Nicholas Financial Reports 1st Quarter Fiscal Year 2020 Results

  • 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 Summary2019  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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