CLEARWATER, Fla., Feb. 06, 2018 (GLOBE NEWSWIRE) -- In a release issued yesterday under the same headline by
Nicholas Financial, Inc. (NASDAQ:NICK), please note a change in the Portfolio Summary table. In the third column of the
second-to-last row, the figure should be "10.13%" rather than "15.20" as originally issued. The corrected release follows:
Nicholas Financial Reports 3rd Quarter Results
Nicholas Financial, Inc. (NASDAQ:NICK) announced that its pretax income for the three months ending December 31,
2017 was $.8 million. In the month of December 2017, the Company had a one-time income tax expense adjustment of $3.4 million
relating to the Tax Cuts and Jobs Act (“TCJA”) which reduced net income to a net loss. The net loss for the three months ended
December 31, 2017 was $2.9 million.
For the three months ended December 31, 2016 the Company had pretax earnings of $2.6 million and net earnings of $1.6 million.
Diluted net loss per share decreased to $0.37 for the three months ended December 31, 2017 as compared to diluted earnings per
share of $0.21 for the three months ended December 31, 2016. Revenue decreased 7% to $20.5 million for the three months ended
December 31, 2017 as compared to $22.0 million for the three months ended December 31, 2016.
The Company announced that its pretax income for the nine months ending December 31, 2017 was $2.7 million. In the month of
December 2017, the Company had a one-time income tax expense adjustment of $3.4 million relating to the TCJA which reduced net
income to a net loss. The net loss for the nine months ended December 31, 2017 was $1.7 million.
For the nine months ended December 31, 2016 the Company had pretax earnings of $10.5 million and net earnings of $6.5 million.
Diluted net loss per share decreased to $0.22 for the nine months ended December 31, 2017 as compared to diluted earnings per share
of $0.83 for the nine months ended December 31, 2016. Revenue decreased 5% to $64.1 million for the nine months ended December 31,
2017 as compared to $67.6 million for the nine months ended December 31, 2016.
On December 22, 2017, the Tax Cuts and Jobs Act was passed into law (“TCJA”). The TCJA includes a broad
range of tax reform including changes to tax rates and deductions that are effective January 1, 2018. The decrease in the enacted
corporate tax rate expected to apply when our temporary differences are realized or settled ultimately resulted in a one-time
revaluation of our net deferred tax asset of $3.4 million in December 2017 with a corresponding charge to income tax expense. The
tax effects of the TCJA increased income tax expense to a level that reduced net income to a net loss for both the three and
nine-month periods ending December 31, 2017.
As noted in prior filings the Company began modifying its underwriting guidelines, including the use of
alternative data, in an effort to improve the quality of contracts being purchased. These changes led to approximately a 39% and
36% reduction in Contracts acquired during the three and nine months ended December 31, 2017, respectively, as compared to the
three and nine months ended December 31, 2016. The reduction in Contracts purchased during these periods resulted in
a reduction of revenue during both the three and nine months ended December 31, 2017 as compared to the three and nine months ended
December 31, 2016.
Our net earnings for the nine months ended December 31, 2017 were also affected by a $4.9 million increase in
the provision for credit losses as compared to the nine months ended December 31, 2016 due to continued higher charge-offs and
past-due accounts.
“Although we are still very aware of excessive competition and its impact on the industry, Nicholas is now more
focused on our own operations, procedures and performance. Since I returned to the Company in December 2017, we have recommitted
ourselves to the Branch model and all the benefits that model offers. Along with that comes a recommitment to the
underwriting discipline and pricing controls that made Nicholas a very successful company for decades. These are the same
disciplines and controls that will help us regain control of our portfolio, minimize loses and increase returns,” said Doug Marohn,
President and CEO.
Nicholas Financial, Inc. is one of the largest publicly-traded specialty consumer finance companies in North
America. The Company operates branch locations in both Southeastern and Midwestern U.S. states. The Company has approximately
7,885,000 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.
Except for the historical information contained herein, the matters discussed in this news release include
forward-looking statements that involve risks and uncertainties including general economic conditions, access to bank financing,
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, 2017. 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. All forward-looking statements and cautionary statements included in this document are made as of
the date hereby 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 (Loss)
(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)
| |
Three
months ended
December 31,
|
|
Nine
months ended
December 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Revenue: |
|
|
|
|
| Interest and fee income on finance receivables |
$ |
20,526 |
|
$ |
22,044 |
|
$ |
64,062 |
|
$ |
67,606 |
Expenses: |
|
|
|
|
| Operating |
|
8,138 |
|
|
8,484 |
|
|
24,984 |
|
|
26,628 |
| Provision for credit losses |
|
8,989 |
|
|
8,796 |
|
|
28,887 |
|
|
23,966 |
| Interest expense |
|
2,585 |
|
|
2,258 |
|
|
7,483 |
|
|
6,745 |
| Change in fair value of interest rate swaps |
|
- |
|
|
(81) |
|
|
17 |
|
|
(184) |
| |
|
19,712 |
|
|
19,457 |
|
|
61,371 |
|
|
57,155 |
| |
|
|
|
|
| Operating income before income taxes |
|
814 |
|
|
2,587 |
|
|
2,691 |
|
|
10,451 |
| Income tax expense |
|
3,712 |
|
|
981 |
|
|
4,432 |
|
|
3,972 |
| Net income (loss) |
$ |
(2,898) |
|
$ |
1,606 |
|
$ |
(1,741) |
|
$ |
6,479 |
| |
|
|
|
|
| Earnings (loss) per share: |
|
|
|
|
| Basic |
$ |
(0.37) |
|
$ |
0.21 |
|
$ |
(0.22) |
|
$ |
0.83 |
| Diluted |
$ |
(0.37) |
|
$ |
0.21 |
|
$ |
(0.22) |
|
$ |
0.83 |
| |
| |
Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)
| |
|
December 31,
|
|
March 31,
|
| |
|
2017 |
|
2017 |
| Cash |
|
$ |
3,082 |
|
$ |
2,855 |
| Finance receivables, net |
|
|
281,358 |
|
|
317,205 |
| Other assets |
|
|
11,750 |
|
|
13,552 |
| |
|
|
|
| Total assets |
|
$ |
296,190 |
|
$ |
333,612 |
| |
|
|
|
| Line of credit |
|
$ |
178,000 |
|
$ |
213,000 |
| Other liabilities |
|
|
10,493 |
|
|
11,752 |
| |
|
|
|
| Total liabilities |
|
|
188,493 |
|
|
224,752 |
| |
|
|
|
| Shareholders' equity |
|
|
107,697 |
|
|
108,860 |
| |
|
|
|
| Total liabilities and shareholders’ equity |
|
$
|
296,190 |
|
$
|
333,612 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
Three months
ended
December 31,
(In thousands)
|
|
Nine months ended
December 31,
(In thousands)
|
| Portfolio Summary |
2017 |
|
2016
|
|
2017 |
|
2016
|
| Average finance receivables, net of unearned interest (1) |
$ |
321,742 |
|
|
$ |
349,916 |
|
$ |
333,660 |
|
|
$ |
345,950 |
|
| Average indebtedness (2) |
$ |
183,615 |
|
|
$ |
210,745 |
|
$ |
196,619 |
|
|
$ |
209,875 |
|
| Interest and fee income on finance receivables |
$ |
20,526 |
|
|
$ |
22,044 |
|
$ |
64,062 |
|
|
$ |
67,606 |
|
| Interest expense |
|
2,585 |
|
|
|
2,258 |
|
|
7,483 |
|
|
|
6,745 |
|
| Net interest and fee income on finance
receivables |
$ |
17,941 |
|
|
$ |
19,786 |
|
$ |
56,579 |
|
|
$ |
60,861 |
|
| Gross portfolio yield (3) |
|
25.52% |
|
|
|
25.20% |
|
|
25.60% |
|
|
|
26.06% |
|
Interest expense as a percentage of average finance receivables,
net of unearned interest |
|
3.21% |
|
|
|
2.58% |
|
|
2.99% |
|
|
|
2.60% |
|
Provision for credit losses as a percentage of average finance receivables,
net of unearned interest |
|
11.18% |
|
|
|
10.05% |
|
|
11.54% |
|
|
|
9.24% |
|
| Net portfolio yield (3) |
|
11.13% |
|
|
|
12.57% |
|
|
11.07% |
|
|
|
14.22% |
|
Marketing, salaries, employee benefits, depreciation, and administrative
expenses as a percentage of average finance receivables, net of unearned
interest |
|
10.12% |
|
|
|
9.70% |
|
|
9.98% |
|
|
|
10.26% |
|
Pre-tax yield as a percentage of average finance receivables, net of
unearned interest (4) |
|
1.01% |
|
|
|
2.87% |
|
|
1.09% |
|
|
|
3.96% |
|
| Write-off to liquidation (5) |
|
13.66% |
|
|
|
12.35% |
|
|
13.00% |
|
|
|
11.02% |
|
| Net charge-off percentage (6) |
|
10.63% |
|
|
|
8.86% |
|
|
10.13% |
|
|
|
8.57% |
|
| Allowance percentage (7) |
|
6.59% |
|
|
|
4.21% |
|
|
6.35% |
|
|
|
4.26% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: All three-month and nine-month statement of income performance indicators expressed as
percentages have been annualized.
- Average finance receivables, net of unearned interest, represents the average of gross finance receivables, less unearned
interest throughout the period.
- Average indebtedness represents the average outstanding borrowings under the Line.
- Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance
receivables, net of unearned interest. 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, net of unearned
interest.
- Pre-tax yield represents net portfolio yield minus administrative expenses (marketing, salaries, employee benefits,
depreciation, and administrative), as a percentage of average finance receivables, net of unearned interest.
- Write-off to liquidation percentage is defined as net charge-offs divided by liquidation. Liquidation is defined as beginning
receivable balance plus current period purchases and originations minus ending receivable balance.
- Net charge-off percentage represents net charge-offs (charge-offs less recoveries) divided by average finance receivables,
net of unearned interest, outstanding during the period.
- Allowance percentage represents the allowance for credit losses divided by average finance receivables, net of unearned
interest, 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”) on a gross basis
which includes unearned interest, excluding any Chapter 13 bankruptcy accounts:
(In thousands, except percentages)
| Contracts |
|
Gross Balance
Outstanding |
|
31 – 60 days |
|
61 – 90 days |
|
91 – 120 days |
|
Over 120 |
|
Total |
| December 31, 2017
|
|
$439,828 |
|
$33,453 |
|
$14,039 |
|
$7,893 |
|
$5,121 |
|
$60,506 |
| |
|
|
|
7.61% |
|
3.19% |
|
1.79% |
|
1.16% |
|
13.76% |
| December 31, 2016 |
|
$499,549 |
|
$35,184 |
|
$17,263 |
|
$11,072 |
|
$8,645 |
|
$72,164 |
| |
|
|
|
7.04% |
|
3.46% |
|
2.22% |
|
1.73% |
|
14.45% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Direct Loans |
|
Gross Balance
Outstanding |
|
31 – 60 days |
|
61 – 90 days |
|
91 – 120 days |
|
Over 120 |
|
Total |
| December 31, 2017 |
|
$10,566 |
|
$254 |
|
$102 |
|
$32 |
|
$83 |
|
$471 |
| |
|
|
|
2.41% |
|
0.97% |
|
0.30% |
|
0.78% |
|
4.46% |
| December 31, 2016 |
|
$11,511 |
|
$282 |
|
$155 |
|
$61 |
|
$64 |
|
$562 |
| |
|
|
|
2.45% |
|
1.34% |
|
0.53% |
|
0.56% |
|
4.88% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents selected information on Contracts purchased by the Company, net of unearned
interest (1):
| |
Three
months ended
December 31,
(Purchases in thousands) |
|
Nine
months ended
December 31,
(Purchases in thousands) |
| Contracts |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Purchases |
$ |
27,378 |
|
$ |
45,941 |
|
$ |
80,321 |
|
$ |
128,312 |
| Weighted APR |
|
21.68% |
|
|
21.99% |
|
|
21.99% |
|
|
22.20% |
| Average discount |
|
6.89% |
|
|
6.87% |
|
|
7.23% |
|
|
7.00% |
| Weighted average term (months)
|
|
54 |
|
|
57 |
|
|
55 |
|
|
57 |
| Average loan |
$ |
11,577 |
|
$ |
11,945 |
|
$ |
11,552 |
|
$ |
11,727 |
| Number of contracts |
|
2,365 |
|
|
3,846 |
|
|
6,953 |
|
|
10,942 |
| |
| |
The following table presents selected information on the entire Contract portfolio of the Company (1):
| |
As
of
December 31, |
| Portfolio |
2017 |
|
2016 |
| Weighted APR |
22.21% |
|
22.43% |
| Weighted average discount |
7.25% |
|
7.48% |
| Weighted average term (months)
|
57 |
|
57 |
| Number of active contracts |
33,993 |
|
37,834 |
| |
- The table does not include any selected information on Direct Loans; which only accounts for approximately 2% of the
Company’s total receivable portfolio.
Contact:
Katie MacGillivary
Vice President, CFO
Ph # - 727-726-0763
Web site: www.nicholasfinancial.com
