Westar Financial Reports Strong Profits for 4Q01; EPS Increases $.99 to $.18, Revenues Increase 205%
TUMWATER, Wash.--May 1, 2001--Westar Financial Services Incorporated (OTCBB:WEST), the leading automobile e-finance company, today reported that rapidly accelerating revenues contributed to significantly increased net income and widening margins for its fiscal fourth quarter ended March 31, 2001. Revenues increased 205% to $100 million compared to $33 million in the fourth quarter a year ago. Revenue growth coupled with widening margins generated a fourth quarter operating profit of $698,000, or $.30 per share, compared to an operating loss of $1.6 million, or $.68 per share, for the like period the year earlier. Net income for the quarter was $413,000, or $.18 per share, compared to a net loss of $1.8 million, or $.81 per share, from the year prior period."Our fourth quarter set new records for originations and gross margin. These results are particularly noteworthy because the fourth quarter is seasonally weak for both revenues and margins. Moreover, they were strong in spite of a deteriorating economy, specifically weakness in the auto sector. Revenues, margins and quality were strong across all of our operations, further validating our business model, competitive niche and the scalability of Westar's proprietary systems and processes," said R.W. Christensen, Jr., President and CEO.
Gross margin expanded to 2.9% in the fourth quarter, up from 2.4% in the third quarter of fiscal 2001 and (.5%) in the fourth quarter a year ago. As expected, the growth rate in overhead expenses slowed substantially from earlier periods. General and administrative expenses were $2.2 million in 4Q01 compared to $1.9 million in 3Q01 and $1.4 million in 4Q00.
"We made our investments in hardware, software and communications in earlier periods and now are beginning to see the payoff as our per-transaction origination and servicing costs shrink and our operating margins grow every quarter," said Cindy Kay, Vice President and Controller. "Another significant benefit of our investments in technology is the continued strength in credit quality." FICO scores averaged 737 on contracts produced during the quarter. Delinquencies declined at the end of the year to 1.17% for the portfolio compared to 1.71% at March 31, 2000, and annualized credit losses were .51% compared to .74% a year ago. The face value of the accounts serviced by the company was $410 million at March 31, 2001 more than double the $201 million a year ago.
"Our Private Label operations continue to contribute to our results, and we are ready to expand the number of institutions participating in the channel. In March, we added USAA Federal Savings Bank, headquartered in San Antonio," said Darcy Huffman of Westar's Strategic Alliance Group. "We are working with several more top-50 financial institutions that have requested our Private Label services, and I hope to sign at least one more in the next several months. I expect each additional strategic partner will contribute at least $200 million in annual originations and $4 million to our income in the first full year of production. We believe our Private Label strategy can produce similar benefits to those MBNA has generated from its unique focus on its affinity relationships: greater volumes, larger margins, lower risks and a competitively defensible niche."
For the full fiscal year ended March 31, 2001, Westar generated revenues of $307 million, a 163% increase from $117 million a year ago. Gross profit more than tripled to $5.5 million. G&A expenses increased 51% to $7.3 million compared to $4.9 million in fiscal 2000, reflecting the company's growth. Net loss to common shares in fiscal 2001 was $2.9 million, or $1.25 per share, compared to a loss of $4.0 million, or $1.79 per share, in fiscal 2000. The company expects to report audited year-end results in June and the results reported in this release may change based on the audit.
WEST is the leading publicly traded automobile-oriented financial portal. Westar originates, decisions, commits to and fulfills consumer financings for itself or others. Westar completed the first entirely electronic Internet automobile purchase and lease transaction in October 1999. The company operates in the western states and nationally through alliances with AmSouth Bancorporation, Mellon Bank, USAA FSB and others.
FINANCIAL HIGHLIGHTS
(unaudited) ($ in thousands, except per share)
For the three months ended 3-month 1-Year
03/31/2001 12/31/2000 03/31/2000 Change Change
---------- ---------- ---------- ------- ------
Total revenues $ 100,093 $ 110,177 $ 32,831 -9% 205%
Direct costs 97,229 107,515 32,991 -10% 195%
---------- ---------- ----------
Gross profit 2,864 2,662 (160) 8% n/a
Gross margin 2.86% 2.42% -0.49%
G & A
expenses 2,166 1,936 1,448 12% 50%
---------- ---------- ----------
Operating
income (loss) 698 726 (1,608) -4% n/a
Operating
margin 0.70% 0.66% -4.90%
Net income
(loss) 442 449 (1,805)
Net income
(loss)
applicable to
common stock $ 413 $ 420 (1,834) -2% n/a
========= ========== ==========
Net income
(loss) per
share $ 0.18 $ 0.18 $ (0.81)
========= ========== ==========
Weighted
average
number of
shares 2,348,170 2,348,141 2,264,284
For the full year ended
03/31/2001 03/31/2000
---------- ----------
Total revenues $ 307,115 $ 116,827 163%
Direct costs 301,578 115,134 162%
---------- ----------
Gross profit 5,537 1,693 227%
Gross margin 1.80% 1.45%
G & A
expense 7,341 4,864 51%
---------- ----------
Operating
income (loss) (1,804) (3,171) 43%
Operating
margin -0.59% -2.71%
Net income
(loss) (2,825) (3,922)
Net income
(loss)
applicable to
common stock $ (2,939) $ (4,048) 27%
========== ==========
Net income
(loss) per
share $ (1.25) $ (1.79) 30%
========== ==========
Weighted
average
number of
shares 2,348,170 2,264,284
Statement regarding "Forward Looking Statements": Statements concerning future performance, developments or events, levels, expansion of operations, growth of consumer financial originations, quality of the company's lease portfolio, the ability to place securitizations, success of the e-commerce model, trends in interest rates, overhead expense variations, results of the year-end audit, various statements concerning expectations for growth or profits and any other guidance on future periods, constitute forward-looking statements which are subject to a number of risks and uncertainties which might cause actual results to differ materially from stated expectations.