CPSS - Earnings call transcript Q1 2019 | Consumer Portfolio Services, Inc.

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2019 First Quarter Operating Results Conference Call. Today's call is being recorded.

Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements as historical fact may be deemed to be forward-looking statements. Such forward looking statements are subject to certain risks that could cause actual results to differ materially from those projected. the filings to further you refer Company's for SEC clarification. I or update assumes of forward-looking events no Company publicly new obligation future result The a to any as statements, information, otherwise. whether Mr. us now With here is, Chief Bradley, Executive Mr. Charles and Officer; Portfolio Fritz, Jeff Services. of Financial Officer Chief Consumer now call over to turn the will Mr. I Bradley.

Charles Bradley

The on we're have was probably were you, different a Good earnings us for than and very expected. conference we quarter what for. itself. everyone, you, first Thank might I that little overall, mean, call. satisfied. thank we where hoped quite joining our The correct not will quarter had is, news

out, First I smaller. foremost, tax always anymore. as we've The known, drawn it season now and be much tax doesn't to exist think probably tends season, more much

first least don't and impact the or and years, have for years, couple big the the diminished, most it tax has we've you was had existent that over probably ever we've last had. of season – non-existent year quarter this So,

XX:XX. push process where almost value. to that is in so so, tends caused portfolio be would And And is the is we to as the And lower quarter. the – in of of earnings low not part the we're another to lower value to going right outstanding Jeff that switching fair we what the at earnings fact some terms through accounting accounting. let of and future. growing – but We've walk therefore, amount the first The the in revenue, we're almost value. at out the coupled in switched fair there's sort sort the It's point that now switch. fair with into of I'll the

they're one-time has we've is beginning vintages good bad about is is terms now And had and the been XXXX, That most shouldn't vintages really The be starting of the all. on few what first would negative and last and The affect news to the the beginning at earnings. Company of XXXX future we're the quarter. news XXXX that of again, and the results. perform. XXXX make in It's the to finally a so, effect And to doing the again great that see for their exactly years performance. hoping for XXXX and on working and are the all pale paper

portfolios the have but pretty portfolios, go the XXXX getting still we provisioning. tag of now shrinking. which to So end again, sort old, of the have XXXX that are still are the they're through Those and

causing again, So different bunch portfolio, have our going that there little results should right and off, XXXX, will of better effects of a then, for us. paper XXXX effect the greater XXXX, are it's part run become is now. that produce earnings the But a that even more to and paper on to

So are that's good down. and the losses

next losses also are of is but Sort the the DQ of level up. good, is down, which

reasons focus of extensions a DQ. is less the DQ working had and on up main is the on real we One just the doing

use has on little extension portfolio just DQ, the a back not that that it's So high we've a bit. of and much try cut the down those so it's turn policies, our

that we to would and be we alarmed that future then would as nothing particularly again So in about expect well. improve the

credit the good facility. was renewed highlight quarter that Another aspect we of news Fortress or the

working in the to. in again, them we have three want our place, So, also way we facilities

just XX.X. normal see a Again sort you of in Another APR effect of you back that the thing up we level. raise yet, one APR, it has will. did focus XX.X, the is in won't the to that's quarter raised We to been first with but future to the our from

else everything after the little the in as different I comment well. as departments quarter, said, is on to in runs more financials. very, the going we're earnings a quarter still at point like this Jeff for through the much I'm almost So very the going

Jeff Fritz

Welcome, Brad. Thanks, everybody.

the Let's the fourth down XXXX. the $XXX.X first on of begin from legacy and $XX.X where coupon XX% traditional XX% right remember everything since XX% the the revenue with XXXX, receivables. the January it, value the is the the of since And impact fair are accrues losses But see receivables quarter revenues. the approximately we've side that's amount of interest from the we down as million. call portfolio, to a you of for X% the value which million portfolio, in XXXX, originated the those revenues quarter Anyway, at to gross Revenues business. of really sort can baked number. quarter is the fair the revenue, for portfolio, on were that, of net transition there, of That's accounting into the

that the big at of portfolio off And to the amortize X.X%, continues The business to along XX% quarter, X% the for is number. provisions down down so that I'm $XX XX% rapidly year quarter. accruing the ago from now, represents losses, to provisions portfolio about at the that's which losses million credit bigger offset December whole for merrily the the to going were from credit while skip the portfolio but for quarter,

that the of you the year-over-year credit credit significant increased And you'll to reduction, credit of somewhat. remember provisions and the only but dragged Now, for vintages provisions the has in legacy for spite see and losses losses down can performance reduction, drastic portfolio. the XXXX the apply XXXX

will XX% of decrease, which kind in as $XX.X a did that's losses, core so get couple and increases interest categories. of maybe a quarter million, decrease in flat. as from a this XXXX. the minute decrease this the quarter, of from $X.X a didn't continue December And to $X.X the million in expense, quite million for quarter of a down talk move the bit for about we quarter quarter we Net the fair down as we compared we're in transition earnings the Pretax a Most here. that's a We we'd first the much to the million quarter quarter XX% are of There's XXXX. list X% of crosshairs, quarter. XX% decreased expenses quarter, broader $X.X for hoped in our The compared where operating down expenses, I'll have slight $X.X million, the December million really income in the in of fourth to decrease December year. and we're on but credit quarter, increase that's $XX for of first accounting, value the last XX% to provisions little they for start

in a in first of last had off from is was year benefit $X.X fourth a the However, the million you a kind may tax million change of balance recall, moving of quarter $X.X year. that we XX% little share of one decrease sheet, The per $X.XX, $X.X XX% very million year. onto earnings in the in sheet. the quarter last the that's from decrease event. last of composition the is balance first And Diluted really $X.XX quarter

see the in that And receivables from compared portfolio to that in is now XX% $X.X decrease decreasing of year. total. portfolio finance as billion a legacy the You the almost XX% I year-over-year. billion That's last the said, portfolio can $X represents this year,

when a side fair Just below accounting. $XXX.X fair the to can debt we the just see No compared the approaching significant that portfolio sheet value sheet. last the in billion had value $XXX.X million on $X changes – balance year begun you of the million balance

Brad credit the quarter. in the first we've renewed As said, Fortress line

risk $XX.X million million, to other Moving onto $XX.X last a million million, the $XX.X we'll the quarter of cost interest talk all-in securitization reduction XX% That's million, $XX compared of net $XX about standpoint, compared by a XXXX. And to significantly quarter cost as in December in the of the minute. move first costs the decrease Core a and adjusted some a X% a the the were expense, from for reduction flat was compared the the X.X% From operating line decrease for million quarter, the fund the first margin stopped the a December and cost new operating about X.X% blended in that's standpoint, of metrics, and influenced influenced was year. funds of compared slightly the quarter we year-over-year year. in to in from $XX.X from quarter here core X% down down reduction first of of expense the $XX.X quarter X% securitization the higher The blended of to somewhat by December was funds. quarter margin last a that's also that's and year. last then, quarter million, $XX.X X% million expenses provision operating from of

last year. also and from percentage, down managed As that's core a X% the of expenses about quarter the quarter down were X.X% first of the December operating and portfolio, about X% from those

the just So quarter XX% the season an that have, operating of I've in for and managed We the about quarter. we've the delinquency. quarter, X.X% that's with the down first portfolio, in a past, in the as the improvement XX% X.X% last we was on down sort in benefits relatively slightly Brad portfolio, up that return didn't That's the refund focused that recognizable delinquency in of as The the The year. flat portfolio. December performance And tax to we've all-in get for and of quarter first said, also the about first XX% from significantly metrics, significantly metric. the for aging slight XXXX. quarter, the X.X% expenses and credit the increasing past X.X% managed from seen seen also said

a compared that's And we to the months in that vintage a and XX know of numbers. portfolios XXXX, delinquency last about is ever-increasing the and portfolio older static a portfolio, at half aggregate, year. month, have maybe So, we month March

X.X% However, for were year. slightly the quarter the down quarter from of X% last net of the first annualized losses in

we even a not about increase have auctions, seen in balance XX% the haven't the vehicles. seen liquidate noticed really although of we've is losses. stable achieved the proportional past when returns haven't at so the auctions, and risen, the too, auctions this as net being At exciting in we we credit at our And delinquencies

priced of ABS to basis October in year. completed that had our getting that of of X.XX%, The in blended benchmarks might but market the of have XXXX really coupon January transaction. out of were almost seen frankly result on Just blocks that is which a the classes less was to in Nevertheless, securitization, we a quarter moving all in in this XXXX when than a largely spreads And also deal. a second or we launched quarter first earlier B event, of deal benchmarks, enjoyed bonds. achieved January a second slightly and back our low cost we achieve few little our significantly of A, the markets, deal drops you really soft we closed the this we spreads higher so compressed quarter of week, transaction was previous in And was XXXX. we we X.XX%. ABS blended a offsetting relatively this tighter points that completed first a about funds transaction And what of week the that

cost also, first significant funds years of that quarter-to-quarter. were bond. about in Class in that's single So improvement to And two a marks time include transaction rated the able a this F B we

our deal execution improves that compared back over I'll significantly turn that, so with other And deals. to to that recent on Brad. it And leverage

Charles Bradley

lots focus marketing, of to can of get fund going walking and up we've press our capture. be And It's buttons send expensive to Jeff. able Thanks, loans to an We through want we're and dealers lots don't process. – applications on. really the applications. of turn departments, the really you to some We tried lots on

work flow getting the we've from on deals system department focus or And the capture Also, very just programs. going in their us They're had apps in sending the sort applications. our we dealers continue the in marketing to we getting so of them of capture terms rather and well. up than a on

We have primarily right working that's now. one

to program to don't look in a We at lend for sub-prime better out then or actually who that's that you their works. grade you basically want where And turn have type is a a us downs. and couple deal more well. given working of And bank Collections, friendly lenders the get work slightly to paper out we banks flow worked me that model is and that it's process still – very on very competitors. has originations, competitive well. have amongst and to And scoring and whole the with we're working rather there so excuse – new market the our in a continuing working with focus

as process is been there to very well. a we crannies at now focus those and can look nooks really That's of sort Our good get good prices. performing working where for well it's paper and

we expect to improve. results So the there to continue

a numbers. things reached customers are collection the XXXX, As collecting very paper, so In all culture collections, will our from will out point finally and sort of good. see value the well. portfolio of hopefully, then trend real see be the I like we XXXX finally culture and again, But that, branches get And from in we the All of continue. the and think should functioning results said, really too rid improvement we good. The that as we paper we that regulatory fair of of this the in then forceful money being all XXXX, the where legacy we've has in we terms are within boundaries. is best XXXX, think and arrived are the some very what those stay without

– and picture as well much that really terms tell but of up, as in is again, out, pointed are I we're the how of DQ collections. losses the down and doesn't doing So

remain As this out, a the Probably flat. Jeff about we of pointed sit while. is where auctions kind for

living that that so cars fine. lease time area through, long cars for of sort we've so of the in And glut but that's goes and off again, been a new

to Santander. industry. that's there There's our Obviously, biggest wants going happens few or I break a the Everyone's that's and bit Fiat to as game. see up combination and We've IPO IPOs. all what years, the waiting industry, that's for a down come little heads In still trying waiting tale is keep stay that, for a Chrysler the of to a Everyone with midst or to companies how quarter away that companies the go trying I happens terms or what of – think consolidation. We there. of a possible. out been think, curious tells know do it's few wait it before. the of we're to that out. couple for to to an curious quarter if to see In last just Everybody saw somewhat our for and in

year haven't we the expect would We any continues. lately, seen as but more some

better importantly, As probably Even to several securitization been bonds in Jeff strong we've demand very with market able the good. rising for get pointed execution. the been doing out, It's is years. as And rates, as great. the it's as is almost

an a the for is. Jeff get As first Very long the gives loans better fund we B the F or rated idea the but an market strong bond we us, time market and pricing, That sold important mentioned, to that time. supporting bond remain for a industry. that just the we Single in in continues you also of again, just backbone strong because our how that's how

work. get have care days. cars In – slowing the not is as one but terms is good. still market said, of any seems need I Unemployment problem people unemployment. still to economy, is We we down overall don't to there thing car – really economy about the these problem some, the with a is The

performs would very summary this finally, stay of are real paper looking way, that numbers And at the not fine fast and a the that yet least, company and had of there's we've we're have sort a we bogey environment, through. of the portfolio we as first modest top expect to performance kind doing slow to to that's this really newer doing get probably at in improve On not get an over aging and the test if sort in quarter, at the what that's how time. and has. value So much doing extra switch doing. to market what will, fact of than have growing And better we in that, growth no we're so portfolio of fact a see company to the fair have what better. is growing of all, portfolio, accounting we're But to our accounting an your

should that in And folks, they are ridiculously terms if some like industry of are growing so we an the at performance. that of numbers. fast flag numbers, if future the like crazy, good you're enormous red too, should things and They of looking the were ridiculously don't, all companies those would have you're very kind important. growing looking loss telling very their delinquency at the in industry we other good If be and

numbers. good easy annually. you in and XXX% not So, to and to XX% modest growing those very are Try hand show it's it if much, fist when show you're numbers so over doing doing same you're then growing growth

there past. and other a can real to the to we want able fast, again. prosper, when a that's again going in to take industry and happen the falls If be and eventually to long then grow we you expect and happened sustain performance company time opportunities be It's advantage do succeed We'd growing those will the of that's in that, end, over. the companies, it can't the for will and really have

quarter So first in this a how will as a With do think and we for up the stepping we're end, we open future was bag, it the for the stone going year forward. bit a much the as of it's in questions. going good mixed that, industry to

Operator

Thank open floor you. The is [Operator questions. for Instructions] now

Operator

the now remarks. no am any lines. you. to I back Bradley conference And turn our from to Thank over I'd closing showing questions Charles for phone like

Charles Bradley

forward nonetheless, will and you this the and unfortunate attending that as little next it think of can we call hear quarter it's we guys for on I week. you Friday, call recorded, who went the to our Again, highlight so And expect go Easter. Thank we've it's I in we folks build Happy all the well off quarter XXXX. a but did But done appreciate Good listen.

Operator

beginning or XXXXXXX. conference with from Eastern April available conference X:XX will today's the XX, conclude PM and call at Time, be a of A by and hours broadcast www.consumerportfolio.com. dialing also have number identification teleconference. XX wonderful X disconnect at now available lines days this your at XXX-XXX-XXXX, for after company's does the the call until website XXXX, time XXXX-XXX-XXXX Standard This A you. live via Thank will replay be Please day.

Consumer Portfolio Services (CPSS) 19 Apr 192019 Q1 Earnings call transcript