CLEARWATER, Fla., Oct. 29, 2009 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (Nasdaq:NICK) announced that for the three months ended September 30, 2009, net earnings, excluding changes in fair value of interest rate swaps increased 189% to $2,286,000 as compared to $792,000 for the three months ended September 30, 2008. Per share diluted net earnings, excluding changes in fair value of interest rate swaps, increased 175% to $0.22 for the three months ended September 30, 2009 as compared to $0.08 for the three months ended September 30, 2008. See reconciliations of the non-GAAP measures on page 2. Revenue increased 5% to $14,158,000 for the three months ended September 30, 2009 as compared to $13,505,000 for the three months ended September 30, 2008.
For the six months ended September 30, 2009, net earnings, excluding changes in fair value of interest rate swaps increased 86% to $4,367,000 as compared to $2,350,000 for the six months ended September 30, 2008. Per share diluted net earnings, excluding changes in fair value of interest rate swaps, increased 78% to $0.41 for the six months ended September 30, 2009 as compared to $0.23 for the six months ended September 30, 2008. See reconciliations of the non-GAAP measures on page 2. Revenue increased 5% to $27,851,000 for the six months ended September 30, 2009 as compared to $26,624,000 for the six months ended September 30, 2008.
According to Peter L. Vosotas, Chairman and CEO, "We are pleased with our second quarter results. Our results were favorably impacted by a reduction in the net charge-off rate and an increase in revenues. While we remain cautious, we are continuing with our planned expansion. During the second quarter we opened our 49th branch location in Akron, Ohio, and during the third quarter our 50th branch location will be opening in Gastonia, North Carolina. The Company continues to evaluate additional markets for future branch locations, and subject to market conditions, could open additional branch locations during the remainder of the Company's fiscal year which ends March 31, 2010. The Company remains open to acquisitions should an opportunity present itself."
Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeast. The Company presently operates out of 49 branch locations in both the Southeastern and the Midwestern States. The Company has approximately 10,500,000 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.
The Nicholas Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6776
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, 2009. 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.
This press release contains disclosures of non-GAAP financial measures including: net earnings, excluding changes in fair value of interest rate swaps and per share diluted net earnings, excluding changes in fair value of interest rate swaps. These measures utilize the GAAP terms "net income" and "diluted earnings per share" and adjust the GAAP terms to exclude the effect of mark-to-market adjustments and reclassifications of previously recorded accumulated comprehensive losses associated with interest rate swaps. Management believes this presentation provides additional and meaningful measures for the assessment of the Company's ongoing results and performance. Because the Company has historically reported mark-to-market (interest rate swaps) through other comprehensive income under hedge accounting, management believes that the inclusion of this non-GAAP measure provides consistency in its financial reporting and facilitates investors' understanding of the Company's historic operating trends by providing an additional basis for comparisons to prior periods. Management recognizes that the use of non-GAAP measures has limitations, including the fact that they may not be directly comparable with similar non-GAAP financial measures used by other companies. All non-GAAP financial measures are intended to supplement the applicable GAAP disclosures and should not be considered in isolation from, or as substitute for, financial information prepared in accordance with GAAP. For a reconciliation of non-GAAP measures from GAAP reported amounts, please see the supplemental information included with this press release.
Nicholas Financial, Inc. Reconciliation of Non-GAAP Financial Measures (Unaudited)
The following tables include reconciliations of GAAP reported net income to the non-GAAP measure, net earnings, excluding changes in fair value of interest rate swaps as well as GAAP reported diluted earnings per share to the non-GAAP measure, per share diluted net earnings, excluding changes in fair value of interest rate swaps. The non-GAAP measures exclude the effect of mark-to-market adjustments and reclassifications of previously recorded accumulated comprehensive losses associated with interest rate swaps.
Three months ended Six months ended
September 30, September 30,
2009 2008 2009 2008
-------------------------------------------------------
Net income,
GAAP $ 2,432,002 $ 791,843 $ 4,695,902 $ 2,349,536
Mark-to-market
gain on
interest rate
swaps, net of
tax expense
of $89,379
and $203,631 (145,699) -- (328,751) --
-------------------------------------------------------
Net earnings,
excluding
changes in
fair value of
interest rate
swaps (a) $ 2,286,303 $ 791,843 $ 4,367,151 $ 2,349,536
=======================================================
Three months ended Six months ended
September 30, September 30,
-------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------
Diluted
earnings per
share, GAAP $0.23 $0.08 $0.45 $0.23
Per diluted
share mark-to
-market gain
on interest
rate swaps (0.01) -- (0.04) --
-------------------------------------------------------
Per share
diluted net
earnings,
excluding
changes in
fair value of
interest rate
swaps (a) $0.22 $0.08 $0.41 $0.23
=======================================================
(a) Represents a non-GAAP financial measure. See information on non-GAAP
financial measures above.
Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited, Dollars in Thousands, Except Per Share Amounts)
Three months ended Six months ended
September 30, September 30,
-------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------
Revenue:
Interest and
fee income
on finance
receivables $ 14,139 $ 13,487 $ 27,812 $ 26,591
Sales 19 18 39 33
-------------------------------------------------------
14,158 13,505 27,851 26,624
Expenses:
Operating 5,921 5,591 11,635 11,440
Provision
for credit
losses 3,254 5,145 6,577 8,547
Interest
expense 1,294 1,432 2,566 2,841
Unrealized
mark to
market gain
on interest
rate swaps (235) -- (532) --
-------------------------------------------------------
10,234 12,168 20,246 22,828
Operating
income before
income taxes 3,924 1,337 7,605 3,796
Income tax
expense 1,492 545 2,909 1,446
-------------------------------------------------------
Net income $ 2,432 $ 792 $ 4,696 $ 2,350
=======================================================
Earnings per
share:
Basic $ 0.23 $ 0.08 $ 0.45 $ 0.23
=======================================================
Diluted $ 0.23 $ 0.08 $ 0.45 $ 0.23
=======================================================
Weighted
average
shares 10,364,000 10,245,000 10,364,000 10,216,000
=======================================================
Weighted
average
shares and
assumed
dilution 10,577,000 10,426,000 10,546,000 10,409,000
=======================================================
Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)
September 30, March 31,
2009 2009
---------------------------
Cash $ 1,868 $ 1,733
Finance receivables, net 197,166 186,694
Other assets 10,134 9,355
---------------------------
Total assets $209,168 $197,782
===========================
Line of credit $109,676 $102,030
Other liabilities 9,188 10,734
---------------------------
Total liabilities 118,864 112,764
Shareholders' equity 90,304 85,018
---------------------------
Total liabilities and shareholders' equity $209,168 $197,782
===========================
Three months ended Six months ended
Portfolio September 30, September 30,
Summary 2009 2008 2009 2008
Average
finance
receivables,
net of
unearned
interest (1) $222,701,667 $208,674,423 $219,211,625 $206,001,623
=======================================================
Average
indebtedness
(2) $106,342,703 $105,150,419 $104,667,063 $103,503,324
=======================================================
Interest and
fee income on
finance
receivables
(3) $ 14,138,708 $ 13,487,161 $ 27,811,980 $ 26,591,127
Interest
expense 1,293,561 1,431,677 2,566,238 2,841,013
-------------------------------------------------------
Net Interest
and fee
income on
finance
receivables $ 12,845,147 $ 12,055,484 $ 25,245,742 $ 23,750,114
=======================================================
Weighted
average
contractual
rate (4) 23.49% 24.15% 23.70% 24.16%
=======================================================
Average cost
of borrowed
funds (2) 4.87% 5.45% 4.90% 5.49%
=======================================================
Gross
portfolio
yield (5) 25.39% 25.85% 25.37% 25.82%
Interest
expense as a
percentage of
average
finance
receivables,
net of
unearned
interest 2.32% 2.74% 2.34% 2.76%
Provision for
credit losses
as a
percentage of
average
finance
receivables,
net of
unearned
interest 5.84% 9.86% 6.00% 8.30%
=======================================================
Net portfolio
yield (5) 17.23% 13.25% 17.03% 14.76%
Marketing,
salaries,
employee
benefits,
depreciation
and
administra-
tive expenses
as a
percentage of
average
finance
receivables,
net of
unearned
interest (6) 10.53% 10.75% 10.51% 10.89%
-------------------------------------------------------
Pre-tax yield
as a
percentage of
average
finance
receivables,
net of
unearned
interest (7) 6.70% 2.50% 6.52% 3.87%
=======================================================
Write-off to
liquidation
(8) 11.11% 12.97% 10.96% 12.09%
Net charge-off
percentage (9) 8.24% 10.25% 7.98% 9.82%
Note: All three and six 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 $56,000 and $9,000 during the three-month periods
ended September 30, 2009 and 2008 and $109,000 and $211,000
during the six-month periods ended September 30, 2009 and 2008,
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 the
beginning receivable balance, plus current period purchases,
minus voids and refinances, minus the 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 Contracts purchased by the Company and its direct loan program:
---------------------------------------------------------------------
September 30,
2009 2008
---------------------------------------------------------------------
Contracts
---------
Gross balance
outstanding $310,564,055 $287,272,780
============= =============
Delinquencies
-------------
30 to 59 days $ 10,944,006 3.52% $ 9,621,940 3.35%
60 to 89 days 4,366,307 1.41% 3,763,896 1.31%
90 + days 1,537,826 0.50% 1,407,925 0.49%
-------------------------------------------------------
Total
delinquen-
cies $ 16,848,139 5.43% $ 14,793,761 5.15%
=======================================================
Direct Loans
------------
Gross balance
outstanding $ 5,952,797 $ 8,472,099
============= =============
Delinquencies
30 to 59 days 169,242 2.84% $ 145,174 1.71%
60 to 89 days 57,787 0.97% 64,682 0.76%
90 + days 50,457 0.85% 67,351 0.80%
-------------------------------------------------------
Total
delinquen-
cies $ 277,486 4.66% $ 277,207 3.27%
=======================================================
The following table presents selected information on Contracts purchased by the Company, net of unearned interest:
Three months ended Six months ended
September 30, September 30,
2009 2008 2009 2008
---------------------------------------------------------------------
Purchases $ 31,262,980 $ 27,662,818 $ 61,352,247 $ 60,987,269
Weighted APR 23.38% 24.15% 23.59% 24.16%
Average
discount 8.96% 8.94% 9.07% 8.82%
Weighted
average term
(months) 49 48 49 48
Average loan $ 9,468 $ 9,400 $ 9,456 $ 9,483
Number of
contracts 3,302 2,943 6,488 6,431
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