Nicholas Financial Reports 3rd Quarter Fiscal Year 2022 Results
Nicholas Financial reported a net loss of $0.7 million for Q3 FY2022, down from net income of $3.8 million in Q3 FY2021. Total revenue decreased 15.4% year-over-year to $12.2 million. A decrease in interest and fee income was noted, dropping 7.1% to $12.2 million. Operating expenses rose to $8.9 million from $7.4 million in the prior year. Despite these challenges, originations for new contracts increased 27.4% and direct loans by 84.7%. The company aims to expand and maintain low credit losses.
- Increased originations for new contracts by 27.4%.
- Direct loans surged by 84.7%.
- Accounts 60+ days delinquent decreased to 3.5%.
- New credit facility reduces credit spread from 3.75% to 2.25%.
- Reported a net loss of $0.7 million for Q3 FY2022.
- Total revenue declined 15.4% to $12.2 million.
- Interest and fee income decreased by 7.1% to $12.2 million.
- Operating expenses increased to $8.9 million from $7.4 million.
- Portfolio Yield for the three months ended December 31, 2021 increased to
27.7% compared to27.3% during the prior year third quarter - Originations year-over-year on new Contracts purchased for the three months ended December 31, 2021 increased by
27.4% compared to prior year third quarter - Originations year-over-year on Direct Loans for the three months ended December 31, 2021 increased by
84.7% compared to prior year third quarter - Accounts 60+ days delinquent decreased to
3.5% , excluding Chapter 13 bankruptcy accounts, compared to3.9% as of the prior year third quarter
CLEARWATER, Fla., Jan. 31, 2022 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ: NICK) announced a net loss for the three months ended December 31, 2021 of
The Company announced net income for the nine months ended December 31, 2021 of
For the nine months ended December 31, 2021, the Company originated
“We are generally pleased with our financial results for the 3rd Quarter of Fiscal Year in spite of having to recognize a one-time, non-recurring, non-cash transaction of
“Additionally, we saw our payroll expenses increase by more than
“The continued positive portfolio results along with the large increase in both Direct and Indirect originations are the real news from this Quarter. We have not only outperformed year-over-year originations in both categories but have actually out produced each of the last 3 years for the same period. We recently opened our 47th office in Houston, TX,” continued Marohn. “We continue to pursue expansion efforts in several markets. We are maintaining historically low credit losses. We are starting to enjoy origination growth from both product lines. The increased investment and emphasis on employee training and development is yielding improved results. These are all positive indicators as we head into our 4th Quarter of this fiscal year.”
Non-GAAP financial measures
From time-to-time the Company uses certain financial measures derived on a basis other than generally accepted accounting principles (“GAAP”), primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. Such financial measures qualify as “non-GAAP financial measures” as defined in SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items and other infrequent charges. The Company may present these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components to understanding and assessing the Company’s financial performance. Such non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP and are, thus, susceptible to varying calculations, any non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures of other companies.
| Key Performance Indicators on Contracts Purchased | ||||||||||||||||||||||||||||
| (Purchases in thousands) | ||||||||||||||||||||||||||||
| Number of | Average | |||||||||||||||||||||||||||
| Fiscal Year | Contracts | Principal Amount | Amount | Average | Average | Average | ||||||||||||||||||||||
| /Quarter | Purchased | Purchased# | Financed*^ | APR* | Discount%* | Term* | ||||||||||||||||||||||
| 2022 | 5,389 | $ | 58,665 | $ | 10,906 | 23.1 | % | 6.8 | % | 47 | ||||||||||||||||||
| 3 | 1,735 | 19,480 | 11,228 | 23.1 | % | 6.8 | % | 47 | ||||||||||||||||||||
| 2 | 1,707 | 18,880 | 11,061 | 23.0 | % | 6.7 | % | 47 | ||||||||||||||||||||
| 1 | 1,947 | 20,305 | 10,429 | 23.2 | % | 7.0 | % | 46 | ||||||||||||||||||||
| 2021 | 7,307 | $ | 74,025 | $ | 10,135 | 23.4 | % | 7.5 | % | 46 | ||||||||||||||||||
| 4 | 2,429 | 24,637 | 10,143 | 23.2 | % | 7.5 | % | 46 | ||||||||||||||||||||
| 3 | 1,483 | 15,285 | 10,307 | 23.4 | % | 7.5 | % | 46 | ||||||||||||||||||||
| 2 | 1,709 | 17,307 | 10,127 | 23.5 | % | 6.8 | % | 46 | ||||||||||||||||||||
| 1 | 1,686 | 16,796 | 9,962 | 23.5 | % | 8.0 | % | 46 | ||||||||||||||||||||
| 2020 | 7,647 | $ | 76,696 | $ | 10,035 | 23.4 | % | 7.9 | % | 47 | ||||||||||||||||||
| 4 | 1,991 | 19,658 | 9,873 | 23.5 | % | 7.9 | % | 46 | ||||||||||||||||||||
| 3 | 1,753 | 17,880 | 10,200 | 23.3 | % | 7.6 | % | 47 | ||||||||||||||||||||
| 2 | 2,011 | 20,104 | 9,997 | 23.5 | % | 7.9 | % | 46 | ||||||||||||||||||||
| 1 | 1,892 | 19,054 | 10,071 | 23.4 | % | 8.3 | % | 47 | ||||||||||||||||||||
| 2019 | 7,684 | $ | 77,499 | $ | 10,091 | 23.6 | % | 8.2 | % | 47 | ||||||||||||||||||
| Key Performance Indicators on Direct Loans Originated (Originations in thousands) | |||||||||||||||||||||||||
| Number of | Principal | Average | |||||||||||||||||||||||
| Fiscal Year | Loans | Amount | Amount | Average | Average | ||||||||||||||||||||
| /Quarter | Originated | Originated | Financed*^ | APR* | Term* | ||||||||||||||||||||
| 2022 | 5,186 | $ | 21,282 | $ | 4,173 | 30.6 | % | 25 | |||||||||||||||||
| 3 | 2,282 | 8,505 | 3,727 | 31.8 | % | 24 | |||||||||||||||||||
| 2 | 1,588 | 7,040 | 4,433 | 30.0 | % | 26 | |||||||||||||||||||
| 1 | 1,316 | 5,737 | 4,359 | 30.1 | % | 25 | |||||||||||||||||||
| 2021 | 3,497 | $ | 14,148 | $ | 4,131 | 29.6 | % | 25 | |||||||||||||||||
| 4 | 753 | 3,284 | 4,362 | 29.6 | % | 25 | |||||||||||||||||||
| 3 | 1,265 | 4,605 | 3,641 | 30.9 | % | 22 | |||||||||||||||||||
| 2 | 924 | 3,832 | 4,147 | 29.2 | % | 25 | |||||||||||||||||||
| 1 | 555 | 2,427 | 4,373 | 28.7 | % | 26 | |||||||||||||||||||
| 2020 | 3,142 | $ | 12,638 | $ | 4,017 | 28.2 | % | 25 | |||||||||||||||||
| 4 | 720 | 3,104 | 4,310 | 28.6 | % | 25 | |||||||||||||||||||
| 3 | 1,137 | 4,490 | 3,949 | 28.4 | % | 24 | |||||||||||||||||||
| 2 | 739 | 2,988 | 4,043 | 27.4 | % | 25 | |||||||||||||||||||
| 1 | 546 | 2,056 | 3,765 | 28.2 | % | 24 | |||||||||||||||||||
| 2019 | 1,918 | $ | 7,741 | $ | 4,036 | 26.4 | % | 26 | |||||||||||||||||
*Each average included in the tables is calculated as a simple average.
^Average amount financed is calculated as a single loan amount.
#Bulk portfolio purchase excluded for period-over-period comparability
Nicholas Financial, Inc. (NASDAQ:NICK) is a specialized consumer finance company, operating branch locations in both Southeastern and Midwestern U.S. States. The Company engages primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. Additionally, Nicholas Financial originates direct consumer loans (“Direct Loans”) and sells consumer-finance related products. For an index of Nicholas Financial, Inc’s new releases or to obtain a specific release, please visit our website at www.nicholasfinancial.com.
Cautionary Note regarding Forward-Looking Statements
This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company’s current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as “anticipate,” “estimate,” intend,” “plan,” “expect,” “project,” “believe,” “may,” “will,” “should,” “would,” “could,” “probable” and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are inherently subject to risks and uncertainties. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include the following: the ongoing impact of the COVID-19 pandemic and the mitigation efforts by governments and related effects on our financial condition, business operations and liquidity, our customers, our employees, and the overall economy; recently enacted, proposed or future legislation and the manner in which it is implemented; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that may be exercised by regulators, including, but not limited to, the Securities and Exchange Commission (SEC), Department of Justice, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans; labor unrest; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements; the Company's assessment of its internal control over financial reporting; changes in interest rates; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; our dependence on debt and the potential impact of limitations in the Company’s amended revolving credit facility or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company). All forward-looking statements and cautionary statements included in this document are made as of the date hereof based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement or cautionary statement.
Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)
| Three months ended | Nine months ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Interest and fee income on finance receivables | $ | 12,240 | $ | 13,180 | $ | 37,406 | $ | 41,395 | ||||||||||
| Realized gain on equity investments | - | 238 | - | 238 | ||||||||||||||
| Unrealized gain on equity investments | - | 1,056 | - | 1,101 | ||||||||||||||
| Total Revenue | $ | 12,240 | $ | 14,474 | $ | 37,406 | $ | 42,734 | ||||||||||
| Expenses: | ||||||||||||||||||
| Operating expenses | 8,863 | 7,407 | 25,127 | 22,881 | ||||||||||||||
| Provision for credit losses | 1,675 | 650 | 3,800 | 7,000 | ||||||||||||||
| Interest expense | 2,613 | 1,442 | 4,923 | 4,660 | ||||||||||||||
| Total expenses | 13,151 | 9,499 | 33,850 | 34,541 | ||||||||||||||
| (Loss) income before income taxes | (911 | ) | 4,975 | 3,556 | 8,193 | |||||||||||||
| (Benefit) income tax expense | (209 | ) | 1,190 | 926 | 1,711 | |||||||||||||
| Net (loss) income | $ | (702 | ) | $ | 3,785 | $ | 2,630 | $ | 6,482 | |||||||||
| (Loss) earnings per share: | ||||||||||||||||||
| Basic | $ | (0.09 | ) | $ | 0.49 | $ | 0.34 | $ | 0.84 | |||||||||
| Diluted | $ | (0.09 | ) | $ | 0.49 | $ | 0.34 | $ | 0.85 | |||||||||
Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)
| December 31, | March 31, | |||||||
| 2021 | 2021 | |||||||
| Cash and restricted cash | $ | 6,530 | $ | 32,977 | ||||
| Finance receivables, net | 165,660 | 170,318 | ||||||
| Repossessed assets | 763 | 685 | ||||||
| Operating lease right-of-use assets | 4,594 | 3,392 | ||||||
| Other assets | 5,039 | 5,066 | ||||||
| Total assets | $ | 182,586 | $ | 212,438 | ||||
| Credit facility, net of debt issuance costs | $ | 54,795 | $ | 86,154 | ||||
| Note payable | 3,244 | 3,244 | ||||||
| Operating lease liabilities | 4,681 | 3,367 | ||||||
| Other liabilities | 3,451 | 4,451 | ||||||
| Total liabilities | 66,171 | 97,216 | ||||||
| Shareholders’ equity | 116,415 | 115,222 | ||||||
| Total liabilities and shareholders’ equity | $ | 182,586 | $ | 212,438 | ||||
| Book value per share | $ | 15.35 | $ | 14.95 | ||||
| Three months ended | Nine months ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||
| Portfolio Summary | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Average finance receivables (1) | $ | 176,949 | $ | 192,966 | $ | 179,333 | $ | 203,996 | ||||||||||
| Average indebtedness (2) | $ | 64,824 | $ | 101,522 | $ | 72,002 | $ | 112,476 | ||||||||||
| Interest and fee income on finance receivables | $ | 12,240 | $ | 13,180 | $ | 37,406 | $ | 41,395 | ||||||||||
| Interest expense | 2,613 | 1,442 | 4,923 | $ | 4,660 | |||||||||||||
| Net interest and fee income on finance receivables | $ | 9,627 | $ | 11,738 | $ | 32,483 | $ | 36,735 | ||||||||||
| Portfolio yield (3) | 27.67 | % | 27.32 | % | 27.81 | % | 27.06 | % | ||||||||||
| Interest expense as a percentage of average finance receivables | 5.91 | % | 2.99 | % | 3.66 | % | 3.05 | % | ||||||||||
| Provision for credit losses as a percentage of average finance receivables | 3.79 | % | 1.35 | % | 2.83 | % | 4.58 | % | ||||||||||
| Net portfolio yield (3) | 17.97 | % | 22.98 | % | 21.32 | % | 19.43 | % | ||||||||||
| Operating expenses as a percentage of average finance receivables | 20.04 | % | 15.35 | % | 18.68 | % | 14.96 | % | ||||||||||
| Pre-tax yield as a percentage of average finance receivables (4) | (2.07 | ) | % | 7.63 | % | 2.64 | % | 4.47 | % | |||||||||
| Net charge-off percentage (5) | 5.67 | % | 6.30 | % | 4.70 | % | 5.94 | % | ||||||||||
| Finance receivables | $ | 176,173 | $ | 188,626 | ||||||||||||||
| Allowance percentage (6) | 2.06 | % | 4.81 | % | ||||||||||||||
| Total reserves percentage (7) | 6.00 | % | 8.76 | % | ||||||||||||||
Note: All three-month statement of income performance indicators expressed as percentages have been annualized.
(1) Average finance receivables represent the average of finance receivables throughout the period.
(2) Average indebtedness represents the average outstanding borrowings under the Credit Facility. Average indebtedness does not include the PPP loan.
(3) Portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables. Net portfolio yield represents (a) interest and fee income on finance receivables minus (b) interest expense minus (c) the provision for credit losses, as a percentage of average finance receivables.
(4) Pre-tax yield represents net portfolio yield minus operating expenses, as a percentage of average finance receivables.
(5) Net charge-off percentage represents net charge-offs (charge-offs less recoveries) divided by average finance receivables, outstanding during the period.
(6) Allowance percentage represents the allowance for credit losses divided by finance receivables outstanding as of ending balance sheet date.
(7) Total reserves percentage represents the allowance for credit losses, purchase price discount, and unearned dealer discounts divided by finance receivables outstanding as of ending balance sheet date.
The following tables present certain information regarding the delinquency rates experienced by the Company with respect to automobile finance installment contracts (“Contracts”) and direct consumer loans (“Direct Loans”), excluding any Chapter 13 bankruptcy accounts:
(In thousands, except percentages)
| Contracts | Balance Outstanding | 30 – 59 days | 60 – 89 days | 90 – 119 days | 120+ | Total | ||||||||||||||||||||||
| December 31, 2021 | $ | 153,480 | $ | 9,886 | $ | 4,176 | $ | 1,662 | $ | 53 | $ | 15,777 | ||||||||||||||||
| 6.44 | % | 2.72 | % | 1.08 | % | 0.03 | % | 10.28 | % | |||||||||||||||||||
| December 31, 2020 | $ | 174,170 | $ | 12,914 | $ | 4,955 | $ | 2,117 | $ | 28 | $ | 20,014 | ||||||||||||||||
| 7.41 | % | 2.84 | % | 1.22 | % | 0.02 | % | 11.49 | % | |||||||||||||||||||
| Direct Loans | Balance Outstanding | 30 – 59 days | 60 – 89 days | 90 – 119 days | 120+ | Total | ||||||||||||||||||||||
| December 31, 2021 | $ | 22,545 | $ | 636 | $ | 199 | $ | 130 | $ | 0 | $ | 965 | ||||||||||||||||
| 2.82 | % | 0.88 | % | 0.58 | % | 0.00 | % | 4.28 | % | |||||||||||||||||||
| December 31, 2020 | $ | 14,227 | $ | 442 | $ | 188 | $ | 110 | $ | 4 | $ | 744 | ||||||||||||||||
| 3.11 | % | 1.32 | % | 0.77 | % | 0.03 | % | 5.23 | % | |||||||||||||||||||
The following table presents selected information on Contracts purchased and Direct Loans originated by the Company:
| Contracts | Direct Loans | |||||||||||||||||
| Three months ended | Three months ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| (Purchases in thousands) | (Originations in thousands) | |||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Purchases/Originations | $ | 19,480 | $ | 15,285 | $ | 8,505 | $ | 4,605 | ||||||||||
| Average APR | 23.1 | % | 23.4 | % | 31.8 | % | 30.9 | % | ||||||||||
| Average discount | 6.8 | % | 7.5 | % | N/A | N/A | ||||||||||||
| Average term (months) | 47 | 46 | 24 | 22 | ||||||||||||||
| Average amount financed | $ | 11,228 | $ | 10,307 | $ | 3,727 | $ | 3,641 | ||||||||||
| Number of contracts | 1,735 | 1,483 | 2,282 | 1,265 | ||||||||||||||
| Contracts | Direct Loans | |||||||||||||||||
| Nine months ended | Nine months ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| (Purchases in thousands) | (Originations in thousands) | |||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Purchases/Originations | $ | 58,665 | $ | 49,388 | $ | 21,282 | $ | 10,864 | ||||||||||
| Average APR | 23.1 | % | 23.5 | % | 30.6 | % | 29.6 | % | ||||||||||
| Average discount | 6.8 | % | 7.4 | % | N/A | N/A | ||||||||||||
| Average term (months) | 47 | 46 | 25 | 24 | ||||||||||||||
| Average amount financed | $ | 10,906 | $ | 10,132 | $ | 4,173 | $ | 4,054 | ||||||||||
| Number of contracts | 5,389 | 4,878 | 5,186 | 2,744 | ||||||||||||||
The following table presents selected information on the entire Contract and Direct Loan portfolios of the Company:
| Contracts | Direct Loans | |||||||||||||||||
| As of | As of | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| Portfolio | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Average APR | 22.8 | % | 22.7 | % | 29.8 | % | 28.4 | % | ||||||||||
| Average discount | 7.4 | % | 7.6 | % | N/A | N/A | ||||||||||||
| Average term (months) | 50 | 51 | 26 | 26 | ||||||||||||||
| Number of active contracts | 20,013 | 23,388 | 6,103 | 4,126 | ||||||||||||||
NASDAQ: NICK
Web site: www.nicholasfinancial.com
FAQ
What were Nicholas Financial's earnings for Q3 FY2022?
How much did total revenue decline for Nicholas Financial in Q3 FY2022?
What is Nicholas Financial's outlook for originations?
What is the status of Nicholas Financial's operating expenses?
