CPSS - Earnings call transcript Q2 2021 | Consumer Portfolio Services, Inc.

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2021 Second 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. 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 XX refer the report annual I filed for further company's March publicly The no a of otherwise. information, company new or statements, -- events obligation update result further assumes future whether any to as forward-looking Mr. now With us is here Charles Bradley, Mr. and Chief Executive Officer; Jeff Financial Fritz, Officer Chief of Consumer Portfolio Services. the call over Mr. turn to now will I Bradley.

Charles Bradley

from a welcome in is quarters The and you, we had good easy as well earnings, that now to it's this not just to We it do cylinders firing we've about of literally marketing quarter way can all probably collections, call. Thank It's going possibly are we board, the to all company, our earnings way originations about best we just think because one the really quarter. go. company but the to the of, everything is get of just the can second of functioning. on history as the the had across

certainly makes it forward. quarter going quarters that for good hopefully and this look So

Sort of of highlights it.

We million One numbers And growth on we've let's by you see year-over-year. the things the out quarter-to-quarter new XXX originated, contracts, that. XXX% was that's growth. to and can done see, coming of pandemic our focus that of XX%

data focus pretty So that, reason good numbers there. analytics. on the of a Part more of

continued new very are All that best And helpful one the that marketing very have a It's been think We're a using branches scorecard have in multiple works. continue, the well. been scorecards had. push. We but probably that's collections. again, we've new will the we brand wonderfully. a the Gen wonderfully trend Again, have in we We X have working on our of X focus performing Gen actually very, effective. scorecard. it's It's terms

pandemic. We results. going been get efficiency across we've but out cut everything the still just the these focus on the is able you're coming good Also, or well. So we workforce, through board, again, to -- going all

workforce And So we've cut XX%. lost the literally, we by nothing there.

become able things to been offshore technology. we've We're So a efficient more or few doing nearshore. through

these all up are together performance. come to with really things kind coming So of

we We $XX release, new premise pointed that press don't need we basically as best raise when in raised under -- capital million capital you out the the of time to it. also is the

the it's And One to the got so in continue just a that, because rate that XX we and future cash flow We processes, did. $XX nice last the on grow. has and will stimulus over collection our of whether months, be been most as important, the one of or note forecast million. we probably last helpful over improved

$XX achieved over we've million the cash over last forecasted flows and So year. the above

strongest in certainly good very in we've a ever as the -- been we're So company. position cash

walks things, the stock through Jeff all is I'll just a on on detail the little So price things that focus those going into I'm after a all I go like finally more. more And board, said, some straight to these little really financials. up across bit. moving

Jeff Fritz

Thanks, everybody. the begin right. All with Brad. We'll revenues. Welcome,

quarter a quarter, And fair XXXX. of total legacy this is the in second million, portfolio. about accommodate for to is of have million we For dwindling no XX% this this where now COVID. X% And bit made $XXX bit quarter results quarter, quarter, of X% compared the is smaller XX.X%. still little a It it's by $XXX.X we yielding took the little every portfolio. the down portfolio, compared and the noisy XX%, it's portfolio, slightly fair the the and billion X which portfolio picture million increase It's what $XX.X about chunk contributing revenue $X.X our growing, million. I to the this also picture; a to the of XX% quarter our over at year, like XXXX, where a for of down. first It's flat, during second earnings, marks first but XXXX. yielding That's has down value months $XX.X Year-to-date of value it's increasingly kind marks of

Of net course, with know, value of that's with XXXX. since you along fair as losses, from going us

Moving on to the expenses.

in second first significant million. million and to alluded Brad $XXX.X million, expenses of and XXXX. $XX.X decrease X% XXXX. had compared quarter XX% we've credit provisions virtually compared X. expense category, a a interest in provisions of to for move Year-to-date particularly reductions the $XX.X a year That's for $XXX.X in quarter, of quarter a there's this XXXX. Well, for the to losses. this. XX% first the had over decrease our expense expenses, For reduction to million every on for We months staff let's credit X at losses year-over-year Cost wise, decrease operating

for pandemic-related in allowance the losses consecutive now credit our the in for the X losses portfolio. finally, for had as see first we've provide presentations -- quarters CECL some third in but for portfolio, that from portfolio did that elsewhere we But know, quarter, is above adopted as this you XXXX, X so additional January actually of XXXX. XX%. can And And where the on we you this legacy is provisions

actually has it's a substantial got improved. and credit so performance And the allowance

first increase XXXX. million increase a XXX% the over pretax earnings quarter -- of Year-to-date and the So quarter, a million, very a XX% is the the over in business. segment over of That's quarter first XXX shape pretax whopping $XX.X for months increase million. XXXX. of on $XX.X of good $X.X that earnings excuse X the Pretax second me, XXX% a earnings, the we're

year last a pleased about of XX% increase for we're first quarter, components the over the over the first over a results quarter we increase XXXX. so triggered of picture, first benefit just last increase of of have the these last tax the $XX.X year's CARES quarter. we reasons, recorded XXXX, we'll year's per an this benefit. So we X months of all Year-to-date tax a onetime quarter more may the That's this which of XXX% move really the benefit earnings far quarter quarter from as with Net the more But One year. over couple Brad a that on recall X-month Act. an was a $XX.X the results the as second income X% first for than bit in income, net said, along. XXXX. $X.X in per which $X.XX million that year talk and increase included we diluted the earnings $X.X these Year-to-date posted and from $X.XX year thing put you for the XXXX. $X.XX for net of million $X.XX over we an this in quarter and little X again, million, of share XXX% increase XX% income second the the of results $X.XX $X.XX, posted the first is months million, $X.XX the of share sort in Diluted

in second alluded financing the end new the We're better-than-expected built at for on the allows last cash. liquidity up to million rely addition $XX that ever sheet. million we've performance. don't us cash been, is which a Moving of in credit we in is balance the the often over residual is the right of as balance in did, quarter, strongest our the to warehouse This on unrestricted quarter see This Brad significant to, sheet second something from year We financing. you on conducted financing. $XX closed and residual we've liquidity position us to the event that less

the the on losses has liabilities. sheet, you'll And very too, The receivables that and that it mentioned at about so is we of XX% substantial look legacy -- now down allowance when shrinking total, for portfolio. it. XX% we balance against see of I finance the

You can warehouse the on lines. look

lines $XX You using we're see at warehouse that significantly. very not million, the

we're we We as hold residual almost have to capacity, result So right? production that's lower the of rapidly, down that. million XXXX. the from facility residual amortizing financing or those $XX million than financing a million contains of then of at X residual now use it's one but month financing less of liquidity this less $XX XXXX incur end a this whole And have components, costs around financing with a $XXX our have and and at The million line quarter. able APR the we $XX new

metrics. year, quarter million in interest for net of was The That's the a margin XX% at year. over quarter of million Looking million. the of increase over increase in the second operating $XX.X $XX.X and a the $XX.X quarter some XX% last first this

blended the months in of of ABS That's $XX months, significantly of last last the from expenses year. rapidly. in quarter for X.X% for X% every really million. it's what's net blended operating to $XX.X we're in But of year down the almost cost compared really quarter months putting very is coming over the For for and all the interest second markets. a a The first ABS first are X% expenses, all compared actual quarter ABS about this the is this deals And were maybe costs increase from million, core older a quarter flat, just with of Year-to-date, operating the our the the margin quarter about XXXX. or sort maybe the bit XXXX. of we'll a X bit, so, million Core of of lower XX.X% talk deal little And the first little X just to second at minute. year up little debt is on down X a in this than was the XXXX. happening more over X% that $XX.X X.X% amortizing

think starting growth come. improving So yet leverage. the of to to mean the quarter. actually of and we lack touched our is the I on portfolio is operating technology efficiencies best We're to is significant of shrinking, And this realize in which I because this. prior this

where first which bit I signs grow once flat the is portfolio operating a And X.X% quarter, to of compared expenses going to so compared the the this second quarter this second XXXX. and shrinking portfolio the to of I really of as quarter itself. the this manifest continue to significantly. said, begins our see portfolio X.X% penalizes Core little up kind metric were as is will to for we're of year is next really think again, a managed in improved this ratio leverage. of And that percent And

we're XXXX. quarter to quarter advantage begins the on X.X%, Return first XXX% which leverage And this of year XX% of in the position the quarter, for assets over portfolio again. the second a managed increase grow increase really of take a a as the operating and so over to again, is

months, of first the X for return to X.X% months the compared assets, X pretax X.X% For on managed XXXX.

the margin, and And so see improvement cost primarily resulting by really gains of credit segments of impacted these the the interest funds gains can the the the all in in performance net lower from of you portfolio, the portfolio. also

The improvement we quarter XXXX. widely this can basis X.X% known on this the is been pretty the in auctions company, we at an And in high of X.X%, attribute second auctions. losses the X.X% losses up in significantly -- Let's but which again, Net year. of first the a X.X% months, that losses was significantly is And the significantly delinquency we vehicles the the seasonally quarter by this much down for recovered X.X% up sell down end second net first to that X compared the which auctions the even at quarter, our quarter quarter, the we X.X%, the X.X%, X for June an end And now, for balances of significantly the at to than of performance. losses, XXXX. I'm And of of first for in wholesale a high the third in from at for all-time that just XX.X% last the annualized the probably year. down this the sure quarter, the what's quarter X.X% quarter is look and higher annualized from of the of happening the from months in credit that's put the little at year. but XX.X% bit end at at for all-time

being so the second lowest And the was second year. quarter those since quarter all of of the things, this XXXX. lowest DQ DQ first the The

We quarterly have the XXXX. sometime losses lowest to prior since net

year-over-year smaller on these and last these average -- are some year. portfolio improvements to And a compared ratios,

be couldn't credit performance. look the we pleased again, the so with quick markets. And A at more ABS

event, this we transaction second and of demand benchmarks cap for quarter is continue that ABS we Our second a of we -- cost second continued see not strong securitization but in blended the quarter not a It's we transaction have actually funds XXXX-C. mention. April And and just XXXX, strong because and structure the our concluded lower I'll X.XX%. across blended not in X.XX%. resulting July a that demand, quarter third And transaction closed to of of in it's yield securitization on

Brad And turn I all it so him we said, now. trends are pleased. positive be more mean, and couldn't and going really to as to back these over numbers, I'm

Charles Bradley

Okay.

boots numbers XX% detail. we're see. couple performance, as We question and modeling grow had our are So doing methods the because looking Certainly, quarters, these But rate seems our can force. data growing little done. XX% new of be at we territories another quarters. still, some territories. folks of and it whole other going in the used done at quite a credit not of just sales XX% better with of And expanded We're ground. how helps. you X at it's found the the some we're more have of we've methods to And to scorecard up are We've But these certainly new last collection probably to We've to We've interest grown over fine. to just give next or probably go our a The into. lot competitive. lot, rates is growing. lots theory new interest we that's find low on with in a the -- still

rates. It's helping Gen both and mentioned, which capture approval new we scorecard, the a I our credits. is As have our X certainly improved

able active volume. We're X,XXX been maintaining increased to still Currently, from model. get we dealers. the credit we've have the So

target get active dealers. Our is XX,XXX to to

good a we continue as improved better modeling, expand and well, much So buying again, to we continue just lot this as would we're sales doing beginning is force, doing to keep hope as of metrics our the paper. the

And should the so follow. results again,

servicing. at Looking

certainly to certainly the is do As sort and money coming our of customers probably the a money that get from to been stimulus days, Again, losses packages and That we fair not entirely that this out, the with as in did see been. the great one share as Jeff of gone has It's every has pointed lot numbers, servicing a later did, easy our government. from stimulus of of say the didn't are that whole good ever DQ they've at back. point. stimulus the as much as something company

do our would performance. on we and strong models put in. attribute We models of So more an more strong card scorecard. to collection the a origination that continue or to begin to have collection this score extension In collections, we new

customers with We system, chat power All up else customers. also text things with to powerful It a also kind better keep new to you the to us to got communication technologies which use. keep put avenues and and moving things more us of in gives the our access these everyone gives your with keep are a up dialer. technology and

of job good pretty a that. done we've so And

are As but certainly to the ever think that hurt I that is us. an it to it's extreme. number high ridiculous. be auctions, help was we've Jeff it It in the the remembering mentioned, don't certainly in us, the big auction XXs a used done doesn't best numbers

So almost points XX and of XX now around we're ahead XX. to normals that

force, it couple been That's of $X savings. cutting as annual efficient to a sales we've with XX%. become we've -- the -- to much I see, mentioned, a other more able We Let's million by things. estimated that be

will to us the out and real the put footprint allow summer, estate branches in we will, in cut about already the estate Now work it time real -- where office. the the real substantially. our changed commercial We've real Lots focused way half If at a that work occupancy the 'XX. in we're people estate We actually think it works the on comes estate. cost. home hybrid schedule up just of half a this time year million our $X of next and that our so of saved summer one

there's the to of as think to are Probably and cash. terms we lot a both more I people a is more becoming Again, combination still think continues really technology. find the stimulus well. systems the of keep terms again, even of credit efficient, rolling. certainly things both childcare working in space, going mentioned I So in of it's

seasoned of very a have We force employees.

we So our lot kicking have not own going we a mention way, think government the and helping. to in

of whole there from few terms years the of or play, in. call just was and lot in really coming is we'll There entrants didn't fintech originators. In them But folks of, industry, now. a new Five ago, interesting it in the most few there not straight it. been it, a coming very sort bunch, a industry. are so hasn't really make new There's people of but the

so part And is that good.

there mentioned sort helps don't it And reached bit. banks so, know, the think lower the cost reached of the with where is of into I down competition. credits little happened industry. in I or big I the some funds, this a XXXX or in,

so happening. it we puts and our tell And what for your pressure charge sell you can And APRs rate customers. the that's can because always interest on

a all So to at might which before there's up we to I and And stimulation, XX%. we of in the timing back a the the to we're we funds of couple think worry least for sort I about months, to But run get do think settles may want have years a low do. do of probably the down we we as problem of to inflation, looks with without or Economy, funds again, when that Beginning problem. else, market. cost a it's really another but play everything good. continue may about XX and That still never industry as not well. little then the think us goes a what but drop of cost happen, just to bit sort number

company this just is really again, We great. working all the do about have is a all time So all really I think branches the perfectly. thrive. where perfectly, working working modeling The can cylinders

much generate and lot of do of open a low-cost the course, up to of it being quarters. to next over lot are a with so With extra stuff -- stuff of -- sort coming in I'll able a So position strong questions. that, we good funds, very for capital,

Operator

from Instructions] [Operator comes question Jefferies. with Kyle Our first Joseph

Kyle Joseph

quarter. good a on Congrats

stimulus payments question. First of out. tax the see we're going started credit heels Obviously, child on to but this at point,

see expect July those in your from of to how year? change impact in seasonality business you do And any payment this checks? Just that would impact you the really the

Charles Bradley

Well, this that's, is of a course, something the even July having of a we're we as good time June, constantly. think still just than for kind sort and even probably We're quarter better. little a summer shows. Normally, is of at industry, as about summer all. tough second more not bad growing

well, saying, stimulus, keeps everybody the to it's -- all everyone of stimulus. of months the real because stopped But ago. think I a of sort lot money the cash

change the And a people very be us middle without that. will to -- a child somewhere But would the at we little, we're we've people the helps. that. good the in there's on It's think way some. they do problem fine. it And work because even at think all. and I to improvements between today, back helps company, may to position not as think auction change. going used would I work I credit stimulus, factor do hurt I the we I as will some good in imagine certainly aspects not of And no year. all prices They think we think technology some big what hard going change But the I are using, some but these to numbers But that the really do to think. so a forever. certainly And across made, just done I of But point. like us The certainly we're maybe said, this keeping imagine

course, averaged the to of of We're we the something for cost So up, to funds that have going X at of is giving for XX And X too. don't years some in -- point any of funds. cost problem of funds the we've company, go Cost up. is range X.X%.

is cost run model funds. to a X.X% not of in built Our

at is run model built a cost Our to of X.X% funds.

as all now. take to run other we'll well. certainly, the the ready right But it from difference certainly again, benefit So we're the way

Kyle Joseph

sure And making quick Got a modeling, got right. then this it. for follow-up just I

As that to credit right, we have in how eventually Jeff? go do value Is to would necessarily fair if just model contemplated not to does, guys have your losses you trigger normalizes, value potential mark, it fair think have And above they'd what a marks? that be that ever up? about just go it

Jeff Fritz

that's Yes, right.

change the credit from value mean fair So could still cohorts on would even feel we're theoretically, a same the in before pretty different the for about we estimates, the we of and from -- the mark books could put we're -- that a we today, come the that. C&Ls benefit were about reasons. of less be initial using the receivables good estimated performance or we One couple back that I be in significant using more pandemic. saw XXXX

feel we very of about so that component the estimates. good And

other companies the this, Theoretically, future like a us comes conditions. to potential it's drastic in books. trigger was pretty change pay Like in what we front and we on the there's stable. flows, a we don't found, mark for stuff if what that some get that pay door. foresee though The market the the paper the ebbs there But more from and example, to could and mark on the that's have in even market,

right probably much from that now. we're direction not So for looking in

Operator

question from have Instructions] Zhang We Jeff with Securities. [Operator JMP a

Jeff Zhang

that Is level we next looking good It strong quarter, X remainder the of should that volume year looks year? quarterly into for at the really be like strongest and for in the a years. the is

Charles Bradley

so. quarter, the the would third about halfway we're volumes through mean, I look almost the think I certainly, same. and

lack Certainly, down slow they year. great case that So guess not Normally there effect have of cars down have one would I may start think dampening but it's summer. Detroit quickly, combination. year. the going year the the can in road, It's next a things up a this so rather ramping so will out the much to be a

we So there think quarter see done be we and I what would from the But continue production the a trend. and quarter, Remembering, it the a in too, will as third bit that dip. feel along even on trend little think what said of focus our this saying we might we've bigger. I second fairly probably safe making is earlier, whole in continuing

it's think should to a I origination the yes, safe continue say very bet So volumes rest in quarter the second year. the of

Jeff Zhang

it. That And we a big heard great the tick the color. that quarter. quite the then that number just last Is expect guys seems was quarter. Got a fair yield quick value to of should follow-up. the year? say the balance from -- pickup be thought XX.X% you for for I That's to I up on portfolio

Jeff Fritz

And we in and at think when I value portfolio. an because X.X back for paid we've what targets many sort started first XX% what XX% the them than of we the pricing cohorts we've the on that fair fair seen yield of what or economic time. were cohorts first XXXX, less model seen years so value those is our the of

of up some have -- coupons. marked the we've those marks actually so taken we've And moved

market offset marks by were cohorts the And older prices. of kind some over last the of sort year current on the some the the below in of of increasing that yields negative like were

like you that of in probably XX%. be purposes, modeling kind XX.X% want neighborhood to So that or I of think for

Operator

back at for further no Charles time. will the questions Mr. are Bradley, to this speaker, I remarks. over floor any closing turn There

Charles Bradley

much. is is somewhat about I price didn't last you. and stock but of couple in substantially has most care least certainly not up quarters. moved Thank important probably some And something we certainly too the mention last ways in the It

goal Our come is continue still to more up create value. to shareholder to ways

I think a per doing that. keep today place sits But start. we at Certainly, $X.XX share. to need to book value our that's

every the that Now of have of buy we amount market the continue lot to shares. buy can that. buying shares we're cash, in certainly day. We do We'll we max a

think I around bought shares this past we XXX,XXX quarter.

of that way repurchasing doing we're So we everything terms can in shares.

We progress to focus to what we'll to quarter, for next look and you in significant terms and forward, the will go thank the the as call. increasing talking we on of all the shareholder that, company. call riding attending at value continue of overall very forward operation With end it of we'll you

Operator

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

Consumer Portfolio Services (CPSS) 13 Aug 212021 Q2 Earnings call transcript