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Nicholas Financial Reports 4th Quarter Fiscal Year 2022 Results

·11-min read
Nicholas Financial, Inc.
Nicholas Financial, Inc.
  • Originations on new Contracts purchased in the fourth quarter of fiscal year 2022 reached a historic high of $27.1 million in principal amount purchased, an increase of 10.2% year-over-year and 39.3% quarter-over-quarter.

  • Principal amount originated on Direct Loans in the fourth quarter of fiscal year 2022 increased by 127.1% year-over-year and 140.3% increase from fourth quarter fiscal year 2020.

  • Portfolio Yield increased to 27.9% for the fourth quarter of fiscal year 2022 , a 30 basis point improvement year-over-year.

CLEARWATER, Fla., May 24, 2022 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ: NICK) announced a net income for the three months ended March 31, 2022 of $0.4 million compared to net income of $1.9 million for the three months ended March 31, 2021. Diluted net income per share was $0.05 for the three months ended March 31, 2022 as compared to diluted net income per share of $0.24 for the three months ended March 31, 2021. Interest and fee income on finance receivables decreased 4.0% to $12.3 million for the three months ended March 31, 2022 as compared to $12.8 million for the three months ended March 31, 2021. The Company reported income before income taxes for the three months ended March 31, 2022 of $0.5 million compared to income before income taxes of $2.8 million for the three months ended March 31, 2021. The Company recorded an income tax expense of approximately $0.1 million during the three months ended March 31, 2022 as compared to income tax expense of $0.9 million during the three months ended March 31, 2021.

The Company announced net income for the year ended March 31, 2022 of $3.0 million compared to $8.4 million for the year ended March 31, 2021. Diluted net income per share was $0.39 for the year ended March 31, 2022 as compared to $1.09 for the year ended March 31, 2021. Interest and fee income on finance receivables decreased 8.3% to $49.7 million for the year ended March 31, 2022 as compared to $54.2 million for the year ended March 31, 2021. The Company reported income before income taxes for the year ended March 31, 2022 of $4.0 million compared to income before income taxes of $10.9 million for the year ended March 31, 2021. The Company recorded an income tax expense of approximately $1.0 million during the year ended March 31, 2022 as compared to income tax expense of $2.6 million during the year ended March 31, 2021.

For the year ended March 31, 2022, the Company originated $114.5 million in finance receivables, collected $119.6 million in principal payments, reduced debt by $33.3 million and cash by $28.2 million.

“Despite the competitive lending environment, we are very pleased with our 4th Quarter originations. Thanks to the efforts of our great employees, we were able to purchase and originate $34.6 million in combined receivable volume - outperforming combined originations by $6.7 million year over year,” commented Mike Rost, interim CEO of Nicholas Financial. “Our direct loan originations more than doubled year over year and our portfolio losses continue trending at historically low levels. This is yet another testament to our tenured underwriting managers, who adequately price for risk and use a time-tested lending model across our branch network,” Rost continued.

“Our training agenda continued into the fourth quarter, with new hire onboarding as well as more in-depth training for our seasoned Branch Managers and Assistant Branch Managers. We also continued our expansion efforts, utilizing our Virtual Service Center to increase our indirect originations. During the quarter, we increased our finance receivables, net by $2.9 million. This is something we haven’t done in a long time and are very proud of,” concluded Rost.

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*

 

 

2022

 

 

 

7,793

 

 

$

85,804

 

 

$

11,002

 

 

 

23.1

 

%

 

 

6.9

 

%

 

 

47

 

 

4

 

 

 

2,404

 

 

 

27,139

 

 

 

11,289

 

 

 

22.9

 

%

 

 

6.9

 

%

 

 

47

 

 

3

 

 

 

1,735

 

 

 

19,480

 

 

 

11,228

 

 

 

23.1

 

%

 

 

6.8

 

%

 

 

47

 

 

2

 

 

 

1,707

 

 

 

18,880

 

 

 

11,061

 

 

 

23.0

 

%

 

 

6.7

 

%

 

 

47

 

 

1

 

 

 

1,947

 

 

 

20,305

 

 

 

10,429

 

 

 

23.2

 

%

 

 

7.0

 

%

 

 

46

 

 

2021

 

 

 

7,307

 

 

$

74,025

 

 

$

10,135

 

 

 

23.4

 

%

 

 

7.5

 

%

 

 

46

 

 

4

 

 

 

2,429

 

 

 

24,637

 

 

 

10,143

 

 

 

23.2

 

%

 

7.5

 

%

 

 

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

 


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*

 

 

2022

 

 

 

6,770

 

 

$

28,740

 

 

$

4,307

 

 

 

30.5

 

%

 

 

26

 

 

4

 

 

 

1,584

 

 

 

7,458

 

 

 

4,708

 

 

 

30.0

 

%

 

 

27

 

 

3

 

 

 

2,282

 

 

 

8,505

 

 

 

3,727

 

 

31.8

 

%

 

 

24

 

 

2

 

 

 

1,588

 

 

 

7,040

 

 

 

4,433

 

 

 

30.0

 

%

 

 

26

 

 

1

 

 

 

1,316

 

 

 

5,737

 

 

 

4,359

 

 

30.1

 

%

 

 

25

 

 

2021

 

 

 

3,497

 

 

$

14,148

 

 

$

4,131

 

 

 

29.6

 

%

 

 

25

 

 

4

 

 

 

753

 

 

 

3,284

 

 

 

4,362

 

 

29.6

 

%

 

 

25

 

 

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

 

*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 both 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

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company’s current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as “anticipate,” “estimate,” intend,” “plan,” “expect,” “project,” “believe,” “may,” “will,” “should,” “would,” “could,” “probable” and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are inherently subject to risks and uncertainties. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include the following: the ongoing impact of the COVID-19 pandemic and the mitigation efforts by governments and related effects on our financial condition, business operations and liquidity, our customers, our employees, and the overall economy; recently enacted, proposed or future legislation and the manner in which it is implemented; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that may be exercised by regulators, including, but not limited to, the Securities and Exchange Commission (SEC), Department of Justice, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans; labor unrest; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements; the Company’s assessment of its internal control over financial reporting; changes in interest rates; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; our dependence on debt and the potential impact of limitations in the Company’s amended revolving credit facility or other impacts on the Company’s ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company). 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

 

 

Twelve months ended

 

 

March 31,

 

 

March 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income on finance receivables

 

$

12,308

 

 

$

12,816

 

 

$

49,714

 

 

$

54,211

Gain on equity investments

 

 

-

 

 

 

470

 

 

 

-

 

 

 

1,809

Total Revenue

 

$

12,308

 

 

$

13,286

 

 

$

49,714

 

 

$

56,020

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

9,275

 

 

 

8,963

 

 

 

34,402

 

 

 

31,844

Provision for credit losses

 

 

2,100

 

 

 

250

 

 

 

5,900

 

 

 

7,250

Interest expense

 

 

443

 

 

 

1,320

 

 

 

5,366

 

 

 

5,980

Total expenses

 

 

11,818

 

 

 

10,533

 

 

 

45,668

 

 

 

45,074

Income before income taxes

 

 

490

 

 

 

2,753

 

 

 

4,046

 

 

 

10,946

Income tax expense

 

 

122

 

 

 

884

 

 

 

1,048

 

 

 

2,595

Net Income

 

$

368

 

 

$

1,869

 

 

$

2,998

 

 

$

8,351

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.05

 

 

$

0.24

 

 

$

0.39

 

 

$

1.09

Diluted

 

$

0.05

 

 

$

0.24

 

 

$

0.39

 

 

$

1.09


Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)

 

 

March 31,

 

 

March 31,

 

 

2022

 

 

2021

Cash and restricted cash

 

$

4,775

 

 

$

32,977

Finance receivables, net

 

 

168,600

 

 

 

170,318

Repossessed assets

 

 

658

 

 

 

685

Operating lease right-of-use assets

 

 

4,277

 

 

 

3,392

Other assets

 

 

5,260

 

 

 

5,066

Total assets

 

$

183,570

 

 

$

212,438

Credit facility, net of debt issuance costs

 

$

54,813

 

 

$

86,154

Note payable

 

 

3,244

 

 

 

3,244

Operating lease liabilities

 

 

4,410

 

 

 

3,367

Other liabilities

 

 

4,717

 

 

 

4,451

Total liabilities

 

 

67,184

 

 

 

97,216

Shareholders’ equity

 

 

116,386

 

 

 

115,222

Total liabilities and shareholders’ equity

 

$

183,570

 

 

$

212,438

Book value per share

 

$

15.42

 

 

$

14.95


 

 

Three months ended

 

 

Twelve months ended

 

 

 

 

March 31,

 

 

March 31,

 

 

 

 

(In thousands)

 

 

(In thousands)

 

 

Portfolio Summary

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Average finance receivables (1)

 

$

176,439

 

 

$

185,750

 

 

$

178,686

 

 

$

199,102

 

 

Average indebtedness (2)

 

$

54,490

 

 

$

92,761

 

 

$

67,684

 

 

$

107,615

 

 

Interest and fee income on finance receivables

 

$

12,308

 

 

$

12,816

 

 

$

49,714

 

 

$

54,211

 

 

Interest expense

 

 

443

 

 

 

1,320

 

 

 

5,366

 

 

$

5,980

 

 

Net interest and fee income on finance receivables

 

$

11,865

 

 

$

11,496

 

 

$

44,348

 

 

$

48,231

 

 

Portfolio yield (3)

 

 

27.90

 

%

 

27.60

 

%

 

27.82

 

%

 

27.23

 

%

Interest expense as a percentage of average finance receivables

 

 

1.00

 

%

 

2.84

 

%

 

3.00

 

%

 

3.00

 

%

Provision for credit losses as a percentage of average finance receivables

 

 

4.76

 

%

 

0.54

 

%

 

3.30

 

%

 

3.64

 

%

Net portfolio yield (3)

 

 

22.14

 

%

 

24.22

 

%

 

21.52

 

%

 

20.59

 

%

Operating expenses as a percentage of average finance receivables

 

 

21.03

 

%

 

19.30

 

%

 

19.25

 

%

 

15.99

 

%

Pre-tax yield as a percentage of average finance receivables (4)

 

 

1.11

 

%

 

4.92

 

%

 

2.27

 

%

 

4.60

 

%

Net charge-off percentage (5)

 

 

6.45

 

%

 

6.83

 

%

 

5.13

 

%

 

6.16

 

%

Finance receivables

 

 

 

 

 

 

 

$

178,786

 

 

$

184,237

 

 

Allowance percentage (6)

 

 

 

 

 

 

 

 

1.61

 

%

 

3.34

 

 

Total reserves percentage (7)

 

 

 

 

 

 

 

 

5.66

 

%

 

7.49

 

%

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 daily outstanding borrowings under the Credit Facility. Average indebtedness does not include the PPP loan.
(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 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

 

 

March 31, 2022

 

$

154,144

 

 

$

7,097

 

 

$

2,936

 

 

$

1,183

 

 

$

49

 

 

$

11,265

 

 

 

 

 

 

 

 

4.60

 

%

 

1.90

 

%

 

0.77

 

%

 

0.03

 

%

 

7.31

 

%

March 31, 2021

 

$

170,195

 

 

$

6,289

 

 

$

2,430

 

 

$

896

 

 

$

42

 

 

$

9,657

 

 

 

 

 

 

 

 

3.70

 

%

 

1.43

 

%

 

0.53

 

%

 

0.02

 

%

 

5.67

 

%

 

 

 

 

 

 

 

Direct Loans

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding

 

 

30 – 59 days

 

 

60 – 89 days

 

 

90 – 119 days

 

 

120+

 

 

Total

 

 

March 31, 2022

 

$

24,376

 

 

$

608

 

 

$

197

 

 

$

77

 

 

$

0

 

 

$

882

 

 

 

 

 

 

 

 

2.49

 

%

 

0.81

 

%

 

0.32

 

%

 

0.00

 

%

 

3.62

 

%

March 31, 2021

 

$

13,909

 

 

$

253

 

 

$

101

 

 

$

81

 

 

$

10

 

 

$

445

 

 

 

 

 

 

 

 

1.82

 

%

 

0.73

 

%

 

0.58

 

%

 

0.07

 

%

 

3.20

 

%

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

 

 

 

 

March 31,

 

 

March 31,

 

 

 

 

(Purchases in thousands)

 

 

(Originations in thousands)

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Purchases/Originations

 

$

27,139

 

 

$

24,637

 

 

$

7,458

 

 

$

3,284

 

 

Average APR

 

 

22.9

 

%

 

23.2

 

%

30

 

%

29.6

 

%

Average discount

 

 

6.9

 

%

 

7.5

 

%

N/A

 

 

N/A

 

 

Average term (months)

 

 

47

 

 

 

46

 

 

 

27

 

 

 

25

 

 

Average amount financed

 

$

11,289

 

 

$

10,143

 

 

$

4,708

 

 

$

4,362

 

 

Number of contracts

 

 

2,404

 

 

 

2,429

 

 

 

1,584

 

 

 

753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts

 

 

Direct Loans

 

 

 

 

Twelve months ended

 

 

Twelve months ended

 

 

 

 

March 31,

 

 

March 31,

 

 

 

 

(Purchases in thousands)

 

 

(Originations in thousands)

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Purchases/Originations

 

$

85,804

 

 

$

74,025

 

 

$

28,740

 

 

$

14,148

 

 

Average APR

 

 

23.1

 

%

 

23.4

 

%

 

30.5

 

%

 

29.6

 

%

Average discount

 

 

6.9

 

%

 

7.5

 

%

N/A

 

 

N/A

 

 

Average term (months)

 

 

47

 

 

 

46

 

 

 

26

 

 

 

25

 

 

Average amount financed

 

$

11,002

 

 

$

10,135

 

 

$

4,307

 

 

$

4,131

 

 

Number of contracts

 

 

7,793

 

 

 

7,307

 

 

 

6,770

 

 

 

3,497

 

 

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

 

 

Contracts

 

 

Direct Loans

 

 

 

 

As of

 

 

As of

 

 

 

 

March 31,

 

 

March 31,

 

 

Portfolio

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Average APR

 

 

22.9

 

%

 

22.8

 

%

 

29.8

 

%

 

28.5

 

%

Average discount

 

 

7.4

 

%

 

7.6

 

%

N/A

 

 

N/A

 

 

Average term (months)

 

 

50

 

 

51

 

 

27

 

 

26

 

 

Number of active contracts

 

 

19,559

 

 

 

22,760

 

 

 

6,444

 

 

 

4,017

 

 


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


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