AmeriCredit Reports Third Quarter Operating Results
FORT WORTH, Texas--April 23, 2003--AMERICREDIT CORP.
-- 3rd quarter earnings of $14.5 million, $0.09 per share
-- Earnings include restructuring charges of $53.1 million pretax
-- On track with revised operating plan
AmeriCredit Corp. today announced net income of $14.5 million, or $0.09 per share, for its third fiscal quarter ended March 31, 2003, versus earnings of $91.6 million, or $1.02 per share, for the same period a year earlier. For the nine months ended March 31, 2003, AmeriCredit reported net income of $40.1 million, or $0.30 per share, versus earnings of $251.0 million, or $2.81 per share, for the nine months ended March 31, 2002.
Net income for the March 2003 quarter was reduced by $53.1 million for pretax restructuring charges including $32.3 million for the workforce reduction and branch consolidation previously announced in February, and $20.8 million for the termination of the Company's Customer Relationship Management (CRM) project. The investment in the CRM project was designed to provide scalability and marketing benefits in a high growth environment, which under AmeriCredit's revised operating plan are no longer necessary.
Automobile loan purchases were $1.32 billion for the third quarter of fiscal 2003, and the Company remains on track to originate approximately $750 million of loans per quarter beginning in the June 2003 quarter. AmeriCredit's managed auto receivables totaled $15.8 billion at March 31, 2003.
"We've operated the business for two months under our revised operating plan, and it's definitely working," said AmeriCredit Chairman and Chief Executive Officer Clifton Morris. "We designed the plan to generate positive cash flow by the June 2003 quarter and build liquidity thereafter, and we remain on target to meet those expectations."
Credit Quality
Annualized net charge-offs were 7.6% of average managed auto receivables for the third quarter of fiscal 2003, compared to net charge-offs of 5.8% for the December 2002 quarter. Vehicles pending sale at auction remained stable at 1.4% of the portfolio at March 31, 2003. Managed auto receivables more than 60 days delinquent were 2.7% of total managed auto receivables at March 31, 2003, compared to 4.1% at December 31, 2002 and 3.1% at March 31, 2002.
Funding Update
During the quarter, AmeriCredit completed a $1 billion whole loan purchase facility as a supplement to the Company's securitization program. In addition, the Company completed its 38th asset-backed securitization with the $1 billion 2003-A-M transaction on April 16, 2003.
"In the past three months, we have completed approximately $2 billion in permanent financing and today have $4 billion in committed credit facilities to fund new loan originations. These accomplishments significantly support our goal of preserving and building our liquidity position," said AmeriCredit President Daniel Berce.
Trust Information
Concurrent with this release, the Company posted its March securitization certificates on www.americredit.com. The Company exceeded the cumulative net loss ratio on three of its 15 FSA-insured securitizations for the first time in the month of March. This has resulted in the postponement of excess cash flow to the Company from all FSA-insured securitizations beginning with distributions payable the first week of April 2003. The postponement of these cash distributions may continue through mid-2004. AmeriCredit continues to receive servicing fees from all of its U.S. securitizations, including those insured by FSA.
Regulation FD
AmeriCredit provides information to investors on its Web site at www.americredit.com including press releases, conference calls, SEC filings and other financial data.
Pursuant to Regulation FD, the Company provides its expectations regarding future business trends to the public via a press release or 8-K filing. The Company anticipates some risks and uncertainties with its guidance as it continues to execute its revised operating plan.
Following is the Company's forecast for net income and earnings per share, which is unchanged from the forecast provided in the press release dated February 12, 2003.
Net income and EPS forecast
---------------------------
($ millions except 12 mos. ending 12 mos. ending
per share) 6/30/03 12/31/03
--------------- ------------------
Net income forecast $60 - 70 $100 - 125
Earnings per share $0.43 - $0.50 $0.63 - $0.79
AmeriCredit will host a conference call for analysts and investors at 8:30 A.M. Eastern Time on Thursday, April 24, 2003. For a live Internet broadcast of this conference call, please go to the Company's Web site to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.
AmeriCredit Corp. is one of the largest independent middle-market auto finance companies in North America. Using its branch network and strategic alliances with auto groups and banks, the company purchases retail installment contracts entered into by auto dealers with consumers who are typically unable to obtain financing from traditional sources. AmeriCredit has more than one million customers and over $15 billion in managed auto receivables. The company was founded in 1992 and is headquartered in Fort Worth, Texas. For more information, visit www.americredit.com.
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties detailed from time to time in the Company's filings and reports with the Securities and Exchange Commission including the Company's annual report on Form 10-K for the period ended June 30, 2002. Such risks include - but are not limited to - deteriorating economic environment, adverse portfolio performance, reliance on capital markets, fluctuating interest rates, increased competition, regulatory changes and tightening labor markets. These forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially.
AmeriCredit Corp.
Consolidated Income Statements
(Unaudited, Dollars in Thousands,
Except Per Share Amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ ------------------------
2003 2002 2003 2002
------------ ----------- ------------ -----------
Revenue:
Finance charge
income $ 185,857 $ 82,188 $ 410,429 $ 259,012
Gain on sale of
receivables - 124,112 132,084 325,732
Servicing fee income 96,646 97,362 228,507 277,168
Other income 5,230 3,067 15,863 9,317
------------ ----------- ------------ -----------
287,733 306,729 786,883 871,229
------------ ----------- ------------ -----------
Costs and expenses:
Operating expenses 82,347 107,885 300,516 315,651
Provision for loan
losses 77,109 16,739 229,785 48,248
Interest expense 51,550 33,123 131,453 99,270
Restructuring charges 53,071 - 59,970 -
------------ ----------- ------------ -----------
264,077 157,747 721,724 463,169
------------ ----------- ------------ -----------
Income before income
taxes 23,656 148,982 65,159 408,060
Income tax provision 9,107 57,358 25,086 157,103
------------ ----------- ------------ -----------
Net income $ 14,549 $ 91,624 $ 40,073 $ 250,957
============ =========== ============ ===========
Earnings per share:
Basic $ 0.09 $ 1.08 $ 0.31 $ 2.97
============ =========== ============ ===========
Diluted $ 0.09 $ 1.02 $ 0.30 $ 2.81
============ =========== ============ ===========
Weighted average
shares 155,492,651 84,988,165 131,268,991 84,470,535
============ =========== ============ ===========
Weighted average
shares and assumed
incremental shares 155,494,768 89,509,209 131,677,520 89,334,924
============ =========== ============ ===========
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
March 31, December 31, June 30,
2003 2002 2002
----------- ----------- -----------
Cash and cash equivalents $ 238,133 $ 179,783 $ 92,349
Finance receivables, net 4,742,859 3,779,648 2,198,391
Interest-only receivables from
Trusts 375,590 356,805 514,497
Investments in Trust receivables 769,492 791,343 691,065
Restricted cash - gain on sale
Trusts 334,124 356,138 343,570
Restricted cash - securitization
notes payable 54,688 57,883 -
Restricted cash - warehouse credit
facilities 538,561 303,420 56,479
Property and equipment, net 130,147 121,320 120,505
Other assets 337,725 343,681 208,075
----------- ----------- -----------
Total assets $7,521,319 $6,290,021 $4,224,931
=========== =========== ===========
Warehouse credit facilities $2,263,547 $1,750,000 $1,751,974
Whole loan purchase facility 875,000 - -
Securitization notes payable 1,675,106 1,792,399 -
Senior notes 379,050 379,668 418,074
Other notes payable 65,914 69,683 66,811
Funding payable 23,082 122,278 126,893
Accrued taxes and expenses 193,534 163,210 194,260
Derivative financial instruments 82,962 88,020 85,922
Deferred income taxes 50,567 34,123 148,681
----------- ----------- -----------
Total liabilities 5,608,762 4,399,381 2,792,615
Shareholders' equity 1,912,557 1,890,640 1,432,316
----------- ----------- -----------
Total liabilities and
shareholders' equity $7,521,319 $6,290,021 $4,224,931
=========== =========== ===========
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- ------------------------
2003 2002 2003 2002
----------- --------- ----------- -----------
Cash flows from
operating activities:
Net income $ 14,549 $ 91,624 $ 40,073 $ 250,957
Adjustments to reconcile
net income to net cash
provided (used) by
operating activities:
Depreciation and
amortization 13,888 11,406 36,353 27,875
Provision for loan
losses 77,109 16,739 229,785 48,248
Deferred income taxes 18,053 11,268 (61,008) 26,446
Accretion of present
value discount (26,416) (51,300) (89,271) (121,535)
Impairment of credit
enhancement assets 4,904 24,949 96,738 38,918
Non-cash gain on sale
of receivables - (118,215) (124,831) (307,752)
Non-cash restructuring
charges 36,678 - 38,546 -
Other (380) - 3,860 -
Distributions from
Trusts 33,484 54,963 144,602 182,826
Initial deposits to
credit enhancement
assets - (48,000) (58,101) (303,500)
Change in assets and
liabilities:
Other assets 19,935 (9,344) 3,386 (38,809)
Accrued taxes and
expenses 22,878 66,190 (7,614) 109,415
Purchases, principal
collections and sales
of receivables held
for sale - (23,736) 1,922,076 (399,292)
----------- --------- ----------- -----------
Net cash provided
(used) by operating
activities 214,682 26,544 2,174,594 (486,203)
----------- --------- ----------- -----------
Cash flows from investing
activities:
Purchases and principal
collections of
receivables (1,126,413) - (4,787,191) -
Purchases of property
and equipment (36,565) 9,923 (38,898) (14,916)
Net change in restricted
cash and other (238,648) 57,843 (668,273) (26,658)
----------- --------- ----------- -----------
Net cash (used)
provided by investing
activities (1,401,626) 67,766 (5,494,362) (41,574)
----------- --------- ----------- -----------
Cash flows from financing
activities:
Net change in warehouse
credit facilities 513,351 (40,327) 511,886 388,328
Issuance of whole loan
purchase facility 875,000 - 875,000 -
Net change in
securitization notes (126,588) - 1,665,871 -
Net change in senior
notes and other (15,364) (36,820) (67,204) 153,774
Proceeds from issuance
of common stock (1,569) 4,112 479,748 15,357
----------- --------- ----------- -----------
Net cash provided
(used) by financing
activities 1,244,830 (73,035) 3,465,301 557,459
----------- --------- ----------- -----------
Net increase in cash
and cash equivalents 57,886 21,275 145,533 29,682
Effect of Canadian
exchange rate changes
on cash and cash
equivalents 464 166 251 190
Cash and cash
equivalents at
beginning of period 179,783 53,447 92,349 45,016
----------- --------- ----------- -----------
Cash and cash
equivalents at end
of period $ 238,133 $ 74,888 $ 238,133 $ 74,888
=========== ========= =========== ===========
Other Financial Data
(Unaudited, Dollars in Thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Loan originations $1,317,646 $2,432,361 $5,623,733 $6,503,273
Loans securitized - 2,400,000 4,540,193 6,049,997
Average on-book
receivables $4,651,309 $1,697,140 $3,237,909 $1,771,980
Average gain on
sale receivables 11,551,091 11,293,534 12,614,872 10,098,419
------------ ------------ ------------ ------------
Average managed
receivables $16,202,400 $12,990,674 $15,852,781 $11,870,399
============ ============ ============ ============
March 31, 2003
----------------------------------------
Auto loan portfolio: On-Book Gain On Sale Total Managed
----------- ------------ -------------
Principal $5,028,731 $10,820,142 $15,848,873
Allowance for losses (285,872) (1,094,660) (1,380,532)
----------- ------------ -------------
$4,742,859 $ 9,725,482 $14,468,341
=========== ============ =============
Allowance for losses (%) 5.7% 10.1% 8.7%
=========== ============ =============
March 31, December 31, March 31,
(% of ending portfolio balance) 2003 2002 2002
--------- ------------ ---------
Loan delinquency:
31 - 60 days 7.3 % 9.2 % 6.7 %
greater than 60 days 2.7 4.1 3.1
--------- ------------ ---------
10.0 13.3 9.8
Repossessions 1.4 1.4 1.1
--------- ------------ ---------
11.4 % 14.7 % 10.9 %
========= ============ =========
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------------
2003 2002 2003 2002
--------- --------- --------- ----------
Net charge-offs:
On-book $ 32,696 $ 16,579 $ 64,997 $ 38,387
Gain on sale 269,468 138,356 679,050 350,673
--------- --------- --------- ----------
$ 302,164 $154,935 $ 744,047 $ 389,060
========= ========= ========= ==========
Net charge-offs as
a percent of
average managed
receivables 7.6% 4.8% 6.3% 4.4%
========= ========= ========= ==========
The Company evaluates the profitability of its lending activities based partly upon the net margin related to its managed auto loan portfolio, including on-book and gain on sale receivables. The Company uses this information to analyze trends in the components of the profitability of its managed auto portfolio. Net margin on a managed basis facilitates comparisons of results between the Company and other finance companies (i) that do not securitize their receivables or (ii) due to the structure of their securitization transactions, are not required to account for the securitization of their receivables as a sale. The Company routinely securitizes its receivables and prior to October 1, 2002, recorded a gain on the sale of such receivables. The net margin on a managed basis presented below assumes that all securitized receivables have not been sold and are still on the Company's consolidated balance sheet. Accordingly, no gain on sale or servicing fee income would have been recognized. Instead, finance charges would be recognized over the life of the securitized receivables as earned, and interest and other costs related to the asset-backed securities would be recognized as incurred.
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------------
2003 2002 2003 2002
--------- --------- ---------- ----------
Finance charge and
other income $ 688,382 $ 589,677 $2,079,626 $1,655,182
Funding costs (189,069) (192,634) (586,070) (560,435)
--------- --------- ---------- ----------
Net margin $ 499,313 $ 397,043 $1,493,556 $1,094,747
========= ========= ========== ===========
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------------
2003 2002 2003 2002
--------- --------- ---------- ----------
Finance charge and
other income 17.2 % 18.4 % 17.5 % 18.6 %
Funding costs (4.7) (6.0) (4.9) (6.3)
--------- --------- --------- ----------
Net margin as a
percent of average
managed receivables 12.5 % 12.4 % 12.6 % 12.3 %
========= ========= ========= ==========
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------------
2003 2002 2003 2002
--------- --------- ---------- ----------
Operating expenses $ 82,347 $ 107,885 $ 300,516 $ 315,651
Operating expenses as
a percent of average
managed receivables 2.1% 3.4% 2.5% 3.5%
Tax rate 38.5% 38.5% 38.5% 38.5%
The following is a reconciliation of finance charge and other income as reflected on the Company's consolidated income statements to the Company's managed basis finance charge and other income:
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------------
2003 2002 2003 2002
--------- --------- ---------- ----------
Finance charge and
other income per
consolidated income
statements $ 191,087 $ 85,255 $ 426,292 $ 268,329
Adjustment to reflect
income earned on
receivables in gain-
on-sale Trusts 497,295 504,422 1,653,334 1,386,853
--------- --------- ---------- ----------
Managed basis finance
charge and other
income $ 688,382 $ 589,677 $2,079,626 $1,655,182
========= ========= ========== ==========
The following is a reconciliation of funding costs as reflected on the Company's consolidated income statements to the Company's managed basis funding costs:
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------------
2003 2002 2003 2002
--------- --------- ---------- ----------
Interest expense per
consolidated income
statements $ 51,550 $ 33,123 $ 131,453 $ 99,270
Adjustment to reflect
expenses incurred by
gain-on-sale Trusts 137,519 159,511 454,617 461,165
--------- --------- ---------- ----------
Managed basis funding
costs $ 189,069 $ 192,634 $ 586,070 $ 560,435
========= ========= ========= ==========