Nicholas Financial, Inc.
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FOR IMMEDIATE RELEASE

Contact: Ralph Finkenbrink
Nicholas Financial, Inc.
Ph # - (727) 726-0763
Fax # - (727) 726-2140
E-Mail - rfinkenbrink@nicfn

Investor Relations
Michael Marika
Ph # - (727) 726-0763
Fax # - (727) 726-2140
E-Mail - mmarika@nicfn.com

Stock Symbol:
         (NASDAQ): NICK.

Web Site -
         www.nicholasfinancial.com

Nicholas Financial Reports
2nd
Quarter Operating Results


 

 

Clearwater, Florida, - October 29, 2009 - Nicholas Financial, Inc. (NASDAQ: NICK), announcedthat 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,” added Vosotas.

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.

Download Adobe Acrobat version of this press release.

 


 

 

 

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 non-cash unrealized mark-to-market gain on interest rate swaps and per share diluted net earnings, excluding non-cash unrealized mark-to-market gain on 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 non-cash unrealized mark-to-market loss of interest rate swaps as well as GAAP reported diluted earnings per share to the non-GAAP measure, per share diluted net earnings, excluding non-cash unrealized mark-to-market loss 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 September 30,

Six Months ended
September 30,

    2009     

    2008     

    2009     

    2008     


Net income, GAAP

$  2,432,002

$791,843

$4,695,902

$2,349,536


Mark-to-market of interest rate swaps (net of tax expense (benefit) of $89,379 and ($203,631).

    (145,699)

               -

   (328,751)

               -


Net earnings, excluding non-cash unrealized mark-to-market (gain) loss of interest rate swaps  (a)

$2,286,303
========

$791,843
=======

$4,367,151
========

$2,349,536
========

 

Three months ended September 30,

Six Months ended
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 of interest rate swaps

         (0.01) 

              -

      (0.10) 

              -


Per share diluted net earnings, excluding non-cash unrealized mark-to-market (gain) loss 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 September 30,

Six Months ended
September 30,

2009

2008

2009

2008

Revenue:
    Interest 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) loss on interest
   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
=======

10,551,000
=======

10,409,000
=======

         

 

NICHOLAS FINANCIAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars 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

..
Shareholder's Equity

      90,304

      85,018

..
Total Liabilities &
    Shareholders' equity


    $      209,168
=======


    $      197,782
=======

 


 

 

Portfolio Summary

         Three Months Ended
         September
30

         Six Months Ended
         September
30

         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
============


Finance revenue (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 finance revenue


$   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%


Operating 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 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 and notes payable-related party.  Average cost of borrowed funds represents interest expense as a percentage of average indebtedness. 

(3)  Finance revenue 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 finance revenues as a percentage of average finance receivables, net of unearned interest. Net portfolio yield represents finance revenue minus (a) interest expense and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest. 

(6)  Operating expenses represent total expenses, less interest expense, the provision for credit losses and operating costs associated with NDS.

(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 delinquency rates experienced by the Company with respect to Contracts and under 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 Delinquencies

$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 Delinquencies

$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
 September
30

Six Months Ended
September
30

Contracts

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%

Avg. Discount

8.96%

8.94%

9.07%

8.82%

Avg.Term (months)

49

48

49

48

Average Loan

$  9,468

$  9,400

$  9,456

$  9,483

# of Contracts    3,302    2,943         6,488         6,431

 



Contact Information

Telephone
727-726-0763
FAX
727-726-2140
Postal address
2454 McMullen-Booth Rd., Bldg. C, Clearwater, FL 33759
Electronic mail
Nicholas Employee E-Mail Directory
Investor Information: mmarika@nicfn.com
Webmaster: mmarika@nicfn.com

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