AP NEWS

CPS Announces Second Quarter 2018 Earnings

July 24, 2018

-- Pretax income of $4.7 million -- Net income of $3.2 million, or $0.13 per diluted share -- New contract purchases of $215 million -- Residual interest securitization raises $40.0 million

LAS VEGAS, NV, July 24, 2018 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq:CPSS) (“CPS” or the “Company”) today announced earnings of $3.2 million, or $0.13 per diluted share, for its second quarter ended June 30, 2018. This compares to net income of $4.6 million, or $0.17 per diluted share, in the second quarter of 2017.

Revenues for the second quarter of 2018 were $99.4 million, a decrease of $10.7 million, or 9.7%, compared to $110.1 million for the second quarter of 2017. Total operating expenses for the second quarter of 2018 were $94.7 million compared to $102.1 million for the 2017 period. Pretax income for the second quarter of 2018 was $4.7 million compared to pretax income of $8.0 million in the second quarter of 2017, a decrease of 41.5%.

For the six months ended June 30, 2018 total revenues were $202.9 million compared to $217.7 million for the six months ended June 30, 2017, a decrease of approximately $14.7 million, or 6.8%. Total expenses for the six months ended June 30, 2018 were $193.7 million, a decrease of $8.2 million, or 4.1%, compared to $201.9 million for the six months ended June 30, 2017. Pretax income for the six months ended June 30, 2018 was $9.2 million, compared to $15.7 million for the six months ended June 30, 2017. Net income for the six months ended June 30, 2018 was $6.3 million compared to $9.1 million for the six months ended June 30, 2017.

During the second quarter of 2018, CPS purchased $214.7 million of new contracts compared to $210.6 million during the first quarter of 2018 and $233.9 million during the second quarter of 2017. The Company’s receivables totaled $2.329 billion as of June 30, 2018, a decrease from $2.332 billion as of March 31, 2018 and $2.343 billion as of June 30, 2017.

Annualized net charge-offs for the second quarter of 2018 were 7.58% of the average portfolio as compared to 7.62% for the second quarter of 2017. Delinquencies greater than 30 days (including repossession inventory) were 10.07% of the total portfolio as of June 30, 2018, as compared to 9.64% as of June 30, 2017.

“We are pleased to record our 27th consecutive quarter of positive pre-tax earnings,” said Charles E. Bradley, Jr., Chairman and Chief Executive Officer. “Our quarterly asset-backed securities transactions continue to be well received and in May 2018 we also securitized our residual interests in 17 existing securitizations to raise $40 million in additional capital.”

Conference Call

CPS announced that it will hold a conference call on Wednesday, July 25, 2018, at 2:00 p.m. ET to discuss its quarterly operating results. Those wishing to participate by telephone may dial-in at 877 312-5502 or 253 237-1131 approximately 10 minutes prior to the scheduled time. The conference identification number is 3392867.

A replay of the conference call will be available between July 25, 2018 and August 1, 2018, beginning two hours after conclusion of the call, by dialing 855 859-2056 or 404 537-3406 for international participants, with conference identification number 3392867. A broadcast of the conference call will also be available live and for 90 days after the call via the Company’s web site at www.consumerportfolio.com.

About Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc. is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems, low incomes or limited credit histories. We purchase retail installment sales contracts primarily from franchised automobile dealerships secured by late model used vehicles and, to a lesser extent, new vehicles. We fund these contract purchases on a long-term basis primarily through the securitization markets and service the contracts over their lives.

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 incurred 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, 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 the provision for credit losses may affect future performance.

Investor Relations Contact

Jeffrey P. Fritz, Chief Financial Officer844 878-2777

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, ----------------------------------- --------------------------------- 2018 2017 2018 2017 Revenues: Interest income $ 97,012 $ 107,485 $ 197,918 $ 212,060 Other income 2,350 2,587 5,008 5,610 99,362 110,072 202,926 217,670 - --------- - - --------- - - -------- - - -------- - Expenses: Employee costs 19,842 17,572 40,483 35,352 General and 7,450 6,819 14,946 13,741 administrative Interest 25,187 23,236 49,249 45,324 Provision for credit 35,531 48,550 76,038 95,717 losses Other expenses 6,698 5,943 12,997 11,792 - --------- - - --------- - - -------- - - -------- - 94,708 102,120 193,713 201,926 - --------- - - --------- - - -------- - - -------- - Income before income 4,654 7,952 9,213 15,744 taxes Income tax expense 1,489 3,380 2,901 6,692 - --------- - - --------- - - -------- - - -------- - Net income $ 3,165 $ 4,572 $ 6,312 $ 9,052 - --------- - - --------- - - -------- - - -------- - Earnings per share: Basic $ 0.15 $ 0.20 $ 0.30 $ 0.39 Diluted $ 0.13 $ 0.17 $ 0.25 $ 0.32 Number of shares used in computing earnings per share: Basic 21,178 23,076 21,375 23,296 Diluted 25,123 27,602 25,393 28,024 Condensed Consolidated Balance Sheets (In thousands) (Unaudited) June 30, December 31, 2018 2017 - --------- - - --------- - Assets: Cash and cash $ 17,435 $ 12,731 equivalents Restricted cash and 119,940 111,965 equivalents Total cash and cash 137,375 124,696 equivalents Finance receivables 1,887,530 2,304,984 Allowance for finance (94,376 ) (109,187 ) credit losses Finance receivables, 1,793,154 2,195,797 net Finance receivables 412,895 - measured at fair value Deferred tax assets, 31,430 32,446 net Other assets 65,816 71,902 - --------- - - --------- - $ 2,440,670 $ 2,424,841 - --------- - - --------- - Liabilities and Shareholders’ Equity: Accounts payable and $ 27,313 $ 28,715 accrued expenses Warehouse lines of 137,930 112,408 credit Residual interest 39,269 - financing Securitization trust 2,030,705 2,083,215 debt Subordinated renewable 15,831 16,566 notes - --------- - - --------- - 2,251,048 2,240,904 - --------- - - --------- - Shareholders’ equity 189,622 183,937 $ 2,440,670 $ 2,424,841 - --------- - - --------- - Operating and Performance Data ($ in millions) At and for the At and for the Three months ended Six months ended June 30, June 30, ----------------------------------- --------------------------------- 2018 2017 2018 2017 Contracts purchased $ 214.74 $ 233.90 $ 425.34 $ 463.55 Contracts securitized 205.00 230.00 398.58 440.00 Total portfolio balance $ 2,329.18 $ 2,343.30 $ 2,329.18 $ 2,343.30 Average portfolio 2,330.29 2,340.23 2,330.94 2,326.02 balance Allowance for finance credit losses as % of 5.00 % 4.64 % fin. receivables Aggregate allowance as % of fin. receivables 6.16 % 5.56 % (1) Delinquencies 31+ Days 8.60 % 8.30 % Repossession Inventory 1.47 % 1.34 % Total Delinquencies and 10.07 % 9.64 % Repo. Inventory Annualized net charge-offs as % of 7.58 % 7.62 % 7.87 % 7.76 % average portfolio Recovery rates (2) 34.9 % 35.6 % 34.4 % 35.4 % For the For the Three months ended Six months ended June 30, June 30, ------------------------------------------ ---------------------------------------- 2018 2017 2018 2017 $(3 ) % (4) $(3 ) % (4) $(3 ) % (4) $(3 ) % (4) Interest income $ 97.01 16.7 % $ 107.49 18.4 % $ 197.92 17.0 % $ 212.06 18.2 % Servicing fees and 2.35 0.4 % 2.59 0.4 % 5.01 0.4 % 5.61 0.5 % other income Interest expense (25.19 ) -4.3 % (23.24 ) -4.0 % (49.25 ) -4.2 % (45.32 ) -3.9 % --------- --------- -------- -------- Net interest margin 74.18 12.7 % 86.84 14.8 % 153.68 13.2 % 172.35 14.8 % Provision for credit (35.53 ) -6.1 % (48.55 ) -8.3 % (76.04 ) -6.5 % (95.72 ) -8.2 % losses --------- --------- -------- -------- Risk adjusted margin 38.64 6.6 % 38.29 6.5 % 77.64 6.7 % 76.63 6.6 % Core operating expenses (33.99 ) -5.8 % (30.33 ) -5.2 % (68.43 ) -5.9 % (60.89 ) -5.2 % - --------- - - --------- - - -------- - - -------- - Pre-tax income $ 4.65 0.8 % $ 7.95 1.4 % $ 9.21 0.8 % $ 15.74 1.4 % (1) Includes allowance for finance credit losses and allowance for repossession inventory. (2) Wholesale auction liquidation amounts (net of expenses) as a percentage of the account balance at the time of sale. (3) Numbers may not add due to rounding. (4) Annualized percentage of the average portfolio balance. Percentages may not add due to rounding.

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