CPS Posts Q2 Gains in Earnings, Revenue and Contracts Purchased

July 20, 2012

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IRVINE, Calif. — The positive momentum for Consumer Portfolio Services continued into the second quarter as the company again reported positive earnings as well as gains in revenue and contracts purchased.

According to its financial statement released this week, CPS generated earnings of $1.3 million or 5 cents per diluted share for its second quarter that ended June 30. A year earlier, the company still was in the midst of its turnaround as it sustained a net loss of $6.4 million or 35 cents per diluted share.

Now through the first half of this year, CPS calculated that its net earnings stood at $1.9 million, or 8 cents per diluted share, marking a stark change from a year ago when the company finished the first half of 2011 with a net loss of $10.6 million or 58 cents per diluted share.

The company's Q2 revenues totaled $44.2 million, an increase of approximately $13.0 million, or 42 percent year-over-year. The gain helped to offset a 14-percent rise in second quarter operating expenses, which came in at $42.8 million.

Furthermore, CPS' pretax income for the second quarter settled at $1.3 million, marking another major improvement as the company suffered a pretax loss of $6.4 million during the second quarter of last year.

Executives also tabulated other financial figures through the first half of 2012, including:

—Total revenues of $88.7 million, up from $63.5 million a year earlier.
—Total expenses of $86.8 million, up from $74.2 million a year earlier.
—Pretax income of $1.9 million, compared to a pretax loss of $10.6 million a year earlier.

Elsewhere on its financial update, CPS indicated that it purchased $137.9 million of new contracts during the second quarter. In the same period a year ago, it purchased $60.8 million, and the company opened 2012 by buying $119.9 million in the first quarter.

That activity left the company's managed receivables at $806.1 million as of June 30, an increase from $781.8 million as of March 31 and $635.0 million as of June 30 of last year.

CPS determined its annualized net charge-offs for the second quarter were 3.16 percent of the average owned portfolio as compared to 6.04 percent for the second quarter of last year.

Delinquencies greater than 30 days (including repossession inventory) stood at 3.81 percent of the total owned portfolio as of June 30 as compared to 5.92 percent on the same date last year.

The turnaround is all part of CPS' plan for an extended recovery. SubPrime Auto Finance News recapped the company's previous improvement and growth strategy here.

"The second quarter of 2012 marks another milestone in our recovery from the financial crisis," CPS chairman and chief executive officer Charles Bradley Jr. said when the company revealed its second-quarter performance.

"We are now growing our total managed portfolio sequentially as our new contract purchases are more than offsetting the runoff of the Fireside Bank portfolio and our 2007 and 2008 vintages," Bradley continued. "As we can see from our financial results, the operating leverage inherent in our business is once again becoming evident. This bodes well for our future profitability.

"Operationally, the second quarter was also solid," he went on to say. "New contract purchases increased 15 percent from the first quarter and yields and credit demographics of the new paper remain attractive. Asset performance metrics continue to be very strong as well with year-over-year net charge-offs and delinquencies continuing to decline. In addition, we achieved another record low funding cost on our June securitization."

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