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Nicholas Financial Inc (NICK) SEC Filing 8-K Material Event for the period ending Friday, October 29, 2021

Nicholas Financial Inc

CIK: 1000045 Ticker: NICK

 

Exhibit 99.1

 

img246915618_0.jpg 

 

 

FOR IMMEDIATE RELEASE

Nicholas

 

 

Contact: Irina Nashtatik

 

NASDAQ: NICK

Nicholas Financial, Inc.

Corporate Headquarters

2454 McMullen-Booth Rd.

Building C, Suite 501

Clearwater, FL 33759

 

               CFO

               Ph # (727)-726-0763

 

Web site: www.nicholasfinancial.com

 

Nicholas Financial Reports

2nd Quarter Fiscal Year 2022 Results

 

Income year-over-year before income taxes for the three months ended September 30, 2021 increased by 57.4% compared to prior year second quarter
Pre-tax yield for the three months ended September 30, 2021 increased to 4.8% compared to 2.6% during the prior year second quarter
Originations year-over-year on new Contracts purchased for the three months ended September 30, 2021 increased by 9.1% compared to prior year second quarter
Originations year-over-year on Direct Loans for the three months ended September 30, 2021 increased by 83.7% compared to prior year second quarter
Accounts 60+ days delinquent decreased to 2.3%, excluding Chapter 13 bankruptcy accounts, compared to 2.9% as of the prior year second quarter
Net Portfolio Yield for the three months ended September 30, 2021 increased to 22.5% compared to 18.6% during the prior year second quarter

October 29, 2021 – Clearwater, Florida - Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended September 30, 2021 of $1.6 million compared to $1.3 million for the three months ended September 30, 2020. Diluted net income per share was $0.21 for the three months ended September 30, 2021 as compared to $0.16 for the three months ended September 30, 2020. Revenue decreased 10.6% to $12.6 million for the three months ended September 30, 2021 as compared to $14.1 million for the three months ended September 30, 2020. The Company reported income before income taxes for the three months ended September 30, 2021 of $2.1 million compared to $1.4 million for the three months ended September 30, 2020. The Company recorded an income tax expense of approximately $0.5 million during the three months ended September 30, 2021 as compared to $0.1 million during the three months ended September 30, 2020.

The Company announced net income for the six months ended September 30, 2021 of $3.3 million compared to $2.7 million for the six months ended September 30, 2020. Diluted net income per share was $0.44 for the six months ended September 30, 2021 as compared to $0.34 for the six months ended September 30, 2020. Revenue decreased 10.8% to $25.2 million for the six months ended September 30, 2021 as compared to $28.2 million for the six months ended September 30, 2020. The Company reported income before income taxes for the six months ended September 30, 2021 of $4.5 million compared to $3.2 million for the six months ended September 30, 2020. The Company recorded an income tax expense of approximately $1.1 million during the six months ended September 30, 2021 as compared to $0.5 million during the six months ended September 30, 2020.

For the six months ended September 30, 2021, the Company originated $52.0 million in finance receivables, collected $59.4 million in principal payments, reduced debt by $16.8 million and cash by $10.1 million.

 

“Although the consistent excellent portfolio performance is great, we are even more encouraged by our ability to once again increase our Indirect contract originations on a year over year basis for the third quarter in a row,” commented Doug Marohn, President and CEO of Nicholas Financial, Inc. “We have also been able to do the same on Direct Loan production, only on a significantly larger scale. Our continued ability to increase both Indirect and Direct origination volume has been a key factor in reducing our portfolio liquidation as we look toward receivable growth in fiscal year 2022 and beyond.”



 

 


 

“Additionally, our branch expansion efforts continued in the second quarter with the opening of our latest brick and mortar office in Houston, TX,” Marohn went on to say. “Houston represents our 47th operational branch and signifies our re-entry into Texas with a physical local office. We are continuing our expansion efforts as we develop the Dallas/Ft. Worth and San Antonio markets in Texas, as well as the Phoenix market in Arizona."

 

”Nicholas Financial, Inc. also celebrated the grand opening of our Central Business Operations facility in Charlotte, NC during the 2nd Fiscal Quarter. This center is home to our training, recruiting, expansion, branch operations, direct consumer loan and other related departments. It exemplifies our commitment to reinvesting in our personnel through training, development and technology,” concluded Doug Marohn.

 

 

 

 


 

 

 

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

 

 

 

3,654

 

 

$

39,185

 

 

$

10,745

 

 

 

23.1

 

%

 

 

6.9

 

%

 

 

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

 

 

2019

 

 

 

7,684

 

 

$

77,499

 

 

$

10,091

 

 

 

23.6

 

%

 

 

8.2

 

%

 

 

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

 

 

 

2,904

 

 

 

$

12,777

 

 

$

4,396

 

 

 

30.1

 

%

 

 

26

 

 

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

 

 

2019

 

 

 

1,918

 

 

 

 

$

7,741

 

 

$

4,036

 

 

 

26.4

 

%

 

 

26

 

*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.

 

## More ##

 

 


 

Nicholas Financial, Inc.

Condensed Consolidated Statements of Income

(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)

 

 

Three months ended

 

 

Six months ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income on finance receivables

 

$

12,572

 

 

$

14,064

 

 

$

25,166

 

 

 

$

28,215

 

 

Unrealized gain on equity investments

 

 

-

 

 

 

45

 

 

 

-

 

 

 

 

45

 

 

Total Revenue

 

$

12,572

 

 

$

14,109

 

 

$

25,166

 

 

 

$

28,260

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

7,916

 

 

 

8,131

 

 

 

16,265

 

 

 

 

15,474

 

 

Provision for credit losses

 

 

1,395

 

 

 

3,050

 

 

 

2,125

 

 

 

 

6,350

 

 

Interest expense

 

 

1,121

 

 

 

1,569

 

 

 

2,309

 

 

 

 

3,218

 

 

Total expenses

 

 

10,432

 

 

 

12,750

 

 

 

20,699

 

 

 

 

25,042

 

 

Income before income taxes

 

 

2,140

 

 

 

1,359

 

 

 

4,467

 

 

 

 

3,218

 

 

Income tax expense

 

 

536

 

 

 

92

 

 

 

1,135

 

 

 

 

521

 

 

Net income

 

$

1,604

 

 

$

1,267

 

 

$

3,332

 

 

 

$

2,697

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

 

$

0.16

 

 

$

0.44

 

 

 

$

0.34

 

 

Diluted

 

$

0.21

 

 

$

0.16

 

 

$

0.44

 

 

 

$

0.34

 

 

 

Condensed Consolidated Balance Sheets

(Unaudited, In Thousands)

 

 

 

September 30,

 

 

March 31,

 

 

 

2021

 

 

2021

 

Cash and restricted cash

 

$

22,851

 

 

$

32,977

 

Finance receivables, net

 

 

165,561

 

 

 

170,318

 

Repossessed assets

 

 

859

 

 

 

685

 

Operating lease right-of-use assets

 

 

4,801

 

 

 

3,392

 

Other assets

 

 

4,397

 

 

 

5,066

 

Total assets

 

$

198,469

 

 

$

212,438

 

Credit facility, net of debt issuance costs

 

$

69,599

 

 

$

86,154

 

Note payable

 

 

3,244

 

 

 

3,244

 

Operating lease liabilities

 

 

4,817

 

 

 

3,367

 

Other liabilities

 

 

3,719

 

 

 

4,451

 

Total liabilities

 

 

81,379

 

 

 

97,216

 

Shareholders’ equity

 

 

117,090

 

 

 

115,222

 

Total liabilities and shareholders’ equity

 

$

198,469

 

 

$

212,438

 

Book value per share

 

$

15.44

 

 

$

14.95

 

 

 

 


 

 

 

 

Three months ended

 

 

Six months ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

(In thousands)

 

 

(In thousands)

 

 

Portfolio Summary

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Average finance receivables (1)

 

$

178,873

 

 

$

203,407

 

 

$

180,364

 

 

 

$

208,608

 

 

Average indebtedness (2)

 

$

72,044

 

 

$

113,233

 

 

$

75,611

 

 

 

$

117,983

 

 

Interest and fee income on finance receivables

 

$

12,572

 

 

$

14,064

 

 

$

25,166

 

 

 

$

28,215

 

 

Interest expense

 

 

1,121

 

 

 

1,569

 

 

 

2,309

 

 

 

$

3,218

 

 

Net interest and fee income on finance receivables

 

$

11,451

 

 

$

12,495

 

 

$

22,857

 

 

 

$

24,997

 

 

Portfolio yield (3)

 

 

28.11

 

%

 

27.66

 

%

 

27.91

 

%

 

 

27.05

 

%

Interest expense as a percentage of average finance receivables

 

 

2.51

 

%

 

3.09

 

%

 

2.56

 

%

 

 

3.09

 

%

Provision for credit losses as a percentage of average finance receivables

 

 

3.12

 

%

 

6.00

 

%

 

2.36

 

%

 

 

6.09

 

%

Net portfolio yield (3)

 

 

22.48

 

%

 

18.57

 

%

 

22.99

 

%

 

 

17.87

 

%

Operating expenses as a percentage of average finance receivables

 

 

17.70

 

%

 

15.99

 

%

 

18.04

 

%

 

 

14.84

 

%

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

 

 

4.78

 

%

 

2.58

 

%

 

4.95

 

%

 

 

3.03

 

%

Net charge-off percentage (5)

 

 

4.88

 

%

 

5.56

 

%

 

4.23

 

 

 

 

5.79

 

%

Finance receivables

 

 

 

 

 

 

 

$

177,013

 

 

 

$

198,168

 

 

Allowance percentage (6)

 

 

 

 

 

 

 

 

2.52

 

%

 

 

5.79

 

 

Total reserves percentage (7)

 

 

 

 

 

 

 

 

6.50

 

%

 

 

9.84

 

%

 

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 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.

(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

 

 

September 30, 2021

 

$

157,940

 

 

$

7,990

 

 

$

2,905

 

 

 

$

1,024

 

 

 

$

19

 

 

 

$

11,938

 

 

 

 

 

 

 

 

5.06

 

%

 

1.84

 

%

 

 

0.65

 

%

 

 

0.01

 

%

 

 

7.56

 

%

September 30, 2020

 

$

185,287

 

 

$

10,232

 

 

$

3,962

 

 

 

$

1,560

 

 

 

$

42

 

 

 

$

15,796

 

 

 

 

 

 

 

 

5.52

 

%

 

2.14

 

%

 

 

0.84

 

%

 

 

0.02

 

%

 

 

8.53

 

%

 

 

 

 

 

 

 

Direct Loans

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding

 

 

30 – 59 days

 

 

60 – 89 days

 

 

 

90 – 119 days

 

 

 

120+

 

 

 

Total

 

 

September 30, 2021

 

$

18,844

 

 

$

416

 

 

$

145

 

 

 

$

53

 

 

 

$

0

 

 

 

$

614

 

 

 

 

 

 

 

 

2.21

 

%

 

0.77

 

%

 

 

0.28

 

%

 

 

0.00

 

%

 

 

3.26

 

%

September 30, 2020

 

$

12,720

 

 

$

349

 

 

$

159

 

 

 

$

52

 

 

 

$

0

 

 

 

$

560

 

 

 

 

 

 

 

 

2.74

 

%

 

1.25

 

%

 

 

0.41

 

%

 

 

0.00

 

%

 

 

4.40

 

%

 

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

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

(Purchases in thousands)

 

 

(Originations in thousands)

 

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Purchases/Originations

 

$

18,880

 

 

$

17,307

 

 

$

7,040

 

 

 

$

3,832

 

 

Average APR

 

 

23.0

 

%

 

23.5

 

%

30

 

%

 

29.2

 

%

Average discount

 

 

6.7

 

%

 

6.8

 

%

N/A

 

 

 

N/A

 

 

Average term (months)

 

 

47

 

 

 

46

 

 

 

26

 

 

 

 

25

 

 

Average amount financed

 

$

11,061

 

 

$

10,127

 

 

$

4,433

 

 

 

$

4,147

 

 

Number of contracts

 

 

1,707

 

 

 

1,709

 

 

 

1,588

 

 

 

 

924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts

 

 

Direct Loans

 

 

 

 

Six months ended

 

 

Six months ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

(Purchases in thousands)

 

 

(Originations in thousands)

 

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Purchases/Originations

 

$

39,185

 

 

$

34,103

 

 

$

12,777

 

 

 

$

6,259

 

 

Average APR

 

 

23.1

 

%

 

23.5

 

%

 

30.1

 

%

 

 

29.0

 

%

Average discount

 

 

6.9

 

%

 

7.4

 

%

N/A

 

 

 

N/A

 

 

Average term (months)

 

 

47

 

 

 

46

 

 

 

26

 

 

 

 

26

 

 

Average amount financed

 

$

10,745

 

 

$

10,045

 

 

$

4,396

 

 

 

$

4,260

 

 

Number of contracts

 

 

3,654

 

 

 

3,395

 

 

 

2,904

 

 

 

 

1,479

 

 

 

 


 

 

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

 

 

 

Contracts

 

 

Direct Loans

 

 

 

 

As of

 

 

As of

 

 

 

 

September 30,

 

 

September 30,

 

 

Portfolio

 

2021

 

 

2020