10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Consumer Portfolio Services Inc. Reports Operating Results (10-Q)

November 16, 2009 | About:
Barel Karsan

10qk

18 followers
Consumer Portfolio Services Inc. (CPSS) filed Quarterly Report for the period ended 2009-09-30.

CONSUMER PORTFOLIO SERVICES is a consumer finance company that specializes in purchasing, selling, and servicing contracts with purchases of vechicles who are sub prime borrowers and are unable to obtain credit from traditional sources. Consumer Portfolio Services Inc. has a market cap of $23.5 million; its shares were traded at around $1.26 with and P/S ratio of 0.06. Consumer Portfolio Services Inc. had an annual average earning growth of 70.9% over the past 5 years.

Highlight of Business Operations:

Revenues. During the three months ended September 30, 2009, revenues were $52.8 million, a decrease of $38.9 million, or 42.4%, from the prior year revenue of $91.7 million. The primary reason for the decrease in revenues is a decrease in interest income. Interest income for the three months ended September 30, 2009 decreased $38.4 million, or 43.8%, to $49.3 million from $87.7 million in the prior year. The primary reason for the decrease in interest income is the decrease in finance receivables held by consolidated subsidiaries.

Total operating expenses were $57.1 million for the three months ended September 30, 2009, compared to $104.4 million for the prior year, a decrease of $47.2 million, or 45.3%. The decrease is primarily due to the continued decline in the balance of our outstanding managed portfolio and the related costs to service it, plus reduced expenses associated with significantly lower volumes of new contract purchases compared to the prior period. Operating expenses for the three-month period ended September 30, 2008 included a loss of $14.0 million resulting from the sale of $198.7 million of our receivables to a third party.

Interest expense for the three months ended September 30, 2009 decreased $14.8 million, or 36.1%, to $26.2 million, compared to $41.0 million in the previous year. The decrease is primarily the result of changes in the amount and composition of securitization trust debt carried on our consolidated balance sheet. Interest on securitization trust debt decreased by $11.1 million in the three months ended September 30, 2009 compared to the prior year. Interest expense on senior secured and subordinated debt decreased by $124,000. Interest expense on residual interest financing decreased $893,000 in the three months ended September 30, 2009 compared to the prior year. The outstanding balances of our aggregate subordinated debt and our residual interest debt have been decreased through repayments since the prior year period. Interest expense on warehouse debt decreased by $2.6 million for the three months ended September 30, 2009 compared to the prior year. In the prior year period, we had access to two warehouse credit facilities totaling $400 million in financing capacity. During that period we were actively purchasing new contracts and financing such purchases with these facilities that had, in the aggregate significant outstanding balances during the three-month period ended September 30, 2008. As of September 30, 2009, our newly established credit facility had an outstanding balance of $5.2 million.

Marketing expenses consist primarily of commission-based compensation paid to our employee marketing representatives. Our marketing representatives earn salary and commissions based on our volume of contract purchases and also on sales of training programs, potential customer targeting, and direct mail products that we offer our dealers. Marketing expenses decreased by $1.5 million, or 63.0%, to $895,000, compared to $2.4 million in the previous year, and represented 1.6% of total operating expenses. The decrease is primarily due to the decrease in automobile contracts we purchased during the three months ended September 30, 2009 as compared to the prior year. During the three months ended September 30, 2009, we purchased 37 automobile contracts aggregating $506,000, compared to 2,227 automobile contracts aggregating $33.6 million in the prior year. The adverse changes that have taken place in the securitization market since the fourth quarter of 2007 have caused us to curtail our purchases of automobile contracts in order to preserve liquidity.

For the three months ended September 30, 2009, we recorded no tax provision or benefit. As of September 30, 2009, our net deferred tax asset of $52.7 million is net of a valuation allowance of $4.5 million and consists of approximately $48.8 million of net U.S. federal deferred tax assets and $3.9 million of net state deferred tax assets. The major components of the deferred tax asset are $27.4 million in net operating loss carryforwards and built in losses and $22.2 million in net deductions which have not yet been taken on a tax return. We have considered the circumstances that may affect the ultimate realization of our deferred tax assets and have

Revenues. During the nine months ended September 30, 2009, revenues were $177.2 million, a decrease of $116.6 million, or 39.7%, from the prior year revenue of $293.8 million. The primary reason for the decrease in revenues is a decrease in interest income. Interest income for the nine months ended September 30, 2009 decreased $116.5 million, or 41.3%, to $165.5 million from $281.9 million in the prior year. The primary reason for the decrease in interest income is the decrease in finance receivables held by consolidated subsidiaries.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 1.5/5 (2 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK