CPSS - Earnings call transcript Q1 2021 | Consumer Portfolio Services, Inc.

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Operator

Good day everyone and welcome to the Consumer Portfolio Services 2021 First Quarter Operating Results Conference Call. [Operator Instructions].

Before we may begin management has asked me to inform you that this conference call may contain forward-looking statements. Any statements made during this call that are not statements of historical facts may be deemed forward-looking statements. Statements regarding current or historical valuation of receivables because dependent on estimates of future events also are forward-looking statements. are differ risks materially statements actual could forward-looking to results from such subject that to cause All those projected. to clarification. you XXth refer the report annual I filed for further company's March publicly The no a of information, company new statements, events otherwise. obligation update result or assumes further whether any to as forward-looking now us here With is Mr. Officer; Executive and Chief Bradley, Charles Mr. Jeff Financial of Portfolio Consumer Officer Chief Fritz, Services. over I will now to turn Mr. the call Bradley.

Charles Bradley

everyone, and welcome, to you, quarter call. our Thank conference first

well. a easy the at to nice quarter, way really had think I it, worked look we

If last pandemic again, the had year, kind performance you to also on government an of the general excellent huge more in problems. it circumstances different seems impetus track, we the to it compare year, for first year's quarter, put back our beginning really growth It's this it checks, be year's given a the in helped We're Obviously, in quarter. last to us of a forget tremendously. it's really mode Certainly, last case. of getting sort of stimulus interested and with But year. was about grow. sort

on been this those rest on improving and effects see, we're and and the well So quite are go how working is have forward. we'll time a calculate of have from bit but the and of we well, doing a is little year. forward strong we how much lot Obviously, of and lot bunch things as will sort think that how having A we All an us we're we of impact like a doing much it the is things done that because we about to government, tell. processes. the go automation of quarter last of

deal to is lowest terms cost which to funds of be get were the done. given It's this of of kind future. for the an ABS probably the did, for a stimulus one the year. of funds. But was the be did to else we checks, company, too, deals ABS, be will history of go X.XX%, a gets to but everyone it of unheard Certainly creep those stick sitting, foreseeable how little the know low-cost us, able was with again, everyone for funds remainder That it's we enhancement. around the does. relatively do we of. going the customers The It bit helpful government to of of In in things probably up but not remarkable will economy that one, as able people as very are low-cost we every our But of forward. of going one sort

has helped so in And charge having really effect the terms our offs. and delinquency that of

as coming, can strong continue and long numbers, the you performance be are as to going performance our should those that by keep checks see numbers So as very, very way.

the financials. thing. quarters. the So what Jeff get go go for After very of a specifics over we after of through the more the quarter, that's also expect next into good we few have I'll

Jeffrey Fritz

into our you yield this yielding XX.X%. portfolio year. the net in really which of million And $X.X $XXX up are everybody. is we're discussions, the the breakdown, total with that's fair losses, the the our a value million yielding to XX% legacy Brad. in billion for XX% on and revenue XXXX of X% or transition Welcome, and that When portfolio fair stretch that is value last quarter, baked total Thanks, is in $XX.X from of first The We'll the the from of million know, quarter. fair quarter portfolio XX% of of about portfolio. value begin calculation. portfolio of quarter XX% as only or The accounting revenues, the course is this $XX.X fourth at our from you down XXXX look quarter home

in other of yield million. some quarter to to of quarter. component The is bought significant the the adjusting fair is portfolio This segments value on the the we this related value older the in revenue the the the of portfolio paper match of yield $X.X markdown first

are So the essentially, that about a now yielding fair yield components same segments percentage. the on value of portfolio, the of And we of the raised the and portfolio. all value markdown in older that fair some results portfolio at

that last XX% to to an $X.X quarter million Net increase on the a Especially fourth reductions XXXX to XXXX. the and XXX% of fourth a decrease compared the as a of was losses, on first losses Pretax million and of first the is to a year. somewhat couple as to fourth quarter, a costs, quarter, $X.X lower categories pretax decrease was million, employee also $XX we've little move decrease million. schedule took the $X.X quarter but CECL I'll related in million quarter and $X.X expenses. compared a income over and other due for earnings lower quarter the the the XXXX last X% - decrease year the we to due bit due million captions down the for million, more the first significant such XX% ago, incorporated Moving years. interest last there's XX% for to $XX.X pandemic. in from increase the over and provision credit earnings while we of that the And legacy increase talk of compared $XX.X here. allowance the to time over $XX.X $XX.X course are expectations of first of the Provisions year million year $X.X over expense the million this of quarter quarter, about the quarter million volumes, of a year-over-year, higher in the efficiencies portfolio, of in and X

the of first XX% the pandemic quarter kind this sort benefit tax per we a in the which $X.X year, recorded for last CARES $X.XX a resulted Act, XXXX per that of in increase of action benefit to of that Earnings resulted of quarter, related benefit. flows first those recall onetime through from $X.XX tax You'll from fourth of government the quarter share, year number. share included the of benefit quarter decrease a tax onetime income net first XX%. earnings and Again, last compared million,

the balance on to Moving sheet.

realizing back credit Our cash running less, is whole assists less, liquidity less. the can We what it a now. credit good strong our now effect and benefits on that less the lot lines occur coffers of the use company. the the situation warehouse right distributed of frequently. alluded receivables, the better kind the that and are just we're is call trusts from are out performance, us finance of I that this Brad's has mentioned, is now. receivables, XX% the more finance losses XX% The the very when delinquencies now we'll trickle-down CECL those are in allowance losses to the When of performance total There's allowance, of into portfolio, the portfolio.

very robust allowance it's So credit losses. for a

of strong a compared residual to usage financing liabilities, but transaction in full mode ago. Looking million million sort somewhat paydown our to $XX also warehouse volumes lower to position the amortization down liquidity $XX.X lower year due and at is the

increase XXXX margin $XX.X And the quarter the to last first XXXX, compared increase we a compared were at That's first a of last same quarter. because for a was million for had but also year. a over $XX.X fourth year quarter That's the to credit that increase $XX.X for but for of I indicated, in XXXX, X% million quarter credit decrease million it's account of the $XX.X $XX.X NIM, increase operating Looking in X% legacy the risk-adjusted fourth compared pandemic takes the the of an X% of Core some are which related Net million metrics. quarter first quarter. losses quarter quarter the last decrease losses the The ago. the as the the into interest X% and expenses of a of quarter. to million other performance provisions year to fourth on compared the for compared X% to provision year. portfolio

ago. to our from of these huge portfolio costs compared credit the when mentioned, of operating performance of to metric. particular Return in That's quarter, that delinquency down year. metrics, are percentage December from so and little year year the of we'll slightly fourth from X.X% fourth The of in though in core for That's several improvement I regards. our up quarter the the managed the X.X%. we're in fourth of in other quarter quarter, to XXXX increase a many considerably as increase X.X% of the core X.X% X.X% again, growing managed the eye-popping portfolio, and That's the XXXX forward a had up expenses a last considerably and first first bit costs in So down, just The compared quarter. are also end X.X%. was first of shrunk operating even the And a as numbers looking an getting portfolio X% and the last in see The it our considerably at significant of the are has XX% we've decreases XXXX on categories. quarter. and those in year-over-year expenses, was quarter assets quarter XX.X% compared XX% to employee down down for also XXXX quarter

we quarter in loss that the in second lowest was lowest first what's particular, that numbers balance the quarter this vehicles numbers, compared the is at loan the of seen history. to balance it and in has one I'll really great before in for second over since contributing kind the really our fourth a of did of of reported loss to week year. the these to strong the very we'd the for first X.X% impacted delinquency is the quarterly execution the of a in fact, this of lowest auctions part And auction. and of company. the also life vehicle the we've X.XX%, number of very compares blended - CPS such just XX% we XXa quarter quarter that out inventories closed Net January, number cost but last quarter, securitization, of loss at a quarter had first that, sold it such with also recoveries securitization - Brad have XXb impact ago, for losses of positive really a squeeze improvement compared - in of event, turn bonds is the 'XX, putting the completed In numbers, recovered those sheet XXXX. yield in quarter Again, And the XX% X.XX%. significant It's the blended XXXX. a so Brad. is on X-year or of inventory our what's net to numbers, to there's Again, a numbers. we've funds alluded X.X% for our net since XXXX these the

Charles Bradley

Okay.

give in did a for the future. ways done. a It And that's given or what many So you given of reflect different get set as to the last where try up pandemic out of we're spot. as numbers to the very sort that. today, picture for ruined we think year And numbers good us. to I first it The we've chance just sort quarter sit certainly we've everyone and much a kind given of of all us in

We've this X words put to cut We a rest a so be We leverage. really year, nearshore home, last the remotely. almost the to nearshore able from we've in of the the ago. XX% focus, went by other think the into as to of A we to work automation. be I will going That pandemic, the one being with this few were without get growing with forward able back is tried use year. want the we'd year. go is company. to growth growing portfolio, pick That We if any originations. done. to effective. back leverage. to lot it our automation, of collections was started and using of lots And do you're Because Along in We workforce the working while now loss. able things effort

If the that the work our So look work we'll folks again, we to some don't leverage. remotely, is have. commercial of estate have then of all expenses, the can real get need continue at, one things on amount to we cutting we

the the expenses can we're start same at try leveraging things lowering time, to, we going results. at looking and growing can increase the we and at again, so look So those that. to while get better all we But can portfolio, different produce

next going we the pros been the of cons - we're next think would with quarter what has stimulus I the everything The helpful. maybe be and where of the and checks sort look this at else again, in those are, few. enormously

Jeff flows We're strong. on As cash the than pointed super we've building are multiple in had more out, cash years.

in we're be when stop. good will okay, our our when up teed unemployment a to care So performance way. checks going question the all automation, The stops continue will is,

And is the I will well economy. so think where soon, should stop things to enough got which we go look, place be anyway. think things both And going as we I we've in do just those

as is may we there prices is to would that Probably that's as us going that we that to get again. going, running get economy grow the Bad shocking good other as should the auction negative be need we we strong. of little going very intend help at news As - sound, be to have to they're cars, tend out grow. one news

there us there's enough and everyone to So cars out for finance. else

of we'll last we quarter that and updated again, scorecard very the forward. cash or loss But we numbers, strong the amount put results flows, The automation strong watch strong. be So that first very We in in in. of end, of the very should these in delinquency going our quarter. kind the think

a know think progress slightly of that I few slowdown our list there's positives forward. whole any in really don't put that be going long we might they negative, So a takeaways but

can really economy, this of off. work, going We inflation. future ride get up that With would Eventually, foreseeable stop But we'll I start In obviously, kick everybody to to we'll should terms rest sort of is year. economy about they the the think to that, questions. worrying very the if open good. unemployment, wave of the like

Operator

Instructions]. [Operator

Rowan from Our first Janney. question with comes John

John Rowan

I you're like, the looking leaves is in X% margin once to pretax what your obviously. very costs a the with focus from X%, at just - in the company going profit have yield cutting funding going legacy we're funding costs obviously, I what value there I looks to model, from? now, where John, ABS, model, are on done want portfolio, right? - just in simple the You're to down last the It's want costs comes Right XX%. what the which mean, no but expenses where to do a your changes off are Where only fair income that's fair operating portfolio? and portfolio when that profit pretax portfolio the are get margin. when is And right? you

Jeffrey Fritz

it's Well, on the and that XX%. fair trying value in trending cohorts, put newer to - portfolio monthly couple of we more is the a than XX% step up, is

on So cohorts. XX.X% and they're monthly going XX% individual between

receivables a the expected the And pay function we what structure so the and are and themselves, that's coupons the the like or of of that fees dealers charge what the losses.

the you of are the And revenue mentioned big we generation the that line the really a component percentage of top the portfolio. fair component, cost other operating the portfolio. So improving value as

And bigger that billion infrastructure in on a we place the $X.X we portfolio books. or have than - the so much so support that have that the number, we

to corresponding year. to And business allow grow servicing And the so things of of significantly we in expect and costs That we the year. service credit going done We've operating levels the business grow increase on to not will and this think the side pricing. business automation are some us terms the this and proportionately.

model. And a profit of in there's so the think we potential lot business

John Rowan

right? leverage operating generate But growth, fair by that where... growing the I that's from on portfolio need your on just expense mean, you Because dependent though, value base to

Jeffrey Fritz

priorities, one As right? Brad that's our of said,

John Rowan

than portfolio the like about. seems we finally It kind talked taking had it's longer initially When Okay. will of run off? legacy

Jeffrey Fritz

that's When I've I've what these got more though you lot out to of they often. in at XX-month static look of a a a that's late portfolio X off, And running just kind like because and like, happens. Yes. loans, end sitting have get like they payments there consumers loan, the been even these

their charges. - to they gone of have more so payments finance And

down the million. nearly while. $XXX the the tail for mean, will a to year, to it it's end insignificant. But so By linger these I tends And of be things on of

Operator

comes Our Jefferies. Kyle from Joseph next with question

Kyle Joseph

know it the on yield about value Just you're understand want talked fair enhancement kind I being fair portfolio. you of attributable to the seeing value the to marks.

function enhancement, higher In that terms of going that gross fair a yield And of is expect lower expected any losses? forward? yield, incremental would marks you yield then value

Jeffrey Fritz

able we on expected those to the in pay applying at acquired got and we've that same those the those XX.X%, and month, to because say, - Well, XX.X%. been we've when just assumptions, credit or accounting on given I same that applying and during value loss years, so credit period, normal charge APRs fees - if the so the even few X.X% performance, the and the started significantly and last example, partially has what performance. - assumptions the improved evolved, the using this for due sit generally receivables as And been that seen well, we is, XXXX receivables, we've But yields business of it's the same seeing somewhat to think between in, any lower right? look like, is evolution lower before dealers the the variables is back losses, right? formula And and fair the we based of we in improve IRR pandemic first we

more were and the And on is, future, of And IRRs your chose 'XX. IRRs lower credit neither marketplace potentially time But have going would expectations same, back if effect expect getting same of yields business, much of change cohorts drastically portfolio trip model, business. of current stuff. to on should we terms the like in same also - We question doesn't to and - a marks the and APRs back older these a XXXX assumptions And pricing portfolio. don't we types new potentially to example, guidelines if we I answer and somewhat so yes, from again, to the drastically the the loss that But pretty not be we significantly. second older the compared our to would in better to very much there's the the if similar loss we've significantly of have and things pretty then business. competitive We the volatility early create well, pricing, sort or newer combination to needle older are it's roll that some IRRs cohorts to if to keep change, the and the better, to the we to been for credit writing our economics back we match profile, the in that then impact the up what in would which is of much - marks pricing same. I the would to us of the model. move tweaks make pricing a going the It have But our the right? aggressive So these a static, time to do. the we be, in change the the older should tweaks if would of kind mean, domino

Kyle Joseph

prices credit the rear with credit should quickly mirror, the and over yes, stimulus strong. improving be of expect used elevated the into obviously, kind But How year been and normalize then, you regarding of in in very to view do year? next which remainder car an Got economy. And it. performance, weighing

Charles Bradley

hope terms much. the we've question. really and best Certainly, too like efforts in collection we we're of prepare hope it's for right strong paper the have won't lose is nothing our currently of an the and kind the we But automation interesting that That's worst. our and you buying done for

this be this - they assuming seems third of jobs by a next on quarter, third I uproar unemployment. So more The more the to amount be lot over about ending of open the and end checks. call, the the But and you'll crazy And second it sending going I probably normalized. think there don't - is should quarter, up. bet start would

one think quarter, get just rest - So the let's of you it people work. all would over to that the second takes Maybe going normalize. more quarter to assume back stops to the next

for of call to real probably those end would be what expect providing. numbers we're you we sort the So the capable numbers of of that third the quarter

Operator

to And additional turn for there this are no the Bradley further at closing time. I'd like questions Mr. over to Charles back floor remarks. any

Charles Bradley

I us up of I So of that wraps position Like I this for the mean rest a our great it think quarter. earlier, said gives kind first year.

to We all we would. be away, Assuming things go would expect good. hope they things would

second We talking after enough soon for you will the be quarter. all Thank attending.

Operator

the be your today's to also of will www.consumerportfolio.com. two call this May the getting number website conference day. by call at disconnect conclude XXX-XXX-XXXX XXX-XXX-XXXX available XX, with days or company's A will teleconference. and the dialing now Please after from does conference have hours available wonderful via a This lines time, until live for XX identification rebroadcast A XXXXXXX. XXXX, replay be at

Charles Bradley	Chairman, President & CEO
Jeffrey Fritz	EVP & CFO
John Rowan	Janney Montgomery Scott
Kyle Joseph	Jefferies

Consumer Portfolio Services (CPSS) 11 May 212021 Q1 Earnings call transcript