AmeriCredit Reports Fourth Quarter and Fiscal Year 2004 Operating Results
FORT WORTH, Texas--Aug. 9, 2004--AmeriCredit Corp. :-- 4th quarter earnings of $0.51 per share
-- Executing growth plan
-- Improved credit results
AmeriCredit Corp. today announced net income of $82.7 million, or $0.51 per share, for its fiscal fourth quarter ended June 30, 2004. AmeriCredit reported a net loss of $17.1 million, or $0.11 per share, for the same period a year earlier. For the fiscal year ended June 30, 2004, AmeriCredit reported net income of $227.0 million, or $1.42 per share, compared to earnings of $21.2 million, or $0.15 per share, for the fiscal year ended June 30, 2003.
"Fiscal 2004 was a transition year for AmeriCredit. Our performance during the fourth quarter caps a year of improving profitability and supports our goal of working toward an appropriate return on equity for our shareholders," said AmeriCredit Chairman and CEO Clifton Morris. "We are right on target with our growth plans, our credit performance continues to improve, and our capital and liquidity position has never been stronger."
Automobile loan purchases increased to $1.075 billion for the fourth quarter of fiscal year 2004, compared to $953.8 million in the March 2004 quarter and $686.9 million in the June 2003 quarter. Managed auto receivables totaled $11.923 billion at June 30, 2004.
Annualized net charge-offs totaled 5.1% of average managed auto receivables for the June 2004 quarter, compared to annualized net charge-offs of 7.4% for the June 2003 quarter and 6.6% for the March 2004 quarter.
Managed auto receivables 31-to-60 days delinquent were 6.3% of the portfolio at June 30, 2004, compared to 8.2% at June 30, 2003. Accounts more than 60 days delinquent were 2.3% of the portfolio at June 30, 2004, compared to 3.3% at June 30, 2003.
Unrestricted cash totaled $421.5 million at June 30, 2004, down $88.2 million from March 31, 2004. During the quarter, the Company retired $168 million of senior notes and purchased $32 million of common stock under the Company's $100 million stock repurchase plan authorized by its Board of Directors in April 2004. The remainder of the authorization was completed by July 30, 2004.
Shareholders' equity increased to $2.125 billion at June 30, 2004, compared to $1.881 billion at June 30, 2003, resulting in a managed assets-to-equity ratio of 5.6 at June 30, 2004, compared to 7.9 at June 30, 2003.
"In fiscal year 2005, we will continue to focus on execution in all areas of the Company while maintaining our strong capital position," said AmeriCredit President Dan Berce. "We have ample liquidity to support our growth plans, and our financial flexibility will improve further as we receive substantial distributions from our old FSA-insured securitization program later this calendar year."
Regulation FD
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 business. The forecasts for fiscal year 2005 incorporate, but are not limited to, the following assumptions:
-- $4.5 -$5.0 billion in new originations in fiscal year 2005 consistent with the plan to grow loan volumes 10-15% annually over time;
-- Maintain net interest margins on the managed portfolio in the 12-13% range compared to 12.5% for fiscal year 2004;
-- Focus on operating efficiencies as the portfolio size begins to stabilize later in fiscal year 2005 for an operating expense ratio of 2.5-3.0% of the managed portfolio;
-- Improve portfolio-level credit losses to 5.5-6.0% for fiscal year 2005 compared to 7.2% in fiscal year 2004;
-- Implementation of Statement of Position 03-3 on July 1, 2004. As the Company reported in April, this requires the dealer acquisition fee received at loan origination be recognized as a yield enhancement and accreted into income over time. Prior to July 1, 2004, this fee was nonaccretable and used to cover inherent losses in the portfolio, thereby reducing the provision for loan losses. This change is estimated to lower fiscal year 2005 earnings by approximately $48 million, or $0.30 per share.
The forecasts do not assume conversion of AmeriCredit's $200 million contingent convertible notes into 10.7 million shares of common stock for the calculation of weighted average shares as proposed by EITF Issue No. 04-8. If implemented, this change would not effect net income, but is estimated to lower fiscal year 2005 earnings per share by $0.07 - $0.08.
Net income and EPS forecasts
12 mos. ending
Net income ($ millions) 6/30/05
--------------
Previous $180 - $200
New $230 - $250
Earnings per share
Previous $1.09 - $1.21
New $1.44 - $1.56
AmeriCredit will host a conference call for analysts and investors today at 5:30 p.m. Eastern Daylight Time. 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.
About AmeriCredit
AmeriCredit Corp. is a leading independent auto finance company. 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 nearly $12 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, 2003. Such risks include -- but are not limited to -- variable economic conditions, adverse portfolio performance, volatile wholesale values, reliance on warehouse financing and capital markets, the ability to continue to securitize its loan portfolio, the continued availability of credit enhancement for its securitization transactions on acceptable terms, fluctuating interest rates, increased competition, regulatory changes and exposure to litigation. 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 Twelve Months Ended
June 30, June 30,
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenue:
Finance charge
income $255,333 $202,796 $927,592 $613,225
Gain on sale of
receivables -- -- -- 132,084
Servicing income
(loss) 69,858 (14,236) 256,237 211,330
Other income 7,571 8,779 32,007 24,642
------------ ------------ ------------ ------------
332,762 197,339 1,215,836 981,281
------------ ------------ ------------ ------------
Costs and
expenses:
Operating
expenses 67,863 73,223 325,753 373,739
Provision for
loan losses 67,543 77,785 257,070 307,570
Interest expense 51,067 70,772 251,963 202,225
Restructuring
charges 12,985 3,291 15,934 63,261
------------ ------------ ------------ ------------
199,458 225,071 850,720 946,795
------------ ------------ ------------ ------------
Income (loss)
before income
taxes 133,304 (27,732) 365,116 34,486
Income tax
provision
(benefit) 50,624 (10,677) 138,133 13,277
------------ ------------ ------------ ------------
Net income
(loss) $82,680 $(17,055) $226,983 $21,209
============ ============ ============ ============
Earnings (loss)
per share:
Basic $0.53 $(0.11) $1.45 $0.15
============ ============ ============ ============
Diluted $0.51 $(0.11) $1.42 $0.15
============ ============ ============ ============
Weighted average
shares 157,328,373 156,320,422 156,885,546 137,501,378
============ ============ ============ ============
Weighted average
shares and
assumed
incremental
shares 161,137,846 156,320,422 159,630,695 137,807,775
============ ============ ============ ============
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
June 30, March 31, June 30,
2004 2004 2003
----------- ----------- -----------
Cash and cash equivalents $421,450 $509,690 $316,921
Finance receivables, net 6,363,869 6,032,838 4,996,616
Interest-only receivables from
Trusts 110,952 145,205 213,084
Investments in Trust receivables 528,345 576,855 760,528
Restricted cash - gain on sale
Trusts 423,025 401,129 387,006
Restricted cash - securitization
notes payable 482,724 429,954 229,917
Restricted cash - warehouse credit
facilities 209,875 58,974 764,832
Property and equipment, net 101,424 106,121 123,713
Other assets 182,915 300,240 315,412
----------- ----------- -----------
Total assets $8,824,579 $8,561,006 $8,108,029
=========== =========== ===========
Warehouse credit facilities $500,000 $767,486 $1,272,438
Whole loan purchase facility -- -- 902,873
Securitization notes payable 5,598,732 4,761,366 3,281,370
Senior notes 166,414 334,607 378,432
Convertible debt 200,000 200,000 --
Other notes payable 21,442 24,537 34,599
Funding payable 37,273 166,600 25,562
Accrued taxes and expenses 159,798 152,149 162,433
Derivative financial instruments 12,348 38,973 66,531
Deferred income taxes 3,460 81,290 103,162
----------- ----------- -----------
Total liabilities 6,699,467 6,527,008 6,227,400
----------- ----------- -----------
Shareholders' equity 2,125,112 2,033,998 1,880,629
----------- ----------- -----------
Total liabilities and
shareholders' equity $8,824,579 $8,561,006 $8,108,029
=========== =========== ===========
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Three Months Ended Twelve Months Ended
June 30, June 30,
---------------------- -----------------------
2004 2003 2004 2003
----------- ---------- ----------- -----------
Cash flows from
operating activities:
Net income (loss) $82,680 $(17,055) $226,983 $21,209
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation and
amortization 11,105 20,324 77,157 56,677
Provision for loan
losses 67,543 77,785 257,070 307,570
Deferred income
taxes (78,856) 69,581 (109,871) 7,441
Accretion of present
value discount (32,552) (13,981) (100,235) (99,351)
Impairment of credit
enhancement assets -- 93,742 33,364 189,520
Non-cash gain on
sale of receivables -- -- -- (124,831)
Non-cash
restructuring
charges and other 5,890 2,027 11,002 44,433
Distributions from gain
on sale Trusts, net of
swap payments 90,018 (3,766) 338,296 140,836
Initial deposits to
credit enhancement
assets -- -- -- (58,101)
Changes in assets and
liabilities:
Other assets 121,219 (59,270) 85,061 (55,884)
Accrued taxes and
expenses 1,366 (40,401) (6,565) (48,015)
Purchases, principal
collections and sales
of receivables held
for sale -- -- -- 1,922,076
----------- ---------- ----------- -----------
Net cash provided by
operating activities 268,413 128,986 812,262 2,303,580
----------- ---------- ----------- -----------
Cash flows from
investing activities:
Purchase of receivables (1,204,914) (688,785) (3,859,728) (5,911,952)
Principal collections
and recoveries on
receivables 670,463 376,849 2,237,731 812,825
Purchases of property
and equipment (2,151) (1,772) (4,703) (40,670)
Net change in
restricted cash and
other (205,811) (299,642) 357,531 (967,915)
----------- ---------- ----------- -----------
Net cash used by
investing activities (742,413) (613,350) (1,269,169) (6,107,712)
----------- ---------- ----------- -----------
Cash flows from
financing activities:
Net change in warehouse
credit facilities (267,486) (991,109) (772,438) (479,223)
Net change in whole
loan purchase facility -- -- (905,000) 875,000
Net change in
securitization notes 839,020 1,595,359 2,316,551 3,261,230
Net change in senior
notes and other (174,001) (43,806) (275,797) (111,010)
Proceeds from issuance
of convertible debt -- -- 200,000 --
Repurchase of common
stock (32,169) -- (32,169) --
Proceeds from issuance
of common stock 20,266 2,597 30,046 482,345
----------- ---------- ----------- -----------
Net cash provided by
financing activities 385,630 563,041 561,193 4,028,342
----------- ---------- ----------- -----------
Net (decrease) increase
in cash and cash
equivalents (88,370) 78,677 104,286 224,210
Effect of Canadian
exchange rate changes
on cash and cash
equivalents 130 111 243 362
Cash and cash
equivalents at
beginning of period 509,690 238,133 316,921 92,349
----------- ---------- ----------- -----------
Cash and cash
equivalents at end of
period $421,450 $316,921 $421,450 $316,921
=========== ========== =========== ===========
Other Financial Data
(Unaudited, Dollars in Thousands)
Three Months Ended Twelve Months Ended
June 30, June 30,
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Loan originations $1,075,484 $686,851 $3,474,407 $6,310,584
Loans securitized 1,664,080 1,947,680 4,819,940 6,487,873
Average on-book
receivables $6,595,442 $5,186,506 $6,012,085 $3,723,023
Average gain on
sale receivables 5,541,432 10,200,346 7,169,743 12,013,489
------------ ------------ ------------ ------------
Average managed
receivables $12,136,874 $15,386,852 $13,181,828 $15,736,512
============ ============ ============ ============
June 30, March 31, June 30,
2004 2004 2003
------------ ------------ ------------
On-book
receivables $6,782,280 $6,413,435 $5,326,314
Gain on sale
receivables 5,140,522 5,943,195 9,562,464
------------ ------------ ------------
Managed
receivables $11,922,802 $12,356,630 $14,888,778
============ ============ ============
June 30, March 31, June 30,
2004 2004 2003
------------ ------------ ------------
On-book
receivables:
Principal $6,782,280 $6,413,435 $5,326,314
Allowance for
loan losses and
nonaccretable
acquisition fees (418,411) (380,597) (329,698)
------------ ------------ ------------
$6,363,869 $6,032,838 $4,996,616
============ ============ ============
6.2% 5.9% 6.2%
============ ============ ============
(% of ending
managed June 30, March 31, June 30,
receivables) 2004 2004 2003
------------ ------------ ------------
Loan delinquency:
On-book:
31 - 60 days 4.2% 3.7% 4.7%
Greater than
60 days 1.6 1.3 1.8
------------ ------------ ------------
Total 5.8% 5.0% 6.5%
============ ============ ============
Gain on sale:
31 - 60 days 9.0% 7.4% 10.1%
Greater than
60 days 3.4 2.7 4.2
------------ ------------ ------------
Total 12.4% 10.1% 14.3%
============ ============ ============
Total portfolio:
31 - 60 days 6.3% 5.5% 8.2%
Greater than
60 days 2.3 2.0 3.3
------------ ------------ ------------
Total 8.6% 7.5% 11.5%
============ ============ ============
Three Months Ended Twelve Months Ended
June 30, June 30,
------------------------ -------------------------
2004 2003 2004 2003
----------- ------------ ------------ ------------
Net charge-offs:
(1)
On-book $52,051 $46,369 $255,134 $111,366
Gain on sale 101,631 236,241 691,928 915,291
----------- ------------ ------------ ------------
$153,682 $282,610 $947,062 $1,026,657
=========== ============ ============ ============
Net charge-offs as
a percent of
average managed
receivables 5.1% 7.4% 7.2% 6.5%
=========== ============ ============ ============
(1) Charge-offs for the periods ended after September 30, 2003, are
not comparable to charge-offs for periods prior due to the change
in the Company's repossession charge-off policy implemented during
the quarter ended December 31, 2003.
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. Analysis of net margin on
a managed basis allows the Company to determine which origination
channels and loan products are most profitable, guides the Company in
making pricing decisions for loan products and indicates if sufficient
spread exists between the Company's revenues and cost of funds to
cover operating expenses and achieve corporate profitability
objectives. Additionally, 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
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 Twelve Months Ended
June 30, June 30,
------------------- -----------------------
2004 2003 2004 2003
--------- --------- ----------- -----------
Finance charge income $503,583 $633,186 $2,187,523 $2,662,249
Other income 15,327 19,231 67,754 69,794
Interest expense (117,490) (193,792) (602,115) (779,862)
--------- --------- ----------- -----------
Net margin $401,420 $458,625 $1,653,162 $1,952,181
========= ========= =========== ===========
Three Months Ended Twelve Months Ended
June 30, June 30,
------------------- -----------------------
2004 2003 2004 2003
--------- --------- ----------- -----------
Finance charge income 16.7% 16.5% 16.6% 16.9%
Other income 0.5 0.5 0.5 0.5
Interest expense (3.9) (5.0) (4.6) (5.0)
--------- --------- ----------- -----------
Net margin as a percent
of average managed
receivables 13.3% 12.0% 12.5% 12.4%
========= ========= =========== ===========
Three Months Ended Twelve Months Ended
June 30, June 30,
------------------- -----------------------
2004 2003 2004 2003
--------- --------- ----------- -----------
Operating expenses $67,863 $73,223 $325,753 $373,739
Operating expenses as a
percent of average
managed receivables 2.2% 1.9% 2.5% 2.4%
Tax rate 37.98% 38.50% 37.83% 38.50%
The following is a reconciliation of finance charge income as
reflected on the Company's consolidated income statements to the
Company's managed basis finance charge income:
Three Months Ended Twelve Months Ended
June 30, June 30,
------------------- -----------------------
2004 2003 2004 2003
--------- --------- ----------- -----------
Finance charge income per
consolidated income
statements $255,333 $202,796 $927,592 $613,225
Adjustments to reflect
finance charge income
earned on receivables in
gain on sale Trusts 248,250 430,390 1,259,931 2,049,024
--------- --------- ----------- -----------
Managed basis finance
charge income $503,583 $633,186 $2,187,523 $2,662,249
========= ========= =========== ===========
The following is a reconciliation of other income as reflected on the
Company's consolidated income statements to the Company's managed
basis other income:
Three Months Twelve Months
Ended Ended
June 30, June 30,
----------------- -----------------
2004 2003 2004 2003
-------- -------- -------- --------
Other income per consolidated
income statements $7,571 $8,779 $32,007 $24,642
Adjustments to reflect investment
income earned on cash in
gain on sale Trusts 1,735 2,157 7,618 10,716
Adjustments to reflect other
income earned on receivables
in gain on sale Trusts 6,021 8,295 28,129 34,436
-------- -------- -------- --------
Managed basis other income $15,327 $19,231 $67,754 $69,794
======== ======== ======== ========
The following is a reconciliation of interest expense as reflected on
the Company's consolidated income statements to the Company's managed
basis interest expense:
Three Months Ended Twelve Months Ended
June 30, June 30,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Interest expense per
consolidated income
statements $51,067 $70,772 $251,963 $202,225
Adjustments to reflect
interest expense incurred
by gain on sale Trusts 66,423 123,020 350,152 577,637
--------- --------- --------- ---------
Managed basis interest expense $117,490 $193,792 $602,115 $779,862
========= ========= ========= =========