AmeriCredit Reports First Quarter Operating Results
FORT WORTH, Texas--Oct. 2, 20054, 2005--AmeriCredit Corp. :-- Net income of $54 million, $0.35 per share, includes charge related to Hurricane Katrina
-- Loan originations increased to $1.52 billion
-- FY06 earnings guidance revised for hurricane impact
AmeriCredit Corp. today announced net income of $54 million, or $0.35 per share, for its fiscal first quarter ended September 30, 2005. Net income was impacted by an approximate $8 million after-tax charge ($13 million pre-tax), or $0.05 per share, related to Hurricane Katrina. AmeriCredit reported net income of $69 million, or $0.41 per share, for the same period a year earlier. Earnings per share for the September 2004 quarter were revised to reflect the retroactive application of EITF Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share."
Automobile loan purchases increased to $1.52 billion for the first quarter of fiscal year 2006, compared to $1.08 billion in the September 2004 quarter. Managed receivables totaled $11.05 billion at September 30, 2005, compared to $11.47 billion at September 30, 2004.
Annualized net charge-offs totaled 5.7% of average managed receivables for the September 2005 quarter, compared to 6.3% for the September 2004 quarter. Managed receivables 31-to-60 days delinquent were 6.0% of the portfolio at September 30, 2005, compared to 6.6% at September 30, 2004. Accounts more than 60 days delinquent were 2.6% of the portfolio at September 30, 2005, compared to 2.7% at September 30, 2004. Deferments totaled 7.2% of average managed receivables for the September 2005 quarter or 6.6% excluding deferments for Hurricane Katrina-impacted accounts, compared to 6.7% for the September 2004 quarter.
Unrestricted cash totaled $692 million at September 30, 2005. During the September quarter, the Company repurchased $204 million of its common stock. As of September 30, 2005, $599 million in aggregate repurchases have been made since inception of the Company's stock repurchase program in April 2004. The Company has $101 million remaining under its board approved stock repurchase plan. At September 30, 2005, shareholders' equity was $1.99 billion resulting in a managed assets-to-equity ratio of 5.6.
"We had a good quarter on many fronts. Loan originations were strong, profitability remained high, and our liquidity position is solid. Our strong balance sheet and increased allowance for loan losses position us well in the current economic environment," said AmeriCredit President and CEO Dan Berce.
Regulation FD
Pursuant to Regulation FD, the Company provides its expectations regarding future business trends to the public via a press release or 8-K filing. The Company anticipates some risks and uncertainties with its business.
The following net income and earnings per share forecasts were revised from guidance provided on August 8, 2005, for the impact of Hurricane Katrina on future portfolio performance. The earnings per share forecast has also been updated to reflect stock repurchased through September 30, 2005.
Net income and EPS forecasts
Revised Previous
12 mos. ending 12 mos. ending
6/30/06 6/30/06
------------------------------------
Net income ($ millions) $257 - $287 $265 - $295
Earnings per share $1.67 - $1.85 $1.64 - $1.82
The forecasts for fiscal year 2006 incorporate, but are not limited to, the following assumptions, which remained unchanged from August 8, 2005:
-- New loan volume of $5.8 to $6.2 billion;
-- Net interest margin of 13.0 to 13.5 percent of average on-book receivables;
-- Operating expenses of approximately 2.8 to 3.2 percent of the managed portfolio;
-- Managed portfolio-level credit losses to average between 5.0 and 6.0 percent overall for fiscal year 2006, but varying seasonally by quarter; and
-- Annualized provision for losses as a percent of average on-book receivables to average in the high-5 percent to low-6 percent range, excluding the impact of Hurricane Katrina.
The forecasts for fiscal year 2006 earnings per share do not assume any share repurchases after September 30, 2005.
AmeriCredit will host a conference call for analysts and investors today at 5:30 p.m. Eastern 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 $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, 2005. 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,
-------------------------
2005 2004
------------ ------------
Revenue:
Finance charge income $373,736 $269,928
Servicing income 25,341 59,357
Other income 21,186 10,671
------------ ------------
420,263 339,956
------------ ------------
Costs and expenses:
Operating expenses 77,865 74,001
Provision for loan losses 165,860 98,716
Interest expense 90,271 57,516
Restructuring charges 159 506
------------ ------------
334,155 230,739
------------ ------------
Income before income taxes 86,108 109,217
Income tax provision 32,075 40,410
------------ ------------
Net income $54,033 $68,807
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Earnings per share:
Basic $0.38 $0.44
============ ============
Diluted $0.35 $0.41
============ ============
Weighted average shares 142,735,494 155,611,880
============ ============
Weighted average shares and
assumed incremental shares 157,590,746 170,306,676
============ ============
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
September 30, June 30, September 30,
2005 2005 2004
------------- ------------ -------------
Cash and cash equivalents $692,476 $663,501 $526,273
Finance receivables, net 8,857,389 8,297,750 6,738,828
Interest-only receivables
from Trusts 15,745 29,905 89,878
Investments in Trust
receivables 181,903 239,446 456,372
Restricted cash -- gain on
sale Trusts 201,367 272,439 422,014
Restricted cash --
securitization notes payable 674,600 633,900 516,844
Restricted cash -- warehouse
credit facilities 271,849 455,426 507,476
Property and equipment, net 59,406 92,000 97,871
Deferred income taxes 62,883 53,759 7,202
Other assets 218,048 208,912 147,599
------------- ------------ -------------
Total assets $11,235,666 $10,947,038 $9,510,357
============= ============ =============
Warehouse credit facilities $1,104,740 $990,974 $1,021,532
Securitization notes payable 7,377,648 7,166,028 5,733,778
Senior notes 166,841 166,755 166,499
Convertible debt 200,000 200,000 200,000
Funding payable 235,573 158,210 41,736
Accrued taxes and expenses 145,914 133,736 165,249
Other liabilities 15,583 9,419 33,919
------------- ------------ -------------
Total liabilities 9,246,299 8,825,122 7,362,713
------------- ------------ -------------
Shareholders' equity 1,989,367 2,121,916 2,147,644
------------- ------------ -------------
Total liabilities and
shareholders' equity $11,235,666 $10,947,038 $9,510,357
============= ============ =============
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Three Months Ended
September 30,
-----------------------
2005 2004
----------- -----------
Cash flows from operating activities:
Net income $54,033 $68,807
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 6,859 8,998
Provision for loan losses 165,860 98,716
Deferred income taxes (9,109) 1,468
Accretion of present value discount (11,663) (27,126)
Impairment of credit enhancement assets 457 91
Stock-based compensation expense 4,203 629
Other (711) (751)
Distributions from gain on sale Trusts,
net of swap payments 143,018 100,282
Changes in assets and liabilities:
Other assets 8,366 23,282
Accrued taxes and expenses 11,856 4,796
----------- -----------
Net cash provided by operating activities 373,169 279,192
----------- -----------
Cash flows from investing activities:
Purchases of receivables (1,621,939) (1,178,422)
Principal collections and recoveries on
receivables 976,538 715,698
Net sales (purchases) of property and
equipment 33,905 (635)
Net change in restricted cash and other 145,561 (307,306)
----------- -----------
Net cash used by investing activities (465,935) (770,665)
----------- -----------
Cash flows from financing activities:
Net change in warehouse credit facilities 113,766 521,532
Net change in securitization notes 210,385 130,213
Net change in senior notes and other (3,685) (8,292)
Repurchase of common stock (204,114) (67,831)
Net proceeds from issuance of common stock 3,407 19,586
----------- -----------
Net cash provided by financing activities 119,759 595,208
----------- -----------
Net increase in cash and cash equivalents 26,993 103,735
Effect of Canadian exchange rate changes on
cash and cash equivalents 1,982 1,088
Cash and cash equivalents at beginning of
period 663,501 421,450
----------- -----------
Cash and cash equivalents at end of period $692,476 $526,273
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Other Financial Data
(Unaudited, Dollars in Thousands)
Three Months Ended
September 30,
---------------------------
2005 2004
-------------- ------------
Loan originations $1,520,146 $1,084,786
Loans securitized 1,189,191 874,318
Average on-book receivables $9,050,440 $6,952,426
Average gain on sale
receivables 1,970,313 4,727,627
-------------- ------------
Average managed receivables $11,020,753 $11,680,053
============== ============
September 30, June 30, September 30,
2005 2005 2004
-------------- ------------ -------------
On-book receivables $9,462,883 $8,838,968 $7,185,962
Gain on sale receivables 1,590,943 2,163,941 4,282,509
-------------- ------------ -------------
Managed receivables $11,053,826 $11,002,909 $11,468,471
============== ============ =============
Three Months Ended
September 30,
---------------------------
2005 2004
-------------- ------------
Operating expenses $77,865 $74,001
Operating expenses as a
percent of average managed
receivables 2.8% 2.5%
Tax rate 37.25% 37.00%
September 30, June 30, September 30,
2005 2005 2004
-------------- ------------ -------------
Loan delinquency:
On-book:
(% of ending on-book
receivables)
31 - 60 days 5.3% 4.3% 4.7%
Greater than 60
days 2.2 1.8 1.9
-------------- ------------ -------------
Total 7.5% 6.1% 6.6%
============== ============ =============
Gain on sale:
(% of ending gain on
sale receivables)
31 - 60 days 10.1% 8.8% 9.7%
Greater than 60
days 4.8 3.9 4.1
-------------- ------------ -------------
Total 14.9% 12.7% 13.8%
============== ============ =============
Total portfolio:
(% of ending managed
receivables)
31 - 60 days 6.0% 5.2% 6.6%
Greater than 60
days 2.6 2.2 2.7
-------------- ------------ -------------
Total 8.6% 7.4% 9.3%
============== ============ =============
Three Months Ended
September 30,
------------------------------
2005 2004
--------------- --------------
Contracts receiving a payment
deferral as an average quarterly
percentage of average receivables
outstanding:
On-book (% of average on-book
receivables) 6.4% 4.7%
=============== ==============
Gain on sale (% of average gain on
sale receivables) 10.7% 9.6%
=============== ==============
Total portfolio (% of average
managed receivables) 7.2% 6.7%
=============== ==============
Three Months Ended
September 30,
-----------------------------
2005 2004
--------------- -------------
Net charge-offs:
On-book $109,173 $74,981
Gain on sale 47,982 111,312
--------------- -------------
$157,155 $186,293
=============== =============
Net charge-offs as a percent of average
receivables:
On-book 4.8% 4.3%
=============== =============
Gain on sale 9.7% 9.3%
=============== =============
Total portfolio 5.7% 6.3%
=============== =============
Net recoveries as a percent of gross
repossession charge-offs:
On-book 47.6% 45.4%
============== ===========
Gain on sale 39.9% 37.3%
============== ===========
Total portfolio 45.2% 40.6%
============== ===========
September 30, June 30, September 30,
2005 2005 2004
------------- ----------- -------------
On-book receivables:
Principal $9,462,883 $8,838,968 $7,185,962
Allowance for loan losses
and nonaccretable
acquisition fees (605,494) (541,218) (447,134)
------------- ----------- -------------
$8,857,389 $8,297,750 $6,738,828
============= =========== =============
Allowance as a percentage
of on-book receivables 6.4% 6.1% 6.2%
============= =========== =============
The Company implemented EITF Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share" ("EITF 04-8") during the quarter ended December 31, 2004, which resulted in the Company's convertible senior notes being treated as convertible securities and included in diluted earnings per share calculations using the if-converted method. EITF 04-8 required retroactive application beginning with the quarter ended December 31, 2003, which was the first quarter the Company's convertible notes were outstanding. The effect of the retroactive application of EITF 04-8 on the Company's diluted earnings per share is as follows:
Three Months
Ended
September 30,
Diluted earnings per share: 2004
--------------------
As previously reported $0.43
====================
As reported under EITF 04-8 $0.41
====================
The Company's net margin as reflected on the consolidated statements
of income is as follows:
Three Months Ended
September 30,
--------------------------
2005 2004
------------- ------------
Finance charge income $373,736 $269,928
Other income 21,186 10,671
Interest expense (90,271) (57,516)
------------- ------------
Net margin $304,651 $223,083
============= ============
Three Months Ended
September 30,
------------------------
2005 2004
------------- ----------
Finance charge income 16.4% 15.4%
Other income 0.9 0.6
Interest expense (3.9) (3.3)
------------- ----------
Net margin as a percent of
average on-book receivables 13.4% 12.7%
============= ==========