Tuesday, May 04, 2010
NICK Q4 results
Nicholas Financial announced their Q4 results today.
I'd like to compare it to the Q3 results, since their business isn't very seasonal.
Weighted average shares with assumed dilution: 11.8 million shares (11.7 in Q3).
The actual shares in Q3 was 11.7 on Jan 31, 2010.
I'm glad to see them report earnings before accounting for the wild interest rate swap swings, even when it makes earnings look worse (which was the case this time).
The business hasn't gone haywire during the financial crisis due to the careful management that, in my opinion, was evident beforehand.
Total earnings without the interest rate swap change were $3.1 million for the quarter vs $2.9 in the prior quarter. By GAAP it's even higher. It works out to about 26 cents a share without the fair value tailwind.
Operating expenses were $5.9 million (42% of total revenue) vs vs $5.4 million (41% of total revenue) yoy.
They dropped the provision for credit losses down to $1.7 million from $3.0 million qoq and $3.3 million yoy. The actual net finance receivables increased by $5 million.
Weighted average contract interest rate increased slightly to 23.76% from 23.41%. Yeah, these are people with seriously bad credit; see previous posts for how they carefully manage these using very detailed static pools.
Ave cost of borrowed money was 5.62% vs 3.92% qoq (5.03% yoy). Gross portfolio yield was 24.82% vs 25.37% qoq (25.25% yoy). Net portfolio yield was 19.15% vs 18.12% qoq (16.55% yoy).
Provision for credit losses was 3.01% of ave finance receivables vs 5.34% qoq (6.26% yoy). Seems to be dropping, but we'll see in time. Write-off to liquidation 6.66% vs 11.27%! qoq (10.91% yoy). Net charge-off down also about the same amount to 5.23%.
Now the delinquencies. I'll cover the contracts and not the direct loans (which are very small and have better results). I'm only looking at qoq, except where noted.
Gross outstanding balance increased to $321 million from $311 million. With a small net change, I'm only going to cover the delinquencies as a percentage of gross outstanding balance
30-59 days: 2.37% vs 3.68% (3.00% yoy)
60-89 days: 0.55% vs 1.23% (0.92% yoy)
90+ days: .24% vs .59% (0.29% yoy)
They purchased $34 million in new contracts (weighted APR 23.7%) at an ave discount of 9.22% (vs purchasing $26 million at 23.27% and 9.08% discount prior quarter). Average loan slightly smaller, same duration.
CONCLUSION
Oh hell yes, I'll keep holding the stock. It's my largest holding. They seem to be doing very well during a very difficult economic time. I believe that when things eventually recover, they will end up in better shape than before the crisis as they continue slowly expanding. I'd sell it all for $22 a share.
I'd like to compare it to the Q3 results, since their business isn't very seasonal.
Weighted average shares with assumed dilution: 11.8 million shares (11.7 in Q3).
The actual shares in Q3 was 11.7 on Jan 31, 2010.
I'm glad to see them report earnings before accounting for the wild interest rate swap swings, even when it makes earnings look worse (which was the case this time).
According to Peter L. Vosotas, Chairman and CEO, “Our positive results for the fourth quarter and year were favorably impacted by a solid increase in revenues and a reduction in the net charge-off percentage of 41% and 26% for the three and twelve months ended March 31, 2010, respectively. We plan to open three to five new branch locations this year and will continue to evaluate additional markets for future branch locations.”It should be noted that Peter Vosotas has been known to correct false information on the Yahoo investment message board for NICK, as well as offer appropriate opinions on the company. Of course, my favorite was in a discussion about whether the company had a "50% chance bankrupt in 2009", where someone said, "Say it aint so Peter!!", to which he responded It is not so, and the company most certainly didn't go bankrupt. I suppose the original poster just thought NICK got lucky.
The business hasn't gone haywire during the financial crisis due to the careful management that, in my opinion, was evident beforehand.
Total earnings without the interest rate swap change were $3.1 million for the quarter vs $2.9 in the prior quarter. By GAAP it's even higher. It works out to about 26 cents a share without the fair value tailwind.
Operating expenses were $5.9 million (42% of total revenue) vs vs $5.4 million (41% of total revenue) yoy.
They dropped the provision for credit losses down to $1.7 million from $3.0 million qoq and $3.3 million yoy. The actual net finance receivables increased by $5 million.
Weighted average contract interest rate increased slightly to 23.76% from 23.41%. Yeah, these are people with seriously bad credit; see previous posts for how they carefully manage these using very detailed static pools.
Ave cost of borrowed money was 5.62% vs 3.92% qoq (5.03% yoy). Gross portfolio yield was 24.82% vs 25.37% qoq (25.25% yoy). Net portfolio yield was 19.15% vs 18.12% qoq (16.55% yoy).
Provision for credit losses was 3.01% of ave finance receivables vs 5.34% qoq (6.26% yoy). Seems to be dropping, but we'll see in time. Write-off to liquidation 6.66% vs 11.27%! qoq (10.91% yoy). Net charge-off down also about the same amount to 5.23%.
Now the delinquencies. I'll cover the contracts and not the direct loans (which are very small and have better results). I'm only looking at qoq, except where noted.
Gross outstanding balance increased to $321 million from $311 million. With a small net change, I'm only going to cover the delinquencies as a percentage of gross outstanding balance
30-59 days: 2.37% vs 3.68% (3.00% yoy)
60-89 days: 0.55% vs 1.23% (0.92% yoy)
90+ days: .24% vs .59% (0.29% yoy)
They purchased $34 million in new contracts (weighted APR 23.7%) at an ave discount of 9.22% (vs purchasing $26 million at 23.27% and 9.08% discount prior quarter). Average loan slightly smaller, same duration.
CONCLUSION
Oh hell yes, I'll keep holding the stock. It's my largest holding. They seem to be doing very well during a very difficult economic time. I believe that when things eventually recover, they will end up in better shape than before the crisis as they continue slowly expanding. I'd sell it all for $22 a share.
Labels: nicholas financial, NICK
