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Business and Finance 
Tue, August 18, 2009
Mon, August 17, 2009
Sun, August 16, 2009
Fri, August 14, 2009
Consumer Portfolio Services, Inc.: Consumer Portfolio Services, Inc. Reports 2009 Second Quarter Operating Results
IRVINE, CA--(Marketwire - August 14, 2009) - Consumer Portfolio Services, Inc. (
Total revenues for the second quarter of 2009 were $58.3 million, a decrease of approximately $40.5 million, or 41.0%, compared to $98.8 million for the second quarter of 2008. Total operating expenses for the second quarter of 2009 were $64.3 million, a decrease of $31.8 million, or 33.1%, as compared to $96.1 million for the 2008 period. Pretax loss for the second quarter of 2009 was $(6.0) million compared to pretax income of $2.7 million in the second quarter of 2008. Net loss for the second quarter of 2009 was $(6.0) million, or $(0.32) per diluted share, compared to net income of $1.5 million, or $0.08 per diluted share, for the year-ago quarter.
For the six months ended June 30, 2009, total revenues decreased approximately $77.7 million, or 38.5%, to $124.4 million, compared to $202.1 million for the six months ended June 30, 2008. Total expenses for the six months ended June 30, 2009 were $130.8 million, a decrease of $64.8 million, or 33.1%, as compared to $195.6 million for the six months ended June 30, 2008.
The pretax loss for the six months ended June 30, 2009 was ($6.5) million, compared to pretax income of $6.5 million for the six months ended June 30, 2008. Net loss for the six months ended June 30, 2009 was ($6.5) million, or ($0.34) per diluted share, compared to net income of $3.6 million, or $0.18 per diluted share, for the six months ended June 30, 2008.
During the second quarter of 2009, CPS purchased $937,000 of contracts from dealers as compared to $1.1 million during the first quarter of 2009 and $79.8 million during the second quarter of 2008. The Company's managed receivables totaled $1,333.9 million as of June 30, 2009, a decrease of $645.6 million, or 32.6%, from $1,979.5 million as of June 30, 2008, as follows ($ in millions):
June 30, June 30, 2009 2008 --------- --------- Owned by Consolidated Subsidiaries* $ 1,173.1 $ 1,979.4 Owned by Non-Consolidated Subsidiaries 160.8 0.0 As Third Party Servicer for SeaWest Financial 0.0 0.1 --------- --------- Total $ 1,333.9 $ 1,979.5 * Before $86.0 million and $152.7 million of allowance for credit losses, deferred acquisition fees and repossessed vehicles for 2009 and 2008, respectively.
Annualized net charge-offs during the first half of 2009 quarter were 11.12% of the average owned portfolio as compared to 6.75% during the same period in 2008. Delinquencies greater than 30 days (including repossession inventory) were 6.99% of the total owned portfolio as of June 30, 2009, as compared to 6.12% as of June 30, 2008. The increase in net charge-off and delinquency percentages vs. the year-ago period can be partly attributed to the aging of the portfolio and the significant decrease in the size of the managed portfolio as nominal new contract purchases have not replaced portfolio run-off.
"While our financial results for the second quarter continued to be affected by the recession and the decline in our total managed portfolio, we are cautiously optimistic that the worst of the contraction in the economy and its impact on our customers is behind us," said Charles E. Bradley, Jr., Chief Executive Officer. "Over the last few months we have seen improvement in our early-stage asset performance metrics vs. the same period last year. In addition, recoveries on liquidated vehicles at the wholesale auction market have continued to improve and should be relatively stable given increasing sales of used cars. Both of these developments should bode well for delinquencies and charge-offs in the near future."
"On the capital markets front, during the quarter we were able to extend the maturity of our residual financing facility for a year until June 2010, which provides us with additional financial flexibility. The securitization market continues to improve as well as the first subprime auto deal this year was completed in July and yields required by investors have decreased significantly since the first quarter."
Conference Call
CPS announced that it will hold a conference call next Monday, August 17, 2009, at 1:30 p.m. ET to discuss its quarterly operating results. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time.
A replay will be available between August 17, 2009 and August 24, 2009, beginning one hour after conclusion of the call, by dialing 800-642-1687 or 706-645-9291 for international participants, with conference identification number 25347904. A broadcast of the conference call will also be available live and for 30 days after the call via the Company's web site at [ www.consumerportfolio.com ] and at [ www.streetevents.com ].
About Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. is a specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able to obtain financing from traditional sources.
Forward-looking statements in this news release include the Company's recorded revenue, expense and provision for credit losses, because these items are dependent on the Company's estimates of future losses. The accuracy of such estimates may be adversely affected by various factors, which include (in addition to risks relating to the economy generally) the following: possible increased delinquencies; repossessions and losses on retail installment contracts; incorrect prepayment speed and/or discount rate assumptions; possible unavailability of qualified personnel, which could adversely affect the Company's ability to service its portfolio; possible increases in the rate of consumer bankruptcy filings or the effects of recent changes in bankruptcy law, which could adversely affect the Company's rights to collect payments from its portfolio; other changes in government regulations affecting consumer credit; possible declines in the market price for used vehicles, which could adversely affect the Company's realization upon repossessed vehicles; and economic conditions in geographic areas in which the Company's business is concentrated. All of such factors also may affect the Company's future financial results, as to which there can be no assurance.
Any implication that the results of the most recently completed quarter are indicative of future results is disclaimed, and the reader should draw no such inference. Factors such as those identified above in relation to provision for credit losses may affect future performance.
Consumer Portfolio Services, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three months ended Six months ended June 30, June 30, -------------------- -------------------- 2009 2008 2009 2008 --------- ---------- --------- ---------- Revenues: Interest income $ 54,960 $ 94,856 $ 116,139 $ 194,218 Servicing fees 942 280 1,971 708 Other income 2,420 3,645 6,261 7,156 --------- ---------- --------- ---------- 58,322 98,781 124,371 202,082 --------- ---------- --------- ---------- Expenses: Employee costs 8,980 12,886 18,242 26,368 General and administrative 5,842 7,574 12,452 14,921 Interest 28,971 40,955 61,103 79,989 Provision for credit losses 18,489 30,894 34,578 65,803 Other expenses 1,993 3,763 4,458 8,518 --------- ---------- --------- ---------- 64,275 96,072 130,833 195,599 --------- ---------- --------- ---------- Income before income taxes (5,953) 2,709 (6,462) 6,483 Income taxes - 1,220 - 2,880 --------- ---------- --------- ---------- Net income $ (5,953) $ 1,489 $ (6,462) $ 3,603 ========= ========== ========= ========== Earnings per share: Basic $ (0.32) $ 0.08 $ (0.34) $ 0.19 Diluted (0.32) 0.08 (0.34) 0.18 Number of shares used in computing earnings per share: Basic 18,744 18,830 18,874 19,063 Diluted 18,744 19,411 18,874 19,692 Condensed Consolidated Balance Sheets (In thousands) (Unaudited) June 30, December 31, 2009 2008 ------------ ------------ Cash $ 21,506 $ 22,084 Restricted cash 139,580 153,479 ------------ ------------ Total Cash 161,086 175,563 Finance receivables 1,130,705 1,417,343 Allowance for finance credit losses (43,597) (78,036) ------------ ------------ Finance receivables, net 1,087,108 1,339,307 Residual interest in securitizations 4,019 3,582 Deferred tax assets, net 52,727 52,727 Other assets 42,040 67,628 ------------ ------------ $ 1,346,980 $ 1,638,807 ============ ============ Accounts payable and other liabilities $ 23,807 $ 21,702 Warehouse line of credit 5,119 9,919 Residual interest financing 62,650 67,300 Securitization trust debt 1,128,158 1,404,211 Senior secured debt, related party 20,649 20,105 Subordinated debt 22,855 25,721 ------------ ------------ 1,263,238 1,548,958 ------------ ------------ Shareholders' equity 83,742 89,849 ------------ ------------ $ 1,346,980 $ 1,638,807 ============ ============ Operating and Performance Data ($ in thousands) At and for the At and for the Three months ended Six months ended June 30, June 30, -------------------- -------------------- 2009 2008 2009 2008 --------- --------- --------- --------- Contract purchases 937 79,834 2,033 255,924 Total managed portfolio 1,333,919 1,979,492 1,333,919 1,979,492 Average managed portfolio 1,384,290 2,023,572 1,466,377 2,068,129 Net interest margin (1) 25,989 53,901 55,036 114,229 Risk adjusted margin (2) 7,500 23,007 20,458 48,426 Core operating expenses (3) 16,815 24,223 35,152 49,807 Annualized % of average managed portfolio 4.86% 4.79% 4.79% 4.82% Allowance for finance credit losses as % of fin. receivables 3.86% 4.63% Aggregate allowance as % of fin. receivables (4) 5.82% 5.91% Delinquencies 31+ Days 4.29% 4.13% Repossession Inventory 2.71% 1.99% Total Delinquencies and Repossession Inventory 6.99% 6.12% Annualized net charge-offs as % of average owned portfolio 10.59% 6.85% 11.12% 6.75% (1) Interest income less interest expense. (2) Net interest margin less provision for credit losses. (3) Total expenses less interest and provision for credit losses. (4) Includes allowance for finance credit losses and allowance for repossession inventory.