Nicholas Financial Reports 4th Quarter and Fiscal Year 2021 Results

Rhea-AI Summary

Nicholas Financial, Inc. (NASDAQ: NICK) reported a 399.6% year-over-year increase in income before income taxes for Q4 2021, totaling $2.8 million compared to $0.6 million the previous year. However, total revenue decreased by 10.8% to $13.3 million. The company achieved a net portfolio yield of 24.22%, up from 17.10% year-over-year. Delinquent accounts dropped to 1.9% from 2.9%. Net income for the year reached $8.4 million, with diluted EPS at $1.09, despite a 9.8% revenue decline.

Positive

• Income before income taxes increased by 399.6% to $2.8 million.
• Net portfolio yield increased to 24.22%, up from 17.10%.
• Delinquent accounts decreased to 1.9%, showing improved credit quality.
• Net income for the year rose to $8.4 million compared to $3.5 million the previous year.
• Diluted EPS increased to $1.09, up from $0.45.

Negative

• Total revenue decreased by 10.8% to $13.3 million in Q4 2021.
• The company reported a revenue decline of 9.8% for the fiscal year.

• Income year-over-year before income taxes for the three months ended March 31, 2021 increased by 399.6% compared to prior year fourth quarter
• Pre-tax yield as a percentage of average finance receivables for the three months ended March 31, 2021 increased to 4.92% compared to 1.03% during the prior year fourth quarter
• Net Portfolio Yield for the three months ended March 31, 2021 increased to 24.22% compared to 17.10% during the prior year fourth quarter
• Contracts purchased year-over-year for the three months ended March 31, 2021 increased by 25.3% compared to prior year fourth quarter
• Amount financed year-over-year on Direct Loans for the three months ended March 31, 2021 increased by 5.8% compared to prior year fourth quarter
• Accounts 60+ days delinquent decreased to 1.9%, excluding Chapter 13 bankruptcy accounts, compared to 2.9% as of the prior year fourth quarter

CLEARWATER, Fla., June 02, 2021 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended March 31, 2021 of $1.9 million compared to $2.3 million for the three months ended March 31, 2020. Diluted net income per share was $0.24 for the three months ended March 31, 2021 as compared to $0.29 for the three months ended March 31, 2020. Total revenue decreased 10.8% to $13.3 million for the three months ended March 31, 2021 as compared to $14.9 million for the three months ended March 31, 2020, which included gains of $0.5 million on equity investments during the three months ended March 31, 2021. The Company reported income before income taxes for the three months ended March 31, 2021 of $2.8 million compared to $0.6 million for the three months ended March 31, 2020. The Company recorded an income tax expense of approximately $0.9 million during the three months March 31, 2021 compared to an income tax benefit of $1.7 million during the three months ended March 31, 2020.

The Company announced net income for the year ended March 31, 2021 of $8.4 million compared to $3.5 million for the year ended March 31, 2020. Diluted net income per share was $1.09 for the year ended March 31, 2021 as compared to $0.45 for the year ended March 31, 2020. Total revenue decreased 9.8% to $56.0 million for the year ended March 31, 2021 as compared to $62.1 million for the year ended March 31, 2020, which included gains of $1.8 million on equity investments during the year ended March 31, 2021. The Company reported income before income taxes for the year ended March 31, 2021 of $10.9 million compared to $2.2 million for the year ended March 31, 2020. The Company recorded an income tax expense of approximately $2.6 million during the year ended March 31, 2021 compared to an income tax benefit of $1.2 million during the year ended March 31, 2020.

For the year ended March 31, 2021, the Company originated $88.2 million in finance receivables, collected $118.6 million in principal payments, reduced debt by a net amount of $35.3 million, repurchased $0.9 million of common stock, and increased cash by $8.3 million.

“We are very pleased with our 4th Quarter and overall Fiscal Year-end results,” commented Doug Marohn, President and CEO of Nicholas Financial, Inc. “We continue to produce excellent portfolio performance, recognizing very low delinquency and net write-offs, the likes of which we have not seen in years. We were also able to enjoy year-over-year increases in both Indirect and Direct originations and loan volumes. The year-over-year increase on Indirect originations was the first we have seen since my return to Nicholas, and it was especially gratifying to see this during the pandemic.”

“The ability to once again report substantially increased earnings is a testament to our core business strategy as well as to the hard-working men and women who execute that strategy every day,” Marohn continued. “Our commitment to the branch-based model with a local office in every market we service allows us to better support our dealer partners and our borrowing customers. This approach has also facilitated the expansion of our Direct Loan products to virtually every NFI branch office. As we continue to increase our core product market share in the existing branch markets, we remain focused on growing the Direct Loan business, as well as expanding our branch network in Western States.”

Key Performance Indicators on Contracts Purchased
(Purchases in thousands)
			Number of				Principal				Average
Fiscal Year			Contracts				Amount				Amount				Average					Average					Average
/Quarter			Purchased				Purchased#				Financed*^				APR*					Discount%*					Term*
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			$	10,086				23.5		%			8.2		%			47
4				2,151				21,233				9,871				23.5		%			8.0		%			46
3				1,625				16,476				10,139				23.5		%			8.1		%			47
2				1,761				17,845				10,133				23.5		%			8.4		%			47
1				2,147				21,945				10,221				23.7		%			8.3		%			48

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*
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			%			25
4			236				1,240				4,654			27.3			%			24
3			738				2,999				4,063			25.9			%			25
2			495				1,805				3,646			26.5			%			25
1			449				1,697				3,779			25.7			%			28

*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 primarily 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

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements, including expectations regarding the impact of COVID-19 on the Company’s business, its ability to obtain the expected financial and tax benefits from the CARES Act, and its ability to obtain loan forgiveness under its PPP loan, that involve risks and uncertainties, including risk relating to competition and our ability to increase and maintain yield and profitability at desirable levels, as well as risks relating to general economic conditions, including in connection with the current COVID-19 pandemic, access to bank financing, our ability to expand the geographical scope of, and otherwise continue growing, our Direct Loan operations, and other risks detailed from time to time in the Company’s filings and reports with the Securities and Exchange Commission including the Company’s Annual Report on Form 10-K for the year ended March 31, 2020. When used in this document, the words “anticipate”, “estimate”, “expect”, “will”, “may”, “plan,” “believe”, “intend” and similar expressions are intended to identify forward-looking statements. Such statements are based on the beliefs of Company management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially from those anticipated, estimated or expect. 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									Twelve months ended
		March 31,								March 31,
		2021				2020				2021				2020
Revenue:
Interest and fee income on finance receivables		$	12,816			$	14,896			$	54,211				$	62,095
Gain on equity investments			470				-				1,809					-
Total revenue			13,286				14,896				56,020					62,095
Expenses:
Operating expenses			8,963				8,583				31,844					34,432
Provision for credit losses			250				3,919				7,250					16,901
Interest expense			1,320				1,843				5,980					8,515
Total expenses			10,533				14,345				45,074					59,848
Income before income taxes			2,753				551				10,946					2,247
Income tax expense (benefit)			884				(1,744	)			2,595					(1,219	)
Net income		$	1,869			$	2,295			$	8,351				$	3,466
Earnings per share:
Basic		$	0.24			$	0.29			$	1.09				$	0.45
Diluted		$	0.24			$	0.29			$	1.09				$	0.45

Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)

		March 31,				March 31,
		2021				2020
Cash and restricted cash		$	32,977			$	24,684
Finance receivables, net			170,318				199,781
Repossessed assets			685				1,340
Operating lease right-of-use assets			3,392				2,598
Other assets			5,066				10,415
Total assets		$	212,438			$	238,818
Credit facility, net of debt issuance costs		$	86,154			$	124,255
Note payable			3,244				-
Operating lease liabilities			3,367				2,652
Other liabilities			4,451				4,332
Total liabilities			97,216				131,239
Shareholders’ equity			115,222				107,579
Total liabilities and shareholders’ equity		$	212,438			$	238,818
Book value per share		$	14.95			$	13.78

		Three months ended								Twelve months ended
		March 31,								March 31,
		(In thousands)								(In thousands)
Portfolio Summary		2021				2020				2021				2020
Average finance receivables (1)		$	185,750			$	213,666			$	199,102				$	226,541
Average indebtedness (2)		$	92,761			$	121,733			$	107,615				$	132,552
Interest and fee income on finance receivables		$	12,816			$	14,896			$	54,211				$	62,095
Interest expense			1,320				1,843				5,980					8,515
Net interest and fee income on finance receivables		$	11,496			$	13,053			$	48,231				$	53,580
Portfolio yield (3)			27.60		%		27.89		%		27.23		%			27.41		%
Interest expense as a percentage of average finance receivables			2.84		%		3.45		%		3.00		%			3.76		%
Provision for credit losses as a percentage of average finance receivables			0.54		%		7.34		%		3.64		%			7.46		%
Net portfolio yield (3)			24.22		%		17.10		%		20.59		%			16.19		%
Operating expenses as a percentage of average finance receivables			19.30		%		16.07		%		15.99		%			15.20		%
Pre-tax yield as a percentage of average finance receivables (4)			4.92		%		1.03		%		4.60		%			0.99		%
Net charge-off percentage (5)			6.83		%		11.29		%		6.16		%			10.01		%
Finance receivables										$	184,237				$	219,366
Allowance percentage (6)											3.34		%			5.09		%
Total reserves percentage (7)											7.49		%			9.18		%

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.
(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
March 31, 2021		$	170,195			$	6,289			$	2,430				$	896				$	42				$	9,657
							3.70		%		1.43		%			0.53		%			0.02		%			5.67		%
March 31, 2020		$	207,247			$	14,977			$	4,290				$	1,893				$	19				$	21,179
							7.23		%		2.07		%			0.91		%			0.01		%			10.22		%
Direct Loans		Balance
		Outstanding				30 – 59 days				60 – 89 days					90 – 119 days					120+					Total
March 31, 2021		$	13,909			$	253			$	101				$	81				$	10				$	445
							1.82		%		0.73		%			0.58		%			0.07		%			3.20		%
March 31, 2020		$	11,844			$	344			$	136				$	59				$	0				$	539
							2.90		%		1.15		%			0.50		%			0.00		%			4.55		%

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
		March 31,								March 31,
		(Purchases in thousands)								(Originations in thousands)
		2021				2020				2021				2020
Purchases/Originations		$	24,637			$	19,658			$	3,284				$	3,104
Average APR			23.2		%		23.5		%		29.6		%		28.6			%
Average discount			7.5		%		7.9		%	N/A					N/A
Average term (months)			46				46				25					25
Average amount financed		$	10,143			$	9,873			$	4,362				$	4,310
Number of contracts			2,429				1,991				753					720
		Contracts								Direct Loans
		Twelve months ended								Twelve months ended
		March 31,								March 31,
		(Purchases in thousands)								(Originations in thousands)
		2021				2020				2021				2020
Purchases/Originations		$	74,025			$	76,696			$	14,148				$	12,638
Average APR			23.4		%		23.4		%		29.6		%			28.2		%
Average discount			7.5		%		7.9		%	N/A					N/A
Average term (months)			46				47				25					25
Average amount financed		$	10,135			$	10,035			$	4,131				$	4,017
Number of contracts			7,307				7,647				3,497					3,142

The following table presents selected information on the entire Contract and Direct Loan portfolios of the Company:

		Contracts								Direct Loans
		As of								As of
		March 31,								March 31,
Portfolio		2021				2020				2021				2020
Average APR			22.8		%		22.6		%		28.5		%			27.3		%
Average discount			7.6		%		7.6		%	N/A					N/A
Average term (months)			51			52				26					26
Number of active contracts			22,760				26,894				4,017					3,481

Contact:	Irina Nashtatik		NASDAQ: NICK
	CFO Ph # (727)-726-0763		Web site: www.nicholasfinancial.com

FAQ

What was Nicholas Financial's net income for Q4 2021?

Nicholas Financial reported a net income of $1.9 million for Q4 2021.

How did total revenue change for Nicholas Financial in Q4 2021?

Total revenue decreased by 10.8% to $13.3 million compared to Q4 2020.

What is the diluted EPS for Nicholas Financial for the year ended March 31, 2021?

The diluted EPS for Nicholas Financial was $1.09 for the year ended March 31, 2021.

How has Nicholas Financial's delinquency rate changed?

Nicholas Financial's delinquent accounts decreased to 1.9% from 2.9% year-over-year.

What was the net portfolio yield for Nicholas Financial in Q4 2021?

The net portfolio yield increased to 24.22% for Q4 2021.