income				1.65		0.3	%			1.33		0.3	%			3.55		0.3	%			2.77		0.3	%
Interest expense				(18.77	)	-3.0	%			(18.98	)	-3.6	%			(35.17	)	-3.0	%			(39.93	)	-3.8	%
Net interest margin				63.25		10.2	%			47.79		9.0	%			121.21		10.2	%			89.96		8.5	%
Provision for credit losses				8.00		1.3	%			-		0.0	%			17.40		1.5	%			-		0.0	%
Risk adjusted margin				71.25		11.5	%			47.79		9.0	%			138.61		11.7	%			89.96		8.5	%
Core operating expenses				(37.03	)	-6.0	%			(33.91	)	-6.4	%			(75.07	)	-6.3	%			(68.14	)	-6.4	%
Pre-tax income			$	34.22		5.5	%		$	13.88		2.6	%		$	63.54		5.4	%		$	21.82		2.1	%
(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.
(5) Excludes third party portfolios.

FAQ

What were the second quarter 2022 earnings for CPSS?

CPSS reported a net income of $25.3 million, or $0.91 per diluted share, for the second quarter of 2022.

How did revenues for CPSS change in Q2 2022?

Revenues increased to $82.0 million in Q2 2022, up from $66.8 million in Q2 2021.

What was the growth rate for new contract purchases in the second quarter of 2022?

New contract purchases grew by 33.7% to $548.1 million compared to Q1 2022.

What were the key financial metrics for the first half of 2022 for CPSS?

For the first half of 2022, total revenues were $156.4 million, and net income was $46.4 million.