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CST: 11/12/2019 13:54:26   

Nicholas Financial Reports 1st Quarter Fiscal Year 2020 Results

124 Days ago

  • Accounts 60+ days delinquent decreased to 3.0%, excluding Chapter 13 bankruptcy accounts, compared to 3.9% as of the prior year first quarter
  • Average APR on new contracts purchased during the quarter decreased slightly to 23.4% compared to 23.7% during the prior year first quarter
  • Average APR on the Contract portfolio increased to 22.6% and the average APR on the Direct Loans portfolio increased to 26.2%
  • Gross Portfolio Yield increased to 28.3%
  • Interest and fee income on finance receivables decreased 11.3% due to a 20.7% decrease in average finance receivables, compared to prior year first quarter

CLEARWATER, Fla., Aug. 09, 2019 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended June 30, 2019 of $0.6 million compared to $1.4 million for the three months ended June 30, 2018.  Diluted net income per share was $0.07 for the three months ended June 30, 2019 as compared to $0.18 for the three months ended June 30, 2018. Revenue decreased 11.3% to $16.6 million for the three months ended June 30, 2019 as compared to $18.8 million for the three months ended June 30, 2018. The Company reported operating income before income taxes for the three months ended June 30, 2019 of $0.8 million compared $2.0 million for the three months ended June 30, 2018.   The Company recorded an income tax expense of approximately $0.2 million during the three months ended June 30, 2019 compared to $0.6 million during the three months ended June 30, 2018. 

“We are pleased to be able to report positive earnings in our first quarter,” commented Doug Marohn, President and CEO.  “Although it is only one quarter, the results indicate that the strategy and tactics deployed during fiscal 2019 are starting to pay dividends in fiscal 2020.  Our core operations were profitable independent of the Metrolina acquisition, and that acquisition definitely helped to increase our realized net earnings for the quarter.”

Mr. Marohn went on to say, “More importantly, our portfolio metrics continue to improve and will be the driving force behind future earnings.  We continue to book loans with higher rate, increased discount, lesser advance and shortened term.  Our return to disciplined underwriting has had a positive impact on our portfolio yield as our gross portfolio yield has increased to 28.3% compared to 25.3% in the prior year first quarter.  The return to a 120+ day charge-off policy along with adjustments to our servicing approach has resulted in improved performance, too.  Our 30+ delinquency is down approximately 100 basis points with most of that coming from a reduction in the 60+ days past due category.”

“We are also starting to see our Direct Loan product contributing to our top and bottom lines.  Our Direct Loan portfolio has now grown to over $8 million and performs better than our indirect portfolio in terms of delinquency and losses.  Currently we offer direct loans in Florida, Georgia, North Carolina and Ohio; and we are in the process of obtaining licenses in the remaining states in which we operate.  As of July 2019, we obtained licensing in Tennessee, and we intend to initiate direct consumer lending there during the second quarter of fiscal 2020.  Several other states are in the final stages of licensing and we intend to have all states licensed and operational this calendar year,” Mr. Marohn added. 

Nicholas Financial, Inc. is a publicly-traded specialty consumer finance company, operating branch locations in both Southeastern and Midwestern U.S. states. The Company has approximately 7.9 million shares of voting common stock outstanding. For an index of Nicholas Financial, Inc.’s news releases or to obtain a specific release, visit our web site 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 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, 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, 2019.  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.

 
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*
2020     1,892   $   19,054   $   10,071   23.4 %   8.3 %   47
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
2018   9,767   $   109,575   $   11,219   22.4 %   7.4 %   54
4   2,814     29,254     10,396   23.3 %   7.9 %   50
3   2,365     27,378     11,577   21.7 %   6.9 %   54
2   2,239     25,782     11,515   22.0 %   7.3 %   55
1   2,349     27,161     11,563   22.3 %   7.6 %   55
                                 

                                                                                                                                                          

 
Key Performance Indicators on Loans Originated
(Originations in thousands)
    Number of   Principal              
Fiscal
Year
  Loans   Amount   Average Amount   Average     Average
/Quarter   Originated   Originated   Financed*   APR*     Term*
2020   546   2,056   $ 3,765   28.2 %   24
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 %   23
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
2018   2,036   $ 7,642   $ 3,754   25.2 %   29
4   380   1,445   3,752   25.0 %   29
3   622   2,218   3,566   25.2 %   28
2   501   1,953   3,897   25.1 %   29
1   533   2,026   3,801   25.4 %   30

*Each average included in the tables is calculated as a simple average.

 
 
Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)
 
  Three months ended
  June 30,
  2019     2018
Revenue:            
Interest and fee income on finance receivables $ 16,641     $ 18,759
Expenses:            
Operating expenses   8,971       8,801
Provision for credit losses   4,385       5,426
Interest expense   2,488       2,540
Total expenses   15,844       16,767
Operating income before income taxes   797       1,992
Income tax expense   206       572
Net income $ 591     $ 1,420
Earnings per share:            
Basic $ 0.07     $ 0.18
Diluted $ 0.07     $ 0.18
 



Condensed Consolidated Balance Sheets

(Unaudited, In Thousands)

  June 30,     March 31,
  2019     2019
Cash and restricted cash $ 34,517     $ 37,642
Finance receivables, net   209,426       202,042
Other assets   15,059       12,736
Intangibles   93       -
Goodwill   328       -
Total assets $ 259,423     $ 252,420
Credit facility $ 146,103     $ 142,619
Other liabilities   7,810       4,916
Total liabilities   153,913       147,535
Shareholders’ equity   105,510       104,885
Total liabilities and shareholders’ equity $ 259,423     $ 252,420
Book value per share $ 13.31     $ 13.26


  Three months ended    
  June 30,    
  (In thousands)    
Portfolio Summary 2019     2018    
Average finance receivables (1) $ 235,172     $ 296,502    
Average indebtedness (2) $ 149,043     $ 162,226    
Interest and fee income on finance receivables $ 16,641     $ 18,759    
Interest expense   2,488       2,540    
Net interest and fee income on finance receivables $ 14,153     $ 16,219    
Portfolio yield (3)   28.30   %   25.31   %
Interest expense as a percentage of average finance receivables   4.23   %   3.43   %
Provision for credit losses as a percentage of average finance receivables   7.46   %   7.32   %
Net portfolio yield (3)   16.61   %   14.56   %
Operating expenses as a percentage of average finance receivables   15.26   %   11.87   %
Pre-tax yield as a percentage of average finance receivables (4)   1.35   %   2.69   %
Net charge-off percentage (5)   8.93   %   8.80   %
Allowance percentage (6)   6.85   %   6.43   %


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 average finance receivables outstanding during the period.

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    
June 30, 2019   $ 226,711     $ 13,566     $ 5,302       $ 1,627       $ 10       $ 20,505    
              5.98 %     2.34 %       0.72 %       0.00   %     9.04 %  
June 30, 2018   $ 275,986     $ 16,645     $ 6,624       $ 2,377       $ 1,718       $ 27,364    
              6.03 %     2.40 %       0.86 %       0.62   %     9.91 %  
                                                         
Direct Loans   Balance                                                  
    Outstanding     30 – 59 days     60 – 89 days       90 – 119 days       120+       Total    
June 30, 2019   $ 8,698     $ 228     $ 103       $ 46       $ 0       $ 377    
              2.62 %     1.18 %       0.53 %       0.00   %     4.33 %  
June 30, 2018   $ 7,516     $ 167     $ 82       $ 36       $ 106       $ 391    
              2.22 %     1.09 %       0.48 %       1.41   %     5.20 %  

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  
    June 30,     June 30,  
    (Purchases in thousands)     (Originations in thousands)  
    2019     2018     2019     2018  
Purchases/Originations   $ 19,054     $ 21,945     $ 2,056       $ 1,697  
Average APR   23.35 %   23.69 %   28.16 %     25.73 %
Average discount   8.28 %     8.32 %   N/A       N/A  
Average term (months)     47       48       24         28  
Average loan   $ 10,071     $ 10,221     $ 3,765       $ 3,779  
Number of contracts     1,892       2,147       546         449  

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

    Contracts     Direct Loans  
    As of     As of  
    June 30,     June 30,  
Portfolio   2019     2018     2019     2018  
Average APR     22.63 %   22.38 %     26.24 %     26.09 %
Average discount   7.65 %   7.44 %   N/A       N/A  
Average term (months)   52     54     27       28  
Number of active contracts     28,631       32,069       2,763         2,498  


           
           
NICHOLAS     Contact: Kelly Malson   NASDAQ: NICK
Nicholas Financial, Inc.
Corporate Headquarters
2454 McMullen-Booth Rd.
Building C, Suite 501
Clearwater, FL 33759
    CFO
Ph #  (727)-726-0763
  Web site: www.nicholasfinancial.com

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