AmeriCredit Reports First Quarter Operating Results
FORT WORTH, Texas--Oct. 2, 20041, 2004--AmeriCredit Corp. :-- 1st quarter earnings of $0.43 per share
-- Loan originations increased to $1.085 billion
-- Cash balance increased to $526 million
AMERICREDIT CORP. today announced net income of $68.8 million, or $0.43 per share, for its fiscal first quarter ended September 30, 2004. AmeriCredit reported net income of $33.3 million, or $0.21 per share, for the same period a year earlier.
Automobile loan purchases increased to $1.085 billion for the first quarter of fiscal year 2005, compared to $745.1 million in the September 2003 quarter. Managed auto receivables totaled $11.468 billion at September 30, 2004.
Annualized net charge-offs totaled 6.3% of average managed auto receivables for the September 2004 quarter, compared to 7.6% for the September 2003 quarter. Managed auto receivables 31-to-60 days delinquent were 6.6% of the portfolio at September 30, 2004, compared to 7.6% at September 30, 2003. Accounts more than 60 days delinquent were 2.7% of the portfolio at September 30, 2004, compared to 2.9% at September 30, 2003.
Unrestricted cash totaled $526.3 million at September 30, 2004, up $104.8 million from June 30, 2004. During the quarter, the Company purchased $67.8 million of common stock, which completed the Company's April 2004 $100 million stock repurchase plan. The Company has not made any purchases under the additional $100 million share repurchase plan authorized in August. Shareholders' equity increased to $2.148 billion at September 30, 2004, resulting in a managed assets-to-equity ratio of 5.3 at September 30, 2004.
"We have started fiscal year 2005 on a solid note," said AmeriCredit Chairman and CEO Clifton Morris. "Our loan volume is on track, credit losses - while seasonally higher - have improved significantly from last year, our margins are very strong, and we are close to receiving monthly cash distributions from our old FSA-insured portfolio."
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:
-- New loan volume of $4.5 to $5 billion -- consistent with planned growth in loan volume of 10 to 15 percent annually over time;
-- Net interest margins on the managed portfolio of 12.5 to 13 percent;
-- Operating expenses of 2.5 to 3 percent of the managed portfolio;
-- Managed portfolio-level credit losses to average between 5.5 and 6.5 percent overall for fiscal year 2005, but varying seasonally by quarter; and
-- Implementation of Statement of Position 03-3 on July 1, 2004, regarding dealer acquisition fees.
Additionally, an earnings per share forecast is provided which assumes conversion of AmeriCredit's $200 million contingent convertible notes into 10.7 million shares of common stock for diluted weighted average share purposes as required by EITF Issue No. 04-8. This assumption, which is effective beginning with the December 2004 quarter, will result in the Company's contingent convertible notes being treated as convertible securities and included in the diluted earnings per share calculation using the if-converted method. EITF Issue No. 04-8 does not affect net income, but will lower fiscal year 2005 earnings per share by approximately $0.08. Including the impact of EITF Issue No. 04-8, fiscal first quarter net income would remain at $68.8 million while earnings per share would be $0.41.
Net income and EPS forecasts
12 mos. ending
6/30/05
--------------------
Net income ($ millions) $230 - $250
Earnings per share $1.44 - $1.56
Earnings per share after implementation
of EITF 04-8 $1.36 - $1.48
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 approximately one million customers and over $11 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, 2004. 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
September 30,
---------------------------
2004 2003
-------------- ------------
Revenue:
Finance charge income $269,928 $211,772
Servicing income 59,357 68,992
Other income 10,671 7,481
-------------- ------------
339,956 288,245
-------------- ------------
Costs and expenses:
Operating expenses 74,001 80,984
Provision for loan losses 98,716 64,243
Interest expense 57,516 88,744
Restructuring charges 506 739
-------------- ------------
230,739 234,710
-------------- ------------
Income before income taxes 109,217 53,535
Income tax provision 40,410 20,210
-------------- ------------
Net income $68,807 $33,325
============== ============
Earnings per share:
Basic $0.44 $0.21
============== ============
Diluted $0.43 $0.21
============== ============
Weighted average shares 155,611,880 156,467,588
============== ============
Weighted average shares and
assumed incremental shares 159,601,471 156,844,007
============== ============
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
September 30, June 30, September 30,
2004 2004 2003
-------------- ---------- -------------
Cash and cash equivalents $526,273 $421,450 $357,985
Finance receivables, net 6,738,828 6,363,869 5,404,569
Interest-only receivables
from Trusts 89,878 110,952 214,949
Investments in Trust
receivables 456,372 528,345 684,144
Restricted cash - gain on
sale Trusts 422,014 423,025 383,557
Restricted cash -
securitization notes payable 516,844 482,724 272,468
Restricted cash - warehouse
credit facilities 507,476 209,875 327,376
Property and equipment, net 97,871 101,424 117,681
Deferred income tax asset 7,202 - -
Other assets 147,599 182,915 236,742
-------------- ----------- -------------
Total assets $9,510,357 $8,824,579 $7,999,471
============== =========== =============
Warehouse credit facilities $1,021,532 $500,000 $1,373,616
Securitization notes payable 5,733,778 5,598,732 3,848,446
Senior notes 166,499 166,414 370,634
Convertible debt 200,000 200,000 -
Other notes payable 18,452 21,442 31,941
Funding payable 41,736 37,273 122,053
Accrued taxes and expenses 165,249 159,798 158,371
Derivative financial
instruments 15,467 12,348 58,091
Deferred income taxes - 3,460 110,849
-------------- ----------- -------------
Total liabilities 7,362,713 6,699,467 6,074,001
-------------- ----------- -------------
Shareholders' equity 2,147,644 2,125,112 1,925,470
-------------- ----------- -------------
Total liabilities and
shareholders' equity $9,510,357 $8,824,579 $7,999,471
============== =========== =============
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Three Months Ended
September 30,
-----------------------
2004 2003
----------- -----------
Cash flows from operating activities:
Net income $68,807 $33,325
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 8,998 42,319
Provision for loan losses 98,716 64,243
Deferred income taxes 1,468 401
Accretion of present value discount (27,126) (24,706)
Impairment of credit enhancement assets 91 13,255
Non-cash restructuring charges and other (122) 1,950
Distributions from gain on sale Trusts,
net of swap payments 100,282 82,292
Changes in assets and liabilities:
Other assets 38,264 21,568
Accrued taxes and expenses 4,796 (2,482)
----------- -----------
Net cash provided by operating activities 294,174 232,165
----------- -----------
Cash flows from investing activities:
Purchase of receivables (1,178,422) (821,265)
Principal collections and recoveries on
receivables 700,716 453,639
Purchases of property and equipment (635) (1,454)
Net change in restricted cash and other (307,306) 431,728
----------- -----------
Net cash (used) provided by investing
activities (785,647) 62,648
----------- -----------
Cash flows from financing activities:
Net change in warehouse credit facilities 521,532 101,178
Net change in whole loan purchase facility (905,000)
Net change in securitization notes 130,213 567,922
Net change in senior notes and other (8,292) (17,844)
Repurchase of common stock (67,831) -
Proceeds from issuance of common stock 19,586 309
----------- -----------
Net cash provided (used) by financing
activities 595,208 (253,435)
----------- -----------
Net increase in cash and cash equivalents 103,735 41,378
Effect of Canadian exchange rate changes on
cash and cash equivalents 1,088 (314)
Cash and cash equivalents at beginning of
period 421,450 316,921
----------- -----------
Cash and cash equivalents at end of period $526,273 $357,985
=========== ===========
Other Financial Data
(Unaudited, Dollars in Thousands)
Three Months Ended
September 30,
--------------------
2004 2003
---------- ---------
Loan originations $1,084,786 $745,076
Loans securitized 874,318 1,011,050
Average on-book receivables $6,952,426 $5,485,801
Average gain on sale receivables 4,727,627 8,946,712
----------- -----------
Average managed receivables $11,680,053 $14,432,513
=========== ===========
September 30, June 30, September 30,
2004 2004 2003
------------ ------------ -------------
On-book receivables $7,185,962 $6,782,280 $5,763,000
Gain on sale
receivables 4,282,509 5,140,522 8,174,857
----------- ------------ ------------
Managed receivables $11,468,471 $11,922,802 $13,937,857
=========== ============ ============
September 30, June 30, September 30,
2004 2004 2003
------------ ------------ -------------
On-book receivables:
Principal $7,185,962 $6,782,280 $5,763,000
Allowance for loan
losses and
nonaccretable
acquisition fees (447,134) (418,411) (358,431)
----------- ------------ --------------
$6,738,828 $6,363,869 $5,404,569
=========== ============ ==============
6.2% 6.2% 6.2%
=========== ============ ==============
September 30, June 30, September 30,
2004 2004 2003
----------- ------------ -------------
Loan delinquency:
On-book:
(% of ending on-
book receivables)
31 - 60 days 4.7% 4.2% 4.7%
Greater than
60 days 1.9 1.6 1.8
----------- ------------ --------------
Total 6.6% 5.8% 6.5%
=========== ============ ==============
Gain on sale:
(% of ending gain
on sale
receivables)
31 - 60 days 9.7% 9.0% 9.5%
Greater than
60 days 4.1 3.4 3.8
----------- ------------ --------------
Total 13.8% 12.4% 13.3%
=========== ============ ==============
Total portfolio:
(% of ending
managed receivables)
31 - 60 days 6.6% 6.3% 7.6%
Greater than
60 days 2.7 2.3 2.9
----------- ------------ --------------
Total 9.3% 8.6% 10.5%
=========== ============ ==============
Three Months Ended
September 30,
-------------------
2004 2003
--------- ---------
Net charge-offs: (1)
On-book $74,981 $56,420
Gain on sale 111,312 221,413
--------- ---------
$186,293 $277,833
========= =========
Net charge-offs as a percent of average
managed receivables 6.3% 7.6%
========= =========
(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 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
September 30,
-------------------
2004 2003
--------- ---------
Finance charge income $487,018 $592,464
Other income 18,293 16,792
Interest expense (114,507) (198,834)
--------- ---------
Net margin $390,804 $410,422
========= =========
Three Months Ended
September 30,
-------------------
2004 2003
--------- ---------
Finance charge income 16.6% 16.3%
Other income 0.6 0.5
Interest expense ( 3.9) ( 5.5)
--------- ---------
Net margin as a percent of
average managed receivables 13.3% 11.3%
========= =========
Three Months Ended
September 30,
-------------------
2004 2003
--------- ---------
Operating expenses $74,001 $80,984
Operating expenses as a percent of
average managed receivables 2.5% 2.2%
Tax rate 37.00% 37.75%
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
September 30,
-------------------
2004 2003
--------- ---------
Finance charge income per
consolidated income statements $269,928 $211,772
Adjustments to reflect finance charge
income earned on receivables in
gain on sale Trusts 217,090 380,692
--------- ---------
Managed basis finance charge income $487,018 $592,464
========= =========
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 Ended
September 30,
--------------------
2004 2003
---------- --------
Other income per consolidated
income statements $10,671 $7,481
Adjustments to reflect investment
income earned on cash in
gain on sale Trusts 2,131 1,957
Adjustments to reflect other income
earned on receivables in
gain on sale Trusts 5,491 7,354
------------ --------
Managed basis other income $18,293 $16,792
============ ========
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
September 30,
--------------------
2004 2003
---------- --------
Interest expense per consolidated
income statements $57,516 $88,744
Adjustments to reflect interest
expense incurred by
gain on sale Trusts 56,991 110,090
------------ ---------
Managed basis interest expense $114,507 $198,834
============ =========