- Operating income increases 20% year-over-year
- Accounts 61+ days delinquent decreased to 4.1% year-over-year, excluding Chapter 13 bankruptcy accounts
- Provision for credit losses saw a 17.5% improvement from prior year second quarter
CLEARWATER, Fla., Nov. 01, 2018 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ: NICK) announced that its
net income for the three months ending September 30, 2018 was $0.6 million compared to $0.3 million for the three months ending
September 30, 2017. Diluted net earnings per share increased to $0.07 for the three months ended September 30, 2018 as
compared to $0.04 for the three months ended September 30, 2017. Although revenue decreased 9.1% to $19.4 million for the three
months ended September 30, 2018 as compared to $21.3 million for the three months ended September 30, 2017, the Company’s operating
income before income taxes increased for the three months ending September 30, 2018 to $678,000 compared to $564,000 for the three
months ending September 30, 2017.
Net income for the six months ending September 30, 2018 was $2.0 million compared to $1.2 million for the six
months ending September 30, 2017. Diluted net earnings per share increased to $0.25 for the six months ended September 30,
2018 as compared to $0.15 for the six months ended September 30, 2017. Although, revenue decreased 12.3% to $38.2 million for the
six months ended September 30, 2018 as compared to $43.5 million for the six months ended September 30, 2017, the Company’s
operating income before income taxes increased for the six months ending September 30, 2018 to $2.7 million compared to $1.9
million for the six months ending September 30, 2017.
“Although we produced relatively modest profits in the second quarter of fiscal 2019, we continue to be pleased
with our trends since my arrival 9 months ago,” said Doug Marohn, President and CEO of Nicholas Financial. “Our renewed focus
on financing primary transportation to and from work for subprime customers is continuing to have a positive impact on each of the
pools from the fourth quarter of fiscal 2018 forward. Prior pools are still presenting a challenge and continue to produce
losses of greater severity and frequency than more recent pools, however we are happy overall with even the prior pools performance
due to improved servicing and operational controls.”
The Company began modifying its underwriting guidelines half way through fiscal 2018, to improve the quality of
Contracts being purchased. These changes led to a decrease in the dollar amount of Contracts purchased by approximately $13.0
million, or 24.5%, during the six months ended September 30, 2018, as compared to the six months ended September 30,
2017. However, the number of Contracts purchased only decreased by 662, or 14.4%, over the same period of time, as illustrated
in the table below. The revenue decrease during the six months ended September 30, 2018, as compared to the six months ended
September 30, 2017, was a result of this reduction in the dollar amount of Contracts purchased. With tighter
underwriting guidelines and a decreasing portfolio, the Company’s provision for credit losses saw a 17.5% improvement for the three
months ended September 30, 2018 compared to the three months ended September 30, 2017 and a 30.6% improvement for the six months
ended September 30, 2018 compared to the six months ended September 30, 2017.
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Fiscal Year
/Quarter |
|
Number of
Contracts
purchased |
|
Principal Amount
purchased |
|
Average Amount
Financed |
|
Average
APR* |
|
Average
Discount%* |
|
Average
Term* |
| 2019 |
|
3,926 |
|
39,961,155 |
|
10,179 |
|
23.6 |
% |
|
8.4 |
% |
|
47 |
| 2 |
|
1,778 |
|
18,011,022 |
|
10,130 |
|
23.5 |
% |
|
8.4 |
% |
|
47 |
| 1 |
|
2,148 |
|
21,950,133 |
|
10,219 |
|
23.7 |
% |
|
8.3 |
% |
|
48 |
| 2018 |
|
9,767 |
|
109,575,099 |
|
11,219 |
|
22.4 |
% |
|
7.4 |
% |
|
54 |
| 4 |
|
2,814 |
|
29,253,725 |
|
10,396 |
|
23.3 |
% |
|
7.9 |
% |
|
50 |
| 3 |
|
2,365 |
|
27,378,449 |
|
11,577 |
|
21.7 |
% |
|
6.9 |
% |
|
54 |
| 2 |
|
2,239 |
|
25,782,056 |
|
11,515 |
|
22.0 |
% |
|
7.3 |
% |
|
55 |
| 1 |
|
2,349 |
|
27,160,869 |
|
11,563 |
|
22.3 |
% |
|
7.6 |
% |
|
55 |
| |
|
|
|
|
|
|
| 2017 |
|
14,619 |
|
170,941,206 |
|
11,693 |
|
22.2 |
% |
|
7.1 |
% |
|
57 |
| 4 |
|
3,677 |
|
42,629,274 |
|
11,593 |
|
22.3 |
% |
|
7.3 |
% |
|
56 |
| 3 |
|
3,846 |
|
45,941,459 |
|
11,945 |
|
22.0 |
% |
|
6.9 |
% |
|
57 |
| 2 |
|
3,592 |
|
41,540,401 |
|
11,565 |
|
22.3 |
% |
|
7.0 |
% |
|
57 |
| 1 |
|
3,504 |
|
40,830,072 |
|
11,609 |
|
22.4 |
% |
|
7.2 |
% |
|
57 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*The averages included in the table are calculated as a simple average.
Mr. Marohn continued, “the key performance indicators on our purchases over the last three quarters continue to
reflect our disciplined approach regarding proper pricing and structure on purchases. For the second quarter of fiscal 2019,
our average amount financed has dropped to $10,130 from $11,515 in the second quarter of fiscal 2018. The average term has
dropped from 55 months to 47 months and our average APR on purchased Contracts has increased from 22.0% to 23.5%. Proper
pricing and deal structuring are critical in this business, and we are extremely pleased that we have been able to meaningfully
improve these aspects in a relatively short period of time.”
“We are also excited to report that we are focusing more on our Direct Consumer Loan business. Nicholas
had only been producing direct loans in Florida and North Carolina. We have not only been able to increase our focus on
direct loan production in these two states, but we are now writing direct loans in the state of Georgia and have applied for our
license to conduct this business in the state of Ohio. Nicholas will continue to evaluate other states in our network for
expansion of the direct loan product. We believe this product line compliments our core business well and aligns extremely
well with our branch-based model.” In conclusion, Mr. Marohn stated, “we will continue to remain focused on our core business
and appropriate pricing of our purchases while also looking for ways to bring other revenue streams to our Company.”
Nicholas Financial, Inc. is a publicly-traded specialty consumer finance company in North America. The Company
operates 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.
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, 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, 2018. 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 |
|
Six months ended |
|
September 30, |
September 30, |
| |
2018 |
|
2017 |
|
2018 |
|
2017 |
| Revenue: |
|
|
|
|
|
|
|
|
|
|
|
| Interest and fee income on finance receivables |
$ |
19,404 |
|
$ |
21,338 |
|
$ |
38,163 |
|
$ |
43,536 |
| Expenses: |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
7,966 |
|
|
8,177 |
|
|
16,767 |
|
|
16,846 |
| Provision for credit losses |
|
8,374 |
|
|
10,146 |
|
|
13,801 |
|
|
19,898 |
| Interest expense |
|
2,386 |
|
|
2,443 |
|
|
4,926 |
|
|
4,898 |
| Change in fair value of interest rate swaps |
|
0 |
|
|
8 |
|
|
0 |
|
|
17 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Total expenses |
|
18,726 |
|
|
20,774 |
|
|
35,494 |
|
|
41,659 |
| |
|
|
|
|
|
|
|
|
|
|
| Operating income before income taxes |
|
678 |
|
|
564 |
|
|
2,669 |
|
|
1,877 |
| Income tax expense |
|
96 |
|
|
220 |
|
|
669 |
|
|
720 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
$ |
582 |
|
$ |
344 |
|
$ |
2,000 |
|
$ |
1,157 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
| Basic |
$ |
0.07 |
|
$ |
0.04 |
|
$ |
0.25 |
|
$ |
0.15 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Diluted |
$ |
0.07 |
|
$ |
0.04 |
|
$ |
0.25 |
|
$ |
0.15 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
| Condensed Consolidated Balance
Sheets |
| (Unaudited, In Thousands) |
| |
|
| |
|
|
|
|
|
| |
September 30, |
|
March 31, |
| |
2018 |
|
2018 |
| Cash |
$ |
2,787 |
|
$ |
2,626 |
| Finance receivables, net |
|
239,250 |
|
|
269,876 |
| Other assets |
|
8,353 |
|
|
8,357 |
| |
|
|
|
|
|
| Total assets |
$ |
250,390 |
|
$ |
280,859 |
| |
|
|
|
|
|
| Line of credit |
$ |
134,200 |
|
$ |
165,750 |
| Other liabilities |
|
5,726 |
|
|
6,672 |
| |
|
|
|
|
|
| Total liabilities |
|
139,926 |
|
|
172,422 |
| |
|
|
| Shareholders’ equity |
|
110,464 |
|
|
108,437 |
| |
|
|
|
|
|
| Total liabilities and shareholders’ equity |
$ |
250,390 |
|
$ |
280,859 |
| |
|
|
|
|
|
| Bookvalue per share |
$ |
13.98 |
|
$ |
13.73 |
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Three months ended |
|
Six months ended |
|
| September 30, |
September 30, |
| (In
thousands) |
(In
thousands) |
| Portfolio Summary |
2018 |
|
|
2017 |
|
2018 |
|
|
2017 |
|
| Average finance receivables (1) |
$ |
279,680 |
|
|
$ |
332,402 |
|
$ |
287,980 |
|
|
$ |
339,431 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average indebtedness (2) |
$ |
143,882 |
|
|
$ |
195,883 |
|
$ |
152,467 |
|
|
$ |
203,145 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest and fee income on finance receivables |
$ |
19,404 |
|
|
$ |
21,338 |
|
$ |
38,163 |
|
|
$ |
43,536 |
|
| Interest expense |
|
2,386 |
|
|
|
2,443 |
|
|
4,926 |
|
|
|
4,898 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest and fee income on finance receivables |
$ |
17,018 |
|
|
$ |
18,895 |
|
$ |
33,237 |
|
|
$ |
38,638 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Portfolio yield (3) |
|
27.75 |
% |
|
|
25.68 |
% |
|
26.50 |
% |
|
|
25.65 |
% |
| Interest expense as a percentage of average finance receivables |
|
3.41 |
% |
|
|
2.94 |
% |
|
3.42 |
% |
|
|
2.89 |
% |
| Provision for credit losses as a percentage of average finance receivables |
|
11.98 |
% |
|
|
12.21 |
% |
|
9.58 |
% |
|
|
11.72 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net portfolio yield (3) |
|
12.36 |
% |
|
|
10.53 |
% |
|
13.50 |
% |
|
|
11.04 |
% |
| Operating expenses as a percentage of average finance receivables |
|
11.39 |
% |
|
|
9.84 |
% |
|
11.64 |
% |
|
|
9.93 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-tax yield as a percentage of average finance receivables (4) |
|
0.97 |
% |
|
|
0.68 |
% |
|
1.85 |
% |
|
|
1.11 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Write-off to liquidation (5) |
|
13.67 |
% |
|
|
13.23 |
% |
|
12.28 |
% |
|
|
12.68 |
% |
| Net charge-off percentage (6) |
|
11.85 |
% |
|
|
10.29 |
% |
|
10.37 |
% |
|
|
9.90 |
% |
| Allowance percentage (7) |
|
6.86 |
% |
|
|
6.24 |
% |
|
6.66 |
% |
|
|
6.11 |
% |
| |
| Note: All three-month
and six-month statement of income performance indicators expressed as percentages have been annualized. |
| |
| (1) Average finance receivables represents the average
of gross finance receivables throughout the period. |
| (2) Average indebtedness represents the average
outstanding borrowings under the Line. |
| (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) 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. |
| (6) Net charge-off percentage represents net
charge-offs (charge-offs less recoveries) divided by average finance receivables, outstanding during the period. |
| (7) 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 |
|
31 – 60 days |
|
61 – 90 days |
|
91 – 120 days |
|
Over 120 |
|
Total |
|
|
Outstanding |
| September 30, 2018 |
$ |
256,095 |
|
$ |
18,322 |
|
$ |
6,341 |
|
$ |
2,181 |
|
$ |
1,970 |
|
$ |
28,814 |
|
| |
|
|
|
|
7.15 |
% |
|
2.48 |
% |
|
0.85 |
% |
|
0.77 |
% |
|
11.25 |
% |
| |
|
|
|
|
|
|
| September 30, 2017 |
$ |
311,132 |
|
$ |
18,330 |
|
$ |
8,768 |
|
$ |
5,067 |
|
$ |
3,624 |
|
$ |
35,789 |
|
| |
|
|
|
|
5.89 |
% |
|
2.82 |
% |
|
1.63 |
% |
|
1.16 |
% |
|
11.50 |
% |
| |
|
|
|
|
|
|
| Direct Loans |
Balance |
|
31 – 60
days |
|
61 – 90
days |
|
91 – 120
days |
|
Over
120 |
|
Total |
|
|
Outstanding |
| September 30, 2018 |
$ |
7,465 |
|
$ |
171 |
|
$ |
113 |
|
$ |
27 |
|
$ |
68 |
|
$ |
379 |
|
| |
|
|
|
|
2.29 |
% |
|
1.51 |
% |
|
0.36 |
% |
|
0.91 |
% |
|
5.08 |
% |
| |
|
|
|
|
|
|
| September 30, 2017 |
$ |
8,169 |
|
$ |
216 |
|
$ |
50 |
|
$ |
54 |
|
$ |
112 |
|
$ |
432 |
|
| |
|
|
|
|
2.64 |
% |
|
0.61 |
% |
|
0.66 |
% |
|
1.37 |
% |
|
5.29 |
% |
| |
|
| |
| The following table presents selected
information on Contracts purchased by the Company (1): |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Three months ended |
|
Six months ended |
|
| September 30, |
September 30, |
|
(Purchases in thousands) |
(Purchases in thousands) |
| Contracts |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
| Purchases |
$ |
18,011 |
|
$ |
25,782 |
|
$ |
39,961 |
|
$ |
52,943 |
|
| Weighted APR |
|
23.52 |
% |
|
21.99 |
% |
|
23.61 |
% |
|
22.15 |
% |
| Average discount |
|
8.42 |
% |
|
7.27 |
% |
|
8.36 |
% |
|
7.41 |
% |
| Weighted average term (months) |
|
47 |
|
|
55 |
|
|
47 |
|
|
55 |
|
| Average loan |
$ |
10,130 |
|
$ |
11,515 |
|
$ |
10,179 |
|
$ |
11,539 |
|
| Number of contracts |
|
1,778 |
|
|
2,239 |
|
|
3,926 |
|
|
4,588 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| The following table presents selected
information on the entire Contract portfolio of the Company (1): |
| |
|
|
|
|
|
|
| |
As of |
|
|
September 30, |
| Portfolio |
2018 |
|
2017 |
|
| Weighted APR |
|
22.37 |
% |
|
22.24 |
% |
| Weighted average discount |
|
7.23 |
% |
|
7.32 |
% |
| Weighted average term (months) |
|
54 |
|
|
57 |
|
| Number of active contracts |
|
30,548 |
|
|
34,935 |
|
| |
|
| (1) The table does not include any selected information
on Direct Loans; which only accounts for approximately 3% of the Company’s total receivable portfolio. |
| |
Contact:
Kelly Malson
CFO
Ph # - 727-726-0763
Web site: www.nicholasfinancial.com
