CLEARWATER, Fla., May 23, 2014 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (Nasdaq:NICK) announced that for the three months ended March 31, 2014, net earnings decreased 40% to $2,860,000 as compared to $4,787,000 for the three months ended March 31, 2013. Diluted earnings per share decreased 41% to $0.23 as compared to $0.39 for the three months ended March 31, 2013. Revenue increased less than 1% to $20,443,000 for the three months ended March 31, 2014 as compared to $20,372,000 for the three months ended March 31, 2013.
For the year ended March 31, 2014, net earnings decreased 16% to $16,703,000 as compared to $19,941,000 for the year ended March 31, 2013. Diluted earnings per share decreased 17% to $1.36 as compared to $1.63 for the year ended March 31, 2013. Revenue increased 1% to $82,629,000 for the year ended March 31, 2014 as compared to $82,110,000 for the year ended March 31, 2013.
"Our results for the three and twelve months ended March 31, 2014 were adversely affected by a reduction in the gross portfolio yield, an increase in the provision for losses and an increase in operating expenses compared to corresponding periods ended March 31, 2013. Each period was also significantly affected by professional fees associated with the previously announced potential sale of the Company. Such fees were principally related to fiscal 2014 and resulted in a higher effective tax rate as the majority were not deductible for income tax purposes. The after-tax impact on diluted earnings per share by such professional fees totaling $1,131,000 and $2,312,000 was approximately $0.09 and $0.18 for the three and twelve months ended March 31, 2014, respectively," stated Peter L. Vosotas, Chairman and CEO.
"Our results for the twelve months ended March 31, 2014 in comparison to March 31, 2013 were impacted favorably by a reduction in dividend taxes which were $143,000 for the twelve-month period ended March 31, 2014, as compared to $1,492,000 for the twelve-month period ended March 31, 2013 when, among other quarterly dividends, the Company paid a special $2.00 dividend. Results were further impacted favorably by a change in the fair value of the interest rate swap agreements which resulted in a gain of $688,000 for the twelve months ended March 31, 2014, compared to a loss of $505,000 for the comparable twelve-month period ended March 31, 2013," stated Peter L. Vosotas, Chairman and CEO.
Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeastern states. The Company presently operates 65 branch locations in both the Southeastern and the Midwestern states. The Company has approximately 12,221,000 shares of 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 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, 2013. Such statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially. All forward looking statements and cautionary statements included in this document are made as of the date hereby 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 March 31, |
Year ended March 31, |
|||
| 2014 | 2013 | 2014 | 2013 | |
| Revenue: | ||||
| Interest and fee income on finance receivables | $ 20,441 | $ 20,363 | $ 82,610 | $ 82,072 |
| Sales | 2 | 9 | 19 | 38 |
| 20,443 | 20,372 | 82,629 | 82,110 | |
| Expenses: | ||||
| Operating | 7,843 | 7,408 | 30,342 | 28,221 |
| Dividend tax | -- | 73 | 143 | 1,492 |
| Professional fees | 1,647 | 254 | 3,659 | 893 |
| Provision for credit losses | 4,181 | 3,542 | 14,979 | 13,392 |
| Interest expense | 1,389 | 1,403 | 5,678 | 5,121 |
| Change in fair value of interest rate swaps | (6) | (141) | (688) | 505 |
| 15,054 | 12,539 | 54,113 | 49,624 | |
| Operating income before income taxes | 5,389 | 7,833 | 28,516 | 32,486 |
| Income tax expense | 2,529 | 3,046 | 11,813 | 12,545 |
| Net income | $ 2,860 | $ 4,787 | $ 16,703 | $ 19,941 |
| Earnings per share: | ||||
| Basic | $ 0.24 | $ 0.40 | $ 1.38 | $ 1.66 |
| Diluted | $ 0.23 | $ 0.39 | $ 1.36 | $ 1.63 |
| Weighted average shares | 12,125,000 | 12,024,000 | 12,096,000 | 11,977,000 |
| Weighted average shares and assumed dilution | 12,348,000 | 12,267,000 | 12,325,000 | 12,218,000 |
| Condensed Consolidated Balance Sheets | ||
| (Unaudited, In Thousands) | ||
| March 31, | March 31, | |
| 2014 | 2013 | |
| Cash | $ 2,635 | $ 2,798 |
| Finance receivables, net | 269,344 | 249,826 |
| Other assets | 11,451 | 11,211 |
| Total assets | $ 283,430 | $ 263,835 |
| Line of credit | $ 127,900 | $ 125,500 |
| Other liabilities | 13,592 | 11,370 |
| Total liabilities | 141,492 | 136,870 |
| Shareholders' equity | 141,938 | 126,965 |
| Total liabilities and shareholders' equity | $ 283,430 | $ 263,835 |
|
Three months ended March 31, |
Year ended March 31, |
|||
| Portfolio Summary | 2014 | 2013 | 2014 | 2013 |
| Average finance receivables, net of unearned interest (1) | $294,412,632 | $279,938,071 | $290,435,690 | $280,916,731 |
| Average indebtedness (2) | $125,737,114 | $126,750,000 | $127,093,220 | $115,157,810 |
| Interest and fee income on finance receivables (3) | $ 20,441,293 | $ 20,363,825 | $ 82,609,859 | $ 82,072,643 |
| Interest expense | 1,389,209 | 1,403,441 | 5,678,188 | 5,120,827 |
| Net interest and fee income on finance receivables | $ 19,052,084 | $ 18,960,384 | $ 76,931,671 | $ 76,951,816 |
| Weighted average contractual rate (4) | 23.10% | 23.16% | 23.00% | 23.43% |
| Average cost of borrowed funds (2) | 4.42% | 4.43% | 4.47% | 4.45% |
|
Gross portfolio yield (5) |
27.77% | 29.10% | 28.44% | 29.22% |
|
Interest expense as a percentage of average finance receivables, net of unearned interest |
1.89% | 2.01% | 1.95% | 1.82% |
|
Provision for credit losses as a percentage of average finance receivables, net of unearned interest |
5.68% | 5.06% | 5.16% | 4.77% |
| Net portfolio yield (5) | 20.20% | 22.03% | 21.33% | 22.63% |
|
Marketing, salaries, employee benefits, depreciation, administrative and professional fee expenses and dividend taxes as a percentage of average finance receivables, net of unearned interest (6) |
12.82% | 10.98% | 11.68% | 10.81% |
|
Pre-tax yield as a percentage of average finance receivables, net of unearned interest (7) |
7.38% | 11.05% | 9.65% | 11.82% |
| Write-off to liquidation (8) | 6.98% | 6.78% | 7.17% | 6.81% |
| Net charge-off percentage (9) | 6.29% | 6.30% | 6.22% | 5.88% |
| Note: All three month key performance indicators expressed as percentages have been annualized. | ||||
| (1) Average finance receivables, net of unearned interest, represents the average of gross finance receivables, less unearned interest throughout the period. | ||||
| (2) Average indebtedness represents the average outstanding borrowings under the Line. Average cost of borrowed funds represents interest expense as a percentage of average indebtedness. | ||||
| (3) Interest and fee income on finance receivables does not include revenue generated by Nicholas Data Services, Inc. ("NDS"), the wholly owned software subsidiary of Nicholas Financial, Inc. | ||||
| (4) Weighted average contractual rate represents the weighted average annual percentage rate (APR) of all Contracts purchased and direct loans originated during the period. | ||||
| (5) Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables, net of unearned interest. Net portfolio yield represents interest and fee income on finance receivables minus (a) interest expense and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest. | ||||
| (6) Administrative expenses included in the calculation above are net of administrative expenses associated with NDS which approximated $54,000 and $48,000 for the three-month periods ended March 31, 2014 and 2013, and $196,000 and $220,000 for the years ended March 31, 2014 and 2013, respectively. The numerators include expenses associated with the potential sale of the Company and include taxes associated with the payments of cash dividends. Absent these expenses, the percentages would have been 11.29% and 10.84% for the three and twelve months ended March 31, 2014, respectively. Absent these expenses, the percentages would have been 10.81% and 10.26% for the three and twelve months ended March 31, 2013, respectively. | ||||
| (7) Pre-tax yield represents net portfolio yield minus operating expenses as a percentage of average finance receivables, net of unearned interest. | ||||
| (8) 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 minus voids and refinances minus ending receivable balance. | ||||
| (9) Net charge-off percentage represents net charge-offs divided by average finance receivables, net of unearned interest, 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 bankrupt accounts:
| Contracts |
Gross Balance Outstanding |
31 – 60 days |
61 – 90 days |
Over 90 |
Total |
|
| March 31, 2014 | $413,613,292 | $11,713,021 | $2,944,228 | $1,896,591 | $16,553,840 | |
| 2.83% | 0.71% | 0.46% | 4.00% | |||
| March 31, 2013 | $386,940,093 | $10,421,500 | $2,631,617 | $1,188,160 | $14,241,277 | |
| 2.69% | 0.68% | 0.31% | 3.68% | |||
| Direct Loans |
Gross Balance Outstanding |
31 – 60 days |
61 – 90 days |
Over 90 |
Total |
|
| March 31, 2014 | $10,730,901 | $143,624 | $25,345 | $22,515 | $191,484 | |
| 1.34% | 0.23% | 0.21% | 1.78% | |||
| March 31, 2013 | $8,781,637 | $72,364 | $21,509 | $13,790 | $107,663 | |
| 0.82% | 0.25% | 0.16% | 1.23% | |||
The following table presents selected information on Contracts purchased by the Company, net of unearned interest:
|
Three months ended March 31, |
Year ended March 31, |
|||
| Contracts | 2014 | 2013 | 2014 | 2013 |
| Purchases | $49,161,645 | $43,847,280 | $169,244,136 | $151,740,809 |
| Weighted APR | 23.10% | 23.06% | 23.00% | 23.28% |
| Average discount | 8.36% | 8.45% | 8.44% | 8.54% |
| Weighted average term (months) | 53 | 51 | 52 | 50 |
| Average loan | $ 10,547 | $ 10,341 | $ 10,612 | $ 10,260 |
| Number of contracts | 4,661 | 4,240 | 15,949 | 14,789 |