Nicholas Financial Reports 3rd Quarter Fiscal Year 2021 Results

  • Income year-over-year before income taxes for the three months ended December 31, 2020 increased by 821.3% compared to prior year third quarter
  • Pre-tax yield as a percentage of average finance receivables for the three months ended December 31, 2020 increased to 7.63% compared to 0.98% during the prior year third quarter
  • Net Portfolio Yield for the three months ended December 31, 2020 increased to 23.0% compared to 15.5% during the prior year third quarter
  • Originations year-over-year on new Contracts purchased for the three months ended December 31, 2020 decreased by 14.5% compared to prior year third quarter
  • Originations year-over-year on Direct Loans for the three months ended December 31, 2020 increased by 2.6% compared to prior year third quarter
  • Accounts 60+ days delinquent decreased to 3.9%, excluding Chapter 13 bankruptcy accounts, compared to 4.0% as of the prior year third quarter

CLEARWATER, Fla., Feb. 03, 2021 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended December 31, 2020 of $3.8 million compared to $0.3 million for the three months ended December 31, 2019. Diluted net income per share was $0.49 for the three months ended December 31, 2020 as compared to $0.04 for the three months ended December 31, 2019. Total revenue decreased 3.3% to $14.5 million for the three months ended December 31, 2020 as compared to $15.0 million for the three months ended December 31, 2019, which included realized gains of $0.2 million and unrealized gains of $1.1 million on equity investments during the three months ended December 31, 2020. The Company reported income before income taxes for the three months ended December 31, 2020 of $5.0 million compared to $0.5 million for the three months ended December 31, 2019. The Company recorded an income tax expense of approximately $1.2 million during the three months ended December 31, 2020 compared to an income tax expense of $0.2 million during the three months ended December 31, 2019.

The Company announced net income for the nine months ended December 31, 2020 of $6.5 million compared to $1.2 million for the nine months ended December 31, 2019. Diluted net income per share was $0.85 for the nine months ended December 31, 2020 as compared to $0.15 for the nine months ended December 31, 2019. Total revenue decreased 9.5% to $42.7 million for the nine months ended December 31, 2020 as compared to $47.2 million for the nine months ended December 31, 2019, which included realized and unrealized gains of $1.3 million on equity investments during the nine months ended December 31, 2020. The Company reported income before income taxes for the nine months ended December 31, 2020 of $8.2 million compared to $1.7 million for the nine months ended December 31, 2019. The Company recorded an income tax expense of approximately $1.7 million during the nine months ended December 31, 2020 compared to $0.5 million during the nine months ended December 31, 2019.

For the nine months ended December 31, 2020, the Company originated $60.3 million in finance receivables, collected $87.5 million in principal payments, reduced debt by a net amount of $29.8 million, repurchased $0.7 million of common stock, and increased cash by $4.6 million.

“For the third consecutive Quarter we recognized near-record low losses and strong portfolio performance in terms of organic delinquency control,” stated Doug Marohn, President and CEO of Nicholas Financial, Inc. “We continue to enjoy these results without any increase in deferments and without the use of any special Covid-19 related customer assistance programs. Indirect sales finance originations continue to be soft, but our direct loan originations are strong.”

“The increase in core earnings is exciting and is a testament to our successful implementation and execution of Nicholas’ business strategy,” Marohn continued. “This unique and disciplined business model is being replicated in new markets as we look to continue our expansion. We have just completed several new offices expansions and continue to initiate expansion in several others states including Texas, Arizona, Utah, Idaho and New Mexico. This will allow us to be prepared to maximize originations potential when the market starts to return to normal levels.”

        

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* 
2021   4,878  $49,388  $10,132   23.5 %  7.4 %  46 
 3   1,483   15,285   10,307   23.4 %  7.5 %  46 
 2   1,709   17,307   10,127   23.5 %  6.8 %  46 
 1   1,686   16,796   9,962   23.5 %  8.0 %  46 
2020   7,647  $76,696  $10,035   23.4 %  7.9 %  47 
4   1,991   19,658   9,873   23.5 % 7.9 %  46 
3   1,753   17,880   10,200   23.3 % 7.6 %  47 
2   2,011   20,104   9,997   23.5 % 7.9 %  46 
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 


Key Performance Indicators on Direct Loans Originated
(Originations in thousands)
 
  Number of  Principal              
Fiscal Year Loans  Amount  Average Amount  Average   Average 
/Quarter Originated  Originated  Financed*^  APR*   Term* 
2021  2,744  $10,864  $4,054   29.6 %  24 
3  1,265   4,605   3,641   30.9 %  22 
2  924   3,832   4,147   29.2 %  25 
1  555   2,427   4,373  28.7 %  26 
2020  3,142  $12,638  $4,017  28.2 %  25 
4  720   3,104   4,310  28.6 %  25 
3  1,137   4,490   3,949  28.4 %  24 
2  739   2,988   4,043  27.4 %  25 
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 %  24 
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 

*Each average included in the tables is calculated as a simple average.
^Average amount financed is calculated as a single loan amount.
#Bulk portfolio purchase excluded for period-over-period comparability

Nicholas Financial, Inc. (NASDAQ:NICK) is a specialized consumer finance company, operating branch locations in primarily Southeastern and Midwestern U.S. States. The Company engages primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. Additionally, Nicholas Financial originates direct consumer loans (“Direct Loans”) and sells consumer-finance related products. For an index of Nicholas Financial, Inc’s new releases or to obtain a specific release, please visit our website 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, including expectations regarding the impact of COVID-19 on the Company’s business, its ability to obtain the expected financial and tax benefits from the CARES Act, and its ability to obtain loan forgiveness under its PPP loan, 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, including in connection with the current COVID-19 pandemic, 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, 2020. 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.


Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)

 Three months ended  Nine months ended  
  December 31,  December 31,  
  2020  2019  2020  2019  
Revenue:                  
Interest and fee income on finance receivables $13,180  $14,973  $41,395   $47,199  
Realized gain on equity investments  238   -   238    -  
Unrealized gain on equity investments  1,056   -   1,101    -  
Total revenue  14,474   14,973   42,734    47,199  
Expenses:                  
Operating expenses  7,407   7,950   22,881    25,848  
Provision for credit losses  650   4,597   7,000    12,982  
Interest expense  1,442   1,886   4,660    6,672  
Total expenses  9,499   14,433   34,541    45,502  
Income before income taxes  4,975   540   8,193    1,697  
Income tax expense  1,190   229   1,711    527  
Net income $3,785  $311  $6,482   $1,170  
Earnings per share:                  
Basic $0.49  $0.04  $0.84   $0.15  
Diluted $0.49  $0.04  $0.85   $0.15  
                   

Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)

  December 31,  March 31, 
  2020  2020 
Cash and restricted cash $29,261  $24,684 
Equity investments with readily determinable fair values  4,286   - 
Finance receivables, net  172,386   199,781 
Repossessed assets  805   1,340 
Operating lease right-of-use assets  2,940   2,598 
Other assets  5,015   10,415 
Total assets $214,693  $238,818 
Credit facility, net of debt issuance costs $91,547  $124,255 
Note payable  3,244   - 
Operating lease liabilities  2,929   2,652 
Other liabilities  3,513   4,332 
Total liabilities  101,233   131,239 
Shareholders’ equity  113,460   107,579 
Total liabilities and shareholders’ equity $214,693  $238,818 
Book value per share $14.69  $13.78 


  Three months ended  Nine months ended  
  December 31,  December 31,  
  (In thousands)  (In thousands)  
Portfolio Summary 2020  2019  2020  2019  
Average finance receivables (1) $192,966  $219,618  $203,996   $230,527  
Average indebtedness (2) $101,522  $119,518  $112,476   $136,164  
Interest and fee income on finance receivables $13,180  $14,973  $41,395   $47,199  
Interest expense  1,442   1,886   4,660    6,672  
Net interest and fee income on finance receivables $11,738  $13,087  $36,735   $40,527  
Portfolio yield (3)  27.32 % 27.27 % 27.06 %  27.30 %
Interest expense as a percentage of average finance receivables  2.99 % 3.44 % 3.05 %  3.86 %
Provision for credit losses as a percentage of average finance receivables  1.35 % 8.37 % 4.58 %  7.51 %
Net portfolio yield (3)  22.98 % 15.46 % 19.43 %  15.93 %
Operating expenses as a percentage of average finance receivables  15.35 % 14.48 % 14.96 %  14.95 %
Pre-tax yield as a percentage of average finance receivables (4)  7.63 % 0.98 % 4.47 %  0.98 %
Net charge-off percentage (5)  6.30 % 8.84 % 5.94 %  9.63 %
Finance receivables         $188,626   $211,813  
Allowance percentage (6)          4.81 %  6.27 %
Total reserves percentage (7)          8.76 %  10.35 %

Note: All three-month and nine-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, annualized for 12 months.
(6)    Allowance percentage represents the allowance for credit losses divided by finance receivables outstanding as of ending balance sheet date.
(7)    Total reserves percentage represents the allowance for credit losses, purchase price discount, and unearned dealer discounts divided by finance receivables outstanding as of ending balance sheet date.


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  
December 31, 2020 $174,170  $12,914  $4,955   $2,117   $28   $20,014  
       7.41 % 2.84 %  1.22 %  0.02 %  11.49 %
December 31, 2019 $200,092  $16,748  $5,993   $2,279   $47   $25,067  
       8.37 % 3.00 %  1.14 %  0.02 %  12.53 %
       
Direct Loans Balance                         
  Outstanding  30 – 59 days  60 – 89 days   90 – 119 days   120+   Total  
December 31, 2020 $14,227  $442  $188   $110   $4   $744  
       3.11 % 1.32 %  0.77 %  0.03 %  5.23 %
December 31, 2019 $11,423  $331  $123   $68   $3   $525  
       2.90 % 1.08 %  0.60 %  0.03 %  4.60 %

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  
  December 31,  December 31,  
  (Purchases in thousands)  (Originations in thousands)  
  2020  2019  2020  2019  
Purchases/Originations $15,285  $17,880  $4,605   $4,490  
Average APR  23.4 % 23.3 % 30.9 % 28.4 %
Average discount  7.5 % 7.6 %N/A   N/A  
Average term (months)  46   47   22    24  
Average amount financed $10,307  $10,200  $3,641   $3,949  
Number of contracts  1,483   1,753   1,265    1,137  
                   
  Contracts  Direct Loans  
  Nine months ended  Nine months ended  
  December 31,  December 31,  
  (Purchases in thousands)  (Originations in thousands)  
  2020  2019  2020  2019  
Purchases/Originations $49,388  $57,038  $10,864   $9,534  
Average APR  23.5 % 23.4 % 29.6 %  28.0 %
Average discount  7.4 % 7.9 %N/A   N/A  
Average term (months)  46   47   24    24  
Average amount financed $10,132  $10,089  $4,054   $3,919  
Number of contracts  4,878   5,656   2,744    2,422  


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

  Contracts  Direct Loans  
  As of  As of  
  December 31,  December 31,  
Portfolio 2020  2019  2020  2019  
Average APR  22.7 % 22.7 % 28.4 %  27.0 %
Average discount  7.6 % 7.7 %N/A   N/A  
Average term (months)  51  51  26   26  
Number of active contracts  23,388   25,995   4,126    3,376  


Contact:
Irina Nashtatik
CFO
Ph # (727)-726-0763


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